Zara Management Consultancy Report

BPP Business School
Coursework Cover Sheet
Please use this document as the cover sheet of for the 1st page of your assessment.
Please complete the below table – the grey columns
Module Name MSc Management
(Global Strategy and Sustainability)
Student Reference Number
(SRN)
BP0270365
Assessment Title ZARA MANAGEMENT CONSULTANCY REPORT
Please complete the yellow sections in the below declaration:
Declaration of Original Work:
The word count, excluding contents table, bibliography and appendices, is 3030
words.
Student Reference Number: BP0270365_______ Date: 22-05-2023___
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Global Strategy and Sustainability
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Table of Contents
Part one- Business Report............................................................................................................3
Introduction....................................................................................................................................3
Task 1............................................................................................................................................4
A-The External and Internal Analysis............................................................................................4
External Analysis:..........................................................................................................................4
PESTEL Analysis:......................................................................................................................4
Political Factors:.....................................................................................................................4
Economic Factors:..................................................................................................................4
Sociocultural Factors:.............................................................................................................4
Technological Factors:...........................................................................................................5
Environmental Factors:..........................................................................................................5
Legal Factors:.........................................................................................................................5
Porters Five Forces Analysis.........................................................................................................5
Internal Analysis:...........................................................................................................................6
B-Three Most Critical Factors........................................................................................................7
C- Current Sources of competitive advantage:..............................................................................8
VRIO for Zara.............................................................................................................................8
Protecting and sustaining competitive advantage..................................................................9
Task 2............................................................................................................................................9
Strategy in the Global Environment...............................................................................................9
Internationalization and Entry Strategies.....................................................................................11
Task 3..........................................................................................................................................12
Corporate Strategy......................................................................................................................12
Enhancing the Supply Chain through Strategic Approaches:......................................................12
Horizontal Integration:..............................................................................................................12
Vertical Integration:..................................................................................................................12
Outsourcing:.............................................................................................................................12
Strategic Alliances:..................................................................................................................13
Recommendations.......................................................................................................................14
Conclusion...................................................................................................................................14
References..................................................................................................................................16
Appendix......................................................................................................................................18
Part B...........................................................................................................................................18
Presentation.................................................................................................................................18
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Part one- Business Report
ZARA MANAGEMENT CONSULTANCY REPORT
Introduction
As a part of the Inditex Group, the fast-fashion label Zara has expanded to become a
worldwide retail juggernaut, with over 2,270 stores in 96 countries. Zara, founded in
1975 by Amancio Ortega, is widely recognized as a pioneer in the fast fashion industry.
This report was compiled by a management consultant hired by Zara to conduct an
update on the company's strategy. Based on their findings, the consultant will
recommend how Zara can best preserve and grow its current market position. Three
prospective global entrance tactics for Zara will be identified, and the company's growth
motives and entry plans will be evaluated using several different models. In addition, the
research will highlight recommendations for how Zara may increase profitability using
suitable models. The primary goal of this research is to advise Zara's CEO on how to
position the firm for continued success best as it expands internationally.
The study examines the significance of improving Zara's supply chain and profitability
as means to this end. The study will support its findings and suggestions with academic
sources and examples from thriving fashion companies. The purpose of this business
report is to help Zara come up with a solid plan for international growth. This report will
help Zara face the challenges and seize the opportunities of the global fashion industry
by conducting an in-depth analysis of the internal and external factors affecting the
company, evaluating its current competitive advantages, and providing actionable
recommendations. Zara will continue to thrive in the cutthroat fashion market by
prioritizing its supply chain's fortification and improving its bottom line (Mazaira et al.,
2018).
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Task 1
The External and Internal Analysis
A-External Analysis:
PESTEL Analysis:
To evaluate how elements affect Zara's business and strategic choices, we will conduct
a PESTEL study.
Political Factors:
Political stability, trade rules, and government policies influence Zara's business
decisions. Raw material and labor costs may fluctuate between areas in response to
changes in import/export policies, tariffs, and employment rules.
Economic Factors:
Consumer spending power and public demand for Zara's items are affected by
economic factors, including GDP growth, inflation rates, and currency rates. Zara bases
its growth and pricing decisions on the financial situation of its target markets (Wenjing,
2021).
Sociocultural Factors:
Zara's success heavily relies on cultural variety, sartorial inclinations, and customer
demand. Zara must learn about local customs and customer habits to tailor its products
and advertising to local markets.
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Figure 1: PESTEL Analysis (Wenjing, 2021)
Technological Factors:
The company's supply chain and business strategy are strongly impacted by
technological developments. If Zara wants to keep its nimbleness, speed, and
efficiency, it must embrace advancements in production, inventory management, and
online shopping (Ruan et al., 2022).
Environmental Factors:
Zara has committed to sustainability and eco-friendly operations in response to rising
environmental concerns and legislation. Zara has shown a commitment that aligns with
shifting customer priorities and governmental mandates by reducing waste, employing
renewable materials, and applying ethical sourcing techniques.
Legal Factors:
Zara places a premium on adhering to all applicable rules and regulations, such as
intellectual property, employment, and workplace health and safety. Alterations to the
law may affect Zara's business, sourcing methods, and reputation (Manktelow, 2021).
Porters Five Forces Analysis
The apparel industry giant Zara may be studied using Porter's Five Forces analysis. The
fashion business faces modest competition from new entrants since it needs substantial
capital expenditures and specialized labor. Second, Zara's worldwide reach and close
ties with its suppliers require more negotiation leverage. Thirdly, consumers have a
modest amount of negotiating power since they have many options but choose Zara
because of its distinctive styles and low pricing. Fourthly, competition from other
companies in the fashion industry is fierce. Finally, competition is fierce, as many firms
fight for a slice of the market. In general, Zara faces a challenging business
environment where several factors might affect the company's standing in the market
(Ruan et al., 2022).
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