Swot and Pestle Analysis of Zara: Evaluating Opportunities and Threats

Context of business

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Swot analysis of Zara :................................................................................................................3
Pestle analysis of Zara :...............................................................................................................5
Evaluating how the changes in PESTEL factors has influenced the Opportunities and Threats
in Zara. Critically commenting on how Zara is addressing their Strengths to negate Threats
and Weakness affecting their Opportunities. .............................................................................7
Recommending a Daniel Goleman's leadership style that can help Zara to meet its objectives :
.....................................................................................................................................................8
Corporate social responsibilities in context of Zara:...................................................................9
Reflection of the report:..............................................................................................................9
REFERENCES:.............................................................................................................................11
Books and Journals:..................................................................................................................11

INTRODUCTION
Business organisation can be said as an entity which is formed to with the sole motive of
carrying on commercial related activities (buying and selling) in an enterprise. The system made
for smooth functioning in an business organisation consists of many different activities and
functions such as management, planning and operating. It needs to work in coordination with its
different resources such as employees, machineries and other assets. It have regulated under
certain laws and principles considering the exchange of goods and services. The following report
consist of the different factors in context of business. The chosen company is Zara which is a
well known brand known for its qualified and fashioned clothing products and related
accessories (Suharjo and Wibawa, 2021). It is a Spanish brand founded by Amancio Ortega in
1975. The report first analyse the brand's business environment through Swot and pestle modals.
Through the help of these modals, influencing opportunities and threats are evaluated with
addressing the strengths that negate its threats and weaknesses. Daniel Goleman's leadership
style is further explained with one recommendation fro the brand. At last, the Corporate Social
Responsibilities in context of Zara are covered.
TASK
Swot analysis of Zara :
Swot is a strategic management tool or technique that is used by a company for
identifying the points that are needed to be covered and considered in the process of making its
strategies through analysing both external and internal environment and providing the strengths,
weakness, opportunities and threats related to the company. Following the swot analysis of Zara :
 Strengths – These consider the strong elements of a company that provides it with a
competitive advantage and these should be maintained effectively. Strengths of Zara are:
◦ Unique designs – The company has made its perspective in the mind of customers as
a company that provides unique and attractive range of products and that are not
provided by other clothing and fashion related dealer (Dilek, 2018). It is consisted of
many expertise designers that understand the uniqueness of the brand and work in
maintaining it through considering the fashion and demand of customers.
◦ Strong global presence – The brand has worked on continuously increasing its
presence across the globe through opening its physical stores in different countries. It

has more than 2100 stores in different parts of the globe with a huge average of sales
as 15.9 billion per annum. The brand is not stopping and working on researches
needed for more expansion.
 Weakness – This provide with the weak points of a company that can provide it a
competitive disadvantage and are needed to be rectified and worked on. Weakness of
Zara are as follows:
◦ Less use of marketing strategies – The use of these types of strategy include
advertising which can make a deep impact on the visibility of the brand to the
consumers and directly have positive impact on sales. Zara does not uses or rarely
uses these techniques (Williams, 2019). This may lead to a cost advantage but this
small advantage is not worth it, as advertisements may lead to drastic increase in the
turnover.
◦ Less buffer stock – The stock in Zara stores are fast moving and focused on providing
different designs continuously with less buffer or safety stock for a particular design.
This is the strategy used by the brand to provide customers with the latest items to
increase customer satisfaction but this strategy sometimes also proves to be flop when
some particular type of designs get hit and are demanded by the customers in huge
quantities.
 Opportunities – These factors when considered and worked on may lead to higher
growth for a company. Few opportunities of Zara are as follows:
◦ Market expansion – Diversifying in new markets always give a business organisation
with opportunity to increase the presence and potential profitability. Zara needs to
keep an eye on emerging markets constantly as these markets have increasing
spending power and are open to adapt with new brands and companies.
◦ Developing online platform – The world is moulding towards the preference of
buying mostly every kind of product online to avoid time wastage. Zara focuses more
on developing its physical stores. Considering the huge potential of online market the
brand should focus on developing its online services (Fitzpatrick and Queenan, 2020).
 Threats – These are the elements that can lead to huge losses and uncertainty for a
company. Following are few threats in context of Zara: