Analysing Zara's Business Leadership in the Business Environment

This case study provides an analysis of Zara's business leadership and business environment, examining both internal and external factors that influence the company's performance. The report includes a SWOT analysis, identifying Zara's strengths, weaknesses, opportunities, and threats, as well as a PESTLE analysis, evaluating the political, economic, social, technological, environmental, and legal factors impacting the business. It explores how changes in PESTLE factors influence Zara's opportunities and threats, and how the company addresses its strengths to mitigate threats and weaknesses affecting opportunities. The report also recommends a suitable leadership style from Daniel Goleman’s leadership styles and discusses Zara's Corporate Social Responsibilities. The second part includes a reflective report and conclusion, providing a comprehensive overview of Zara's strategic positioning and operational effectiveness in the global market.

Context of Business
Leadership and Business
Environment Case Study

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
SWOT and Pestle analysis......................................................................................................3
How the changes in PESTEL factors has influenced the Opportunities and Threats for
business...................................................................................................................................6
How the business is addressing their Strengths to negate Threats and Weakness affecting their
Opportunities..........................................................................................................................6
Recommend a suitable leadership style from Daniel Goleman’s leadership styles...............7
Corporate Social Responsibilities of Zara..............................................................................8
TASK 2............................................................................................................................................9
Reflective report.....................................................................................................................9
CONCLUSION .............................................................................................................................10
REFERENCE.................................................................................................................................11

INTRODUCTION
Business environment is considered as the set of different internal and external factors
that impacts business performance and functionality in positive and negative manner. It is
important for organisation to analyse these factors and their impact on business operations for
gaining sustainable competitive advantages. In current competitive business environment,
organisations create trust as well as loyalty of customers that enable business to enhance market
share and customer base (Ghezzi, and Cavallo, 2020). In this report chosen organisation is Zara
which is clothing brand founded in 1975 by Amancio Ortega and Rodalia Mera. Headquarter of
organisation situated in Arteixo, Spain. Zara offers its products through 68 stores in UK in which
almost 3000 employees perform their functions of selling clothing products in UK. This report
covers two parts. First part is based on Zara that covers Swot and pestle analysis and who the
factors of pestle analysis influence the opportunities as well as threats of business. Furthermore,
how business address their strengths to neglect threats and how weaknesses of business impacts
opportunities of business are mentioned. Leadership styles and CSR activities of Zara is
mentioned in this report. In second section of this report reflection of learning is explained in the
context of Amazon.
TASK 1
SWOT and Pestle analysis
SWOT analysis: SWOT analysis is considered as the strategic management framework
which is used by organisation to evaluate business internal and external factors that impacts
business performance and effectiveness (Hamid, 2018). It facilitates Zara to access the factors of
strengths, weaknesses, opportunities and threats. Swot analysis in the context of Zara in
mentioned below:
SWOT analysis of Zara-
Strength-
Unique and trendy designs: The greatest
strength of Zara is its unique designs in
Weakness-
Lack of advertising: lack of advertisement
is the weakness of Zara because through

clothing that attracts large customer base.
Cloths of Zara are elegant, superior quality
and having superb finishing. Organisation
provides variety of clothes such as party
wear, office ware, cloths for kids, men and
women.
Strong presence: Zara has strong presence
on international across the globe. It has 2100
stores worldwide that generating almost 15.9
billion per annum. Zara also gas efficient
supply chain that provides quality material to
organisation at affordable prices.
advertising its collection Zara can doubled
up its profits and turnover. Respective
organisation so not promote its products
through social media and other platforms
that impact on awareness of new product
launch.
Generalised collection: Zara offers range
clothing products and has no specialised in
specific products. It is main reason that
customers are shifting to its competitors that
affect profitability ratio of organisation.
Opportunities-
Online E-commerce: Zara gain opportunity
to provide its products through the mode of
e-commerce. It facilitates organisation to
make its clothes available at global level
through e-commerce stores.
Rapid delivery cycle: Zara deliver its
products to its customers rapidly that
maintains organisation strong reputation in
market place.
Threats-
Intense competition: Zara faces high
competition from the organisational that
offer close substitute products. H&M,
UNIQLO, Reformation are the organisation
branded clothes that affect the profitability
margin of organisation.
Economic downturn and pandemic: These
are the factors that create threat for Zara to
sustain in changing environment (Hamilton,
and Webster, 2018). Pandemic of covid-19
impacts on organisational sales and
profitability ratio.
PESTEL analysis of Zara: Pestle analysis is undertake by the organisation to analyse external
business environment factors that influence business decisions and performance. Factors of
pestle analysis in the context of Zara are mentioned below:

Political factors: As Zara is the Spanish brand, so it enjoys the benefits of operating
business operation out of European Union and free trade agreement as well as tax concessions.
Due to these benefits Zara find it easy to import raw material and export finished goods. In the
context of UK, Zara do not face trade restrictions and take advantages of political stability.
Political parties of UK do not interface in corporate decisions that help business to gain
competitive advantages over other competitors.
Economic factors: Success of Zara depends on economic status of the territories in
which it perform its operations. In UK employment rate is high that enable Zara to hire skilled
and talented employees who contribute in the success of organisation. Respective organisation
gain high cost materiel that impacts overall revenue of brand (Jnaneswar, and Ranjit, 2020). As
organisation provides trendy, fashionable and affordable clothing products that helps
organisation to remain relevant in global economy. Fluctuation in interest rates and economic
trends impacts business so Zara develop monitory funds that help business in the situation of
recession.
Social factors: Social factors includes changes in demographics, population and market
trends that impacts in buying behaviour of customers. Population of UK have high purchasing
power that facilitates Zara to increase sales of its branded products. Unique designs and quality
products enable organisation to fulfil needs and demands of UK customers. Zara analyse these
factors and target specific segment of market that help business to enhance its reach and
profitability.
Technological factors: Technological advancement and development plays important
role in the success of Zara. Organisation has both online stores and brick-and-mortar that helps
Zara to collect relevant information regarding customers. Respective organisation also uses
automation and AI technologies that helps business in stemless manufacturing as well as Zara
uses efficient logistic and delivery process and enable business to improve its operations. Online
selling helps business to gain higher market share and customer base.
Environmental factors: Environmental sustainable business practices influence business
Zara operations across the world. Zara stores are energy efficient and it adopts efficient
manufacturing process that reduce waste (Leitch, and Volery, 2017). Organisation promotes to
adopt eco-friendly practices that enable business to gain sustainable competitive advantages
over other competitors.

Legal factors: There are various legal laws and regulations are developed by the
government that must be follow by organisation to sustain in specific territory. Labour law,
supply chain functioning, trademark and copyright regulations, employment laws and health &
safety regulations are complied by organisation to ensure its prosperity in environment. Zara
ensures safety of employees at work place through provide health insurance and protect their
rights that help organisation to gain competitive advantages.
How the changes in PESTEL factors has influenced the Opportunities and Threats for business
Changes in the factors of pestle analysis has create great influence on the opportunities as
well as threats of business that impacts business success factors. There is regular changes are
happened in laws and regulations that are developed by government and social trends that
impacts Zara's functionality and performance. Technological advancement create opportunity for
business to provide its products across national boundaries with the help of e-commerce and
through using social media platform, business can spread awareness of its products and services
in wide area of customers. Fluctuation in the prices of raw material create threat for Zara because
it enhances overall operational cost of business (Mahamitra, 2019). It compiled business to sale
its products t higher prices that impacts on the satisfaction level of customers with brand and
they switch brand with its closest competitors. Implementation of legal laws and regulations
helps business to gain trust of employees and customers and retain them with organisation for
longer period of time. Changes in cultural trends and interest level of customers create the
environment of uncertainty that impacts business performance and functionality. Uncertainty in
environmental conditions and environmental laws create treat for Zara because it impacts
business policies and health conditions of organisational employees. To enhance opportunities
and reduce threats organisation analyse all these factors and develop policies accordingly.
How the business is addressing their Strengths to negate Threats and Weakness affecting their
Opportunities
Zara is the leading clothing brand that provides unique, trendy and designer clothings to
its customers which is the biggest strength of organisation. It helps organisation to attain higher
market share and satisfy needs and demands of targeted customers. Hence, organisational
operations efficiency help business to mitigate the risk of competitors (Nyide, 2020). Zara
provides its products at global level that enable business to face the recession of specific market
place.

Zara weak area is its ineffective marketing that impacts business performance and
functionality. Weak areas of organisation affect opportunities such as lack of marketing impacts
business brand awareness in international market place. Zara provides generalised collection
such as it offers clothes for men, women and kids that impacts business specialisation which
cause that customers are switching to other competitors.
Recommend a suitable leadership style from Daniel Goleman’s leadership styles
Daniel Goleman's leadership style contains six types of leadership styles which are adopted by
the organisation to develop healthy and supportive working environment. Related leaders of
Daniel Goleman's leadership style are mentioned below:
 Affiliative leader: These types of leaders emphases on resolving various issues and
conflicts of business team members that motivates and encourage than to work with each
other with efficiency (Oc, 2018). Leaders ensure that employees feel valuable and
comfortable in business organisation. This kind of leadership style that enable leaders to
develop effective working environment.
 Democratic leaders: In this leadership style, leaders encourage subordinates to take
active participation in decision-making process of organisation which is beneficial for
both employee as well as organisation. Leaders motivates employees to share their ideas,
views over certain topic to make suitable decisions.
 Commanding leader: In this leadership style. Leaders give command to its employees
and expect that they follow all orders of leaders without questioning and raising their
points. It helps organisation to make quick decisions.
 Pacesetting leader: In thus leadership style, leaders concentrate on team members
working performance as well as encourage them to produce high quality products.
Leaders do not ask report to employees on regular bases that enable them to focus on
their skills and quality (Özmen, 2018). Leaders are highly experienced as well as skilled
to work in efficient manner without being supervised.
 Authoritative leaders: In this leadership style, leaders provide direction to employees
to ensure that that understand missions and visions clearly. Team members of
organisation are influenced to obey the direction that are provides by leaders due to their
expertise and personality in specific field.

 Coaching leader: In coaching leadership, leaders concentrates on employee's strengths
and weaknesses and provide them proper training or coaching to attain the skills and
competencies that are necessary for perming determined job roles and responsibilities.
As per the above Daniel Goleman’s leadership styles, it is analysed that there are various
kinds of leadership styles that are adopted by the leaders to accomplish determined goals and
objectives in efficient manner. It is recommended to Zara to adopt democratic leadership
leadership style in which leaders motivate employees to take active participation in business
decision-making process and present their point of views and thoughts. It helps organisation to
develop efficient decisions because employees are relates to production so they can provide
supportive advise that enable to reduce obstacles in operational process as well as improve
productivity of business (Shamir, and Howell, 2018). Secondly, it helps Zara to develop strong
relationship with employees that motivates to attain the objective of higher performance. It is
recommended to Zara organisation to adopt coaching leadership style through providing training
and coaching to its employees that enhance their skills and competencies which enable them to
product quality products according to requirement of customers. Leaders of organisation should
understand the strengthen and weak areas of employees and provide them coaching accordingly
that motivates employees and improving their working performance.
Corporate Social Responsibilities of Zara
There are various corporate social responsibility practices are used by the Zara that
enable business to sustain in changing and competitive business environment. Zara adopts
“Closing the Loop” programme in which organisation take initiate to inspire its customers to
drop their used clothes at Zara stores than organisation distribute them to those people who need
them. Zara concentrates on collecting garments from their customers through online ways as well
and distribute them in needed community and society.
Zara takes initiative to reduce the usage of plastic begs through promoting the use of
paper begs to provide products to its customers (Tang, and Hussin, 2020). In the stores of Zara
90% paper begs are used to pack paper begs that helps organisation protect environment from
harmful toxic that are released from plastic begs. As plastic begs are non-degradable item that
harm environment.
Zara take initiative to protect environment through using ecological fabric such as
organic cotton. Mostly clothes are produced by organisation by the material which is pure cotton.

Respective organisation resist use of pesticides, chemicals, bleaches and chemicals in the process
of manufacturing clothes that are easily decompose and reduce negative impacts on environment.
Zara uses 5% of biodiesel fuel in transportation for the purpose of transferring products
from one place to another that helps organisation to reduce the level of carbon emission of
Carbon Dioxide in atmosphere. Respective organisation also reduce the production of waste and
promote recycling process that helps to protect environment from harmful impacts.
TASK 2
Reflective report
In this module I have learnt different types of models as well as theories that helps Zara
to attain the objective of growth and development. I have learnt various skills and competencies
during the process of preparing this assignment such as effective writing skill, research skill,
presentation skills and communication skills that help me to attain determined goals and
objectives on great effectiveness. Secondary research is used by me that help me to collect
relevant data and information of companies. I have faced various problems and difficulties to
prepare this assignment such as inappropriate time management and lack of coordination. I have
analysed all these situations that take effective decisions to resolve these problems and improve
efficiency of project (Yoon, and Han, 2018). These models include swot analysis strengths and
weakness that help business to develop effective strategies. It helps business to convert its
weakness and threats into opportunities to gain competitive advantages over other competitors. I
have analysed that strengths of organisation that help business to attain its objectives with
efficiency such as uniqueness of their products that enable business to stand out then other
competitors. It helps business to gain attention of large customer base. I have realised that Zara
has global presence that enable business to enhance its market and attaining strong customer
base.
I have researched that Zara is the leading online retailing organisation that have strong
image in market. Respective organisation adopts the e-commerce platform that enable business
to enhance its global reach. Zara has strong logistic and distribution network that help business
deliver its products to customers with efficiency. Zara faces intense competition from its
competitor with H&M and other organisations that impacts business performance and efficiency.

I have analysed that receptive organisation develop various strategies to convert weakness into
strengths and threats into opportunities.
I have recognised that external environment factors impacts business proficiency and
performance. As per my point of view regular changes in political conditions, regulations that are
formulated by the government, taxation and interest rate create uncertainty for business and
impacts its operations in negative manner. Zara analyse these changes to mitigate risk from
organisation. I have investigated that Zara uses various types of latest technologies, artificial
intelligence and robots that improve business performance and productivity (Zarinah, Farhana,
and Nadiah, 2017). Zara compiles all legal factors, laws and regulations in organisation that
helps business to run all operations with efficiency. Organisation also adopts waste management
and recycling approaches to reduce the impacts on environment.
I have analysed that, in business various leadership styles are implement for leading and
directing employees efforts in right direction. Zara is the task-oriented organisation. It adopts
democratic as well as supportive leadership styles that improve employees morale and enhance
their working performance. Organisation include employees in decision-making process and
provide them support to gain desirable outcomes.
Throughout the process of completing this project, I have learnt different theories and
frameworks, leadership styles as well as corporate social responsibilities that help me to attain
determined goals and objectives with efficiency. As pee my point of view, understanding of
these aspects help business to run business operations with efficiency and gain sustainable
competitive advantages over other competitors.
CONCLUSION
As per above report, it can be concluded that the aspect of business environment is the set
of different factors that are exist internally and externally in business that impacts its operations
and functionality. It helps business to identify opportunities and threats to improve business
performance. To analyse these factors business conducts various analysis such as swot and pestle
analysis. In current competitive business environment, various CSR policies are adopted by
organisation that helps business to identify their responsibilities towards society and
environment. It helps business to sustain in environment for longer period of time. Business
adopts suitable leadership styles to lead its employees in right direction and enhance their
contribution towards attaining business goals and objectives in efficient manner.

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