Strategy implementation management assignment on: Zara

Zara is a well known and very well reputed brand name in the fashion circle and it has been declared the most marketing responding as well as efficient enterprise in the fashion industry of UK. The strategic decisions taken by Amancio  Ortega, the founder and creator of Inditex is praised for his  getting marketing edge strategies and they are being followed by his competitors too.

 Zara is one of the most famous fashion brands of Inditex and was founded in the year 1975. Along with generating very huge profit margins Zara is a fashion brand name which the customers recognize very well in the fashion market (Murphy, 2008). Majority of the Inditex’s market share is being sourced through Zara only which forms almost 80% share of the total revenue of Inditex (Brand Watch Zara., 2003). Zara is already a globally recognised fashion leader and now it is planning further expansion for which the environmental analysis using various tools for the analysis is being required (Sull and Turconi, 2008) for making effective and successful decision-making (Mazaira, González and Avendano, 2003).

2. Environmental Analysis for Zara

Till now the main dominance of Zara as fashion brand was found in Spain and some portions of European continent. But now with planning further expansion we need to study the new global working environment, competitive pressures, industry surrounding as well as other factors which might affect Zara and assist in Global Strategic Management (Lopez and Fan, 2009). That is why the Pestle analysis is being used for conducting the environmental analysis.

2.1 Microenvironment Analysis

2.1.1Political Factors

 Marketing and expansion decisions do get affected strongly by the ongoing developments in the political environment. Political environment is quite peaceful in most of the countries. Most of the countries across the globe welcome international trade despite for their political systems. Even the main base country of Zara, Spain also supports and encourages exports of the firms which will help Zara in lot many ways.

 Moreover the laws of international trade becoming a lot subtle and lenient, its expansion will be easier. This will help in safeguarding both Zara as well as its customers worldwide. The reliable brand image of Zara also arises because it is a law abiding firm (Baidu, 2010).

 Another very good example which Zara shows is that it promises unique and fastest designs in fashion to its customers whom it delivers both very quickly and they are exclusive too at the same time.

2.1.2 Economic Factors

The economic environment mainly comprises of the factors which affect the buying power of the consumers and their spending behaviour or pattern too. The main target group of Zara is the consumer who is young and highly educated and along with that has relatively higher income. This consumer group mainly falls in the age group of 25-35 or 40 years and these purchasing groups are highly sensitive about fashion and possess some amount of spending power too. They do not have very regular consumption of high-end luxury branded merchandise. Zara has been dealing with just one currency since its origin that is Euro. The world’s fluctuating markets did not affect the financial position of Zara who has been successful in achieving greater market share. The main reason is that it deals in Euro and not in Dollars which is experiencing very severe highs and lows during recession worldwide.

2.1.3 Social Factors

Since Zara has been operation in one country so it has been facing social influence which has already been handled smartly by other brands of Inditex group. The cultural roots of Spain are very independent and Zara has been very lucky to flourish in culturally independent markets of Spain. Spain has contributed a lot and has long history which talks about major contributions in the field of designing and arts domains. The bright cultural events and calm social environment attracts a lot many tourists to this country. The stronger tourism exchanges help Zara to get new customers and the by delivering quality products Zara is able to retain its customers by fulfilling their needs too. Fashion at very minimal price allows customers to make big purchases in a single shot which leads to higher turnover for Zara.

 2.1.4Technological Factors

The advanced technological improvements have lead Zara to cater to the customer’s needs of fresh fashion within no time. Many fashion firms have implemented new technological concepts at the sales point and in their manufacturing processes too to get a competitive edge but Zara have always taken a step ahead by making technological advances in the form of creating eco-friendly stores. The manufacturing process has been simplified by breaking it into small and simple tasks which are performed by machines and then by workers (Baidu, 2010).

  2.1.5 Ecological Factors

Zara follows the trend of not just earning profits from the customers but also takes solid steps as environmental responsibility towards society. They take environmental issues into account while planning and implementing their activities and encourage environmental awareness amongst suppliers, employees and the public too. Zara is completely in compliance with the environmental laws and tries very hard to prevent pollution and reduce carbon footprints as much as possible. The Management systems are continuously improved in order to make the best use of the resources in order to save and protect environment and minimise wastage.

2.2 Micro Environmental Analysis

2.2.1Competitors Analysis

 The most challenging competitor for Zara is H&M, which has been ranked 21^st amongst the most valuable global brands in the year 2009 (Baidu, 2010). Other competitors which pose great competition to Zara are GAP, Forever 21, and UNI QLO (Gunbal, 2011).

2.2.3 SWOT Analysis

Table 1: SWOT Analysis of Zara (Gunbal, 2011)

The SWOT analysis of Zara shows clearly that it has  quite satisfied and  motivated organisational structure as well as staff The major strengths possessed by Zara are its vertically integrated  structure an the achievable setting of the objectives. The credit goes to rationale decision making for all the success achieved by company, achieving leading market position and gaining competitive advantage.

 However some of the weaknesses like lack of communication of the products where Zara does not strongly promote its products through promotional activities. This strategy is necessary in order to attract more consumers and it should follow Euro-centric Approach.

The lucrative and appealing opportunities are very, much welcoming Zara to enter new market geographically. This could be done through further segmentation of the product line into new segments which are more customer-oriented and specialized. Another opportunity which can be utilised by Zara is to take benefit from lower cost of labour which can be done through effective management of workforce and development of corporate identity.

 One major threat which Zara will have to face is the  potential oversaturation of the current markets with the competitors, currently fluctuating exchange rates  can cause major setback, and any unforeseen natural disaster might happen which might damage the manufacturing units of Zara.

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