Zara's Macro Environmental Impact: Business Analysis Report

This report provides a comprehensive analysis of Zara's macro-environmental influences, examining the impact of external factors on the company's operations and strategic decisions. The report begins with an introduction to the business environment and a brief overview of Zara, a leading S...Read More

Macro Environmental
Influence

Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
Different types of organisation....................................................................................................1
Relationships between different functional areas along with its advantage and disadvantage.. .3
PART 2............................................................................................................................................4
Internal and external analysis to strengths and weaknesses of organisations..............................4
Interrelation of strengths and weaknesses with external macro factors......................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment is majorly determined like an aid of whole intrinsic and extrinsic
component that has oblique influence on determination devising of firm. These components
affect potential of company to manage effective customer relations. For this document, the
selected private enterprise is Zara that is leading Spanish apparel retailer and generally specialise
in to fast fashion (Belas and et. al., 2018). It offers several products like clothes, home product,
footwear, beauty product and accessories etc. The document will considered information about
different kinds of organisation, relationship among different functional areas with its pros and
cons. Further, it will explain about PESTEL and SWOT analysis and the interrelation of
strengths and weaknesses with macro and micro environmental factors.
PART 1
Different types of organisation
There are mainly three kinds of company that are defined as under:
Public sector: It is referred as entities which developed for administrating process and policy as
well as operates demands which help a government to accomplish their goals. One of the
appropriate examples of this is NHS; it was incorporated in 1948 within Wales, England and
others. It majorly renders healthcare service to their patient according government policy and
laws.
 Purpose: The main motive of this specific public venture is to facilitate high standard of
competent and excellence facilities to their patients and service taker. Along with this, its
purpose is to great quality care which is safe, focused and beneficial to patient.
 Size: In NHS, there are 106,430 doctors, 285, 893 nurses and health care visitors are
employed with about 30,000 management bodies and others. It is a large sized company.
 Scope: It largely provides their facilities to more than 64.6 million people in UK
(Hamilton and Webster, 2018). In current era, they are searching to explore their large
number of facilities where they are already operating such Wales, Scotland, Northern
Ireland and England.
Types of public sector organisation:
 Departmental undertaking: It is mentioned to be one of the tradition types of public
sector firm which is operated, executed and financed by other government venture.
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 Public or statutory corporation: It is a type of enterprises that include within existence of
Parliament special act. The main goal of it is to ensure wellbeing of community.
 Legal Structure: NHS is Public corporation which is developed with some form of
special parliament funded support (Čepel and et. al., 2018). The national authority offer
them total support facilities for generate more public service option such as medical test,
treatment etc.
Private sector: It is commences a essential economical part of nation. These kinds of company
are run by sole proprietors, entities and unit of individual in term of partnership. For example,
Zara is a private company and leading Spanish apparel retailer and basically specialises into fast
fashion.
 Purpose: The main aim of private venture is to acquire profit and be a growth entity in
potential market. The key purpose of Zara is to manufacture latest designer garments that
attained consumer needs.
 Size: In this firm, there are approx 176,611 employees make their contribution in running
the business.
 Scope: Respective Company is a global firm that runs in to 88 nations across the world.
Types of private sector organisation:
 Sole proprietorship: When an organisation by an individual then it is acknowledged as
sole proprietorship where their owner shares entire beneficiaries and costs by them self. It
is also considered to be the tradition and simplest form of executing business.
 Partnership: When two or more than people are executed collectively with intent to earn
desired profitability and development is acknowledged as partnership agreements that
considers sharing of profits, capital progression etc.
 Legal Structure: Zara comply public limited company legal framework and this is listed
on London Stock Exchange. Moreover, it is a limited liability venture that shares can be
sold and traded to customers.
Voluntary sector: It is majorly formed with aim to support and advance develops community
without goal to earn profit (Brennan, Canning and McDowell, 2020). For example, Oxfam, it
was incorporated in 1942 and wants ro develop global poverty, disaster and others.
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 Purpose: The key aim to cooperate by offering primary liberty and rights to needed
people and society. The main aim of the venture is to improve a lasting solution for
scarcity and inequality (Hans, 2018). Moreover, participating in global change movement
for improving future that is safe and free from poverty.
 Size: Oxfam is medium sized firm which facilitates health services in UK to solve
poverty, pro-migration and other. Along, it has approx 10,000 people who contribute on
fighting against poverty in crosswise 90 nations. Also, they work into 20 independent
charitable companies in to nation.
 Scope: It execute hard to fight towards poverty in across 90 nations and want to develop
global poverty, disaster and other, It is also a global venture which operates in number of
locations of different countries across world.
 Types of voluntary organisation:
o Unincorporated association: It is a unit of two people which is combined by
mutual understanding for legal aim to conducted an appropriate goal or not. It
does not have any legal right and a separate entity.
o Charitable trust: It is mainly formulated to accomplish substantial societal
advantages for individual. It also acknowledged as unchangeable trust which is
framed for charitable purpose.
 Legal Structure: This venture is unincorporated in unincorporated association that was
framed with an agreement between several individuals and group for intent to execute
towards injustice activities and poverty.
Relationships between different functional areas along with its advantage and disadvantage.
In company, several sections are executing to collect in reference to attain their aims in
effective form. Entire these operational function activities are based on its organisational
structure (Gaganis, Pasiouras and Voulgari, 2019). Zara utilise hierarchical organisational
structure where communication flows differ in one functional unit to others. The basic cause
toward this framework is large and several layers where different departments are executing at
diverse areas.
Marketing and HR: In Zara, both functions play an effective role. HR division help
marketing venture in filling the vacant position of this department by hiring skilled employees.
Along with this, firing, retaining and rewarding workers so that they perform their work
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appropriately. Whereas marketing play an effective role for endorsing firm’s services in to target
market and analyse consumer’s needs regarding services (Halbert and Ingulli, 2020). Both
execute together in respeectove venture to measure marketing staff demands after organise
process of hiring where skilled people are hired to attain business goals.
 Advantages and disadvantages: It assists Zara to publish its products in effective form
through skilled workers and help in attaining set objective. But sometime both divisions
acknowledge each other need that affects Zara operations unfavourably.
Finance and marketing: Both function in Zara execute together to attain enterprise’s growth
options after efficient marketing evaluation. In specific context, finance function offer them
required fiscal support as per market division needs. Whereas marketing unit execute for finance
to analyse fund raising opportunities. Whole these activities aid Zara to measure market
development regions where they may operates its new shops in simple form.
 Advantages and disadvantages: Due to having effective relation among marketing and
finance function, the organisational goals can be achieved in effective manner. But due to
lack of fund marketing function cannot capable to execute its operations like promotion
and other which affect efficiency of firm.
PART 2
Internal and external analysis to strengths and weaknesses of organisations
PESTEL analysis of Zara
Political- Government policies of taxation, licensing and other for controlling venture. Zara is a
global venture, so there execution is influenced by laws and political actions of country.
 Positive impact: In UK, stability in political environment is the factor which favourably
impacts Zara in form of running business internationally and develop consumer base.
 Negative impact: Government has formulated employ law which supermarket should
offer mix of employment that is lower and huge recompense, flexible (Brotspies and
Weinstein, 2019). Therefore accomplish need of several individual belonging to section
that are student, middle and lower group of people.
Economical- This aspect consider components such as economic development, interest rate,
inflation, and deflation, currency rate and many more.
 Positive impact: In UK, the country has developing GDP that beneficial for Zara to
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make development in its business.
 Negative impact: Fiscal organization like banks, make modification in their interest
rate for managing fund which create negative impact in term of business expansion.
Social- It consist demographic components, needs, demands, culture, trends and beliefs as well
as changes in consumer preferences etc.
 Positive impact: In UK, consumer prefers to buy products from supermarket where they
can get all things at one place (Calabrese and et. al, 2018). It helps Zara in developing in
customer base.
 Negative impact: In current time changes are occurred in trends and fashion so taste and
preferences of target audiences are also changed which unfavorably affect Zara in term of
its more production of wastage.
Technological- It considers, advance technology, R&D, technical innovation and artificial
intelligence etc. Positive impact: In UK, customer prefer online shopping due to less time and it also
favorably influence respective company in term of increase number of consumer. Negative impact: In term of high use of internet, it is being determined that online
delivering of crucial facts can be utilised through hackers regarding Zara which affect its
revenue.
Environmental- It considers ecological factor like weather, climate, environmental laws and
many more.
 Positive: In Zara, the administration of the venture utilise wastage reduction activity and
also determined to join the deal to minimise their carbon footprint that frame a positive
influence over atmosphere.
 Negative: Zara is a fast fashion brand so that they rapidly jump on trend that increase the
level of wastage and unfavourably affect business sustainability (Jevšenak, 2019).
Legal- It refers to regulations and legislation which are developed by government for business
ventures.
 Positive: In Zara, the administration follows employment and consumer protection law
for effective running of business.
 Negative: The enterprise has been charged of stealing designs and clothing concepts form
other ventures which affect its image and position in particular market.
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PESTEL analysis of NHS
Political- The political environment in the nation is affecting at NHS, such things that are
favourably and unfavourably influence the political atmosphere of NHS are as:
 Positive: The business of NHS is positively affected by political stability situation of UK
(Krajnakova, Navickas and Kontautiene, 2018).
 Negative: the administrators of NHS are not capable to concentrate on long term plan
because the regular changes are occurred in poetical environment which affect
development of enterprise.
Economical- It consist economic development, interest rate, employment and unemployment
rate and many more.
 Positive: In UK, government frame certain measures to handle economic crash so
undercutting the budget measure favourably influence this venture to deal financial
issues.
 Negative: Due to COVID 19 pandemic and Brexit, the cost of commodities are
maximised which unfavourably affect NHS business during purchasing.
Social- Social environment of the country in NHS is exist will analyse in the change that they
need to make. The impact of few modifications is as:
 Positive: NHS is determined to be situated in the locality so that people can reach the
hospital when they need urgent care.
 Negative: Due to corona virus pandemic, patents are maximised and due to limited
capacity of employees the firm negatively affected.
Technological- Technology is budding quickly and the NHS should implement it so that they
can stay ahead in the competition.
 Positive: Technology favourably influence NHS in form of providing surgical
instruments and creative machinery associated to medical facilities.
 Negative: High utilisation of technology in form of administrating patient and consumer
data can unfavourably affect the firm (Luiz, Ganson and Wennmann, 2019).
Environmental- Each company is legally and ethically responsible to contribute to the
environment within they survive.
 Positive: NHS uses disposable surgical instruments so that no harm is caused to the
environment.
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 Negative: The current corona virus crisis influence the workplace of the company in form
of generating stress and stress on employees.
Legal- The laws and legislations that are included by NHS for its efficient operating. The
influence of them as:
 Positive: The NHS has to produce the accounts every year so that the government can
manage a track of the taxes that pay and the profits that they earn (Kokodey, Gnezdova
and Lomachenko, 2018).
 Negative: Modification in laws and government rules generate unfavourable influence
over business of NHS and expectations of patients.
SWOT analysis of Zara
Strength Weakness
 Zara has approximate 2000 stores
across different parts of world
 Zara is one of biggest Spanish retail
brands
 Zara has effective supply chain
management process in its functions
like operations and manufacturing are
vertically integrated.
 Zara uses very minimal advertising and
marketing techniques as compared to
its competitors.
 There is high competition and that is
leading to limited market share & fats
brand switching (Popescu and Popescu,
2019).
Opportunities Threats
 There are many different global
markets that can be explored by Zara.
 There is opportunity in expansion in e
commerce and online marketing.
 Apart from clothing, footwear,
handbags, accessories, perfumes there
can be other product segment where
Zara can expand such as electronics or
superstores.
 There are fake imitations that are
affecting brand image of Zara.
 There is very quick switching of
consumers is taking place because of
large number of competitors in industry
to which Zara belongs.
 Economic turn-down because of events
such as COVUID-19 virus has affected
the sales of all brands as people are
focusing towards necessities and it is
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going to impact upcoming future sales.
SWOT analysis of NHS:
Strength Weakness
 National health services are a public
funded healthcare system in England.
 It is second largest single payer health
care system in world.
 NHS is providing health care services
to all English residents and also
residents who are from different
regions of UK.
 They are offering most services free of
cost at point of use to their customers.
 There is financial issues because of
most services are offered free of cost
that includes emergency treatments &
treatments for infectious diseases that is
free for most people including visitors
(Katz and Green, 2018).
Opportunities Threats
 NHS is a public funded organisation.
There is a opportunity that there can be
expansion by using some private
sources of funding to increase their
sources of finance.
 There are other institutions such as
private health care that are running to
NHS. They are catering to needs of 8
percent of population this is a support
of services of National health services.
Any other institution like this can be
established for providing support to
National health services.
 NHS is funded from general taxation
and there is very small contribution
from national insurance payments. Fees
is levied according to changes taking
place in Immigration Act 2014. so such
frequent changes can impact the whole
policy structure in which NHS is based
(Belas and et. al., 2018).
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Interrelation of strengths and weaknesses with external macro factors
International among macro and micro factors of ZARA
Political: Strengths: In UK, there is political condition that positively impacts Zara in term of
global business expansion. Weaknesses: In UK, national authority modifies policy and laws which affect the
administration of respective venture’s business (Hamilton and Webster, 2018).
Economic: Strengths: The situation of inflation in UK assist Zara to gave effective range if
consumer to buy goods. Weaknesses: Unemployment rate of respective venture affect profits because individual
power shift to reprehensible goods. For it, they will not require to purchase commodities
from different cheap outlets.
Social:
 Strengths: Online shopping option help in developing profits and customer base.
 Weaknesses: The venture provides goods and services at affordable cost that outcome in
to people that products may not be of effective quality.
Technological: Strengths: Within company, purchasers are offered great tech experience and deposit by
online form like card and other options. Weaknesses: E-commerce is due to development of internet which affect the sales and
profits of Zara.
Environmental:
 Strengths: The management of Zara work towards waste minimization and reduction of
carbon foot prints.
 Weaknesses: Due to fast fashion venture the waste maximize that affect environment and
financial condition of it (Čepel and et. al., 2018).
Legal: Strengths: The venture effectively follows employment laws which help in effective
running of venture.
 Weaknesses: Copying clothing design and concepts affect its images due to break
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intellectual property rights.
International among macro and micro factors of NHS
Political:
 Strengths: Political stability is one of the key factors which favorably influence NHS and
be strength of it.
 Weaknesses: Lack of assets and inflation due to Brexit are some weakness of NHS
(Brennan, Canning and McDowell, 2020).
Economical:
 Strengths: The firm offering its facilities at reasonable cost which develop its financial
situation.
 Weaknesses: Lack of assets and diverse economic laws, NHS under stress to reduce pay
of its worker which increase turnover of workers.
Social:
 Strengths: Cause of having more patients for its good services, the brand image and
market position of firm develop.
 Weaknesses: The firm do not manage the demand cause of increasing population.
Technological:
 Strengths: NHS has been able to use technical machinery to provide effective and speedy
healthcare services to patients.
 Weaknesses: Ineffective administration of training influence the utilisation of technology
through workers in their medical facilities.
Environmental:
 Strengths: The firm utilizes decomposable and recyclable material in its surgical
materials.
 Weaknesses: NHS is a great participator to the toxic waste that is collecting throughout
the world.
Legal:
 Strengths: The company appropriately follow law due to which its business records in
term of accounting statement are accurate and tracked by the government (Hans, V.B.,
2018
Gaganis, Pasiouras and Voulgari, 2019).
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 Weaknesses: Patients who are unhappy and unsatisfied with the health services of NHS
are taking their complaints in legal level (Halbert and Ingulli, 2020).
CONCLUSION
From the above discussed aspects it can be concluded that there are different objectives and
legal structures of organisations. There is always a interrelationship present between functions of
organisation and their link with structure of organisation. External environment always consist of
factors that can lead to both positive and negative impact on business functions. For this
PESTLE analysis is the most appropriate framework that can be applied in order to get insights
of the different factors that are part of this macro environment. Political and legal factors are
affecting majorly and strength can be used for purpose of dealing with external strengths that can
be depicted by determination of interrelationship between such factors.
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REFERENCES
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Kokodey, T., Gnezdova, I. and Lomachenko, T., 2018, October. Modeling the global business
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