PESTLE analysis, leadership style, CSR and impact of Brexit and Covid-19 on ZARA

This report discusses the PESTLE analysis of ZARA, different types of leadership styles, corporate social responsibility, and the impact of Brexit and Covid-19 on ZARA's business. The report evaluates the external factors affecting ZARA's business and how the company deals with these issues.

Context of Business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
PESTLE analysis of ZARA..................................................................................................1
The leadership style helps to accomplish the organisational objectives................................2
Explanation of Corporate Social Responsibility....................................................................4
The impact of Brexit as well as Covid-19 on ZARA and how company deal with these issues 6
CONCLUSION................................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
Business is a combination of understanding all the elements that impact on their business
from wide perceptive. It includes what approaches are used for achieving the objectives and how
effective decision are taken. For the present report ZARA has been chosen as based company.
ZARA was founded by Marta Ortega in 1975 and Its headquarter located in Spain. ZARA is
mainly dealing in perfumes, beauty, swimwear, shoes, accessories and clothes across the Japan,
United Arab Emirates and Portugal etc. The report will cover the discussion about analysis of
external environment through PESTEL analysis as well as explaining the different type of
leadership style. In addition to this, critically evaluate the corporate social responsibilities along
with COVID 19 and Brexit impact on ZARA business.
MAIN BODY
PESTLE analysis of ZARA
PESTLE analysis is an analytical framework that mainly used in examine the business
environment. This tool help to analysis the external factor that may harm the business sector as
well as help to size the opportunities. In context ZARA, The PESTLE analysis help to analyse
the external factor and designed the policies to meet with external change.
Political: The political factors are mainly controlled by the governments polices and actions
such as free trade, fiscal policy and corporate taxation etc. In context to ZARA, The respective
company is a Spanish brand that successful expanded the business across the global. The
political condition of Spain has well established for extensive internation trade that help to
ZARA to acquire the raw material and supply the finished good in different countries. The
apparel industry of European Union accounts of approx. 74% of the sum the export, therefore it
provide access to ZARA to explore the fresh market without paying additional tariffs.
Economic: The unemployment rate of Spain is the highest when compare to other company such
as United Kingdom, Germany and France. Hence, this factors provide benefits of less labours
cost as it improve the cost strategy of the organisation. The GDP of such counties is not higher
as people may less spend on clothing and others things that impact on revenue.
Social: The social factors help to understand the consumer behavioural, consumer's need and
trends. Social trends is dynamic in nature as it may change by the time that create a huge impact
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on organisational operation. The social culture of Spain allows ZARA to provide wide range of
cloth designed to millions of consumers according to the demographic ans cultural taste
Technological: The technology has a major role in the organisational growth in present century
as it provide a innovative ways to produce and supply the goods(Boccalon and et.al., 2022).
The ZARA has mainly focused on advanced equipments that help to manufacture the clothes,
shoes and bags etc. The ZARA has expanded presence on digital world such as website, apps
and social media that help enhance the annual revenue.
Environmental: The whole fashion industry connected with wastefulness as the clothing trends
and interests are changing continuously. The ZARA has been planing to make entire outlets with
100% eco effective. The respective organisation have used ECO friendly raw material that may
not harm the environment such as avoiding use of plastic bag. The respective company move
forward to reduce its water and energy consumption.
Legal:The legal factor influence the internal policies of the organisation such as protection of
intellectual property, employments and industry regulation etc. The ZARA mainly focused on
maintaining the rules and regulation of the Spain as it improve the reputation in the eyes of
governments. However, The respective company has been defamed for stealing the cloth
designed from Balenciaga and Adidas. The ZARA also need to effectively enforce the
copyright laws as clothing industry required lots of money, effort and time etc.
The leadership style helps to accomplish the organisational objectives
Leadership style is a process of improving and changing the ways of organisational
operation. It is defined as a leader's behaviours and methods that help to managing, motivating
and directing to others. There are eight type of leadership style that will mention below.
Democratic Leadership: The democratic leadership style allows to lower level of staffs to take
part in organisational authority as leaders takes decision according to the input of every team
members(Kenge,and Khan, 2020). This type of style is more effective for organisation as
encourages the employees to engaged with organisation
Autocratic Leadership. Autocratic leadership style is the opposite to the democratic leadership
as leadership takes decision with involving of subordinates employees. The employees are
neither consulted not considered prior to modify in direction and decision strictly imposed the
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changes on employees. This type of leadership reduce the morale of the employees as they feel
that they are not essentials part of the organisation.
Laissez- faire Leadership: Laissez- faire Leadership refers to attitude of reliance and trust on
their staffs as it not provide too much guidance or instructions. This type of leadership allow to
manager trust their staffs so that it enhance the confidence in the organisation.
Strategic Leadership: Strategic leadership refers to intersection between organisation's growth
opportunities and operations. The individual acceptance the pressure of administrator interest
while mark sure that present performing conditions stay balance for every( Zhang, Cao and
Wang, 2018) . It is a most preferable by the many organisations as strategic thinking help
different type of employees.
Transformational Leadership: The transformational leadership is always improving and
transforming the organisational conversations. The staffs have basic set targets and tasks that
they accomplish every month but the leader is continue pushing them out of their comfortable
zone.
Coach style leadership: The coach style leadership is similar to the sport team's instructor as
the leader aim at nurturing and identifying the employment strength of every member of the
team. This type of style mainly focus on democratic lead and strategic leadership style so that
each member of the team perform the task with effective quality.
From the above the analysis of leadership style, coach style leadership is the most
effective among all as it combing strategies of democratic and strategic leadership that help to
enhance the operational work of the organisation(.Shahzad, and et.al., 2018).. The ZARA should
adopt coach style leadership s for better improvement of employees 's skill that help accomplish
the organisational objectives. The respective organisational managers ought to change leadership
style according to the time and external changes. This type of style help to identifying the
strength or weakness of individuals so that leadership motivate the employees toward personal
development. The coach style allows to make balance between criticism and praise as leaders
provide the effective feedback so that employees make improve toward development. This type
of leadership allows to leaders to takes time and conduct researches as it more emphasis on
gathering information in order to improve your leader's skills. This type of style help to connect
the individual with each others as leaders more focus on improving the trust level so that
employees more communicate with other employees and organisational top level of mangers.
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For example, ZARA hired fresher employees as such employees not performing
effectively as per predefined criteria. In this situation, ZARA have to use coach leadership as it
transform the poor performance to advanced performance of the specific employees(Chin, And
et.al., 2019) This leadership style help to enhance the mutual understanding as it fresh employees
come ahead with issues to enhance their skills. All leadership style suits according their working
culture and their organisational size as manger should analysis their whole function and then
implement the leadership style. The democratic leadership style help to enhance the decision
making in lower level of employees as it play important role in those organisation which required
quick decision in a day. On the other hand, the autocratic leadership is the most suitable for
those organisation which have less professional experts in the management. The organisation
have to always motivate their employees through effective leadership that help to employees as
they putting their best effort for organisational success.
Explanation of Corporate Social Responsibility
Corporate social responsibility refers to self regulating business structure which helps a
organisation be socially responsible for public, its stakeholder and itself. The organisation can be
self-aware of what type of affect they are having on prospect for society, involving
environmental, social and economic. There are many ways of being eco-conscious and
environmental friendly, enhancing the equality and improving the workplace in order to treating
the staff with respect and value. CSR is a the voluntary option of individual organisations to
mandatory rules and regulation at local, national and internation level. However, there are
various organisation select to move beyond the legal obligation and admire the view of doing the
business in good. CSR is an essential for organisations to to have more conscious about their
brand image. In competitive world, the organisation has to prove in the eyes of public as
organisation doing their best for their people and for their environment(Sharma, 2019). If
company more focus on their employees welfare scheme and show the respect toward their
employees so that it improve the retention of employees, The CSR helps to organisation to
allure the investor to invest in such organisation those are more aim at social responsibility. The
organisation implements sustainable systems so that they are in top from all others companies as
showing on social media and design the story, hence more people engaged toward organisation.
In context to ZARA, The respective organisation have more focused toward Corporate
social responsibility that helps to improve the brand image across the global. Recently,ZARA has
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bound up with sustainable development of society and interacts with environmental
development as respective organisation have taken initiative that includes decrease the effort
the effort of energy consumption by approx. 20% in their all outlets as they use automated
recycling hanger machine that picks up plastic material form their outlets(Ye and et.al., 2020).
The ZARA is famous for designable cloths and different type of others items but now, company
have also used organic cottons in their specific clothes that make more attractive toward social
advancements. The ZARA has decreased encourages the recycling and production wast as they
reuse the waste production and wastage of products to design the effect product that shown the
organisation have moved CSR. The ZARA has wide numbers of outlets in different countries so
that company have used biodegradable plastic hand bags that give out to consumers that
enhance the reputation in the eyes of different governments. The biodegradable plastic hand bags
are easily decompose through natural process that secure the environmental uncleanness caused
by old type of plastic.
The ZARA has promoted the ecological agriculture in which eliminating the bleaches and
chemical, pesticides that may harms the environmental as well as consumers. The main sources
of air pollution is used of petroleum that impact the whole environment so that ZARA have
avoided to use of petroleum in the production of footwear(Adnan, Hay and van , 2018).. The
respective organisation have more focus on renewal energy and avoiding the uses of natural oils
and electricity so that it helps to save the operational cost by decreasing their energy costs. The
respective company have installed solar panels and other type of renewable energy sources on
their manufacturing area. ZARA has used genuine leathers instead of animal skins that mainly
used in shoes and jackets as it is a good news for animal lovers who can carry such types so that
improve the sales. However, the labours conditions of ZARA is not good enough as half of final
process of production in the Spain as risk of country's labours abuse. The ZARA have not made
clear progress toward effective payment structure for labours that make bad picture of
organisation. However, ZARA have gained huge profits margin. The ZARA has wide market
value in different as it helps in reducing the poverty alleviation as it provide numbers of job in
different nations so that it is playing crucial role in improving the financial conditions of low
level of countries.
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The impact of Brexit as well as Covid-19 on ZARA and how company deal with these issues
Impact of Brexit: All industries are affected by the Brexit because of reducing the investments,
increasing the high migrated workforces and increasing the shortage of skilled workers. Some
industries have been more impacted when compare from others likely financial service as world
have seen the great modifications( Hill, 2022)(.Freedman and Loutzenhiser, 2022) The supply
chain of many countries have affected due to consumers or supplier impacted. There are various
issues face by the ZARA from Brexit that will mention below.
Border tariffs: The tariffs plays a crucial role in export and import so that ZARA have
faced difficulty to manage the different tax rate in UK.
Economic problems: The every parts of economy which operated by UK have mainly
impacted from Brexit. The financial conditions of countries not good that time so that ZARA
have reduced sales in last past years.
Intellectual Property: Intellectual property involves copywriting, trade secrets, designs,
trademarks and patents. The United Kingdom leaving from European Unions that means
modification of IP laws in the UK so that ZARA businesses may impacted from these changes.
ZARA have taken crucial steps to address the Brexit
ZARA have faced challenging periods during the Brexit as UK changed the employment
regulation and laws that made unclear . ZARA have made essential decision that help to revival
the business and improve the supply of product.
Employees Communications: The main initiative taken by the ZARA is
communication as the ZARA have made effective decision through strong communication with
all employees and implementing all changed policies in well manners.
Examine Potential Impact: The all businesses affected by the Brexit changes as sudden
changes in rules and regulation of the countries(Kamal, 2020).. The ZARA have evaluated
potential impact of Brexit as respective company allocate the time HR team and their legal to
understand the potential outcomes. The area have taken into consideration such as pension,
employees retention, recruiting strategies and employment law.
Tracking as well as Processing Information: The respective organisation have
dedicated the resources to gathering the informations so that they can design the contingency
plans.
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Employment Laws: The employment laws of United Kingdom instructed the active
memberships in the European United( Fuchs., 2021) After the separation, UK created their own
laws and regulation so that organisation have followed such rules that help to maintain the
business in UK
Impact of COVID19 on business
The fist COVID pandemic in 2020 have worst affected on different type of organisation
as approx. 73% of organisation fell sakes by approx. 10% and 35% during that period. One third
of organisation closed their business in average periods due to high restriction in different
countries. In context to ZARA, The respective company have faced difficulty to mitigate the
impact of COVID19 as company's revenue downfall by every day due to high rate of infection.
There are certain challenges faced by the ZARA that will mention below.
Difficulty in operation: The respective organisation have faced challenges to manage the
operation as many governments restricted the social gathering in office, factory and other area.
In this satiation, the higher chance of inappropriate communication in their operational works as
clothing industry high require of effective company to effective allocate the tasks and respurces
to their employees.
Difficulty in decision making: The clothing industry highly need of decision making in
dynamic nature as fast changes in consumer's(trendsSaleem,, 2019). The ZARA has faced
difficulty in decision making as it require of high level of researches and analysis of past
experience.
High rate of unemployment: The most of the countries , increased the high level of
unemployment due to closer of businesses and shortage of skilled labours due to fear of
infection. ZARA have not enough employees to manage the operational works that made more
challenging.
Reduce in sales: Over the COVID periods, the sales of ZARA reduced in worst manner as
governments had imposed the social distancing in different places. The consumers have less
spend on clothes because they have not jobs and money in some countries.
Effective step taken by ZARA
Work from home: The ZARA allows work from home to their employees to maintain the
social distancing so that employees perform their work effective in order to accomplish the
organisational objectives.
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Technology: The growth of organisation depend on effective technology that help to make the
work innovative and creative. The ZARA have used Google Meet, ZOOM, Webex other
technology to meet the organisation target. The virtual software help to conduct the online
interview and also helps in improve the effective communication.
Digital marketing: After COVID, the people more like to prefer to by a product from online
and they more connect toward social media. The ZARA have more focused on digital media that
help to deliver the informative content across the multi nations at real time through internet.
CONCLUSION
The above stated report concluded that analysis of external factors are very important for
a organisational development and growth as well. It has been concluded that there are different
of leadership style that may help the organisation to build the positive organisation in order to
meet the organisational objectives(Garg,2019). The organisational managers need to implement
the leadership style as per the requirement and situation of organisation. There are various of
type of leadership style such as democratic leadership, autocratic leadership, laissez- faire
leadership, strategic leadership, transformational leadership and Coach style leadership. The
company have been worst impact by the Brexit and COVID-19 as in both cases companies have
faced different type of challenges.
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