Business Context of Zara SA: Micro, Macro Factors, and Ethics

This report offers a comprehensive analysis of the business context surrounding Zara SA, a prominent Spanish fashion retail company. It begins by examining both micro and macro environmental factors, including demographic, economic, socio-cultural, technological, ecological, and political influences, as well as factors such as customers, competitors, and suppliers. The report then delves into the importance of ethical behavior for organizations, particularly in relation to social, cultural, and environmental issues. It emphasizes the need for businesses to operate ethically to maintain a competitive advantage and fulfill social responsibilities, such as reducing carbon emissions and providing equal opportunities. The report concludes by highlighting the significance of adhering to ethical codes of conduct for brand image and market position. The analysis includes a detailed look at Zara's operations, its market analysis, and the ethical principles it should follow in its business practices.

Context of Business

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1.Micro and macro factors that have changes the nature of modern business..........................1
TASK 2............................................................................................................................................1
P2. Identifying need for organisations and individuals to behave in an ethical manner in
relation to social, cultural and environmental issues..................................................................1
CONCLUSION................................................................................................................................2
REFERENCES................................................................................................................................3

INTRODUCTION
Businesses today are made up of a number of complex and critical activities without
which functionality of an organisation cannot be determined. Every business today comprises of
a number of activities and processes. Also they need to function in an effective manner by
studying various internal as well as external business factors ( Brocke, Zelt and Schmiedel,
2016). This report has been framed on ZARA SA which is a Spanish fashion retail sector
business concern. It has its headquarters in Arteixo, Gaicia and was founded in the year 1975.
Furthermore, this report combines various elements such as study of micro and macro
environmental factors along with issues related to social , ethical and behavioural contexts as
well.
TASK 1
P1.Micro and macro factors that have changes the nature of modern business.
Macro-environment factors
These are external environment factors which are beyond the control of organisation.
Macro factors also influence decisions while formulation of marketing strategies. This consist of
six factors also called as DESTEP model. These factors affect business of ZARA which are
described below:-
Demographic factors- These factors are related to people. These include age, gender,
size, income, and occupation. Demographics offer diverse opportunities and challenges for
business. Their is vast change in demographics so ZARA should focus on market analysis and
than do further manufacturing according to customer needs.
Economic factors- Economic factors and profitability have close relationship on
business. Various economic factors are tax rates, labour cost, government policy, and interest
rates. If economic activities decline ZARA can sell products at affordable prices as purchasing
power of customers decline.
Socio-cultural factors- Social- culture factors affect society's values, ethics, preference
and behaviour (Bell, Bryman and Harley, 2018). These factors plays vital role in success of
company. Company have to follow social trends and fulfil social responsibilities. As, culture
influences buying decisions so, ZARA introduces new products after proper market research.
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Technological factors- Technology is constantly changing so it is important for business
to accept changes. These factors are related to new technologies which help in creating market
opportunities and products. ZARA can maximise profits by utilizing new technologies. It helps
in inventory management and improve customer experience
Ecological factors- These factors include natural resources which are required for
production and affect marketing activities (Greasley, 2017). Customers have become more
environment concern so it is crucial factor to be considered. ZARA stores can consume less
energy, uses recycling system and eliminate hazardous waste from its supply chain system.
Products of ZARA are made from recycled wool and tencel and organic cotton.
Political factors- Political factors include laws, agencies and pressure groups. Decisions
in marketing are influenced by political environment. Before entering a new market, company
should have done prior analysis which can affect the business. ZARA do its operations form
home and neighbour countries which is political friendly as, it helps in minimising threat of
political disruption.
Micro-environment factors
These are external environment factors which have direct and immediate affect on
operations of company. These factors are part of operating environment as it effect performance
and decision making. Various factors are customers, competitors, suppliers, distribution channel
and general public which effect business of ZARA.
Customers- Every business can maximise its profits by customer satisfaction. Marketing
begins and ends with customers which helps a firm becoming successful. Customers are
important element of micro environment of business. ZARA attracts young customers which are
highly sensitive to fashion trends.
Competitors- Competitors are threat to organisations success and existence. Their is cut
throat competition in market as wide range of differentiated products are available at low and
best quality (Lieder and Rashid, 2016). Competitors of ZARA are Mango, Tap Shop and River
Island.
Suppliers- Suppliers are individuals or businesses. They provide resources required by
company. Suppliers of ZARA are those who comply with stringency levels.
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TASK 2
P2. Identifying need for organisations and individuals to behave in an ethical manner in relation
to social, cultural and environmental issues.
Every business concern needs to operate in a fair and ethical manner so as to achieve a
competitive advantage in respect of its rival firms. A company that does not operate as per ethics
or ethical standards faces a number of complexities and critical issues in relation to social
cultural as well as behavioural aspects (Lankoski, 2016).
Social responsibilities: Every business has a well developed set of social responsibilities
that they need to fulfil in order to be successful and attain high amount of profits. Social
responsibility is a set of guidelines that have been framed or constructed on a well developed
system of ethics which believes that decisions or actions undertaken by business men should be
ethically correct or sound. Various social responsibilities of business include reducing carbon
emissions from industries, engage in charitable giving etc.
Individuals working in a business or business as a whole need to practice ethical code of
conduct so as to be effective in their approach and maintain a stable position of their business
concern in respect of various rival firms. Ethical behaviour comprises of a number of values
such as being honest, fair and providing equal amount of rights and opportunities to each and
every employee working.
This policy will be quite useful as businesses will be able to enhance their productivity as
well as profitability for a quite longer period of time (Sprout and Sprout, 2015). Also it will be
helpful in enhancing customer base of ZARA. Hence in this aspect, managers of ZARA have
considered a number of activities and processes such as adopting CSR activities, following laws
and regulations set up by governments, providing equal rights and opportunities to each and
every employee in their company. This proves to be quite useful for improving brand image of
ZARA which further ensure success and growth.
CONCLUSION
From the above mentioned report it has been examined that every business has to follow
a certain set of principles along with a developed and set code of conduct including business
laws and ethics so as to be successful. Apart from this following an ethical code of conduct while
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conducting business operations helps in providing a stable brand image and market position to
the company. This report comprises of a internal and external market analysis along with need
to follow certain ethical principles in respect of environmental, social and cultural issues as well.
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REFERENCES
Books and Journals
vom Brocke, J., Zelt, S. and Schmiedel, T., 2016. On the role of context in business process
management. International Journal of Information Management. 36(3). pp.486-495.
Bell, E., Bryman, A. and Harley, B., 2018. Business research methods. Oxford university press.
Greasley, A., 2017. Simulation modelling for business. Routledge.
Lieder, M. and Rashid, A., 2016. Towards circular economy implementation: a comprehensive
review in context of manufacturing industry. Journal of cleaner production. 115. pp.36-
51.
Lankoski, L., 2016. Alternative conceptions of sustainability in a business context. Journal of
cleaner production. 139. pp.847-857.
Sprout, H. and Sprout, M., 2015. The context of environmental politics: unfinished business for
America's third century. University Press of Kentucky.
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