Zara: Business Environment, Stakeholders, and Market Analysis Report

This report provides a comprehensive analysis of Zara's business environment. It begins with an introduction to Zara, highlighting its commitment to innovation and customer satisfaction. Task 1 delves into the purposes of different organizational types, focusing on Zara's mission, vision, and stakeholder management, including internal, connected, and external stakeholders. Task 2 examines economic systems, fiscal and monetary policies, and competition policies and their impact on Zara's operations. Task 3 explores how business and cultural environments shape Zara's behavior, along with market structures and forces influencing its pricing and output decisions. Finally, Task 4 addresses the significance of international trade, global factors, and the impact of European Union policies on Zara. The report concludes by summarizing key findings and providing references for further study.

BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................1
TASK 1......................................................................................................................................1
1.1 Purposes of different types of organisations and appropriateness of Zara’s purpose......1
1.2 Extent to which Zara meets the objectives of its diverse stakeholder groups..................2
1.3 The responsibilities of Zara and the strategies employed to meet the expectations of
different stakeholder groups...................................................................................................3
TASK 2......................................................................................................................................3
2.1 Economic systems and their influence on Organizations................................................3
2.2 Impact of Fiscal and Monetary Policy on shaping the macro environment.....................4
2.3 Impact of Competition Policy..........................................................................................5
TASK 3......................................................................................................................................5
3.3 Business and cultural environments shape the behaviour of the Zara.............................5
3.2 Market structures determine the pricing and output decisions of the business................5
3.2 Impact of Market Forces..................................................................................................6
TASK 4......................................................................................................................................6
4.1 Significance of international trade to UK business organisations...................................6
4.2 Impact of global factors on Organizations.......................................................................7
4.3 Impact of Policies of the European Union.......................................................................7
CONCLUSION..........................................................................................................................7
REFERENCES...........................................................................................................................8
REFERENCES.........................................................................................................................10

INTRODUCTION
In today’s highly competitive environment there are various factors which affect the
business in a positive as well as negative way. In these factors, internal as well as external
factors affect the functioning of company as well as its employee’s performance (Shaikh,
2010). In this regard, the present report is developed on the case study of Zara which is
world’s fastest growing manufacturers of affordable fashion clothing. The company is highly
committed to satisfying their consumer’s needs by continuously incorporating the innovative
business practices. Zara maintains a strong relationship with their contractors and suppliers—
viewing them as part of the company. Further, this study gives brief description about the
environmental analysis and the fundamental concepts and principles of the marketing process
applicable to the Zara. It also helps in analysing the cultural, economic and regulatory
environment within which a Zara operates.
TASK 1
1.1 Purposes of different types of organisations and appropriateness of Zara’s purpose
There are different types of organizations which are operating different business
functions for different purpose such as:
Public sector organization: These are the firms which are owned by different
individuals. It is a sort of private business started with diverse people for gaining positive
amount of profits for their personal growth. In this, profit which has been gained is equally
distributed among all the partners of business.
Private sector organization: These are the organizations which basically includes
national as well as local governments and agencies (Nandi, 2010). For the whole community
these organizations are founded to be very beneficial as they serve for public concern
provides them number of benefits as well.
Non-profit organization: One of the best example of non-profit organizations are
NJO’s which serves for maintaining sustainability within the country. It can also be define as
a group which is highly concentrated towards the fulfilling the demands of targeted audience.
Various development programs are raised by such companies for the profit of poor people as
well.
From the above description it can be stated that Zara is Spanish clothing and retail
firm which serves as a public limited company (Dwivedi, 2009). Here, Zara has found
differences that matter to customers and differentiated itself from its competitors by
performing key activities.
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Mission of Zara: The main mission of company is to give their customers and
exclusive choice of fashion as per their needs. They want to provide quicker turnover of new
stock than new retailers.
Vision statement: Company wants to become a first choice of their customers in a
family retail shopper by enhancing their level of customer satisfaction (Chris, 2000).
Company is serving their business operations as public limited company and by
setting their vision they are able to achieve their objectives. In this regard, the objective of
Zara stated that they want to go through the business expansion in other countries by
producing high quality product.
1.2 Extent to which Zara meets the objectives of its diverse stakeholder groups
A stakeholder plays a most important role in managing all the business operations
more effectively. There are diverse ranges of stakeholders in Zara such as customers,
suppliers, employees, government agencies etc. In this regard, it is quite essential to fulfil the
needs and demands of all their stakeholders. Zara have adopted various strategies which helps
them in meeting such needs (Atkinson, 2012). There are basically three parts in which they
have divided their stakeholder’s i.e.
Internal stakeholders: In this, all the managerial level people are involved and they
are one who takes all the decisions regarding the future growth of company. In comparison
with other clothing retailers, Zara tries to maintain comfortable working environment.
Company is also helping their workers by providing them appropriate training about to make
quality products (Stredwick, 2005). Creative teams have been developed by them which is
basically consists of designers, sourcing specialists and product development personnel. In
addition to this, management team of Zara has taken a decision to hire young professionals.
Company hire them and train them to make quick decisions. With the help of this, company
is able to, speeding up the development process and minimizing the number of samples made.
Connected Stakeholders: These people works with company for their own interest
such as suppliers, clothing retailer etc. Zara is meeting the objectives of these stakeholders by
maintains a strong relationship with their contractors and suppliers (Bello, 2005). Company
develop better relations with them and view them as a part of their company. In addition to
this, some of the major connected stakeholders of Zara are designers, pattern makers and
merchandisers and all of them are involved in the product development.
External Stakeholders: These are the stakeholder for whom company works and
develop various. These includes customers, government etc. and company is able to identify
all their consumers need effectively. Zara is successfully reacting to their customers’
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demands. Zara's global average of 17 visits per customer per year is considerably higher than
the three visits to its competitors.
1.3 The responsibilities of Zara and the strategies employed to meet the expectations of
different stakeholder groups
One of the major responsibilities of Zara is to put their clients need first and try to
provide them high quality products. The major area of responsibility of Zara is to maintain a
well-developed culture. Zara is one of the biggest business success stories in Spanish history.
Today customers are spending less on clothing and choose to spend their disposable income
on healthcare, electronics, education, and travel and leisure (Richter, 2001). Due to this
factor, it is quite essential for Zara to adopt some of the best strategies to attract their
customers. For this, they have adopted twice weekly deliveries of replenishment stocks. With
the help of this, lines that are not selling well are quickly removed and popular items quickly
replenished. They also work on attractive environment of company in which they are focused
with modern and spacious store, well-lit and walled with mirror.
Further, it can be stated that they are providing appropriate training to all their team
members about how to react consumer’s demands more effectively. They are also focusing
on eliminating waiting time for the long laborious process of fabric formation. They are
adopting better model for maintaining their supply chain in a cost effective manner (David,
2000). In order to meet the expectations of Customers Company is taking different reviews
from their customers and try to improve their services as per the requirements of consumers.
Zara has adopted differentiation strategy as well in order to differentiate itself from its
competitors by performing key activities. Further, attracting more number of customers
towards their store and clothing retail market it is more important than ever to find a
breakthrough in the clothing market.
TASK 2
2.1 Economic systems and their influence on Organizations
Economic system of country highly affects the pricing decisions of company as well
as their other business operations. From a macro-environmental point of view it can be stated
that governments allocate resources to mobilize the economic system. Generally there are
three types of the economies-
Free Market Economy: At the time of considering this economy supply of all the
goods and services are determined by their value in market. It considers the present market
effect of product as well (Miller, 2011). Government is having limited number of company
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and all they are serving very flexible rules for companies. This factor determines an effective
resource allocation at the time of following free market economy.
Command Economy: Government is having total control on the supply and prices of
products. With the help of having proper information about market quick and better decisions
can be made about the resource allocation (Dwivedi, 2009). In addition to this, it can be
determined that due to the lack of production knowledge of government it is quite difficult to
allocate resources.
Mixed Economy: In this economy system government is having less involvement in
the fiscal and monetary policies.
As a junior manager on Zara’s head office at UK it has been determine that company
follows mixed economy system as they have the full freedom to operate its business activities
freely.
2.2 Impact of Fiscal and Monetary Policy on shaping the macro environment
There is different Fiscal and monetary policies developed by the government and also
help in shaping the macro environment of Zara. Here, it can be determine that these policies
are having greater impact on the company’s business operations such as:
Tax rates: This is a government duty which might impose on the several bills of
customers. In case of having high tax Rate Company need to pay high amount to government.
It is the major reason due to which all their products prices also increases and it might leads
to decrease their number of customers (Siklos, 2011). In case of having low tax rate
customers will like to prefer the higher range products of company and it increase firm’s
market share as well.
Interest rates: Due to the continuous change in the interest rates Zara’s business
operations are highly affected. In case of having higher interest rates Zara might face several
difficulties such as: Demands of products decreases. It is the major reason due to which
company might face financial loss.
Exchange rates: Zara is serving their business operations in different countries such
as London, Paris, New York or in Rio de Janeiro etc. Due to this, Exchange rates are major
policy which impacts their business (Gani, 2011). In case if the prices of Dollar will increase
then the international market of Zara will be impacted.
From both the above policies it can be determine that total expenditure of customers
and profit margin of company highly got affected due to the Fiscal and monetary policies.
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2.3 Impact of Competition Policy
There is a huge impact of competition policy and other mechanism on the business
activities. Competition policy serves various positive factors to company and enhance their
growth as well as success. Taking into consideration the UK’s government competition
policy it has been founded that it will restrict Zara to form the monopoly formations. Due to
this, they need to provide high class fashion clothing products in fewer prices and increase
the customer choices as well (McGovern, 2014). Competition Act 1998 presents the total
viewpoint and it highly contributes and guarantees the free and fair competition. However,
this policy also helps in encouraging firms to go through the appropriate innovative products
as per their consumer’s needs. In case of having any type of changes in the competition
policy Zara also requires to change its policies and fight with the growing competition.
TASK 3
3.3 Business and cultural environments shape the behaviour of the Zara
The total culture and business environment helps in shaping the behaviour of Zara.
Economic environment of the company is very good as it is one of the most promising brands
of clothing worldwide. Due to the continuous rise in the world’s GDP the economic condition
is very good. In addition to this, within some countries Zara might have to face strong rules
and regulations of government (Madi, 2013). The total behaviour of Zara depends on the total
internal and external environment. Here, with the changing generation there is a huge and
rapid advancement in the field of technology. Zara can serve high quality clothing retail
services online to their customers. For this, they have developed their online presence and
start selling their products online. It has helped them in increasing their business on a rapid
pace.
In addition to this, Zara follows informal corporate culture in which they hires young
designers and trains them to make quick decisions. In this, they maintain strong relationship
with their contractors and suppliers and regularly help their employees in developing their
skills (Hoffman, 2012). It shapes their business and motivates their workers to perform well
and delivery quality goods to their customers.
3.2 Market structures determine the pricing and output decisions of the business
The whole pricing and output decisions of business depend on the market structure. In
this, there is different market economy such as:
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Perfect Competition Market: In this type of Market Company need to choose their
output sales volume after considering the opportunity costs. Here, prices are equal to the
marginal costs of production (Khalifa, 2012).
Monopoly market: In this market competition is less so that firms can easily change
their prices. Here, only one seller exists and he can change all his decisions appropriately.
Oligopoly Market: This is very complicated market in which prices of the products
kept very low. Here, in this few seller exists and they consider top level of competitors on the
basis of it.
Monopolistic market: There are many producers in this market and firm serving in
this market structure change their business decisions and prices according to their competitors
(Shaikh, 2010). Zara is a world’s leading sellers of clothing goods and their prices may vary
as per the changing market demand. Further, Zara serves under the monopolistic market
structure.
3.2 Impact of Market Forces
Market forces may impact the economies of scale of Zara before producing the high
volume products. They are having very good range of economies of scale and they can
produce high amount of goods in case of having higher clothing demands. In addition to this,
market forces highly affect the total production capacity of company. In case of having high
demands company will produce in the large quantity and vice versa (Bello, 2005). Zara can
change their decisions accordingly and produce more products as per increasing needs of
customers. Further, it may state that due to the changing fashion trends customers are
demanding more fashionable cloths. Due to this factor, Zara is changing their strategies and
try to deliver high quality and latest fashion products to their customers.
TASK 4
4.1 Significance of international trade to UK business organisations
UK serves as one of the most open economies in the world. Due to the international
trade, all the business firms operating under UK are having greater advantages. The UK
business organisations need to have significant knowledge of domestic and international
marketing concepts to flourish international trade (Dwivedi, 2009). Further, the cost of
communication and transportation has been lower down in the country due to the increasing
technology. Zara's global average of 17 visits per customer per year has been measured.
International trades helped them in building their network in large basis. Due to this, several
opportunities are available for company through which Zara can expand their business and
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achieve their vision. In case of having low transfer Capital Company can make their
processing better. Further, it can be stated that due to the international trader all the UK
business organizations are producing higher level of employment opportunities.
4.2 Impact of global factors on Organizations
Due to the increasing globalizations companies are adopting several strategies so that
they can compete within this environment. There are various global factors such as political,
economic, legal, technological and environmental business of Zara might get affected.
Political conditions of UK are very strict and it is essential to follow all the policies
developed by government (Shaikh, 2010). The major political factor is a rate of tax levied by
the government and it affects the business of Zara on an increasing way. In addition to this,
UK interest rates stand at an all-time low of 0.5% which is a positive factor for Zara for their
international business expansion. Moreover, political instability, terrorism, etc will highly
affect the operations of the companies. Due to the social and cultural changes taking place in
UK performance of fashion retailers is highly influenced such as religion, friends and family
opinion etc. In addition to this, Zara must conform to the legal minimum standards which are
enforceable in a jurisdiction (Global Factors Affecting Business, 2011). Further, it is essential
to follow all the norms developed by government so that business can maintain appropriate
standards.
4.3 Impact of Policies of the European Union
Some of the most common European Union policies are climate act, health and safety
measures, Discrimination act etc. It highly affects the Zara’s operation as they need to follow
climate act by meeting all the standard of law. In case of not following they are banned to
produce goods. In addition to this, they do not make any type of discrimination in between
their workers and give them full chance to grow (Miller, 2011). All the health and safety
measures also require following by company for the kind concern of workers. For the
betterment of society, EU has encouraged people to use domestic goods rather than foreign
goods.
CONCLUSION
From the above study, it has been concluded that it is very important for Zara to
maintain appropriate business environment to understand the threats that can hamper the
activities of the company. They are keeping their clients’ needs first and maintain appropriate
culture of working. Further, it has been articulated that they are following all the rules and
regulation while working in the UK.
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REFERENCES
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Shaikh, S., 2010. Business Environment, 2/E. Pearson Education India.
Siklos, P., 2011. Fiscal and monetary institutions and policies: onward and upward. Journal
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REFERENCES
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