Case Study: Zara's Leadership, Environment, and Social Responsibility

This case study provides an in-depth analysis of Zara's business strategies, focusing on its leadership and operating environment. It includes a SWOT analysis, examining Zara's strengths, weaknesses, opportunities, and threats, as well as a PESTLE analysis, evaluating the political, economic, social, and technological factors impacting the company. The study assesses how changes in PESTLE factors influence Zara's opportunities and threats, and how the business leverages its strengths to address weaknesses. It also recommends a suitable leadership style based on Daniel Goleman’s framework to achieve business objectives and discusses Zara's corporate social responsibilities. The reflection report summarizes the key insights and learnings from the analysis.

Business Leadership and
Business Environment
Case Study
Table of Contents
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(1) Internal and External Analysis of ZARA (SWOT & PESTLE)...............................................3
Swot analysis...................................................................................................................................3
Pestle analysis..................................................................................................................................4
(2) Evaluation of the changes in the factors of PESTEL which has influenced the opportunities
and threats of the business. Also, the way in which business is addressing their strengths to deal
with the threats and weakness influencing their opportunities........................................................5
(3) Recommend a suitable leadership style from the leadership styles of Daniel Goleman’s
(2000) to ascertain the business objectives......................................................................................6
(4) Corporate Social Responsibilities in the context to Zara...........................................................8
(5) Reflection report.........................................................................................................................9
References......................................................................................................................................10
Books and journals....................................................................................................................10
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(1) Internal and External Analysis of ZARA (SWOT & PESTLE)
Swot analysis
It is a strategic method used by managers to analyse company’s internal situation so that it can
get benefits from external factors. Zara being leading apparel retail firm perform SWOT analysis
on regular basis so that it can retain its position and grow in industry (Jermsittiparsert, 2020).
Various elements of this analysis are as follows:-
Strength:- it include what firm do well, what is unique to it etc various strength of zara
are:-
 Fashionable and unique designs
 Presence in most of the countries
 Innovation used in designs
 Low cost manufacturing
 Increased brand value
Weakness:- this factor comprises of where company can improve, where it is not
efficient, how others see them weak. followings are weakness:-
 Advertisement
 Some low ethical workings
 Particular segment of population as customers
Opportunities:- it comprises of what factors it can take benefits of, how to convert any
opportunities into benefits. Opportunities are as follows:-
 E-commerce
 Potential of its customers
 Business expansion
 Going with trends
 Capturing un-touched market segment
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Threats:- It include anything which have potential to effect business negatively.
 Innovative advertisement by other brands
 Cut-throat competition
 Fluctuation in exchange rates of currency
 Negative attestation by others
Managers of Zara should consider all these aspects and can try to eradicate its weakness
by addressing them properly thus converting them into strengths and they should catch every
opportunity they get by being aware of any threats.
Pestle analysis
It is an analysis tool used by managers of firm to gain macro view of industry’s environment
and work accordingly. This framework let managers take into consideration all external factors
that effects business operations and form policies through which they can grow (Bailey, Mankin
and Garavan, 2018). In this we are going to review pestle framework of Zara which are as
follows:-
Political: - This element includes factors such as governmental policies, international
relation of government etc which effects Zara in following ways:-
 Positive – Favourable changes in governmental policies may fetch some benefits to
them.
 Negative – Constant changes in government may make firm’s policies instable.
Economical:- this include changes in exchange rate, credit cost, inflation and deflation Zara
gets effected in following ways:-
 Positive – Decrease in cost of labour may reduce cost of production of Zara.
 Negative – Fluctuation in exchange rates, inflation and deflation may shake firms
financial stability (Noor, Adi, and Kamaruddin, 2018).
Social:- This factor includes various elements such as demography, age structure in market,
purchasing capacity etc which effects Zara as under:-
 Positive – Young adult age structure of market plus higher purchasing power of
customers may be profitable of Zara.
 Negative – Constant changes in taste and preferences of customers may disturb
production pattern.
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Technological:- This is prime factor nowadays which include up gradation of machinery,
innovation in technology etc this influence Zara in following ways:-
 Positive – This advancement let Zara improve their effectiveness and efficiency of
production and distribution.
 Negative – This may cost heavy to firm as there are constant changes in technology
in this modern world.
(2) Evaluation of the changes in the factors of PESTEL which has influenced
the opportunities and threats of the business. Also, the way in which
business is addressing their strengths to deal with the threats and
weakness influencing their opportunities.
Pestle factors are various macro factors that may affect businesses internal plans, policies
thus overall working of it. Here we are going to evaluate how changes in pestle factors
influenced strength, weakness, opportunities and threats of Zara, PESTLE factors which we are
taking are political, economical and technological which are as follows:
Political: - this factor includes tariffs regulation, trade restriction, taxation policies and political
stability. This factor decide the degree to which government control any industry or firm
(Gröschl, Gabaldón and Hahn 2019) For example change in government may introduce new
taxation policies which affect company’s revenue generation system.
 Strength to neglect threat: - biggest strength of Zara is that it is a Spanish brand which
enjoys benefits of functioning business inside European Union. In political context
biggest advantage is country’s vast trade agreements this let Zara ship its products at very
low cost, which let them neglect threats of market dominance from giant competitors
such as Prada, Gucci, LV etc.
 Weakness affecting opportunities:- major weakness of Zara according to political factors
are that it advertise and market its products less as compare to competitors because of
some political restriction which restrict them to advertise their products freely. They can
find opportunities on social media or at any other platform where governmental
restrictions are less and they can reach their customers through advertisement.
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Economical:- this factor include all those matters which are related to foreign exchange rate,
fluctuation in wage rates, variation in supply of money, increase in credit cost etc (Caswell,
2019) For example variation in foreign exchange rate may make Zara products expensive in one
country and cheap in other and to overcome this they have to incur cost for universal pricing.
 Strength to neglect threat: - Zara being Spanish brand make them to have low cost
labour as Spain has huge unemployment, they can work on this to reduce cost of
production which let them neglect threat of reduced profit because of competitive price
market. Thus it can work on this strength of price advantage and lead the market.
 Weakness affecting opportunities: - one of the major weaknesses of Zara is that people
think Zara as an expansive brand, so they prefer to buy less from them. It should see
opportunity of reducing their price and capturing more markets and destroy all myths
related to pricing which increase their revenue.
Technological: - this factor includes technological advancement, machinery up-gradation,
artificial intelligence, machine learning etc. Various companies use technology to get edge in
market, they also use various data related to customers through technology to get visible benefits.
Zara being faction brand must use this to keep itself up-to-date with trends.
 Strength to neglect threat: - Main strength of Zara is that it maintains its website as well
as social media accounts by posting regularly about their new launches which make their
online presence strong (Joiner, 2019). That helps reduce threat of fake imitation as
customer can directly place their order through website and can also verify product.
 Weakness affecting opportunities: - limited use of online data available about customers
in formulation of strategy to place product is major weakness of Zara, as this make Zara
lack behind in proper product placement. They can develop opportunities from this by
keeping eyes on strategy of others in market and develop their own analytical team to
work toward this.
(3) Recommend a suitable leadership style from the leadership styles of
Daniel Goleman’s (2000) to ascertain the business objectives.
A management leadership style is a leader's approach of supplying direction, imposing
plans, and motivating people. It basically helps out the leader to attain the business objectives
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effectively as well as efficiently (Piscicelli, Ludden and Cooper, 2018). The different leadership
styles based in Daniek Goleman are explained below:
 Affiliative Leader: This form of the Goleman Leadership Styles is involved with
harmonizing the group while there may be a terrible ambiance. In this management style,
the chief attempts to remedy conflicts in the organization via way of means of trying to
lead them to collaborate. The purpose of the affiliative chief is to create a group in which
all and sundry feels valued and feels a part of the group.
 Democratic Leader: This style appreciates the contributions of each team member,
along with their participation in process of decision-making. For a pacesetter or a leader
to behave as a democratic leader, she or he need to make sure of excessive worker
engagement earlier than this style may be useful. The democratic management style of
leadership is beneficial whilst a leader is depending on the expertise of the team
members.
 Commanding Leader: while a leader tells an worker to execute a selected task, it's miles
predicted that the worker completes the challenge with out asking questions and with out
complaining. Many times, while this kind of management style is utilized, it's miles best
powerful for a quick duration of time.
 Pacesetting Leader: This management style is involved with effects and tremendous
work. Many times, the leader serves as an example. The participants of a group are
subsequent anticipated to supply the preferred pleasant of paintings (Megheirkouni, and
Mejheirkouni, 2020). Leaders assume the group to work independently and normally
handiest require weekly or month-to-month updates approximately the popularity of a
project. Team participants are due to their independence anticipated to supply wonderful
effects. Leaders with this management style normally work in a exceedingly capable
group with group participants who're exceedingly engaged.
 Authoritative Leader: The authoritative leader style of the Goleman Leadership Styles
is constantly involved with undoubtedly energizing the team to attain targets that make
contributions to attaining organizational goals (Moralee, and Bailey, 2018). This
leadership style could be very powerful for motivating team members. These sorts of
leaders are regularly stimulated due to their enjoy and contributions to the field.
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 Coaching leader: This form of leadership style of the Goleman Leadership Styles is
concerned with the improvement of group members. The training leader try and discover
the strengths and weaknesses of personnel and inspire them to enhance their capabilities
and capabilities. This leadership style is consequently typically concerned with the long-
time period purpose of the organization, and the way personnel can make contributions to
attaining those goals.
In context to ZARA, the company is using the authoritative leadership style in order to achieve
the objectives of the business. The main reason behind using this leadership is that it helps the
leaders to motivate the team on a constant note. Also, the leaders of this type are more focussed
towards contributing towards the end goal of the company in the best possible manner.
(4) Corporate Social Responsibilities in the context to Zara.
CSR activities refer to a company's "corporate social responsibility." A company is an integral
aspect of society. As a result, a business enterprise should conduct business and produce money
in a way that satisfies society's aspirations. As a result, social responsibility refers to business
people's voluntary efforts to contribute to social well-being (Browne, 2018). Businessmen make
use of the resources available in society and earn money from its members, thus they must
provide something for the society in return. Corporate social responsibility is supported by a
number of arguments. Because business is a product of society, it must respond to the needs of
society in order to survive and expand in the long run. In the long run, a company's reputation
and goodwill can be improved. It may not be able to exist if it engages in unfair commercial
practises. By voluntarily taking on social duties, businesses can avoid the pitfalls that come with
government rules. A firm has valuable financial and human resources that can be put to good use
in tackling societal challenges. It is the commercial enterprise's social obligation to improve
people's quality of life and level of living. As a result, businesses will have a better
neighbourhood in which to conduct business (Anning-Dorson, 2018). Some social issues, such as
pollution, have been caused by businesses themselves. As a result, it is the moral responsibility
of business to address such societal issues. In context to Zara, the business organization is
committed to the long-term enhancement of society and the environment with which it interacts.
Zara's programmes include a 20 percent reduction in power use in all of its stores, an automatic
recycling hanger system that replaces processed and plastic items in its stores, and the use of
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ecological fabric and natural cotton in all of its products. Zara hopes to contribute to the long-
term sustainability of society and the landscapes with which it interacts through its commercial
form. This commitment to the environment is part of the institution's social responsibility policy.
Zara conserves energy and takes great effort to make its stores environmentally friendly. They
are cultivating one-of-a-kind eco-friendly control styles for their stores. This control version
recommends actions to be taken in all phases, starting with the layout of the building. Baggage
made of paper or biodegradable plastic The majority of the luggage Zara provides to customers
is made of paper. However, plastic bags are only used in a small percentage of cases, such as for
promotional purposes (Peters and Kallmuenzer, 2018). All of the plastic bags they use are
biodegradable, which means they decay in a natural, organic way, avoiding the pollution caused
by conventional plastic. All animal goods, including fur and leather, sold at Zara are derived
entirely from animals kept in cow form and never from animals slaughtered for skin sale.
(5) Reflection report
From the above report, I have understood that I is highly important for any company to conduct
the PESTEL and SWOT Analysis as it helps the business organization to understand the internal
as well as external environment in a very effective manner. I believe that pestel and swot
analysis are critical tools that helps an business organization to assess the business environment
and strategize accordingly. Also, if I consider the different leadership styles, in consideration to
Zara, authoritative leadership style is the best suitable ne because this leadership helps the
leaders to motivate the team on a constant note. Also, the leaders of this type are more focussed
towards contributing towards the end goal of the company in the best possible manner. The
respective company is also highly focussed towards contributing to the society so that it can
build a sustainable and effective business model. The respective company is trying its best to use
all the sustainable ways which should not harm the environment in any manner and positively
affect the business environment as well. The different strategies which are required to keep the
environment and the surrounding safe have been adopted by the company in order to have
efficient corporate social responsibility.
In context to the business organization of Amazon, applying the above theories helps in
understanding the importance of running the business in a effective and efficient way. Main
strength of Amazon is that it maintains its website as well as social media accounts by posting
regularly about their new launches which make their online presence strong. Also this company
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have the strongest network of distribution that makes it business model even more efficient as
compared to is competitors in all the manners. Also, the respective brand is also contributing its
part in corporate social responsibility sector so that it can also become a part of a responsible
society.
References
Books and journals
Jermsittiparsert, K., 2020. Leadership and Industry 4.0 As A Tool to Enhance Organization
Performance: Direct and Indirect Role of Job Satisfaction, Competitive Advantage and
Business Sustainability. In Agile Business Leadership Methods for Industry 4.0. Emerald
Publishing Limited.
Bailey, C., Mankin, D. and Garavan, T., 2018. Strategic human resource management. Oxford
University Press.
Gröschl, S., Gabaldón, P. and Hahn, T., 2019. The co-evolution of leaders’ cognitive complexity
and corporate sustainability: The case of the CEO of Puma. Journal of Business
Ethics, 155(3). pp.741-762.
Caswell, A. S., 2019. A Qualitative Study of Student Leadership Development via Postsecondary
Collegiate Choral Instruction (Doctoral dissertation, Capella University).
Piscicelli, L., Ludden, G. D. and Cooper, T., 2018. What makes a sustainable business model
successful? An empirical comparison of two peer-to-peer goods-sharing
platforms. Journal of cleaner production, 172. pp.4580-4591.
Moralee, S. and Bailey, S., 2018, May. Beyond hybridity in clinical leadership: a case study of
medical curriculum change. In 11th International Organizational Behaviour in Health
Care (OBHC) Conference: Coordinating Care Across Boundaries and Borders.
Browne, D. R., 2018. Leadership Strategies for Improving Supervisors' Performance (Doctoral
dissertation, Walden University).
Peters, M. and Kallmuenzer, A., 2018. Entrepreneurial orientation in family firms: The case of
the hospitality industry. Current Issues in Tourism, 21(1). pp.21-40.
Anning-Dorson, T., 2018. Innovation and competitive advantage creation: The role of
organisational leadership in service firms from emerging markets. International
Marketing Review.
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Megheirkouni, M. and Mejheirkouni, A., 2020. Leadership development trends and
challenges in the twenty-first century: rethinking the priorities. Journal of Management
Development.
Joiner, B., 2019. Leadership agility for organizational agility. Journal of Creating Value, 5(2).
pp.139-149.
Noor, H. M., Adi, M. N. M. and Kamaruddin, N. K., 2018. Fostering innovative workforce
behavior through transformation leadership: A case study among Enterprise 50 award
companies. Advanced Science Letters, 24(5). pp.3279-3285.
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