Unit 43 Business Strategy Assignment Sample

ZARA's Strategic Management Plan and SWOT Analysis.

  • 54000+ Project Delivered
  • 500+ Experts 24x7 Online Help
  • No AI Generated Content
GET 35% OFF + EXTRA 10% OFF
- +
35% Off
£ 6.69
Estimated Cost
£ 4.35
15 Pages 3769Words

Unit 43 Business Strategy Assignment

New Assignment Help is your one-stop destination for impeccable academic support. Our assignment writing help in the UK caters to diverse subjects and topics, guaranteeing thorough assistance for every student. Explore our Free Assignment Sample to kick-start your assignments with confidence.

Overview

ZARA is a well-renowned Private Retail Fashion Industry based in Zorba, Spain it was founded by MrAmancio Ortega and Co-founded by Mr. Rosalia Mera in 1975 (Zara.com, 2023). The former name of ZARA was Zobra. Its headquarters are situated in Arteixo, Galicia, and Spain. ZARA enjoys the distinct advantage of having a large number of High-income age groups in the customer database. It has its in-house factory production, located at La Coruna, and offers one roof product purchase platform for all age groups of personnel having multi-specialist and clothing brands (Garro, 2011). In the year 2022, ZARA earns total revenue in U.S. Dollars 13 billion approximately. ZARA is well known for its superior quality clothing brand having 2007 stores all over the world and ready to enter into new geographical locations for ease of doing business. ZARA never spends its cost on advertisement instead it utilizes its revenue for the opening of new outlays.

How Zara Spends Next to $0 on advertising and still Succeeds?

Figure 1 How Zara Spends Next to $0 on advertising and still Succeeds?

(Source: AVADA, 2022)

The Objective of ZARA

  • To expand its outreach into new global areas of business.

Vision

“To contribute to the sustainable development of society and that of the environment with which it interacts." It includes –

  • Zara believes in creating Society, and
  • Improving the climate through launching eco-friendly products.

Mission

  • To “Give customers what they want, and get it to them faster than anyone else.”

Core Values of ZARA

PESTLE Analysis of ZARA

Every business enterprise faces some internal and external factors which directly or indirectly affect the performance of the organization. Internal factors are controllable and these factors are limited within the organization. Whereas, External factors are uncontrollable and their causes affect the business environment. Some of the External factors include PESTLE; let’s get familiar with this terminology and how these factors lead the businesses either in favorable or unfavorable directions (Perera, 2017).

  • Political – ZARA is a Spanish brand, which is located in the UK. UK government has maintained a Favorable Political policy which leads to enhancing the sales of ZARA. By taking advantage of the UK govt. trade policies ZARA can sell its products globally with minimum effort and at low-cost import-export charges.
  • Economic – Economic policies of the country directly affect the performance of the businesses. ZARA belongs to Spanish, where the unemployment rate is very high as compared to the rest of the parts of Western European. Hence, low-cost labor facilities are available there and every business wants maximum profit at minimum cost.
  • Socio-cultural – ZARA is known for its latest fashionable collection at an affordable price. ZARA believes in quality over quantity and assures their customer's needs and wants must be fulfilled in exchange for the prices charged by them (Yin, 2022).
  • Technological – Technology plays an important role in the country’s overall production. ZARA is a popular fashion brand that sells its products internationally. ZARA is the choice of many customers, with the use of effective technology ZARA has the potential to increase its customer outreach range.
  • Legal– Every enterprise must be bound to follow the Rules and Regulations, Legal Procedure, and must act as lawful. These rules and regulations are framed by the authorized legal representative of that country. ZARA is representing an “International Latest Fashion Clothing hub”. Therefore, ZARA is bound to make its products Copyright so its brand innovation may not be stolen by any other fashion industry.
  • Environmental – Environmental factors can hugely influence the performance of businesses in both a positive and negative manner. As can be seen in the surroundings Fashion is changing rapidly, and ZARA is known for its Fashionable Collections (Christodoulou and Cullinane, 2019). Rapid changes in fashion cause a waste of money as well as a wastage of natural resources. Rapid changes in fashion harm the environment well.

SWOT Analysis of ZARA

Based on the PESTLE analysis of ZARA, the SWOT analysis was as follows: -

Evolution and Interpretation of Data

The procedure of Converting Raw materials into Finished goods

According to the modern marketing concept, every enterprise first Research its target customers and get to know their needs, wants, and taste, at which price they are willing to pay for it. After the research industries develop their strategies regarding product launching with the use of the 4 p's of marketing, which include Product, price, place, and promotion. The Production department makes products accordingly, and lastly, these final products are ready for sale in the market this is explained in the above figure 6 of this report.

Structure of organization

ZARA orders raw materials from its suppliers, and ask its fashion designers to design the sketches of the garments, both raw materials and sketches send to the clothing factory for production, and then the final products are distributed to its store managers at the global level. The structure of Zara is designed to enable quick and efficient decision-making, fast response to changing fashion trends and customer preferences, and close communication and collaboration among its various departments. The structure of the company includes the following key elements:

  • Centralized decision-making: Inditex, the parent company, is responsible for the overall strategy and direction of the company. It sets the guidelines and standards that all Zara stores must follow.
  • Decentralized operations: Each Zara store operates autonomously and is responsible for its own stock management, ordering, and staffing.
  • In-house production: Zara owns its production facilities, which allows it to quickly respond to changes in fashion trends and bring new products to market faster than its competitors (Khalid and Rahman, 2019).

Skills needed to perform work in ZARA

  • Strong Communication – To work in ZARA, personnel must have good communication skills to interact with its customers and be able to entertain their queries.
  • Organizational Skills – Employees must be able to systematize their work.
  • Knowing Team spirit – Good team leader leads the organization's success, working in harmony with other team members.
  • A desire for Career growth within the company – Personnel must be willing to work in such industries.
  • Customer Service Skills – Personnel must have cheerful and humble by nature. Smiling employees attend to their customers well (Rastogi, and Trivedi, 2016).
  • Ability to achieve the target in a given time frame – Assign tasks should be done at a given time.
  • Polite and Kind behavior – Retail jobs need more patience; to work in the case company the person should not be short-tempered and should ask in a polite way to their customers.
  • Minimum of 3-5 years retail management experience – Experienced personnel will able to handle the customers well.
  • Multitasked – In a retail job, employees are assigned multiple tasks. Hence, Personnel must be versatile in their action.
  • Adequate Knowledge of the Latest fashion and Market – This is most important to have complete knowledge about the latest fashion trends in the market.

Identification and Assessment

This analytical study is based on the fast-moving Fashion Industry "ZARA", which gets 1st rank in Spain and number 3rd position all over the world. ZARA is known for its great innovation in the Fashion world. ZARA Industry has its in-house factory production that launches new products within a week; this is a rapid but flexible process of production adopted by ZARA. The biggest Fashion Brand “ZARA”, Its headquarters mainly followed by four strategies of Marketing to capture its customers, which include - Competitive Market Research, An Integrated Organizational Structure, Small Quantity Batch Production, and a Specialized Distribution System. Also, ZARA’s Subsidiaries have their own international Marketing Strategies, which include – Differentiated International Expansion, Independent Human Resource Management having small but fundamental IT technology-based, and the Maximization of its storage resources. These two core principles of strategies play key contributors to the success of ZARA in the Fashion world (Anwar, 2017). It continues to give efforts to make its Brand Visibility and provide quality assurance products among its valuable customers (Christodoulou and Cullinane, 2019). ZARA has its own Technical and Human-centric oriented research operations model, which is completely linked between stock levels and demand to select store replenishment quantities for the store's inventory management, this model will help to increase its sales of the businesses.

Conclusion

The report on strategic management planning for ZARA shows the importance of having a systematic approach to planning, monitoring, analyzing, and evaluating information needed to achieve the goals and objectives of an organization within a set time frame. The report uses PESTLE and SWOT analysis to collect data and identify areas of strengths, weaknesses, opportunities, and threats for ZARA. The critical evaluation of the adopted model shows the merits and demerits of using SWOT analysis for ZARA. The report also identifies the objectives of the study, which include knowing the future potential of the ZARA industry in the international market, identifying the amount of advertisement cost involved in social media marketing, checking the responsiveness of the supply chain of ZARA, and understanding the business model and strategies adopted by the fast fashion industry ZARA.

References

Anwar, S.T., 2017. Zara vs. Uniqlo: Leadership strategies in the competitive textile and apparel industry. Global Business and Organizational Excellence, 36(5), pp.26-35.

AVADA, 2022. Zara's 0$ Advertising Strategy And Why It Succeeds, (Online). <https://blog.avada.io/resources/zara-advertising.html> accessed on 28.03.2023.

Christodoulou, A. and Cullinane, K., 2019. Identifying the main opportunities and challenges from the implementation of a port energy management system: A SWOT/PESTLE analysis. Sustainability, 11(21), p.6046.

Christodoulou, A. and Cullinane, K., 2019. Identifying the main opportunities and challenges from the implementation of a port energy management system: A SWOT/PESTLE analysis. Sustainability, 11(21), p.6046.

Khalid, L.S. and Rahman, I.A., 2019. A conceptual model for the external factors affecting project performance using PESTLE factors. Journal of Advanced Research in Dynamical and Control Systems, 11(3), pp.246-250.

Morden, T., 2016. Principles of strategic management. Routledge.

Perera, R., 2017. The PESTLE analysis. Nerdynaut.

Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify external risks in construction projects. International Research Journal of Engineering and Technology (IRJET), 3(1), pp.384-388.

Ruan, T., Sang, D. and Zeng, Q., 2022, July. Research on ZARA’s Business Environment and Marketing Strategies in China. In 2022 2nd International Conference on Enterprise Management and Economic Development (ICEMED 2022) (pp. 659-672). Atlantis Press.

Yin, Z., 2022, July. How Fast-Fashion Brands Went Viral—Taking Zara as an Example. In 2022 2nd International Conference on Enterprise Management and Economic Development (ICEMED 2022) (pp. 538-542). Atlantis Press.

Zara.com, 2023. about Zara, (Online). <https://www.zara.com/> accessed on 29.03.2023.

Activity B

Vocational scenario and assignment

Research Methodology

ZARA is known for its unique Fashion Collection Industry in the International market and is ready to expand into new geographical locations (Duoyan, 2021). The collection of data is based on PESTLE and SWOT analysis, which includes –

  • Financial Resources – It indicates that the financial soundness of the ZARA industry is based on their financial position captured in the international market, data has to be collected for further analysis and interpretations can be possible on it.
  • Performances Indicators – As ZARA is an international brand in the Fashion Industry. Its performances show positive indications and have the potential to go upward shortly (Burmatova, 2017).
  • Competitor Performances Statistics – As ZARA tries to provide a unique selling proportion of their products in the international market. Hence, ZARA is creating Cut-throat competition with the rest of its Fashion Industries.
  • Annual Reports – ZARA has captured a large share of the market globally. Hence, based on Companies' financial annual reports, predictions and recommendations can be done.
  • Online Tracking – ZARA has a large number of its customers database, and with the use of regular monitoring interpretations can be possible.

Objectives of the study

The summarized way of approach and purpose of the project, deplete from the objectives of the study. The key areas of study are called objectives, which are as follows -

  1. To know the future potential of the ZARA industry in an international market.
  2. To identify how much amount of advertisement cost is involved in social media marketing, to enhance customer's equity and purchasing behavior concerning Fashion Brand "ZARA".
  3. To check the responsiveness of the supply Chain of ZARA (Wels, 2021).
  4. To understand the business model and strategies adopted by the fast fashion industry “ZARA”.

Importance of Strategic Management Plan (SMP) concerning "ZARA"

SMP is a systematic process of Planning, Monitoring, Analysing, and Valuation of all the required information that is needed to achieve its organizational goals and objectives within a set time frame. SMP allows the organization to adapt to the changes occurring in their business surroundings and act accordingly (Alfaro, et.al 2020).

Importance of SMP in terms of ZARA’s Fashion Industry

  • With the use of the SMP model, ZARA can provide the latest fashion products to its target customers in a quick manner and under their pocket-friendly and these products can be seen in fashion Magazines, Runways, and High-end designers at a high price (Loureiro, Costa and Panchapakesan, 2017).
  • ZARA plays a key role by having Digital Integrations, Innovation in its products, Flexibility in its policies, and easily adapting to the changes occurring in the surroundings of businesses (Bertola, and Teunissen, 2018).
  • ZARA follows its high-vertical integration level for the smooth functioning of its supply chain which manages its design of sketches, converts sketches into finished goods, Handle Inventories Management, Sales and Promotions, and Shipments (Kaiser, 2019).
  • SMP of ZARA allows them to bring flexibility in its operations, which improves its efficiency in communications between its suppliers and distributors.
  • ZARA’s SMP model helps in improving its technology and adapting safeguard IT software so that, Customers’ trust can be a build-up.

Critical analyses of the Adopted model

The study is followed by two Statistical tools i.e., SWOT Analysis and PESTLE Analysis –

Merits of SWOT Analysis “ZARA” –

  • According to Hobfoll, Halbesleben, Neveu, and Westman, 2018 SWOT Analyses are useful for evaluating a business process and implementation for the same within the organization or any organizational unit, or individually. ZARA's Strengths and Opportunities are acted as a merit of the organization.
  • It helps to gain more valuable information about “ZARA”
  • SWOT analysis of ZARA is useful for data integration, which further helps in Policy-making, improves enterprise-level planning, and establishes coordination among organization operations (Farhana, Mahamude, and Mica, 2022).
  • It is easy to understand that, SWOT analysis can be done by any ordinary person having complete knowledge about that organization and it is economic.

Demerits of SWOT Analysis “ZARA”

  • SWOT analyses only cover the four factors of ZARA lists – Strengths, Weaknesses, Opportunities, and Threats. The rest of the factors won’t be covered under the SWOT analysis. Hence, this kind of analysis shows a one-dimensional model of influences.
  • Weaknesses and Threats such as ZARA need not waste a lot of money and natural resources by launching new products frequently and they must have the copyright of their products are some points to be considered as demerits.

Merits of PESTLE Analysis “ZARA”

It helps to understand the macroeconomic environment of business, which helps in forecasting the future and taking corrective measures to protect the businesses from probable threats (Gazzola, et.al 2020).

Demerits of PESTLE Analysis “ZARA”

This model shows the negative impact on ZARA's supply chain because it is very difficult to expand globally as it involves a huge amount of expenditure for the distribution of products internationally.

Merits and Demerits of Internal and External Data

The model (both SWOT and PESTLE analysis) covers Internal as well as External data of the ZARA industry – Internal Data covers Internal Operations, Marketing and Sales, Financial Management, Staffing and Human Resources Management, and Customer Service skills and they are parts of Strengths and Weaknesses of ZARA. Whereas, External Data covers macroeconomic forces and are known as Threats and Opportunities. This data has its own merits and demerits as follows –

Merits of Internal and External Data of ZARA

  • ZARA plays a vital role in the fast-changing fashion Retail industry and ZARA got this position because of its large data analytics. As already discussed above that, ZARA has a large number of Rich income age groups data, and its sales are constantly growing. Whereas, External Data also talks about upcoming opportunities and threats.
  • ZARA has the potential to beat the rest of the fashion industries in the international market by making small efforts, and low-cost production. Also, Industry has favorable trade policies.
  • ZARA has developed its in-house factory production, which launches new and innovative designs within a week. This seamless process of production is economical. Also, Spain has a high unemployment rate, and ZARA contributes to employing their locality.

Demerits of Internal and External Data of ZARA

  • External data are expensive, Time-consuming to analyze relevant data because data are getting from multiple sources, which creates additional burdens for the administration regarding their proper records.
  • In the case of ZARA, it has a large number of its customers database, which it not possible to study the entire customers' information. Hence, the generalization of the company's decisions won't apply to it.

Recommendations

There are some of the essential recommendations which will help ZARA to achieve its success in a very effective manner are as follows:

  • Marketing Strategies – ZARA is the most prominent brand in the fashion world. Zara needs to overwhelm its weaknesses and protect itself from potential threats.
  • ZARA won’t invest its revenue in advertisements, should invest its little amount of revenue in marketing.
  • ZARA would try to send some attractive coupon codes, and big festival discounts on their products, and should invest in email marketing for the brand promotion of its products.
  • ZARA should organize and sponsor Fashion shows to reach a large audience, who has an interest in Fashion.

Conclusion

The importance of strategic management planning for ZARA is highlighted in the report, as it allows the organization to adapt to the changes occurring in its business surroundings and act accordingly. The report identifies the merits and demerits of using SWOT analysis for ZARA, which is a useful tool for evaluating the business process and implementation for the same within the organization. In conclusion, the report provides valuable insights into the strategic management planning of ZARA and how it has helped the organization succeed in the highly competitive fast-fashion industry. The recommendations provided in the report will help ZARA continue to adapt and succeed in the future.

References

Bertola, P. and Teunissen, J., 2018. Fashion 4.0. Innovating the fashion industry through digital transformation. Research Journal of Textile and Apparel.

Burmatova, O.L.G.A., 2017. Strategy for sustainable development of the region: environmental scenarios. In The 6th Central European Conference in Regional Science: Engines of Urban and Regional Development in September (p. 2017).

Duoyan, H., 2021, April. Research on ZARA strategy from the perspective of the SWOT analysis method. In 2021 6th international conference on social sciences and economic development (ICSSED 2021) (pp. 201-205). Atlantis Press.

Farhana, K., Mahamude, A.S.F. and Mica, M.T., 2022. The Scenario of Textile Industry in Malaysia: A Review for Potentiality. Materials Circular Economy, 4(1), p.20.

Fuertes, G., Alfaro, M., Vargas, M., Gutierrez, S., Ternero, R. and Sabattin, J., 2020. A conceptual framework for the strategic management: a literature review—descriptive. Journal of Engineering, 2020, pp.1-21.

Gazzola, P., Pavione, E., Pezzetti, R. and Grechi, D., 2020. Trends in the fashion industry. The perception of sustainability and circular economy: A gender/generation quantitative approach. Sustainability, 12(7), p.2809.

Hobfoll, S.E., Halbesleben, J., Neveu, J.P. and Westman, M., 2018. Conservation of resources in the organizational context: The reality of resources and their consequences. Annual review of organizational psychology and organizational behavior, 5, pp.103-128.

Kaiser, F., 2019. Essays on Vertical Integration, Inventory Efficiency, and Firm Performance (Doctoral dissertation, Universität Passau).

Loureiro, S.M.C., Costa, I. and Panchapakesan, P., 2017. A passion for fashion: The impact of social influence, vanity and exhibitionism on consumer behavior. International Journal of Retail & Distribution Management, 45(5), pp.468-484.

Wels, S., 2021. The Fast Fashion Industry and Sustainability: Where is the 'fast now? How a large player in the fast fashion industry responds to public discourse regarding sustainability–Zara case study.

35% OFF
Get best price for your work
  • 54000+ Project Delivered
  • 500+ Experts 24*7 Online Help

offer valid for limited time only*

×