Critical Analysis of Zara's Strategies: SWOT, PESTLE, Porter's Five Forces and Blue Ocean

Assignment 1 Individual
Report

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................3
Commenting and sharing pros and cons on the existing strategy of Zara in account to the
external and internal environment by using SWOT and PESTLE analysis.................................3
Critically analysing how Zara should improve its strategy.........................................................6
Recommending changes and strategies that will turn out to be more effective for the brand.....7
Evaluating contemporary strategy issues by using Porters five forces and Blue ocean..............7
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1
INTRODUCTION
Strategies refer to the planning that a business does in order to survive and compete in the
market. For any business to have a strategic plan is very crucial as with the help of strategic
planning, a business can understand the external as well as internal environment properly and
can do the decision-making efficiently (Adıgüzel., 2020). Zara is a UK based company, founded
in 1975. The brand is engaged in selling shoes, clothing, bags and many other accessories that
can be purchased from the brand's stores only. Zara is recognized all around the world and deals
in creative and luxury products that appeals to the youth and high class clientele. The company
no doubt has the biggest fashion name across the globe (Wang., 2018, July). With the help of
some models and tools here is the critical analysis of the strategies that are used by Zara.

MAIN BODY
Commenting and sharing pros and cons on the existing strategy of Zara in account to the external
and internal environment by using SWOT and PESTLE analysis
Strategies turn out to be the backbone of any business, on which it can formulate its
operations. With properly analysing the strategies it can tell a lot about the development and
evaluation of the environment in which the business is operating (Grant., 2021). Sometimes it
may even tell the right opportunities that are available in the environment and threats that a
business must be aware of. By choosing the right models to find out the strategies that are used
by the company, here is the SWOT and PESTLE analysis of Zara to look onto the internal and
external environment of the business and the strategy the business is using.
SWOT ANALYSIS
Strengths-
 The brand strategy involves an already established target market that gives benefit to the
brand as it do not have to waste time on the customers who are not interested (Benzaghta,
And et.al., 2021). This is the best strategy that any brand can have. When the customer
base become evident to the brand, there is no going back.
 Zara is a parent company of many other brands such as Hublot, De beers, Tag Heuer and
many other brands. It started its business in other lines also, such as wines and spirits,
cosmetics and perfumes, leather and fashion goods etc. This strategy of the brand by
manufacturing under so many areas and undertaking other brands, has lead to a beautiful
growth (Vlados. and Chatzinikolaou., 2019). Once the brand start to go good, it should
always plan to expand its operations and reach new heights.
Weaknesses-
 Zara exists in more than 96 countries of the world. It is a good strategy in terms of profits
but due to the large spread existence it can expose itself to risks which are faced by the
economies (Teoli. and et.al., 2019). The environment in outside world is totally uncertain
so any uncertainty in the economy regarding the tax laws, workforce structure,
import/export or any sudden economic crisis such as Covid-19, can easily affect the
profits of the company and may even lead to close its store in the following country.

 The brand strategically always update itself with the new coming trends. Constant
changing of the fashion environment may also lead to huge losses to the brand (Illés.,
2020). In order to avoid such losses it should manufacture less of the seasonality items.
Opportunities-
 The brand strategy only involves focusing on premium products but, in the environment
of the fashion industry there are a lot of chances for the brand to expand its operations
and offer more than just premium products to the people (Shtal And et.al., 2018). Rising
middle class can lead to huge profitability to the brand.
 As the brand is engaged in offering premium products, the demand for these products has
arisen (Kameneva., 2018). It has widened the scope for the brand as now the brand can
make entries to the new market and start making even more profits.
Threats-
 The entire fashion industry is prone to risk because of the continues changing trends.
Previous collection of the brands here, becomes old and the sales get limited (Vlados.,
2019). Zara in order to avoid such threats should always produce less of goods.
 The brand's strategy is to sell exclusively from the stores but as the products are very
costly it has large no. of first copies in the market and many small businesses imitating
the products.
PESTLE ANALYSIS-
Political factor- These factors are engaged with the politics of the particular nation in which the
business is operating. It involves the strictness of the laws, to what extent the corruptions are
going on, risk of military invasion etc. It is important to take care of the politics of the market
before making entry into it (Simões., 2020). As Zara has a presence in 96 countries, it should
take care of the political scenario of these countries. But the focus should be on France as the
brand has its headquarters there.
Economic factor- These factors involve the level of employment, interest rate of the loan,
exchange rates and many other uncertainties that take place in the economy. Zara should
consider the following factors as high interest loan can make it difficult for the company to
operate smoothly but high level of unemployment will facilitate easy workers in the
manufacturing zone for the company. Sudden economic crisis like pandemic can also affect the
business in the worst manner where the business has to close its stores.