Zara International Fashion Retailer Case Study

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Section 1: Presentation (496 words)

In this academic paper, I represent the organisation “Zara” an international fashion retailer to analyse its strategic behaviour in the market to sustain in a competitive environment. My research as a consultant will concentrate on the various factors that Zara as a global retail organisation has faced to survive and grow as a brand. Before discussing the global strategy, I would like to first put some light on how Zara as an organisation has grown in the last three decades.

 Zara, being a largest international fashion organisation is part of Inditex which is one of the largest distribution groups. Inditex owns eight brands and one of its main brand is Zara the other famous brands that are part of this group such as Massimo Dutti, Pull & Bear etc (Exhibit 1 describes all Inditex’s brands). Zara as an organisation is known as a “fast fashion” international retail brand which started its journey in Spain in the year 1975. The brand was originated by Amancio Ortega and Rosalia Mera somewhere in northern part of Spain. The company since its inception to the beginning of the next decade approach towards fashion and its business resulted into the growth in his Spain, which lead to opening of around 9 more stores in the biggest cities of Spain. It started expanding internationally since 1988 with its first store opening in Porto. According to Inditex Annual report 2017 Zara has existence in over 96 markets, with around 2200 stores and net sales of over €16 million.

During my research of Zara as a company, I was eager to critically analyse its business model and include this in this academic paper (Exhibit 2. refers to the organisational structure of the company). Initially I would like to critically analyse two parts of its business model one is the mission statement and the other one is how its strategy has been directly related to the mission statement. Zara has a mission statement “its business model aims to contribute to the sustainable development of society and that of the environment with which we interact”. Zara has been successful as a brand and been growing rapidly in the fashion industry. As a committed consultant to analyse the mission statement, I have been surprised to learn that the second largest polluter in the world is the fashion industry and Zara being the one of the largest fast fashion retailer has been found guilty of the fast-moving product that are available for cheap price. The fast circulation of products creates opportunity to continuously buy new garments, which contributes to the carbon emission growth leading to harming the environment.  

Many academic scholars have researched and provided an opinion that Zara has adopted not only a very robust business strategy but is also a leader in the fashion industry for fast moving fashion products.

As a consultant to this academic piece for Zara, in my next section I would like to discuss in detail the academic business strategy such as PESTEL (Internal Analysis), VRINE and Porters Five Forces (External Analysis)

Section 2: Environmental analysis: Internal and External Issues (998 words)

PESTEL Framework Evaluating Macroenvironment of Zara.

Many authors have provided excellent academic explanation for PESTLE and how important it is for business objectives if managed well. (refer Exhibit 3. For further analysis)

Political factor is directly related to the policies of the present government and its sustainability, in one of the report that I researched on Zara clearly stated that the approach of Zara in foreign market is pragmatic as countries can easily change policy for international brands.

Economic factors are best measured in situation like fluctuation economy and price differences in different countries. Zara has been able to grow in markets in both the conditions.

Social factors of Zara are country specific based on geographical location, race and populations. The products are developed keeping in mind the demand of location based on the sizes and preferences.

Technologies in fast moving fashion products are based mostly in three factors- Launching Apps that are suitable for all devices, easy locations of store and medium via which new experience can be provided to customers. The approach is standard in all the retailers.

Legal factors are based on the security of the organisation and its consumers and dealing with different level of litigations at country level to support its operations.

Environmental factors- The fast-moving fashion retailer has a few challenges with supporting the environment and needs to do more to manage the rapid fashion change and provide a better reduction in pollution as it is the second largest industry after Oil.

Porter Five Forces and its relevance to Zara

(refer Exhibit 4. For further analysis)

 Competition in the Industry- Low

There are eventually two competitors in the market. H&M and Gap, the former is closer than Gap. H&M is more robust in its operation and have been getting closer to Zara. Zara due to many factors of business have a better stake in the global markets than H&M. One of the major reason being quick turnover of stock and quick responsive supply chain.

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