Examining SWOT and PESTLE analysis, evaluating leadership style and CSR of Zara

This report analyses Zara's business environment using SWOT and PESTLE analysis, evaluates the impact of changes in these factors, presents the best leadership style to achieve business objectives, and critically analyses the corporate social responsibility of the firm.

Context of Business

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Examining SWOT and PESTLE analysis...................................................................................3
Evaluating the impact of changes in SWOT and PESTLE on Zara............................................5
Presenting the best leadership style to achieve business objectives...........................................6
Critically analysing the corporate social responsibility of the firm............................................8
Writing a reflection report on the bases of experience...............................................................9
REFERENCES..............................................................................................................................12

INTRODUCTION.
Business environment is very essential to understand all the factors that are directly or
indirectly affecting the business during any specific period. The present report is based on Zara
that is global leader in fashion and sells variety of goods that ranges from clothes, shoes, beauty,
perfumes etc. Further, the report will analysis the micro and macro factors of the business that
impact the business in conducting various activities across various regions. Moreover, the study
will analyse how changes in these factors have influences the opportunities and threats of the
quoted firm while developing various business policies and organization structure. Furthermore,
the best suitable leadership style using the Daniel Golemans model of leadership will also be
discussed so that the Zara could meet the target objectives in the most effective manner. Also,
importance of corporate social responsibilities in making any future decisions and the current
practices for the same will also be analysed in detail. Lastly, the report will discuss personal
reflection on the overall knowledge gained during the research.
MAIN BODY.
Examining SWOT and PESTLE analysis.
Zara is Spanish retailer based company that is most popular among the large number of
social groups in the world. The brand is also known for selling all the premium products that are
different from the competitors. The following is the SWOT for the company:
Strength
 It is specialized in selling variety of
trendy and unique designs clothes that
are available for large number of
people (Belas and et.al., 2019)
 It has the strong brand value all over
the world in terms of business and
innovative design.
 Company enjoys low costs and higher
profits because of its trendy image that
it rarely advertise most of the products
Weakness
 It has the generalized collection that
does not focus on one category of
products unlike other competitors that
is specialized in one category.
 There is inadequate advertising due to
which it is not able to benefits from
earning double profits from more
customers (Barr and et.al., 2018)
 Firm also does have low safety stock
margin due to which it is not able to

that saves the overall advertising costs. cater the needs of the customers when
demand is very high.
Opportunities
 It can benefit from expanding the
online presence that would hike the
sales of the firm.
 It needs to keep a close eye on the
emerging markets that would make the
firm more profitable in the future.
 To increase loyalty the firm need to
focus on developing more of
environmental friendly products so that
growing need would be met easily.
Threats
 High level of competition in the market
might lead to decreased in overall sales.
 Currency fluctuations in any country
might also affect prices of the brand.
 New product and substitute in the
market at the low cost might also affect
the operations of the company(World
Bank, 2017).
PESTLE Analysis:
Political factors:
Various factors that includes tariff rates, tax rate, political instability affect the sales of
the business. This might in turn negative for the company operations as in any country if political
environment is unstabler than it would be difficult for the Zara to conveniently run the overall
business (Miftari, 2018). Moreover, costs and profits would be highly impacted as tax rates
would also be increased to higher level. Thus, the firm need to closely look into these factors so
that products could be sold into effective manner.
Economic factors:
Factors such as unemployment rate, new reforms, import export restrictions etc. need to
be addressed in proper manner. Also, new Brexit reforms in the country has also impacted
largely on the fashion. Further, this has led to drop in sales of most of the business as it does not
allow free trade between countries. Moreover, rising costs in various raw materials has also
impacted the quoted firm that has lead to decrease in the revenue of the firm.
Social factors :
With the changing trends and fashion in clothing industry people are more concern in
purchasing products that ensures sustainability. Hence, this might be negative for quoted firm as

it is more focused on increasing the sales. However, in regard to cultural influence Zara would be
benefited the most as it launches clothes that are culturally trending.
Technological:
With the Covid situation it is seen that Zara was active in expanding the business online
rather than shutting it down (Korcsmáros and Šimova, 2018) Also, it uses various trends and
algorithm to identify the current patterns of shoop0ing patterns of customers. Moreover, more
use of online communication is followed by the company that shows effective use of digital
technologies.
Legal factors:
Various rules and laws need to strictly followed so that there are no hindrances in the
future operations of the business. Thus, the firm need to focus on implementation of patent and
copyrights law so business could be run smoothly.
Environmental:
With growing concern for the environment protection and to create positive impact the
quoted firm has aimed to produce goods that are sustainable and aims to serve the betterment of
society in the long run. Also, the quoted firms aims at creating disposable products so that it
could be easily used and thrown away.
Evaluating the impact of changes in SWOT and PESTLE on Zara.
It is seen that Zara is working on large scale and thus success of quoted firm is totally
dependent on analysing macro and micro environmental factors that are present inside and
outside the business organizations. Further, it is seen that while expanding the business in other
regions the major threat the company faced was Covid 19 that affected the sales of many
businesses (Halbert and Ingulli, 2020). Also, it was seen that because of major strength of having
strong online presence and strong brand image of the company the firm was able to grow in
better manner. Furthermore, the major threat of political affairs in terms of Brexit had also been
overcome by the business in systematic manner. Furthermore, it can be said that to face the
growing competition in the industry the firm has partnered with engineering companies like
Toyota so that customer response rate could be increased Also, to overcome problem of
environmental issues the quoted firm is planning to make stores in way that consumes less
energy and have better recycling features so that all type of hazardous waste could be managed
properly.

Thus, it can be said that some pestle factors were important for the growth of the Zara
such as technological and environmental factors while some other factors have high chances of
creating negative impact and thus the company has planned to overcome such factors in planned
and systematic manner. Furthermore, it can be said that Zara is continuously working on the
strengths' so that best customer experience could be given to all its buyers. Also, with strong
brand image and one of the world largest store it is launching the detox campaign so that it can
aim at toxic free manufacturing (Akhmetshin and et.al., 2017). Moreover, with aim to
continuously expand the business the firm is moving in the retails so that international presence
could be developed. Also, maintaining the customer loyalty the firm has also developed efficient
working culture so that previous litigations regarding the child labour and copyright
infringements would not occur again. Moreover, company need to avoid the threat of selling low
quality products by ensuring that major strength of the company is premium quality. Thus, while
entering into any new market it ensures that it does not introduce goods that are similar to low
quality local products available in the target market. Furthermore, to have the opportunity to
invest in new emerging market the quoted firm is actively involved in researching new markets'
so that culture could be understood in better ways (Dobrotă, Dobrotă and Petrescu, 2017). Thus,
this would allow Zara to ignore the threats' trough properly calculating the expected returns from
the target market before launching any new products or services.
Presenting the best leadership style to achieve business objectives
Daniel Golemans has given variety of leadership style that help various business to meet
target goals in systematic manner. Some styles are coercive, authoritative, affiliative, democratic,
pacesetting and coaching leadership style. The one that would be best suited for Zara would be
democratic leadership style where the management of Zara would give flexible environment to
all team-members so that goals could be achieved in the best manner. Also, this style would be
most apt for the company like Zara as it has business all over the world and adopting this would
allow in producing best results in various small groups that are working at the workplace under
various departments (Saleh and Watson, 2017). It would also allow in efficient problem solving
to any of the complex situation as it encourages more participation of various team members
through which the quoted firm would be able to generate large amount of revenues.
Moreover, such leadership style would allow in building better team relationships where
individuals are able to communicate various ideas openly and properly to large number of

groups without any hesitation. Also, this type of practice would be helpful for the management
especially in time of Covid that would allow the employees to increase morale and job
satisfactions as they are being valued by the leaders for all the decisions that are undertaken at
the workplace (Saura, Palos-Sanchez and Correia, 2019). Furthermore, with the adoption of
such style Zara would be able to build the strong and clear vision for greater teamwork and
engagement. Also, all the employees are able to find out the mistakes of others in collective
manner through building proper feedback systems within the workplace. Moreover, with
upcoming of various rules and regulations in the legal system in UK would allow the Zara to
shift the burden of work from the leader to the team by adopting this style so that stress could be
reduced and better outcomes could be delivered in the future.
However, it is very important that this type of style is applied properly within Zara else it
can cause disharmony that might reduce the overall productivity of the employees. Also, if this
happens than there are chances that quoted firm might losses the brand image as employees
might feel that there opinions are not valued (22 Advantages and Disadvantages of Democratic
Leadership Style, 2021). Furthermore, in those cases where lot of decisions are to be made faster
and the management of Zara totally relies upon the opinions that are taken by the employees than
there are chances that it might lead to negative and incorrect outcomes and losses in case of
sensitive issues. Thus, it can be said that there are always the chances of uncertainty in cases as
some productive employees at the workplace might not feel comfortable in sharing the opinions
in the open manner that might reduce the efficiency of the business decisions (Fleaca, 2018,
June). Thus, it is very important that while using the democratic style of leadership the managers
and leaders are able to recognize the changing business environment so that positive outcomes
are achieved. As it is also seen in cases that no one in democratic style is ready to take
responsibility of decisions that are made in wrong manner and hence the quoted firm need to
make sure that it focuses on building strong diverse teams that have high morale that would help
in better innovation. Also, such teams would help managers in picking the best employees for
making significant impact in the future.
Critically analysing the corporate social responsibility of the firm.
Corporate social responsibility (CSR) helps the company in becoming social responsible
to all its stakeholders, public and company itself. In today situation more companies are
becoming socially responsible apart from earning only profits so that goodwill of the company

could be maintained. In context of Zara it can be said that all the objectives of the firm are
carried out while keeping in mind environmental commitment that is linked to its stores and
customers. Also, the firm is actively involved in reducing total production of waste and is
encouraging use of more recycling methods through collecting the hangers and security tags
from the stores that are of no used to turn them into another useful plastic items and setting
example of waste management to others (Erasmus, Strydom and Rudansky-Kloppers, 2017).
Moreover, the quoted firm is also involved in increasing awareness among the employees
through special training programmes and campaigns so that more sustainable practices could be
encouraged such as cutting down the energy consumption, using sustainable mode for
transportation and change at the workplace habits etc.
Furthermore, the CSR duty is fulfilled in systematic manner by Zara through using the
paper bags instead on plastic bags at the time of sales of products (CSR: ZARA Announces
Commitment To Sustainability, 2021). However, also in any cases if plastic bags are used than
they are biodegradable and can be easily decomposed. Also, the firm uses the organic cotton in
production of certain clothing items and strictly follows the animal welfare policy where no
animal is harmed for gathering the fur or leather products.
Moreover, it can be seen that the company has introduced the biodegradable fuel for
transporting variety of goods from one place to another thus ensuring the very less emission of
CO2 into the atmosphere (Newman and et.al., 2020). Zara is always ready to make strong
sustainable relation with environment and society and thus it is always revising some business
policies and procedures over the due course of time so that it is able to maintain the competitive
advantage over the others. It has also developed sustainable goals that ensure healthy life for all
human beings of all age groups and ensure inclusive and quality education for all the people.
Further, it is seen that quoted firm is focused on maintaining transparent relationships with all its
stakeholders so that if any of the sustainable issues are faced than better opinions could be
provided.
However, various measures are taken by the Zara it is necessary that these measures are
adopted on the continuous and regular basis so that long term benefit could be gained. Moreover,
it is found out that if these are not monitored (properly) than the firm might incur losses. For
example : the firm has taken the initiative of introducing the latest trends in every 13 days. Such
type of commitments through ensuring the sustainability might be unachievable for the firm in

time when the situations of the country is not stable due to any of the political or legal problems
or there is lack of availability of raw materials. Thus, in such cases it might disappoint large
groups of people and might lose brand loyalty of many people. Hence, CSR policy and programs
need to be carefully analysed so that stronger bonds could be developed for both company,
societies and people.
Writing a reflection report on the bases of experience.
From the report I have got to learn about various topics and also been able to develop
different skills and along with understanding towards those topics. With gaining proper
knowledge I have become capable to assess about different things. By the assessment of report I
my able to generate my clear understanding about SWOT analysis of firm. As this analysis help
me in getting to know about various types of internal factors present in business environment
which may tend to affect the working of brand. Not just about that from this module I have also
being able to get to access information regarding the PESTLE analysis. What were many
external factors that present in the environment which may tend to affect the organization. I have
also got to develop capabilities and knowledge about various leadership styles of Daniel
Goleman. As well as about how useful and effective these styles were in meeting the objectives
of business.
Also, about why leadership styles plays an important part in any enterprise and how it is
required at various level in an industry. As leadership is vital management function that helps to
direct an industry's resources for improved efficiency and achievement of goals, with effective
leaders provide clarity of motivation and guidance for workers to complete their target. With the
proper assessment of report I may also able to know about different Corporate Social
Responsibilities being done by organization and how it is required for firms to deliver CSR as
one of their major objectives while operating in environment. Efforts also help to foster more
productive and positive working environment for employees. Along with the use of various
social responsibilities company may able to improve their profit margins and also aiding
enterprise.
The analysis also help me in developing my assessment skills as for this report I have
required to assess various strength, weakness, opportunities and threats being present in company
as well as pestle with different leadership styles and CSR practices and policies. With the
analysis I may also improve skills and knowledge about how to use SWOT and pestle analysis to

get the required information regarding what were these factors, which impacting company's
working environment in positive way or different factors which may results in negative way for
firm to operate and use enterprise's strengths to change out weakness into opportunities and
being able to access them so that firm may able to increase profitability and gain competitive
advantage over other competitions.
These newly developed skills and knowledge benefited in using analyses in future
whenever required and reviews about how we can do more or what suggestions may required for
improving and using these skills. With the use of new and improved knowledge and experience
may tends to aid me whenever I required to do any assessment of external or internal factors and
CSR policies. Also, help me in observation, analysing and choosing the correct leadership style
required in accordance to the working.
CONCLUSION.
From the above report it can be concluded that business practices adopted by different
firms is totally different from one another as it based on certain objectives. Also, the report had
analysed the affect of various factors on Zara through applying the swot and pestle model so that
better policies could be developed in the future. Moreover, evaluation on the changes on such
practices on the overall firm activities had also been covered under this report. Furthermore,
bets suited democratic leadership style through applying the Daniel Golemans model had also
been discussed so that future goals could be achieved in smooth manner. Also, the report had
analysed different CSR practices that are currently followed by the quoted firm along with
certain suggestions that could be taken for further improvements. Lastly, the study had presented
self reflection based on the knowledge that had been gained through this research experience and
analysed various theories that had been used under this study.

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