Marketing assignment Case study management help analysis online:: Company strategy case study on Zara

Question asked?? Write a case study analysis on Zara??

Solution the case frames is::

Introduction 

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).

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.

Microenvironment Analysis

Political 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.

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.

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.

 Technological 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).

 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.

Micro Environmental Analysis 

Competitors 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

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. 

 Application of relevant theories/ concepts and principles of Global Strategic Management

 There are many successful  organizations which find that their domestic  are saturated  or the foreign markets will offer better opportunities for both profitability as well as growth to them (Harrison and St. John, 2010) which might not be achievable in the domestic markets. This is what even Zara believes and that is why many forces are leading this fashion giant to enter the international arena some of them are shown in figure below:

The trend of global strategic management helps in offering many new management challenges to the firms. The strategic management process model should be based upon a Combined Approach. The firm planning expansion to the global markets should adapt to the external forces because it is very unreasonable to expect them to change and should be proactive in other areas.

 Moreover a successful strategic planning can emerge from a successful planning process , drawing inspirations from the organisational learning and through  trial and error or through a combination approach (Barney, 1991).For the internal analysis the resource-based view is very vital and focal and which helps in developing  and gaining competitive advantages . While the Stakeholder Theory is helpful in drawing the conclusions from the analysis of external environment.

 The resources-based perspective does not clash with the stakeholder perspective in the long run. But the fact is that the two perspectives are found to be complimentary to each other in any organisation (Lado et al., 2006). The reason being in every organisation for acquiring their resources they depends upon their stakeholders to acquire as well as develop the resources. Therefore it implies that for any organisation to be successful it should have good working relationship with its stakeholders and these strong relationships will in turn help in gaining competitive advantages (Helfat and Peteraf, 2003).

Strategic Options for Zara 

Zara completely denies the concept of cheap outsourcing and the main manufacturing activities of Zara are being conducted in Spain. This proves to be a real god approach towards owning their own work force and this in turn helps in avoiding from getting involved in activities which might turn out to be unethical. The image of Zara is very clear and untarnished with its quality management processes, so the time is right for Zara to unleash new domains. It is highly not recommended for Zara to outsource its activities; like assembly or manufacturing which might cause confusions and starts questioning the quality management processes currently applicable in Zara. A health internationalisation process should be developed neither questions the employee relationship management nor the quality management at Zara.

Another better option which Zara can follow is to become eco-friendly organizations which will help it in achieving good sales-points. The eco-efficient and friendly certificates gained by Inditex, like the major one LEED (Leadership in Energy and Environmental Design) can be put forth to attract customers. Mentioning this LEED certificate accomplishment in the mission statement and also following it will definitely give Zara a competitive edge it is looking for (Murphy, 2008).

 The Fast fashion trend introduced by Zara through new styles helps it in moving parallel to the current market trends. The PDA’s used by the sales force in the stores help in fast communication and transferring information to “ The Cube” which helps in responding to the market trends in two weeks time . The excellent team of designers which includes 300 stylists collect all the information and feedbacks form the stores directly which are analysed and propose new designs (How Zara Fashions its Supply Chain, Strategic Direction, 2005). This takes less than ten days to reach markets and the customers feel elated to see their ideas realised into practical products. The ideas are not present in the form of sketches before three weeks of their production (Folpe, 2000). Where other companies take at least 6 months time to convert an idea into realisation, Zara gains competitive advantage over here.

The corporate identity of Zara can also be used to get good market response for Zara. It has been defined as the set of meaning through which any object lets itself known in the market and through these set it lets people recognise, remember, relate and describe itself (van Rekom, 1997). Therefore a better brand image in the market will ensure Zara survival as well as sustainability in the international markets. Establishment of consistent identity of the retailing organization is very beneficial in gaining competitive differentiation (Burghausen and Fan, 2002) (Kennedy, 1977). Well communicated as well as well established corporate identity helps the organization in establishing emotional ties and producing numerous loyal and trustworthy customers (Balmer and Gray, 2003). Thus what Zara needs is string corporate image which is well communicated  and emphasised along with better marketing so that its gets desired expansion results in the global markets.

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