Zara’s Global Expansion Strategy: An Evaluation Using the SAF Model
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TABLE OF CONTENTS
Introduction................................................................................................................................1
Q1. External analysis..................................................................................................................2
Business environment.............................................................................................................2
Opportunities and threats........................................................................................................3
Industry analysis.....................................................................................................................3
Q2. Internal analysis...................................................................................................................5
Organisation’s resources & unique capabilities.....................................................................5
How unique capabilities link to competitive advantage.........................................................6
Q3. Strategy evaluation..............................................................................................................9
Recent strategy of Zara- Cover developing market................................................................9
Evaluation using SAF tests..................................................................................................10
Conclusion................................................................................................................................12
References................................................................................................................................13
Introduction................................................................................................................................1
Q1. External analysis..................................................................................................................2
Business environment.............................................................................................................2
Opportunities and threats........................................................................................................3
Industry analysis.....................................................................................................................3
Q2. Internal analysis...................................................................................................................5
Organisation’s resources & unique capabilities.....................................................................5
How unique capabilities link to competitive advantage.........................................................6
Q3. Strategy evaluation..............................................................................................................9
Recent strategy of Zara- Cover developing market................................................................9
Evaluation using SAF tests..................................................................................................10
Conclusion................................................................................................................................12
References................................................................................................................................13

Introduction
Business strategies are an in-depth analysis of the internal and external environment to
achieve expected outcomes. Zara as one of the leading clothing brand has a global presence
and mainly operate within the United Kingdom. The presented report will discuss the
business environment of the organisation through pestle analysis and determine the
opportunities and threats. Also, Porter’s five forces will be used to understand the external
environment impacts on the business. Later, the report will discuss internal factors on the
business with a focus on strengths and weakness and implementation of VRIO framework.
The evaluation of the strategy will highlight the benefits and limitations of the strategy the
organisation have made for business expansion.
1
Business strategies are an in-depth analysis of the internal and external environment to
achieve expected outcomes. Zara as one of the leading clothing brand has a global presence
and mainly operate within the United Kingdom. The presented report will discuss the
business environment of the organisation through pestle analysis and determine the
opportunities and threats. Also, Porter’s five forces will be used to understand the external
environment impacts on the business. Later, the report will discuss internal factors on the
business with a focus on strengths and weakness and implementation of VRIO framework.
The evaluation of the strategy will highlight the benefits and limitations of the strategy the
organisation have made for business expansion.
1
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Q1. External analysis
Business environment
Pestle analysis can be used to determine the business environment of the organisation. The
external analysis is useful to identify the external factors working on strategic planning
toward the growth and profitability.
Political: The organisation has opportunities to scale the business with free trade agreements
in Europe. Also, the governmental approaches and policies for taxation and transportation are
stable in the European region. However, developing countries are politically, and the
organisation has to consider the changing policies and regulations for trading.
Economic: The organisation has root in stable markets and moving toward developing
countries. The economic strengths are from the low labour market and production cost in
developing countries. Also, adequate exchange rates and interests on the financial values are
helping the business to achieve profitability (Lueg and Lueg, 2013). Also, stable markets
such as Spain and the United Kingdom support the business to handle inflation situations.
Higher employment rates and increasing disposable incomes are helping the business to
achieve economic strengths. However, recent withdrawal as Brexit has an impact on business
on trading practices.
Social: the lifestyle of the people in the country is changing whereas the population is not
varying annually. The organisation has provided low cost and high-quality products during
the period of recession. Also, it is becoming a major source of employment for society.
Throughout the global presence, the organisation is also ahead in the social contribution such
as empowering health and education (Adamkasi, 2016). The cultural values have fewer
impacts on the business as it has wide coverage to the market with a variety of products.
However, changing age distribution is required to concern to identify the potential source of
profitability.
Technological: The organisation has a strong technological implementation to achieve
customer satisfaction in products and services. The organisation has automated the
production and communication channel and improved the presence on online sources such as
social media and website to attract the market and brand the products and services. For
2
Business environment
Pestle analysis can be used to determine the business environment of the organisation. The
external analysis is useful to identify the external factors working on strategic planning
toward the growth and profitability.
Political: The organisation has opportunities to scale the business with free trade agreements
in Europe. Also, the governmental approaches and policies for taxation and transportation are
stable in the European region. However, developing countries are politically, and the
organisation has to consider the changing policies and regulations for trading.
Economic: The organisation has root in stable markets and moving toward developing
countries. The economic strengths are from the low labour market and production cost in
developing countries. Also, adequate exchange rates and interests on the financial values are
helping the business to achieve profitability (Lueg and Lueg, 2013). Also, stable markets
such as Spain and the United Kingdom support the business to handle inflation situations.
Higher employment rates and increasing disposable incomes are helping the business to
achieve economic strengths. However, recent withdrawal as Brexit has an impact on business
on trading practices.
Social: the lifestyle of the people in the country is changing whereas the population is not
varying annually. The organisation has provided low cost and high-quality products during
the period of recession. Also, it is becoming a major source of employment for society.
Throughout the global presence, the organisation is also ahead in the social contribution such
as empowering health and education (Adamkasi, 2016). The cultural values have fewer
impacts on the business as it has wide coverage to the market with a variety of products.
However, changing age distribution is required to concern to identify the potential source of
profitability.
Technological: The organisation has a strong technological implementation to achieve
customer satisfaction in products and services. The organisation has automated the
production and communication channel and improved the presence on online sources such as
social media and website to attract the market and brand the products and services. For
2
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example, it has introduced augmented reality so that customers can capture the image of the
product and can visualise the appearance on their body (García-Álvarez, 2015). However,
data security and technological upgrade is always a point of concern.
Opportunities and threats
From the business environment analysis, Zara has opportunities in the European market for
trading due to the free trading agreement and lower exchange and trading rates. Also,
developing markets are inviting large-size businesses to achieve economic strengths. It has
the opportunity for the organisation to diversify the dependency on the market and improve
the sales whereas it also can achieve high profitability with lower competition. Economic
strengths have benefits to achieve business expansion and integration (Huang, 2019). The
organisation has the opportunity to use the existing physical stores to deliver social and
cultural values-oriented clothes and other products to the community.
However, Zara has the main threat of the recession and inflation rates in European countries.
Changing governmental rules and policies in developing countries along with changes in
customer market demands are threats to achieve effective operations. The organisation also
has threats of new entrants in the business to achieve competitive growth and profitability.
Besides it, technological risks on failures and data security are a point of concern for
business.
Industry analysis
The fashion industry is a fast-growing sector with the largest share in the national economy.
The industry can be analysed through the implementation of Porter five forces.
Bargaining power of suppliers: The organisation has high availability of the suppliers of the
raw material and ready-made products as the organisation has effective profitability for them.
The organisation also has diversification of suppliers to decentralise the dependency so that
overall bargaining power with business is low. However, in some countries, it is also high
where the organization has limited suppliers for a continuance.
Bargaining power of customers: The concept to deliver ‘Fashionable and affordable
products directly from fashion designer’ generates brand value and customer base. The
organisation has high quality with affordable prices and so that customers are satisfied with
3
product and can visualise the appearance on their body (García-Álvarez, 2015). However,
data security and technological upgrade is always a point of concern.
Opportunities and threats
From the business environment analysis, Zara has opportunities in the European market for
trading due to the free trading agreement and lower exchange and trading rates. Also,
developing markets are inviting large-size businesses to achieve economic strengths. It has
the opportunity for the organisation to diversify the dependency on the market and improve
the sales whereas it also can achieve high profitability with lower competition. Economic
strengths have benefits to achieve business expansion and integration (Huang, 2019). The
organisation has the opportunity to use the existing physical stores to deliver social and
cultural values-oriented clothes and other products to the community.
However, Zara has the main threat of the recession and inflation rates in European countries.
Changing governmental rules and policies in developing countries along with changes in
customer market demands are threats to achieve effective operations. The organisation also
has threats of new entrants in the business to achieve competitive growth and profitability.
Besides it, technological risks on failures and data security are a point of concern for
business.
Industry analysis
The fashion industry is a fast-growing sector with the largest share in the national economy.
The industry can be analysed through the implementation of Porter five forces.
Bargaining power of suppliers: The organisation has high availability of the suppliers of the
raw material and ready-made products as the organisation has effective profitability for them.
The organisation also has diversification of suppliers to decentralise the dependency so that
overall bargaining power with business is low. However, in some countries, it is also high
where the organization has limited suppliers for a continuance.
Bargaining power of customers: The concept to deliver ‘Fashionable and affordable
products directly from fashion designer’ generates brand value and customer base. The
organisation has high quality with affordable prices and so that customers are satisfied with
3

the business (Adam, 2017). However, changing requirements and expectations drive toward
the other brands in the market. The overall bargaining power of customers is low.
The threat of new entrants: The fashion industry is affordable for the small and medium-size
retailers also so that the organisation has a high threat of new entrants. However, innovation,
creativity and quality in products with a proper focus on brand value are useful for business
to drive the market. Small businesses are being a barrier to meet adequate profitability and
market share as they have high impacts to penetrate the market.
The threat of substitutes: The organisation has patents and trademarks on the clothes and the
name itself is the brand value. Quality and experience of the product are recognisable so that
it is always difficult for other organisations to substitute the products. There is a low impact
on other businesses to attract loyal customers (Hansen, 2012).
Industry rivalry: The internal competition within the business is high. Burberry, Primark and
other businesses are major competitors. Price and quality of the business product have fewer
positioning gap. However, the organisation has an affordable price and so that the products
have reached to larger customer base whereas decentralisation of the supply chain has
benefits to optimise the cost and dependency.
The fashion industry is attractive for businesses due to high profitability. However, entrants
need large capital to optimise the cost per product, and they also need technological
advancements to establish the business (Caro and Gallien, 2012). The purchasing power of
the customers is increasing with increasing disposable income.
4
the other brands in the market. The overall bargaining power of customers is low.
The threat of new entrants: The fashion industry is affordable for the small and medium-size
retailers also so that the organisation has a high threat of new entrants. However, innovation,
creativity and quality in products with a proper focus on brand value are useful for business
to drive the market. Small businesses are being a barrier to meet adequate profitability and
market share as they have high impacts to penetrate the market.
The threat of substitutes: The organisation has patents and trademarks on the clothes and the
name itself is the brand value. Quality and experience of the product are recognisable so that
it is always difficult for other organisations to substitute the products. There is a low impact
on other businesses to attract loyal customers (Hansen, 2012).
Industry rivalry: The internal competition within the business is high. Burberry, Primark and
other businesses are major competitors. Price and quality of the business product have fewer
positioning gap. However, the organisation has an affordable price and so that the products
have reached to larger customer base whereas decentralisation of the supply chain has
benefits to optimise the cost and dependency.
The fashion industry is attractive for businesses due to high profitability. However, entrants
need large capital to optimise the cost per product, and they also need technological
advancements to establish the business (Caro and Gallien, 2012). The purchasing power of
the customers is increasing with increasing disposable income.
4
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Q2. Internal analysis
Organisation’s resources & unique capabilities
The internal analysis of the organisation has the main goal to identify the strengths and
weaknesses along with resources and unique capabilities to achieve the profitability,
expansion and customer market satisfaction. Internal analysis is required to understand the
strategic capabilities and positions to make competitive benefits.
Strengths
Strong supply chain: The organisation has a strong supply chain in 88 countries through 90%
of the stores. The organisation also has several other franchise and joint ventures. The supply
chain has power from the self-hosted production houses. It enables the organisation to reach
the customers effectively and avail high-quality services within an effective time.
Adroit design strategy: The organisation has effective integration of technology and brick-
and-mortar model to establish the connection with customers. It allows responding quickly to
market trends, and customer demands (Cortez et al., 2014). The organisation has the strength
of the business structure and functioning to achieve faster reach to market with new and
expectation-oriented products.
In-house operations: Low wage and high unemployment markets such as Portugal and
Galicia are used for in-house production. It helps the organisation to reflect the changes
within effective time and improve the cost saving. There is no outsourcing like other
competitors. The main strength is that the organisation has effective savings on warehousing
and transportation.
Product design strategy: Zara prepared only 15 to 25% products as advance to a season to
meet market demands, and 50% of the products are designed in between the season. It allows
the organisation to understand the customer expectations and opinions for product and make
change accordingly to improve the rest of the customers in the same season (Gallien et al.,
2015). Unique product design and distribution helps to achieve profitability.
Affordable price and larger distribution network: Zara has a larger distribution network
through physical stores and online presence whereas the price of the products and service is
5
Organisation’s resources & unique capabilities
The internal analysis of the organisation has the main goal to identify the strengths and
weaknesses along with resources and unique capabilities to achieve the profitability,
expansion and customer market satisfaction. Internal analysis is required to understand the
strategic capabilities and positions to make competitive benefits.
Strengths
Strong supply chain: The organisation has a strong supply chain in 88 countries through 90%
of the stores. The organisation also has several other franchise and joint ventures. The supply
chain has power from the self-hosted production houses. It enables the organisation to reach
the customers effectively and avail high-quality services within an effective time.
Adroit design strategy: The organisation has effective integration of technology and brick-
and-mortar model to establish the connection with customers. It allows responding quickly to
market trends, and customer demands (Cortez et al., 2014). The organisation has the strength
of the business structure and functioning to achieve faster reach to market with new and
expectation-oriented products.
In-house operations: Low wage and high unemployment markets such as Portugal and
Galicia are used for in-house production. It helps the organisation to reflect the changes
within effective time and improve the cost saving. There is no outsourcing like other
competitors. The main strength is that the organisation has effective savings on warehousing
and transportation.
Product design strategy: Zara prepared only 15 to 25% products as advance to a season to
meet market demands, and 50% of the products are designed in between the season. It allows
the organisation to understand the customer expectations and opinions for product and make
change accordingly to improve the rest of the customers in the same season (Gallien et al.,
2015). Unique product design and distribution helps to achieve profitability.
Affordable price and larger distribution network: Zara has a larger distribution network
through physical stores and online presence whereas the price of the products and service is
5
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affordable for most of the people. Like other premium brands, the organisation has focused
on customer reach and satisfaction through sales.
Weaknesses
However, the business also has several weaknesses besides of customer base and larger
market share. Such weaknesses are essential to resolve or control to achieve proper use of the
strengths for profitability:
Self-contained distribution system: Unlike the raw material supply network, the organisation
has a centralised distribution system which is the main weakness for operational efficiency.
The organisation has a high cost and management complexities due to centralisation. Zara
controls the production, supplies, marketing and retailing as centralisation and so that it is
more prone to the unpredicted problems (Crofton and Dopico, 2012).
Imitator not a creator: Zara does not create the new fashion products with their innovations
and creativity, but it copies the luxury and branded products mostly presented in fashion
weeks to meet customer demands. The organisation provides high-quality products, but it has
no creating behind it. It might become a major weakness for the organisation to run out of the
market.
No advertising: With time, advertising is a major weapon to attract the market and spread the
words about products and services, but Zara has no annual investment in advertising. It is the
weakness, and the organisation is being shrunk to market coverage.
How unique capabilities link to competitive advantage
The organisation has a competitive advantage from the unique capabilities as it helps the
business to respond to the changes and demands in the market and attracts the customers for
products and services. The organisation can use the VRIO framework for internal business
analysis. The framework is effective to identify the potential uniqueness and capabilities the
organisation has to achieve competitive advantages (Lin et al., 2012). However, the model
has no information about strategic planning and execution to achieve the benefits.
VRIO framework
6
on customer reach and satisfaction through sales.
Weaknesses
However, the business also has several weaknesses besides of customer base and larger
market share. Such weaknesses are essential to resolve or control to achieve proper use of the
strengths for profitability:
Self-contained distribution system: Unlike the raw material supply network, the organisation
has a centralised distribution system which is the main weakness for operational efficiency.
The organisation has a high cost and management complexities due to centralisation. Zara
controls the production, supplies, marketing and retailing as centralisation and so that it is
more prone to the unpredicted problems (Crofton and Dopico, 2012).
Imitator not a creator: Zara does not create the new fashion products with their innovations
and creativity, but it copies the luxury and branded products mostly presented in fashion
weeks to meet customer demands. The organisation provides high-quality products, but it has
no creating behind it. It might become a major weakness for the organisation to run out of the
market.
No advertising: With time, advertising is a major weapon to attract the market and spread the
words about products and services, but Zara has no annual investment in advertising. It is the
weakness, and the organisation is being shrunk to market coverage.
How unique capabilities link to competitive advantage
The organisation has a competitive advantage from the unique capabilities as it helps the
business to respond to the changes and demands in the market and attracts the customers for
products and services. The organisation can use the VRIO framework for internal business
analysis. The framework is effective to identify the potential uniqueness and capabilities the
organisation has to achieve competitive advantages (Lin et al., 2012). However, the model
has no information about strategic planning and execution to achieve the benefits.
VRIO framework
6

The framework has mainly four dimensions to determine the uniqueness and capabilities-
value of the resources, rareness of the resources, imitation risks and organizational
competence.
Resources Value Rare Imitation Organization Competitive
advantage
Customer
loyalty and
service
network
84% sales are
powered by
23% customers
for revenue.
Strong
customer
loyalty.
Not yet
cracked by
competitors
It is being used
to generate
good impacts
on the business.
It provides
competitive
advantage for
medium-term.
Channel
management
and sales
force
Yes No It is prone to
actions of
competitors
The potentials
are not fully
utilized.
Sustainable
competitive
advantages
can be
achieved with
potential
utilization.
Pricing Good enough No It fluctuates in
market with
trends and
customer
demands
Yes, the
organization
monitors price
regularly
Positive price
change can
lead
temporary
benefits.
Digital
technology
Yes. The
organization
has strong need
of technology
to compete.
No.
Digitalization
is common for
most of the
businesses
It is imitable
by
competitors
The leading
position and
good brand
value in
industry.
Digital
technology is
essential but it
cannot deliver
sustainable
competitive
benefits
Stores and
corporate
strategy
alignment
Yes No Each store has
own
approaches to
attract
The
organization is
capable for
strategic
Still, much of
the changes
required.
7
value of the resources, rareness of the resources, imitation risks and organizational
competence.
Resources Value Rare Imitation Organization Competitive
advantage
Customer
loyalty and
service
network
84% sales are
powered by
23% customers
for revenue.
Strong
customer
loyalty.
Not yet
cracked by
competitors
It is being used
to generate
good impacts
on the business.
It provides
competitive
advantage for
medium-term.
Channel
management
and sales
force
Yes No It is prone to
actions of
competitors
The potentials
are not fully
utilized.
Sustainable
competitive
advantages
can be
achieved with
potential
utilization.
Pricing Good enough No It fluctuates in
market with
trends and
customer
demands
Yes, the
organization
monitors price
regularly
Positive price
change can
lead
temporary
benefits.
Digital
technology
Yes. The
organization
has strong need
of technology
to compete.
No.
Digitalization
is common for
most of the
businesses
It is imitable
by
competitors
The leading
position and
good brand
value in
industry.
Digital
technology is
essential but it
cannot deliver
sustainable
competitive
benefits
Stores and
corporate
strategy
alignment
Yes No Each store has
own
approaches to
attract
The
organization is
capable for
strategic
Still, much of
the changes
required.
7
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customers. alignment
Intellectual
property and
rights
Yes. These are
extremely
valuable
Yes as IPR
and other
rights are not
available to
competitors
and also rare.
Low risk but
industry
disruption
chances are
high
The
organization
has not used
IPR and other
rights properly.
It is
supporting
strong
competitive
advantages.
Brand
positioning
Yes No. Most of
the brands are
known to
customers.
It can be
imitated but
there is need
of large
budget.
Yes. Zara has
positioned
according to
customer
demands.
It can assure
short term
benefits.
From the analysis, the organisation has opportunities with effective use of the intellectual
properties and rights to achieve competitive positioning and brand recognition whereas the
organisation can use customer loyalty to achieve competitive advantages. The framework
suggests how the organization can improve and retain the profitability with effective use of
the resources and capabilities.
8
Intellectual
property and
rights
Yes. These are
extremely
valuable
Yes as IPR
and other
rights are not
available to
competitors
and also rare.
Low risk but
industry
disruption
chances are
high
The
organization
has not used
IPR and other
rights properly.
It is
supporting
strong
competitive
advantages.
Brand
positioning
Yes No. Most of
the brands are
known to
customers.
It can be
imitated but
there is need
of large
budget.
Yes. Zara has
positioned
according to
customer
demands.
It can assure
short term
benefits.
From the analysis, the organisation has opportunities with effective use of the intellectual
properties and rights to achieve competitive positioning and brand recognition whereas the
organisation can use customer loyalty to achieve competitive advantages. The framework
suggests how the organization can improve and retain the profitability with effective use of
the resources and capabilities.
8
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Q3. Strategy evaluation
Recent strategy of Zara- Cover developing market
Zara has a global presence either through physical stores or services through an online store.
The organisation has started operations in India and other developing countries. The secrets
of success are working in such countries also and reshaping the existing retailing businesses
and practices.
The organisation has opened new stores and offices along with franchise and a joint venture
with local businesses in such countries. The organisation has planned to achieve customer
market and satisfaction and attracted them toward quality products from the organisation.
The strategy to penetrate the market is simple enough: the organisation has focused on the
pricing and quality along with distribution (Crofton and Dopico, 2012). The organisation has
determined that the market has potentials to deliver high sales and profitability whereas
overall competition among branded clothes and accessories is low.
Zara has applied the strategy with proper understanding with strengths and weaknesses. The
organisation is facing the issue of high competition and new entrants in the developed market
but developing markets are opportunities to establish the roots. The organisation can use
brand image and reputation in such countries to attract the customers whereas the overall cost
on the production, distribution and marketing can be reduced to achieve effective profitability
through sales. Zara has used strengths such as brand values and customer loyalty to expand
the operations. Also, the strategy has power from suitable trading regulations among hosting
and destination country (Cortez et al., 2014). The strategy is also used to overcome the
weakness of centralisation of operations and lack of creativity in the business operations.
From the strategy, the organisation has increased the revenue by 20% at the end of the year
2018 whereas the overall increase in the customer base is determined to 8%. Zara has
identified that the market has values for higher sales and profitability and can be dominant
through effective pricing and quality in the products and services. The goal of the strategy
was to acquire new market and expand the services for higher profitability and stability in the
operations.
9
Recent strategy of Zara- Cover developing market
Zara has a global presence either through physical stores or services through an online store.
The organisation has started operations in India and other developing countries. The secrets
of success are working in such countries also and reshaping the existing retailing businesses
and practices.
The organisation has opened new stores and offices along with franchise and a joint venture
with local businesses in such countries. The organisation has planned to achieve customer
market and satisfaction and attracted them toward quality products from the organisation.
The strategy to penetrate the market is simple enough: the organisation has focused on the
pricing and quality along with distribution (Crofton and Dopico, 2012). The organisation has
determined that the market has potentials to deliver high sales and profitability whereas
overall competition among branded clothes and accessories is low.
Zara has applied the strategy with proper understanding with strengths and weaknesses. The
organisation is facing the issue of high competition and new entrants in the developed market
but developing markets are opportunities to establish the roots. The organisation can use
brand image and reputation in such countries to attract the customers whereas the overall cost
on the production, distribution and marketing can be reduced to achieve effective profitability
through sales. Zara has used strengths such as brand values and customer loyalty to expand
the operations. Also, the strategy has power from suitable trading regulations among hosting
and destination country (Cortez et al., 2014). The strategy is also used to overcome the
weakness of centralisation of operations and lack of creativity in the business operations.
From the strategy, the organisation has increased the revenue by 20% at the end of the year
2018 whereas the overall increase in the customer base is determined to 8%. Zara has
identified that the market has values for higher sales and profitability and can be dominant
through effective pricing and quality in the products and services. The goal of the strategy
was to acquire new market and expand the services for higher profitability and stability in the
operations.
9

Evaluation using SAF tests
The business strategy of the organisation is essential to evaluate on the SAF criteria as the
criteria can help to understand the potential values and returns from the practices. A good
business strategy must have to meet the three criteria as given below to achieve the desired
goals and objectives.
Suitability
It is one of the most crucial criteria to determine the success of the strategy as it can help to
determine whether the strategy is capable of determining the expectations of the business. It
identifies the suitability of the decisions and strategies in the business context and related
environments. However, suitability can be considered of several types according to type and
need of the business. For example, the strategy of Zara for business expansion is
environmentally suitable as the organisation can get new sources for raw material and can
optimise the cost of the production (Oxford College of marketing, 2019). The business
environment can be improved with low cost and high quality through the decentralisation of
the operations. Also, developing countries have a higher availability of the raw inputs so that
the organisation can achieve stable operations.
From the point of expectation suitability, the developing market has increased income, and
the people are highly oriented to the new products and services. The organisation has the
opportunity to meet the customer expectations for luxury and branded clothes and accessories
within affordable price. The organisational expectations for high sales and profitability also
can be achieved (Temas, 2019). Also, capability suitability shows that an individual can use
the organisational products and the organisation also has financial and other resources to
think about expansion.
Acceptability
It is all about to measure the risks, returns and stakeholder reactions from a particular
strategy. The financial and non-financial benefits can be considered as returns while
comparing with expectations of the stakeholders. For example, Zara has effective returns
while mapping stakeholders with power/interest matrix. The matrix shows that the strategic
outcomes have values from the proper balance of the power and interest the stakeholders
have on the strategy. Besides it, the cost-benefit analysis shows that the organisation has
10
The business strategy of the organisation is essential to evaluate on the SAF criteria as the
criteria can help to understand the potential values and returns from the practices. A good
business strategy must have to meet the three criteria as given below to achieve the desired
goals and objectives.
Suitability
It is one of the most crucial criteria to determine the success of the strategy as it can help to
determine whether the strategy is capable of determining the expectations of the business. It
identifies the suitability of the decisions and strategies in the business context and related
environments. However, suitability can be considered of several types according to type and
need of the business. For example, the strategy of Zara for business expansion is
environmentally suitable as the organisation can get new sources for raw material and can
optimise the cost of the production (Oxford College of marketing, 2019). The business
environment can be improved with low cost and high quality through the decentralisation of
the operations. Also, developing countries have a higher availability of the raw inputs so that
the organisation can achieve stable operations.
From the point of expectation suitability, the developing market has increased income, and
the people are highly oriented to the new products and services. The organisation has the
opportunity to meet the customer expectations for luxury and branded clothes and accessories
within affordable price. The organisational expectations for high sales and profitability also
can be achieved (Temas, 2019). Also, capability suitability shows that an individual can use
the organisational products and the organisation also has financial and other resources to
think about expansion.
Acceptability
It is all about to measure the risks, returns and stakeholder reactions from a particular
strategy. The financial and non-financial benefits can be considered as returns while
comparing with expectations of the stakeholders. For example, Zara has effective returns
while mapping stakeholders with power/interest matrix. The matrix shows that the strategic
outcomes have values from the proper balance of the power and interest the stakeholders
have on the strategy. Besides it, the cost-benefit analysis shows that the organisation has
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