Zara: Analysis of the Business Environment and Company Functions

This report provides a comprehensive analysis of Zara's business environment, examining its micro and macro aspects. It begins with an introduction to the business environment, followed by an overview of different types of companies, including private (Zara), public (NHS), and voluntary (Oxfam) organizations, focusing on their functions, sizes, and scopes. The report then delves into PESTEL and SWOT analyses to evaluate Zara's strengths, weaknesses, opportunities, and threats, and how these factors interrelate with external macro factors. It also discusses the relationships between different departments within Zara, such as HR, finance, sales, and marketing. The report concludes by summarizing the key findings and insights from the analysis, offering a holistic view of Zara's position and strategies within its competitive landscape.

BUSINESS & THE
BSUINESS ENVIRONMENT

Table of content
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
P1 Different kinds and functions of company........................................................................1
P2 Size & Scope of companies...............................................................................................2
P3 Relationship between different types of company in context of objectives......................4
PART 2............................................................................................................................................5
P4 Micro and macro analysis in relation to strength and weaknesses of company................5
P5 SWOT Analysis.................................................................................................................6
P6 Interrelation of strengths and weaknesses with external macro factors............................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment is integration of both micro as well as micro environment element
that imposes direct effect on functions and activity of business organisation. In this report, the
organisation is ZARA. It is considered as a private company. NHS is determined as a public
company and Oxfam is considered as a voluntary organisation that assists in enhancing
knowledge that is connected to purpose of company. In addition to this, there is a relation
between various functions or activity of organisation in proper way. This report will offer
discussion in respect of different kind of organisation like public, private as well as voluntary by
considering their legal structure, scope and also size. This is also discussion regarding PESTEL
and SWOT analysis and also interconnects this kind of function in proper way (Akinseye and
Adebowale, 2016).
PART 1
P1 Different kinds and functions of company
There are different kinds of companies that offer goods and services to its customer in
order to satisfy them. In assistance of this, there are various kinds of association that is given
below:
Private Association the company emphasis on increasing and maintaining operations by
person for earning profit margin in future period of time. This helps organisation in offering
facility to its customer in accomplishing goal in pre-decided period of time. There is considered
as a private company which produces clothing and offer different kind of items to its customer.
Purpose the primary purpose of private company is to satisfy need of its user. The aim of
user is to provide trendy product to its customers for satisfying them.
Public Association is determined as other kind of companies that supported by
government for increasing nation for satisfies need of its community. The NHS focus is on
providing medical facility to persons of UK.
Purpose: The primal aim of this kind of organisation is to offer appropriate facility to
individual person and community for welfare of society. NHS performs work for welfare of
society in UK.
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Voluntary organisation it signifies the company that emphasize on enhancing standard
and offer benefits in proper way. They emphasis on increasing living standard of community that
help in accomplishing goal and objective in an appropriate manner.
Purpose: the company that offer comfort to individual person that needed and also offer
help to younger sister. The purpose of chosen organisation is to perform different type of work
for welfare of society. The primary purpose of function is to offer services or facility to deprive
society. Thus it helps in increasing standard of living of individual person of society.
Oxfam is considered as a charitable company that offer free facility that assists in
increasing structure and offer benefit to individual person for decreasing injustice during the
period of time (Amankwah-Amoah, Osabutey and Egbetokun, 2018).
Growth as well as improvement there is different kind of factor that has determined by
using various factors like a change in politics, education, foreign exchange, weather and focuses
on operating at global level. The main purpose is to use appropriate strategy that helps in
achieving goal in timely manner. Their purpose is to accomplishing competitive edge over rival
firm at marketplace.
P2 Size & Scope of companies
Public private and voluntary company are the type of company who conduct their
organisation in addition with different purpose and scope of such type of company differentiate
its function that is completely depend upon size. Therefore, the explanation in context of size and
scope is related with three type of company that is given below:
Public organisation NHS is well-known organisation of UK that offers Healthcare
services to individual person.
Product and services the Healthcare organisation offers medical facility to person in
addition with its payment.
Size and scope and chosen company has approx 211 clinic in addition with 4 million
services that is provided by them to poor person during particular phase of time period.
Vision and Mission the vision of organisation is to offer free facility to individual person.
In addition to this, the vision of organisation is to offer proper care to individual person around
boundaries.
Business objective the primary objective of companies to offer treatment that is connected
to medical facility at fewer prices.
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Legal structure
State government is determined as a national authority that offers political privileges to
person during the time.
Local government is a kind of public management that include law, administration
authority in nation. They take proper action for executing activity in proper way. For example
maintain pace around houses that is involved in division.
Central government is a kind of company that manage policies for executing task in
proper way. For instance offer endorsement services to construction for implementing or
executing building.
Organisational structure Healthcare Company needs execution or accountability that is
connected to job for various functions of organisation.
Stakeholder of company is employees, director, and customer and so on.
Private company ZARA determined as a well-known organisation at UK that offer
different services to person for satisfying them.
Product and services is considered as a global company for providing fashionable cloth to
its user according to demand for satisfying them (Briggs, Kalra and Agnihotri, 2018).
Size and scope ZARA focuses on operating organisation around 7475 stores at
international level.
Vision and Mission the organisation offer branded goods to its user. In assistance of this
the vision of company is to operate their business across the world.
Business objective the objective is to increase need of its user and offer opportunity to
increase or buying innovative things.
Legal structure
Sole proprietorship business is managed by person to create income for individual person
as sole proprietor.
Partnership is considered as a company that is maintained by two or more person for
sharing profit and bearing loss during the time.
Organisational structure is emphasized on operating its function by adopting lean
structure with appropriate execution.
Stakeholder of chosen company involves employees, manager, retailer and many more.
Oxfam is determined as a non-profit company that is situated at UK.
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Products and services it is determined as a company that emphasized on fight related to
poverty during the period of time.
The vision of organisation to increases poor condition of individual personal during
particular phase of time period.
Objective is to introduce their company for livelihood and situation that is connected to
living.
Legal structure
Unincorporated association determine company that is implemented by person for
increasing competitive edge.
Trust signifies or determines the organisation such as agent as well as fiduciary to transfer
assets for achieving competitive advantage over rivalries.
Organisation structure which is adopted by organisation is network structure and their
main purpose is to operating its organisation at global level (Doh,Luthans and Slocum, 2016).
Stakeholder of organisation include volunteers, sponsor and so on.
P3 Relationship between different types of company in context of objectives
Herein, the individual person is divided according to different section for executing work
properly. There is different finance, marketing as well as sales department that is implemented
by manager that assists in providing right kind of services to individual person. In addition to
this, it is necessary to have a good relationship with one another which is given below:
HR department and Finance HR division emphasis on supervising its employees of
ZARA for possessing appropriate subordinate for conducting or organising various works
properly. There are various activities like recruitment, reward and increasing various activities
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that is implemented by manager of ZARA. Therefore, their focus is on preparing financial
statement that is connected to expenses which is helpful in future time period.
Sales Division with marketing department signifies the person who interacts with
customer in proper way. The sales division of ZARA emphasize on providing useful information
to its customers in respect of goods and services.
Organisation structure practical, Matrix and divisional are determined as a different kind
of Framework that is used by business organisation to plan and make a structure in proper way.
The financial situation, objective is determined as different plan for coordinating staff member in
proper way (Gupta, Mejia and Kajikawa, 2019).
PART 2
P4 Micro and macro analysis in relation to strength and weaknesses of company
PESTEL analysis is a Framework that is adopted by manager to analyse impact of external
element on organisation. It is used by organisations that are given below:
Political factor the government signifies policy that is related to taxation, licensing as well
as so on that enforces direct effect on organisation. It is well known organisation so their
execution is increased by legislative and political situation of nation.
Positive impact due to increase in stability in political condition of ZARA, it is
determined as a positive impact on company.
Negative impact due to change in government policy frequently it imposes negative
impact on the company.
Economic factor it involves exchange rate, inflation that is based on fiscal condition of
country. The organisation emphasised on earning or gaining profit during period of time.
Positive impact they emphasis on increasing GDP that is impact on ZARA to make
appropriate improvement within business organisation.
Negative impact due to increase in interest rate, it imposes negative impact on smooth
running of ZARA.
Social factor include taste as well as preferences of goods and services for fulfilling need
and want of its customer.
Positive impact the person emphasised on buying products and services that increase
sales in upcoming time period.
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Negative impact due to alter in taste of its user frequently which reduce sales of
organisation.
Technological factor it is determined as other element that is connected to technology for
performing various functions in proper way.
Positive impact the organisation adopts Artificial Intelligence and latest technology that
assists in retaining user for a longer time period.
Negative impact the technology cost is determined as a very high that adds price to
organisation that enforces adverse effect on organisation.
Environmental factor includes climate as well as weather condition that imposes direct
impact on organisation.
Positive impact the organisation focuses on providing eco-friendly goods to its customers
(Leischnig, Woelfl and Ivens, 2016).
Negative impact due to enhancing pollution it reduces the profit of organisation.
Legal factor include laws, regulations as well as legislation that must be obtained by
company.
Positive impact the company obeys rules in order to execute different activity of
organisation in proper way.
Negative impact due to changes laws of government that enforces negative effect on
organisation.
P5 SWOT Analysis
SWOT Analysis of Zara
SWOT analysis is a type of metal which is used by most of the enterprises to analyse
their internal analysis. The help of this framework it is easy to be aware about weak and strong
areas which need improvements within the business sector. Due to rise of competition, Zara has
been also adopting this framework on the basis of which they are able to make effective decision
making process. Moreover, strategy and tactics are also implemented with proper considerations.
STRENGTHS WEAKNESSES
 The first most important strength of Zara
is that it is located at global level and
has wide number of customer base as
well as brand goodwill in a market.
 Main weakness of Zara is that they
spend huge amount on their store
layouts and due to which it is difficult
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Within its large number of customer
base, it is easier for them to carry out
their business operations and activities
in proper manner.
 Another strength of selected enterprises
that it is a large organisation and which
also have large number of financial
resources which are used by them at
optimum level. Through these furniture
resources it is easier to use capital at
right place.
 Furthermore, Zara has large product
portfolio and also focuses on New
Market trends and follow them which
results in achieving competitive
advantage in retailing sector.
for them to invest in other activities.
 Also, due to regular changes in
retailing business, it is difficult for
them to use their management
strategies (Ruhi, 2016).
OPPORTUNITIES THREATS
 As Zara is operating its activities at
globally, they have the opportunity of
merging with other brands which help
them to expand their business at wider
context.
 Also, with changing needs and demands
of customers we can engage both old
and new customers to their brand by
offering them specific category product
rather than generalised one Tseng, Yi
and Yeh, 2019)
 The biggest threat of company is that
due to low promotion and advertising
they might lose interest of customers
within their brand. Also they changed
their designs frequently which can
lead to customer shift.
 In retailing market, there is wide range
of competitors of same field which
provide same products and services at
more affordable prices. This
competitor might dominate the market
of Zara at larger scale.
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VRIO
The VRIO Framework which is used by organisation in order to achieve competitive
advantage at Marketplace that is given below:
Valuable: there are various valuable resources such as the employees, distribution
network, patent as well as brand that are considered valuable by business organisation. The
management team provide training to its subordinate in order to conduct different work in an
appropriate manner. In addition to this, the distribution network is determined as a valuable
resource because it allows organisations to marketing its goods without any kind of competitive
interference. The distribution network of ZARA is valuable because it helps in attracting or
reaching large number of user at a time. Due to well-known brand, it provide branded product to
its customers that is determined as a valuable source for company.
Rare resources of Zara are determined as an employee’s, patent and distribution network.
The employees of Zara are determined as a skilled that helps in performing their work in an
effective manner. The patent which is used by Zara which is not available easily and not
possesses by any other competitive firm which is beneficial for ZARA. In addition to this, the
competitors needed large amount of investment, therefore it is not easy for them to have better or
superior distribution network then ZARA, so it imposes positive impact on company and these
are considered as rare resources for firm (Liu and Vrontis, 2017).
Inimitable The patent as well as distribution network of Zara is inimitable by its
competitive firm. In addition to this, the patent of Zara is very complex to imitate or identified by
its competitive firms. In addition to this, the distribution network which is used by Zara is also
costly to imitate by its competitive firm so it is a determined as an inimitable resource of
company.
Organised: The distribution network which is used by ZARA is determined is organised
because their main focus is to reach a large number of customer and make sure that goods are
available on outlets that help in achieving competitive edge over rivalries at Marketplace.
Mc Kinsey framework
This model is determined as a strategic Framework that assists management team to
analyse performance during particular phase of time period. There is an element that is used by
business organisation which is going to be mentioned below:
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Strategy the strategy which is adopted by ZARA is clearly defined and communicated
with all subordinate as well as a stakeholder. This helps company in managing or handling
performance in an appropriate manner.
Structure ZARA adopt flatter organisation hierarchy that help in increasing performance
of business organisation in future period of time. The flatter structure helps the organisation in
taking decisions quickly and enhances commitment of organisation during particular phase of
time period.
System Zara focuses on making plan for operation of organisation is handling in an
appropriate manner and reduces conflict. The system used by Zara depends on different
departments such as finance, marketing as well as sales and many more (Peršič, Markič and
Peršič, 2018).
Shared value the core value which is adopted by ZARA communicated to its subordinate
in order to perform different work in an appropriate manner during particular phase of time
period.
Style ZARA focuses on adopting participating style of leadership that help in taking
decisions by its employees which will be beneficial for organisation in upcoming time period.
Staff focus is on having a appropriate number of employees perform their work during
particular phase of time period. The subordinate focuses on recruiting employees by using
internal and external for achieving goal.
Skill The management team of ZARA focuses on having a skill and competence that is
completely depend upon qualification that help in increasing success or growth in future period
of time.
P6 Interrelation of strengths and weaknesses with external macro factors
Micro element assists manager to analyse impact on company and also its operations.
Therefore, the interrelation of strength as well as weaknesses with external factor that is given
below:
Political
Strength due to increase in stability in political condition of ZARA, it is determined as a
positive impact on company.
Weakness due to change in government policy frequently it imposes negative impact on
the company.
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Economical
Strengths they emphasised on increasing GDP that is impact on ZARA to make
appropriate improvement within business organisation.
Weakness due to increase in interest rate, it imposes negative impact on smooth running of
ZARA.
Social
Strengths the person emphasised on buying products and services that increase sales in
upcoming time period (Ratten, Dana and Ramadani, 2017).
Weakness due to change in taste of its user in quickly which reduce sales of organisation.
Technological
Strengths the organisation adopts Artificial Intelligence and latest technology that assists
in retaining user for a longer time period.
Weakness the technology cost is determined as a very high that adds price to organisation
that enforces adverse effect on organisation.
Environmental
Strengths the organisation focuses on providing eco-friendly goods to its customers.
Weakness due to enhancing pollution it reduces the profit of organisation.
Legal
Strengths the company obeys rules in order to execute different activity of organisation in
proper way.
Weakness due to changes laws of government that enforces negative effect on
organisation.
CONCLUSION
On given report, it is assess that business environment is integration of both micro as well
as micro environment element that imposes direct effect on functions and activity of business
organisation. In addition to this, there is a relation between various functions or activity of
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organisation in proper way. This report will offer discussion in respect of different kind of
organisation like public, private as well as voluntary by considering their legal structure, scope
and also size. This is also discussion regarding PESTEL and SWOT analysis and also
interconnects this kind of function in proper way.
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REFERENCES
Books and Journals
Akinseye, U.O. and Adebowale, F., 2016. The Fear of Business Failure and Government's Role
in Supporting Entrepreneurs in Nigeria. Ife PsychologIA, 24(2).
Amankwah-Amoah, J., Osabutey, E.L. and Egbetokun, A., 2018. Contemporary challenges and
opportunities of doing business in Africa: The emerging roles and effects of
technologies. Technological Forecasting and Social Change, 131, pp.171-174.
Briggs, E., Kalra, A. and Agnihotri, R., 2018. Contrasting effects of salespeople’s emotion
appraisal ability in a transaction-oriented environment. Journal of Business & Industrial
Marketing.
Doh, J.P., Luthans, F. and Slocum, J., 2016. The world of global business 1965–2015:
Perspectives on the 50th anniversary issue of the Journal of World Business: Introduction to the
special issue.
Gupta, R., Mejia, C. and Kajikawa, Y., 2019. Business, innovation and digital ecosystems
landscape survey and knowledge cross sharing. Technological Forecasting and Social
Change, 147, pp.100-109.
Leischnig, A., Woelfl, S. and Ivens, B., 2016. When does digital business strategy matter to
market performance?.
Liu, Y. and Vrontis, D., 2017. Emerging‐market firms venturing into advanced economies: The
role of context. Thunderbird International Business Review, 59(3), pp.255-261.
Peršič, A., Markič, M. and Peršič, M., 2018. The impact of socially responsible management
standards on the business success of an organisation. Total Quality Management & Business
Excellence, 29(1-2), pp.225-237.
Ratten, V., Dana, L.P. and Ramadani, V., 2017. Internationalisation of family business groups in
transition economies. International Journal of Entrepreneurship and Small Business, 30(4),
pp.509-525.
Ruhi, U., 2016. An experiential learning pedagogical framework for enterprise systems
education in business schools. The International Journal of Management Education, 14(2),
pp.198-211.
Tseng, H., Yi, X. and Yeh, H.T., 2019. Learning-related soft skills among online business
students in higher education: Grade level and managerial role differences in self-regulation,
motivation, and social skill. Computers in Human Behavior, 95, pp.179-186.
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