Zara's Strategic Initiatives: Evaluation and Alternative Strategies

This report identifies and evaluates Zara's corporate-level strategies, focusing on product development and market development within the competitive business environment. It assesses the suitability of these strategies, highlighting Zara's reliance on excellent designs and low prices. The report recommends two alternative strategies: market penetration to leverage existing customer base and diversification to minimize risks and attract a broader customer base, drawing parallels with competitors like Coca-Cola, Gucci and Burberry. By implementing these strategies, Zara can enhance its competitive advantage and improve overall effectiveness. The document is available on Desklib, a platform offering a wide range of study resources for students.

Running head: BUSINESS STRATEGY
Business Strategy
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Table of Contents
Executive Summary...................................................................................................................2
Identification of Corporate-Level Strategies..............................................................................3
Evaluation of Suitability of Corporate-Level Strategies............................................................3
Recommendations of Two Alternative Strategies......................................................................4
Conclusion..................................................................................................................................6
References..................................................................................................................................7

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Executive Summary
The report has thrown light on the overall identification and evaluation of the
corporate level strategies which have been adopted by the company Zara. The assessment of
the suitability of the current approach utilised by the organization is required to be done
which has proved to be effective. The corporate level strategies are the different actions
which are being expected to be adopted by the organizations to gain a competitive advantage
in the market.
With the help of the corporate level strategies, this can help the company in making
strategic decisions which will be appropriate for the overall sales aspect of the company
positively. Furthermore, the two alternative strategic initiatives have been recommended
which can be pursued by the organization to improve the overall effectiveness appropriately.
With proper implementation of the diversification and the market penetration
approaches, the company can gain huge market share in the overall competitive business
environment which will be beneficial for the overall success of the firm concerning the
competitors. The examples of the different companies and brands have been considered to
provide a clear perception on the importance of corporate level strategies.

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Identification of Corporate-Level Strategies
With the help of Ansoff Matrix, Zara has tried in increasing their brand presence in
the overall competitive business environment (ZARA Spain, 2019). However, this has been
noticed that these are the intensive growth strategies which can be applied by the company to
become more customer-centric and increase the market share as well.
The unique approach of Zara to the Product Development has been instrumental
towards the success of the organization. Zara tries to provide the managers of the stores with
the critical type of autonomy in determining the products which will be displayed and which
are required to be placed on sale (Bailey et al., 2018). The critical strategy which has been
used by Zara is product development which helps in growing the brand and the market base
as well. This is one of the primary strategy used by Zara by developing new products as to
lure the customers including the existing and the new ones (Carnall, 2018).
Secondly, the Market Development is the other strategy used by Zara in entering the
new markets or the different geographic regions. Zara has tried in expanding in the global
scenario at a rapid speed in which Zara has their presence in more than 93 countries (Dawes,
2018). In the year 2015, there has been the addition of more 65 stores along with 50 home
locations of Zara (Furrer, 2016).
From the above, this can be analyzed that these are the three primary corporate level
strategies which are being used by Zara to grow the customer and market base. However, in
the present competitive business environment, the popularity of Zara is mainly based on
excellent designs and low prices in comparison to the other competitors.

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Evaluation of Suitability of Corporate-Level Strategies
With the help of the analysis of the corporate level strategies which are being used by
Zara, this can be recognized that Zara tries to provide the store managers with significant
independence in determining and properly researching the different products. As commented
by Hill, (2017), the present-day environment is dynamic and fast changing in nature which is
making it difficult for the modern business to operate. There is the inclusion of various
threats along with constraints faced by organizations, and this is creating enormous pressure
on them as well.
On the other hand, Kazanjian, Drazin & Glynn, (2017), have opined that with proper
utilization of the corporate level strategies, this will be assisting in improving the competitive
position of the organization in comparison to the other competitors which are present in the
market. As discussed by Rothaermel, (2015), the corporate level strategies are defined as the
tool which is being used by the organization to limit the allocation of the resources to best
available business investment opportunities. In the case of Zara, the company is utilizing the
market development and penetration strategies along with the development of the product
which has helped in managing the overall supply chain aspects appropriately.
Wheeler et al., (2017), have commented that though there is a cost advantage in the
approach followed by Zara, however, there is lack of diversification and flexibility in the
changing orders based on the current trends which are affecting the operational efficiencies of
the company. There are a few significant competitors of Zara which are inclusive of Gucci,
Burberry, Armani and Prada which can impact the overall performance of the organisation
negatively.

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Recommendations of Two Alternative Strategies
From the above analysis of the different corporate strategies which are being utilized
by Zara in the overall competitive business environment to become more competitive.
However, there are two strategies which can be alternatively used by Zara as to compete with
the other competitors in the market which are included as follows:
The corporate level strategy which can be utilized by Zara is Market Penetration
strategy by selling the different products and services to the existing customers in the market
which helps in growing sales and revenues. As the various outcomes of Zara have become
popular, the current customers in the market can try to buy from the fast fashion brand which
assisted them in growing their sales.
With proper implementation of the market penetration strategy, this will enable fast
growth and enlarge the customer base of the company as well. The best of the market
penetration strategy is to combating the competitors in the market which will result in
increasing the profitability of the organization.
For example- The brand of Coca-Cola has used the market penetration strategy by
selling the existing products and services to the current customers in the market by adopting
the promotional policies within these markets appropriately.
Furthermore, the diversification is the other aspect which can be adopted by Zara as
to become more useful like the fellow competitors. There can be risk minimization as if one
of the investments such as apparel sector is performing poorly over the certain span of time;
there can be other investments such as accessories which can be helpful in reducing the
potential losses within the period.
Moreover, at times this has been noticed that the diversification approach can be
helpful in generating returns as there can be times when one of the investments do not

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perform as expected, at that respective point of time, the diversification of the departments
can help the company not to rely only on one source of income (Hill, Jones & Schilling,
2015).
For instance- Zara have different competitors all around the world namely Gucci and
Burberry which have different segments, and they are performing well in the competitive
business environment. Similarly, in the case of Zara, the company can attract more customers
through diversification which will assist them in combat with the different competitors.
Conclusion
Therefore, from the above, this can be inferred that corporate level strategies play a
vital role in the generation of success for the organization. In the present competitive business
environment, Zara has fine tuning of the supply chain which is one of the strategic tools, and
this manages in providing competitive differentiation and diversification aspect for the
overall profitability of the organization.
With the help of the market development and product development strategies, these
are helpful in becoming more competitive in comparison to the other competitors. The
decision-making is encouraged, and the market penetration has been effective in speeding the
process of development, and this minimizes the number of risks which are helpful in reducing
the risks which can create a positive impact on the overall competitive advantage.

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References
Bailey, C., Mankin, D., Kelliher, C., & Garavan, T. (2018). Strategic human resource
management. Oxford University Press.
Carnall, C. (2018). Managing change. Routledge.
Dawes, J. (2018). The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems.
Furrer, O. (2016). Corporate level strategy: Theory and applications. Routledge.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2015). Strategic management theory. Cengage
Learning.
Hill, T. (2017). Manufacturing strategy: the strategic management of the manufacturing
function. Macmillan International Higher Education.
Kazanjian, R. K., Drazin, R., & Glynn, M. A. (2017). Implementing strategies for corporate
entrepreneurship: A knowledge‐based perspective. Strategic entrepreneurship:
Creating a new mindset, 173-199.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic
management and business policy. pearson.
ZARA Spain - Official Website. (2019). Retrieved from https://www.zara.com/es/en/