Analyzing Zara's Global Business Environment: PESTLE and SWOT Insights

This report provides a detailed analysis of Zara's global business environment. It begins with an introduction to the global business environment and its influence on businesses, specifically focusing on Zara, a leading global retailer. The study then delves into Zara's external environment through a PESTLE analysis, examining the political, economic, social, technological, legal, and environmental factors impacting the company. Following this, an internal environmental analysis is conducted using a SWOT framework to identify Zara's strengths, weaknesses, opportunities, and threats. The report highlights Zara's cost leadership strategy as a key strength and its limited manufacturing centers as a weakness. Opportunities for market penetration and online channel expansion are also discussed, along with threats from competitors and brand imitation. The conclusion summarizes that Zara's global business environment has positively influenced its profitability and sustainability, emphasizing the importance of a global presence. Finally, the report includes references to the sources used for the analysis.

Global Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Presenting internal and external environmental analysis in the context of Zara....................1
CONCLUSION................................................................................................................................2
REFERENCES................................................................................................................................3

INTRODUCTION
Global business environment means the societal and environmental aspect of an enterprise
that are influenced by the forces worldwide. These global forces involve external and internal
factors which in turn closely influences business operations and functions. The present study is
based on Zara, a global leading retailer of clothing and fashionable accessories. Furthermore, the
study will provide deeper insight about environmental situation of ZARA through the means of
PESTLE and SWOT analysis.
Presenting internal and external environmental analysis in the context of Zara
External environmental analysis of ZARA: PESTLE
Political factor-these factors relates with the government rules, policies and procedures
that has a great influence on the activities of the business. Zara is the largest brand that follows
the vertical integration strategy, where it owns transport system, different factories and own
outlets. Therefore, it is essential for the firm to take care political decisions and they must know
about the import-export policies of the government. Stable political situation creates better
opportunities for the company to form the business roots in several countries.
Economic factors- Zara should be well aware about the economic growth, exchange rates,
taxation charges, inflation and tariffs, as it is the brand that doesn't sell its products to lower
classes, therefore, it is essential for them to determine that their brand is reasonable and
affordable in that specific market or not. This helps the management in knowing the probable
profit margins along with cost management.
Social Factors- Changing trends and the spending patterns of the customers are one of the
major important factors that the Zara should be familiar about (ZARA PESTEL Analysis, 2019).
These factors highly influence the working as the taste and references of the customer’s changes
with the fashion trends which lets the company to bring more innovations in the market to follow
the current and the future trends. As Zara is a global brand, it operates under the diverse cultures,
so it needs to take care about the cultural factors of the different countries to survive effectively
and efficiently.
Technological factors- Advancement in technology bring quality and standardization in
the product of the brand. Zara has adopted newer technology with the changing trend like it has
its own website on social media so that people can opt for online shopping. This makes the
interactive shopping with Zara.
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Legal factors- Legal formalities can impact the reputation of the company. Zara fulfills all
the legal laws of different countries across the globe for building a well-known brand image in
the consumer mind and in the overall international market.
Environmental factors- Any violation in the safety measure might be a negative impact on
the environment in the global market. Zara creates environmental friendly products like it uses
the organic fabric for its clothing segment which reflects a positive contribution by the firm
towards the society. In this way, ZARA ensures environment sustainability aspect while carrying
out business s
Internal environmental analysis- SWOT Strengths- the cost leadership strategy adopted by the Zara act as a big strength in
increasing its profit margin and to attain the competitive advantage over its competitors.
Wide distribution channel enhance the market share of the enterprise. Weaknesses- Zara has only one distribution and manufacturing center around the world
which becomes a weakness for it to ensure quick delivery of the products (Zara SWOT
Analysis, Competitors & USP, 2019). The corporate does not spend much on the
advertising and promotional activities which leads to lack in attracting the large
customers. Opportunities- It could adopt market penetration strategy for gaining the large customer
base worldwide. It can create more online channels for selling its product so that
increased revenue can be ascertained by the firm.
 Threats- the global and the local competitors like H&M, Uniqlo etc. create a high threat
for the Zara in operating its business with stability. It is Spain based company and has a
huge store in Europe which leads to decline in the revenues of the corporate. Imitation of
the brand can reduce the sale of the entity.
CONCLUSION
From the above report it is summarized that global business environment of Zara has reacted
positively and favorably in increasing its profitability and sustainability. Besides this, itr has
been articulated that operating business worldwide enables enterprise in enhancing their
goodwill and global presence.
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REFERENCES
Online
ZARA PESTEL Analysis. 2019. [Online]. Available through:
<https://notesmatic.com/2017/03/zara-pestel-analysis/>
Zara SWOT Analysis, Competitors & USP. 2019. [Online]. Available through:
<https://www.mbaskool.com/brandguide/lifestyle-and-retail/3814-zara.html>
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