Zara: Business Strategy Analysis and Recommendations Report

This report provides a strategic analysis of Zara, a prominent fast-fashion company, addressing key issues such as lack of advertising, product imitation, changing customer preferences, and sustainability concerns. The report identifies Zara's existing vertical integration model and its connection to the company's mission. It explores two strategic alternatives: differentiation and adjacent businesses, evaluating their advantages and disadvantages. The report recommends a growth and product differentiation strategy, emphasizing the importance of innovation, increased advertising, and expanded product lines to enhance Zara's competitive advantage and customer satisfaction. The chosen strategy aims to fulfill financial objectives by improving revenue and brand image. Finally, the report discusses potential issues related to the implementation of the selected strategies.

Business Integration

Executive Summary
Business strategy is tactic to improve the existing process of any organisation. Every firm
requires an effective business strategy to compete with rival. In the present report, how Zara
develop its strategic plan to overcome the issue has been systematically addressed. In addition to
this, various strategic alternative's option and strategy has been also discussed which help Zara in
improving its existing business. Differentiation is the strategy by which organisation start
producing different products from their competitors in order to gain competitive advantage. The
organisation is adopting differentiation strategy which helps them to stand different in the
market. It helps the venture to produce innovative products by which they can attract and retain
large customers. The firm is facing lots of problems such as lack of advertisement and
promotion, limitation of the Zara product, changing customer taste and preference and
sustainability of the fast fashion. In order to remove these problems, they have adopted
differentiation strategies so that they can attract large target market and have competitive
advantage.

Table of Contents
Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................1
4 Brief issue identified in the Zara .......................................................................................1
5 Identification of the existing strategy and its connection with company vision and mission..2
6 Two viable strategic alternative...........................................................................................3
Advantage e and disadvantage of the strategic alternatives...................................................5
7. Recommendation on strategy and why it is important.......................................................5
(a) Description on selected alternative strategy and discuss why its chosen over others. .....5
RECOMMENDATIONS.................................................................................................................7
(b) Description on how these strategies helps in manner to full fill financial objectives of
Business enterprise.................................................................................................................7
8. Discussion on issue due to implementation of selected strategies.....................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
In the present time, there is huge competition in the market through which organisation
develops their own business strategy to compete with rivals. In order to survive in the
competitive market, firm required to understand its actual goal of business. With help of
business environment analysis and internal audit company can easily understand its own
capability and competency. In the present report, significance of the business integration has
been systematically addressed with respect of Zara company. It is own of the most well known
international fast fashion company which delivers high quality of clothing and accessories. This
assignment has done according to the assessment one under which various issue of the Zara has
been identified. On the basis of the issue identified in the assessment one, a systematic strategic
plan has been developed for the cited venture by which all issue will overcome in the future and
zara can attain its determined objective in an effective manner.
4 Brief issue identified in the Zara
As per the discussion in the assessment one, it has been identified that Zara is one of the
most international fast fashion corporation which delivers the high quality of fashion accessories
and clothes to the customers. It has more than 1830 stores in the more than 82 countries. It has
strong position in the market due to its reasonable prices and high quality of product and
services. In the internal audit it has been founded that cited venture have some major weakness
issues related to its business through which it negatively influenced. These issues are as follows-
 Its major issue is it have lack of advertisement and promotion in the market due to
which many of the customer are still unaware about its product and services.
 Its another major issue is imitation of the Zara product (Leitner, Meissner and Martyna-
David, 2015). There is huge competition in the market and several rivals are delivering
same products.
 Its another issue is regular changing customer taste and preferences. As Zra is dealing in
the fashion products which is largely depends upon trends and changing customer taste
and choice. Due to changing customer perception it have to changing its style of product
and services (Kernbach, Eppler and Bresciani, 2015).
 Another major issue is the sustainability of the fast fashion. Zara has created long lasting
style to the market which could reduce market uncertainties.
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 Zara is too centralised under which all decision about the design are taking place at La
Coruna.
5 Identification of the existing strategy and its connection with company vision and mission
Zara has successfully developed its vertical integration model under which it includes
effective designing, just in time production, marketing and sales. With help of the vertical
integration zara has able to meet actual customer expectation related to the product and services
within the short period of time .It has adopted flexibility through which it has adopted the
changes in the fast fashion industry and deliver product and services according to the customer
demand. This is one of the most successful factor of the zara as it has adopted the vertical
integration model. This success factor is link with its mission as it wanted to become the fastest
fashion store (Amran, Ooi and Devi, 2015). As per the inbound logistic, Zara has always
opposed the trends of outsourcing their manufacturer and it produces the product and services in
the low cost. On the other hand in the context of outbound logistic it follows demand based
system which does not manufacturer the large quantity of stock of materials at one time. This
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Illustration 1: Zara Product
(Source:Zara , 2017)

strategy links with its vision to become environment friendly and develop the society. In the
context of marketing, its sales and marketing is matching with customer demand and expectation
which have linked with vision statement about to committed to satisfying the desires of the
customers (Staake, Thiesse and Fleisch, 2012). In addition to this Zara mission statement is to
contribute toward the society and the environment so its strength have directly link with its
mission like it focus on the low cost and vertical integration supply chain management which
gives Zara an advantage and benefit to identify actual needs of the customer and dedication
toward the society. In addition to this Zara services is always become appealing either it is in
terms of customer services or the cleanliness of the inside of the stores. This strategy of Zara
have linked with its aim to contribute sustainable development in the society and in the
environment.
6 Two viable strategic alternative
As per the above discussion it has been founded that Zara have some kind of strategic
issue which negatively influence its progress and success. Following are major two strategic
alternative which address the key issue of zara-
 Differentiation- As it has been founded that Zara have issue related to the imitation. As
there is huge competition in the fashion industry. Many rivals produce the same product
and services like Zara so it can be said that differentiation is one of the alternative option
to overcome this strategic issue in the cited venture (Doeksen and Symes, 2015). With
assistance of this strategy, company can come up with features and characteristics that
differentiate their product and services from its competitor in the market (Market
Differentiation Strategies , 2017).
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 Adjacent businesses- This is another effective strategic alternative which can help to the
Zara in overcome its strategic issue. With help of this strategy company can enter into a
niche market and consider on the current customer preferences, taste, life style, standard
etc in order to gain high growth opportunities in the market. In order to move in the
adjacent business, company requires developing new distribution channels and develop
effective discipline. With help of this Zara can overcome the issue related to continue
changing taste and preferences of customer in the fashion industry.
As per the company internal and external audit it has been founded that Zara have
business model which is based on the changing fashion. The strategic alternative of Adjacent
business will very effective for Zara company by which it can focus on the niche market and will
able to focus on the actual needs and wants of the customers related to the product and services.
In addition to this its another strategic alternation option is related to the differentiation which
will help to Zara in producing the effective featured of product and services which is different
from its competitors in the market. This strategic is suitable because according to its internal
analysis it has founded that Zara outbound logistic follows the demand based system under
which it does not produce the large quantity of inventory at the one time. In addition to this it
focuses on the awareness campaign and training program in order to educate their staff about the
attainability changing transportation pattern, reduce energy etc which help it in developing the
different product and services and meet its mission about the environment friendly corporation.
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Illustration 2: Differentiation Strategy
(Source;Market Differentiation Strategies , 2017)

Advantage e and disadvantage of the strategic alternatives
As Zara will use the two major strategic alternative for overcome its strategic issue.
There are various advantage and disadvantage of these two alternative option which are as
follows-
Advantage and disadvantage of the differentiation strategic alternative
The major advantage of the differentiation strategy for Zara is by help of this strategy company
can provide the varieties of product and services to the customers (Wesseling, Niesten and
Hekkert, 2015). Corporation can able to fight with competition in the market and delivers
different and unique commodities to customer. However, its major disadvantage is that
differentiation strategy is very expensive as company have to invest large amount of capital in
develop unique feature of the product and services.
Advantage and disadvantage of the adjacent businesses
The major advantage of adjacent business strategy is it can attract the new customer
toward the company. With help of this strategy Zara can able to expand its business in the new
market and develop its unique position within the market. However, it has major drawback is
related to the huge capital requirement.
7. Recommendation on strategy and why it is important.
(a) Description on selected alternative strategy and discuss why its chosen over others.
In business enterprise it is essential to have long time growth in business objective so that
profitability and productivity can be maximised. Zara is one of the most successful and largest
fashion brand across the global to make this approach more effective they need to satisfy their
customer by innovation in their goods and services (Pimenova and et.al., 2016). To make
consistent increment in profit profile of company it is necessary to take initiative in order to
bring those strategies which can help in manner to bring gain in revenues of firm and help in
maintaining the strong brand image of firm.
The whole assignment is focusing on working strategy of ZARA.
In this the Growth and product differentiation strategy has been selected to achieve desire
growth of business enterprise.
Growth strategy- It is very essential tool in order to take effective step as introducing
innovative products and adding new features to existing commodities. The ZARA is not taking
impressive advertisement due to this the customers are lack aware about their goods and
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services. They should do publicity so that profit grow of company can be maximised. The firm
should have increment in commodities line to keep up good level of competition among them.
Whether it is big or small enterprise, they should adopt a growth strategy by identification of
new products for market (Rashid and et.al., 2013). The main object of ZARA is to bring
competitive advantage by having maximum number of market share. They are adopting those
unique method which help in manner to have up to date styles in market for maximisation of
productive growth of business enterprise. The main motive behind taking this is to value their
customer. They are backbone to organisation so it is essential to full fill their expectation.
Recommendation behind this strategy is-
The main aim to bring large amount of profit scale so it can have competitive advantage over
other fashion brands.
The should have effective modification and innovation in their existing products due to this
customer's expectation can be full-filled (Rezaee, 2015).
They should provide qualified products within affordable price.
The market is rapidly changing they should have various methods to cope up with this factor.
They can have idea about this by taking feedback of consumers.
Product differentiation strategy- This also one of the effective strategy in order to bring
unique and different product in market from other retail outlets. This kind of technique also have
competitive advantage by providing superior quality and service. This kind of methods is always
works in manner to provide enough level of satisfaction to their consumer. Everyone wants to
have those kinds of service which has some uniqueness which is differed from other fashion
brand. The one of the major drawback is that there are many rivals who works as copy zara
outlet by deliver same product within lower cost. It can lead to have distraction in their
customers (Rashid and et.al., 2013). These kinds of polices helps to bring maximisation in
profitability and productivity in firm growth level. It is also impressive method in order to bring
brand loyalty in the mind of number of individuals in market.
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Illustration 3: Product differentiation
(Source:Use Case and Product Differentiation –
Product Differentiation, 2017)
RECOMMENDATIONS
The company should take steps to provide uniqueness in their product and services.
They have to take those methodologies which help them to full fill customers satisfaction.
They should maintain quality too with uniqueness in their commodity service.
They should also consider price factor in manner to have effective growth in market (Van
Dongen, Dijkman and Mendling, 2013.
The organisation should focus on strategic alliance which helps them to gain excellent financial
status and gain competitive advantage.
They should use mix of marketing such as advertisement, sales promotion, publicity by which
they can generate awarness about their brand and products.
They must focus on vertical integrationwhich helps them to create strong merchandising
strategy.
They should use centralised distrubution facility which gives them chain for competitive
advantage by reducing theirlead time of the production of goods and services.
By taking method of uniqueness they can manage to cope up with rivals in market.
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(b) Description on how these strategies helps in manner to full fill financial objectives of
Business enterprise.
With the help of following strategy there can be several benefits in relation to financial
profile of business enterprise. This is defined in following manner are as-
1. By adopting Growth and product differentiation strategies. There is maximisation ion
profitability and productivity growth of business entity (Zimmermann and et.al., 2013).
2. This is very effective just because its help in manner to bring market share with
increment of 15% from last year of profit.
3. By having no substitutes there can be more chances to earn financial profit as compare to
last years of sale growth.
4. This kind of method is very useful in order to gain heigh profit margin just due to
uniqueness in their product services.
5. The product differential strategy is helpful in giving major focus on cost saving and
durability of product in comparison to other available commodities in market (Van
Dongen, Dijkman and Mendling, 2013).
6. This is also helpful with aim to gives it consideration quality and design of goods so with
the help of this there can be competitive advantage in market but without fall in their
price value.
8. Discussion on issue due to implementation of selected strategies.
The business enterprise has to focus on various kind of issue while implementing new
methods, plan, polices and strategy. In this present scenario there are many kinds of obstacles
behind implement of growth and product differentiation strategy in Business enterprise of ZARA
are discussing in following manner are as-
This challenges of implementation are defined as
1. Insufficient partner buy-in-In these partners and leader enterprise has to involve in
development of strong and effective chosen strategy in order to gin competitive
advantage in market (Pananond, 2013). With the help of this kind of method they can
earn large amount of profitability and productivity. There should be better understanding
of rational behind this strategies so that implementation can be taken in effective manner.
2. Ineffective leader attention- at the time of development process in strategy planning
process the firm leader and manger should draw there equal participation. They are the
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main pillars behind making successful implementation of strategies in business
enterprise.
3. Insufficient leadership- he leader are the person who has to lead overall functioning of
an organisation. It is essential to have their active participation in entity. This kind of
strategy can be fall due to have weak leadership in firm (Pananond, 2013). It can be true
to said that they are very important person in order to bring large amount of profitability
and productivity in firm.
4. Resist to change- the main problem in this relation is to that many leaders and employees
of firm always resist accepting any changes in firm. It is also time consuming and cost
effective processes. It is essential to have modification in policies of company so that
new approaches can be obtain to do things in new manner. It is very beneficial to have
growth and profitability in business enterprise.
5. Weak and inappropriate strategy- The weak strategy can also bring downfall in profit
scale of business. This is to make in strong and effective manner so that organisation can
earn heigh amount of profitability. It is essential to have heigh skilled employees in
business enterprise.
CONCLUSION
From the above report it has been concluded that there is huge competition in the market
through which organisation develops their own business strategy to compete with rivals. In order
to survive in the competitive market, firm required to understand its actual goal of business.
With help of business environment analysis and internal audit company can easily understand its
own capability and competency. The business enterprise has to focus on various kind of issue
while implementing new methods, plan, polices and strategy. In business enterprise it is essential
to have long time growth in business objective so that profitability and productivity can be
maximised. The Zara has taken various approaches in manner to deal with various issues. The
main motive of this firm is to give value to their customer. The both strategy are very helpful in
order to have profitability in firm revenue and to face with tough competition in market. In this
whole research is based on true and fact figures.
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