Strategic Management Analysis of Zara

This report provides a strategic management analysis of Zara, including its business model, vision, mission, goals, and strategies. It also includes PESTLE and Porter analysis, strategic groups, and the retail industry. Zara is a unique brand that takes care of its customers, employees, stakeholders, and the environment.

Running head: Strategic Management
Strategic Management
Zara

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Strategic Management
Table of Contents
Introduction............................................................................................................................2
Top Management and Leadership Contribution.......................................................................2
Business Model of Zara............................................................................................................3
Vision and Mission..................................................................................................................3
Major Goals of the Firm...........................................................................................................4
Strategies of Zara....................................................................................................................5
PESTLE ANALYSIS.....................................................................................................................5
Porter Analysis........................................................................................................................6
Strategic Groups......................................................................................................................7
Retail Industry.........................................................................................................................7
Conclusion...............................................................................................................................8
References..............................................................................................................................9

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Strategic Management
Introduction
Zara is a very well known for selling apparels. It is a Spanish brand and was founded by
Amancio Ortega Gaona and Rosalia Mera in Artexio, Galicia. It was incepted in 1975. Zara is
mainly known for selling clothes and is a biggest retailer in fashion industry also known as
Inditex. It sells in 86 countries and the total number of stores it has is 1,763 across the whole
world. If talked about Inditex, it is in itself a very big retailer in fashion industry and is known
for the brands like ZARA, Pull & Bear, Massimo Dutti, Bershka, Oysho etc. Inditex for founded
much earlier in the year 1963. Zara has a different and unique business model and it is quite
innovative too. Due to this Inditex went on becoming the biggest retailers across world. Zara’s
first store was incepted in Spain. It promotes offers on clothing and fashionable design for all
people, men, women and children. For completing their product line, they became the sellers of
the accessories too (Inditex, 2015).
Top Management and Leadership Contribution
If the hierarchy of the firm is seen, at the top of the management, there stands the CEO and the
Chairman of the Firm. He is Pablo Isla and then follows Zara’s directors. They are the main
decision makers of the firm and they control the firm. The directors in Zara create and manage
the future goals of the company so as to maximize the value of the firm if seen in the long term.
The board of director’s duties involves decisions making in terms of domains like administration,
management and company representation and also daily management in day to day basis. At the
same time, they also address the competencies of the management that involves the seniors and
liaising with the stakeholders of the firm. They also look after the ethical and social duties with
respect to the stakeholders. The other domain consists of the Audit and control, Nomination and
remuneration and ethics committee (Huiru, 2011).
All these people bring good leadership in the firm and they make people learn from their positive
experiences.

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Strategic Management
Business Model of Zara
Business Model of Zara
Source: (Inditex, 2015)
The business model of Zara actually is based on this principle that it is able to sell medium
quality fashion clothing at good reasonable prices. The keep to the procedure lies in the skill of
Zara for tuning in to customer’s personal tastes in order to provide them what they are looking
for and asking for. For doing so, there are approximately 200 designers who sit at the
headquarters of the company in Spain and continuously collect knowledge about the decision
made by the users in each store of Zara. They try and give the latest trends that their self scouts
see in the lanes and streets and malls to get some inspiring creations and also, the logistics of
Zara’s products id done in the company of Zara itself. The advantage of this strategy is that it
provides Zara flexibility for adapting the changes of the consumers in fashion (Verma, 2016).
Vision and Mission
The vision of the company is that it is dedicated to satisfy the customers and their desires. For
maintaining this vision, Zara pledge about regularly innovating the business for improving the
experience. They swear to provide the customers with the new designs that are made of fine
quality materials and the prices are reasonable.

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Strategic Management
The mission statement is that with the help of the business model, Zara aims to add to the
sustainable growth of the society and the environment as well in which human beings interact.
The values that Zara has to abide with are:
 Ensuring harmony of the rationale in the firm.
 Give a standard for allocating the firm’s resources.
 Establish good climate in firm.
 To serve as the central point to the people in order to identify firm’s purpose and way.
 To provide the facility of the translation of the aims into a work structure consisting of
the tasks assignment to responsible factors in the firm (Elizaga, 2016).
Major Goals of the Firm
The long-term goals of the firm are:
 Eco friendly Store: Zara believes in the management which is eco friendly and hence,
they look for the eco-friendly store management for reducing the 20% consumption of
energy by incepting sustainability and efficiency criteria.
 Less Waste Production: The hangers and the alarms in Zara are being recycled. They are
picked up from the shops and then they are processed into plastic elements. This is a
very good example of their waste management policy.
 Dedication towards the Staff: In company awareness campaigns and multimedia based
training programs in order to educate the employees in terms of the sustainable
practices are performed.
 Ecological Fabrics: Zara is in the support for Organic farming and create garments of
organic cotton which are completely free from the pesticides and bleach.
 The label is specific and easy to spot in the shops.
 Biodiesel Fuel: They use 5% biodiesel fuel per year. This allows Zara to decrease the
carbon dioxide emissions by 500 tons (Crofton & Dopico, 2007).

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Strategic Management
Strategies of Zara
 Integration Strategies: The strategy that Zara applies is forward integration. Inditex
demands for high integration in between the headquarters and the other branches around
the world and hence, Inditex control the retailers and the distributers around the world for
standardizing the business performance.
 Intensive Strategies: It is an expander in the market and therefore, this firm practices the
development in the market strategy in which Zara enters new market with the Asian
countries that are developing these days. Zara is presently in targeting the Asian markets
like Indonesia, India etc. and they hope to get good profit from this strategy.
 Diversification Strategy: In the formation of differentiation, Zara is able to sell
accessories as a complement to the main product that is clothing. This is the type of
strategy which is linked with diversification. It also has an unrelated form of
diversification and that is Zara Home. This specializes in the decor and home fashion.
 Defensive Strategies: The firm has no strategy like this as the firm is in better condition.
It is not in any kind of jeopardy (Mo, 2015).
PESTLE ANALYSIS
Political: If there are any disruptions in the market due to politics then it impacts the economy.
This type of turmoil also disrupts the supply chain and this creates difficulty for the brand. Zara
got rid of this situation by limiting the operation in supply chain in the home nation and
neighboring nations. This way, it reduced the fear from political disruption (Rastogi & Trivedi,
2016).
Economic: The economics of any market or nation has huge effects on the business. It depends
on the economy as to how the business will do. Zara sells its products in reasonable prices and
that is the strategy which make Zara sustainable in the market. Even when people shift to other
brands, they will probably return for the affordable prices (Ho, 2014).

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Strategic Management
Social: Zara minds Social factors of the business in a very good way. It does the good research
before entering into any market. With the help of the research, any risks come out in the eye of
the frim before. The culture is studies well before in order to sustain in the market (Gupta, 2013).
Technology: Zara utilizes the technology in a very best manner and that is why it is known as to
be the disruptive new name in the fashion industry. It also partnered with Toyota in the year
2014, for the application of JIT and lean facilities around the manufacturing operations. This
type of technology increases the company’s responsiveness.
Environment: The stores of Zara consumes less energy and water if compared with the normal
other stores. Also, Zara believes in Recycling its hangers after being used. This way Zara keeps
the environment clean. It wants to eliminate any waste from the environment (Pratap, 2017).
Legal: The firm emphasize on developing the ethical image of itself. For maintaining this, legal
compliance is important and that is why Zara invests in the compliance all through system
including the supply chain too. It also makes sure that the brand abides with the local laws in the
markets.
Porter Analysis
Rivalry: There are no big rivals in the market if compared with this firm due to its uniqueness.
This helps Zara to earn profit from the people with not having to spend huge sums on marketing
in order to gain attention (Omsa & Abdullah, 2016).
New Entry: The different approaches and profitability creates the attention of the people with
investment to enter into the new market. Still it will be tough to gather workforce required in
such a short period of time. This might be easier to enter if the people are ready to enter into the
new market with getting enough time for preparation.
Power of Suppliers: The low power of supply is there because the goal is to attract each potential
user for buying their merchandises (Indiatsy, Mwangi, & Mandere, 2014).

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Strategic Management
Substitute Threat: This industry of fashion is not very much predictable in terms of finding out
the competitors. However, Zara is still different from other brands because of its innovative
designs and creative fashion.
Power of Buyer: It lies in the hands of consumers of what they like and purchase, regardless of
the brand. Though there are still some individuals who have “loyalty” towards Zara and does not
mind the long line ups.
Strategic Groups
Zara and its Strategic Groups
Source: (Google Images, 2018)
The above diagram shows the strategic groups of the firm but if talked about the competition
then Zara beats all its competitors and stays the number one brand because of its Business Model
(Adam, 2013).
Retail Industry

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Strategic Management
Zara comes in the retail industry and it is very dynamic as it keeps on changing day after day as
the technology and other strategies increases and changes every day. The best evidence of that is
that Retail industry has joined hands with the Ecommerce industry and it has created high levels
of profits in the market (Scozzese, 2013).
Conclusion
This report focusses on the company named Zara and its strategic analysis. The PESTLE and
Porter analysis is discussed so as to know the strategic groups and the competition of the internal
and external market. Zara is a brand which has so much positive to talk about. No doubt it is
number one brand because it takes care of the costumers, its employees and other stakeholders as
well as the environment. With the introduction of the firm, the vision, mission and long term
objectives are also mentioned.

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Strategic Management
References
Adam, P. (2013). The Strategic Management Analysis of ZARA (Relative to the Case in
Developing Countries). Retrieved June 15, 2018, from
http://www.academia.edu/5492552/The_Strategic_Management_Analysis_of_ZARA_Re
lative_to_the_Case_in_Developing_Countries_
Crofton, S. 0., & Dopico, L. G. (2007). ZARA-INDITEX AND THE GROWTH OF FAST FASHION.
Essays in Economic & Business Histor, 25.
Elizaga, L. U. (2016). THE CONTRAST OF FAST FASHION GIANTS ZARA, H&M AND
UNIQLO . Retrieved June 15, 2018, from
https://academica-e.unavarra.es/bitstream/handle/2454/22898/TFM_The%20contrast
%20of%20Fast%20Fashion%20giants%20Zara%2C%20H_M%20and%20UNIQLO.pdf?
sequence=1&isAllowed=y
Gupta, A. (2013). Environment & PEST Analysis: An Approach to External Business
Environment. International Journal of Modern Social Sciences, 2(1), 34-43.
Ho, J. K.-K. (2014). Formulation of a Systemic PEST Analysis for Strategic Analysis.
EUROPEAN ACADEMIC RESEARCH, 3(5).
Huiru, D. (2011). THE IMPORTANCE OF STRATEGIC MANAGEMENT. Retrieved June 15,
2018, from https://www.theseus.fi/bitstream/handle/10024/27622/Huiru_Ding.pdf
Indiatsy, C. M., Mwangi, M. S., & Mandere, E. N. (2014). The Application of Porter’s Five
Forces Model on Organization Performance: A Case of Cooperative Bank of Kenya Ltd.
European Journal of Business and Management, 6(16).
Inditex. (2015). ANNUAL REPORT. Inditex.
Mo, Z. (2015). Internationalization Process of Fast Fashion Retailers: Evidence of H&M and
Zara . International Journal of Business and Management, 10(3).

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Omsa, S., & Abdullah, I. H. (2016). Five Competitive Forces Model and the Implementation of
Porter’s Generic Strategies to Gain Firm Performances. Science Journal of Business and
Management, 5(1), 9-16.
Pratap, A. (2017). ZARA PESTEL Analysis . Retrieved June 15, 2018, from
https://www.cheshnotes.com/2017/03/zara-pestel-analysis/
Rastogi, N., & Trivedi, M. K. (2016). PESTLE TECHNIQUE – A TOOL TO IDENTIFY
EXTERNAL RISKS IN CONSTRUCTION PROJECTS. International Research Journal
of Engineering and Technology, 3(1).
Scozzese, G. (2013). From the supply chain management to the demand chain management in
fast fashion: Zara’s winning model. International Journal of Management Sciences and
Business Research, 2(5).
Verma, K. (2016). Business model of zara. Retrieved June 15, 2018, from
https://www.slideshare.net/KanikaVerma19/business-model-of-zara