Analysis and Evaluation: Zara Case Study
Analysis and Evaluation: ZARA Case Study
One of the most popular and celebrated brands in the domain of fashionable clothes and gear is the apparel manufacturing company, Zara. This enterprise has been advertised as the proficient market-acknowledging leader, with the latest trending fashion statement in the affordable range and competing with few fashion brands in the market. The founding father of Inditex, Mr. Amancio Ortega has won several accolades from his rivals, people from the industry and the consumers all over the world due to the strategic and courageous decisions of business adopted by him. One of the brands that represent Inditex is the world-renowned manufacturing enterprise, Zara. The origination of this brand is associated with the iconic brand Inditex, which was established as a small warehouse. The nation Spain was the origination of this brand, which was named as Zorba in its initial days and later converted to Zara, by Ortega. Eventually, the brand gained its prominence in the global market, including the United States of America and France.
The success of Zara is attributed to the rationale of its progress, which is being achieved with the promptness of presenting the market within the current trends in fashion. The emerging trends in vogue are intensely observed by Zara, which results in establishing the brand as not only the profit-earning enterprise but also the distinguished brand by the consumers (Murphy, 2008). The majority share of the market is conquered by Zara being as the core enterprise of the Inditex, as well as it generates substantial revenue for the brand Inditex. The market share of Zara has been reported at 80 per cent being the essential profit maker for the organization (Brand Watch Zara, 2004, p.2).
Zara has been conducting its operation in the market since over a decade. Also read about marketing strategies and business models of Zara Case Study. The brand has proved its worth since its inception as it preserved the trust of its consumer by providing qualitative service and fulfilling their obligations. The brand had been venturesome in the market, and these decisions led the enterprise to worldwide recognition and prosperity. The strategy followed by Zara to crush the competition by the rival companies is by implementing innovative and fresh designs in a span of two weeks in comparison to that of the rivals that require more than six months to introduce latest designs following the trends. While many rival companies cannot finalize their strategy of this method, Zara trends to be the preferred brand, which does not undermine the fashion trends and the trust of the consumers, on the brand’s innovations. The industry was controversial with the point of view shared by Mr. Ortega about the outfits. He deemed them as items easy to perish. He termed the usage of outfits as single-use products assuming that the consumers would prefer to get dressed as they use disposable items like bread and butter. The range of outfits that were manufactured by him was known as fresh from the oven, which was suited only for a month as per the transforming trends in vogue. The customer would get new clothing if they visited the store a week late for the trendy outfits. In an enterprising time, the innovation and bold decisions require intense intellectual thoughts that emerge from the comprehensive investigation of ecological analysis at the macroeconomic and microeconomic level in the market and its trends.
The intellectual decision-mechanism requires a systematic approach of internal and external investigation that results in the procurement of data to devise practical aims and objectives. The targeted goals have been accomplished by the enterprise Zara that made its progress into the next phase considered as its extension. (Sull and Turconi, 2008). The contribution of Zara towards the environment is regarded as significant because it proved to be the ecological enterprise with its base in Spain. The nation is famous for the employment of the photovoltaic system and the wind power plant. Zara is recognized as the rarest brand, which has employed the system of producing apparels that are purely free from toxic elements.
The objectives of this research study reflect the analysis of market ecology and achieve feasible prospective goals. This may prove to be very vital and significant process facilitating the findings that may serve as the basis of the future course of actions and resolutions. The achievement or fail results will be identified through these crucial decisions. An instance may be cited mentioning Sainsbury, where impulsive decision led to the immense loss. The decision applied by Sainsbury was to transform the entire chain of supply that led the company to immense difficult circumstances overthrowing the company from the market. Zara has applied the technology of streamlining the complicated process. The choice of deciding the scope of the technology may be implemented only through accurate investigation and measurements. This study will determine the probable areas of implementing such strategies, and they need to be explored for the advanced growth of the company.
2. Objectives and Mission
The brand Inditex specifically and precisely marked the definition of its future planning and vision. They have expressed their process and areas of prioritization with a clear concept, which they selected for their organization. Mr. Ortega wisely chose the concise set of policies that assures hopeful, sustainable and flourishing choice of career. The statement of the mission (according to Environmental Policies) of Zara defines, “our aim is to support the development of sustainability in the environment and the society with our interaction using the model of business of Zara.” The statement of the mission by Zara is displayed at every outlet,
“At the store
- Energy is saved by Us
- The store is environment-friendly
- Our motto is to recycle and produce less of waste
- We are committed to all staff
- Team is aware of their environment
For producing units and ancillary, the statement of the mission is below:
- The eco-friendly fabric is used by us
- Eco-friendly cotton
- PVC-free shoes are manufactured by Us
The channel of distribution (the transit of finished products from the phase of manufacturing to the phase of sale) is stated as ecological,
“In our transit, we employ biodiesel fuel."
The statement of vision termed by Zara reflects,
“ZARA owns the commitment towards the satisfaction of our privileged customers. This results in our pledge of innovation that is improving the experience of our customers. We pledge to offer the latest designs from superior materials at an accessible range." (zara.com)
The company Zara has recorded an immense growth and prosperous record of accomplishing its predefined targets to date. The group Inditex has been identified as an ecological enterprise in comparison to its rivals. The enterprise has acquired the honour of being an accountable and logical company in the sustainability of the environment and committed to the welfare of the community. The range of commodities offered by Zara is spread across 68 nations. The interesting feature the has been observed with Zara is that all the outlets provide the same range of outfits which shows the prompt sale with its launch by clearing the old stocks. Zara has adopted the technique of providing qualitative apparels that are of latest fashion trend but in small quantity. This makes the customers buy the latest trendy garments at affordable range without delay for the announcement of sale offered by the company. The collection of Zara has been named as “Banana Republic” by a market analyst Flope and termed the prices set by the company as “Old Navy”. The Company provides a variety of range that helps in achieving satisfaction from the men, women and kids. Spain helps in managing the supply chain management by developing the shipyards for transportation and an effective delivery system. The current focus of Zara is on the ecological aspect whereby inaugurating the outlets the viewpoint of the company will be supported. The worldwide strategies of Inditex, on ecological issues, are significant as termed by the Deputy Chairman of the enterprise. They annexed a strategic goal, which is needed to be incorporated in all the outlets by 2020.
3. Situational Analysis
A robust picture of the brand was portrayed by Zara is one of the prominent leaders in the fashion market. The company has set a similar pattern of the sale in 68 countries. An efficient system of communication is up by Zara to have a comprehensive understanding of the market. The communication that was set up by Zara depicted the transformations in Vogue, which assisted designers in creating a style which matches the aspirations of the consumers. The managing technique adopted by Sainsbury and Mark and Spencer’s were inadequate to meet the demands of the customers. The branch had to face many issues that were caused by reason of not meeting up the aspirations of the customers (Gluyas, 2004). Introduction of a transformation in the supply chain by Sainsbury had resulted in the wastage of resources that were available. For manipulating the market trends, the best achievable combination of supply chain management and management of demand must be considered, which also create the strategy to win over the rivals (D. Walters, 2006).
The primary goal was accomplished by Zara, which led to the on-time shipping of products to the customers achieving their satisfaction. Zara made transactions to be affordable for the customers. Zara applies the technique in achieving the best customer satisfaction the eliminations of the third-party supply. Zara directly supplies its products from Spain. Zara did not apply any marketing technique to manipulate their customers; rather, they believed to satisfy the demands of the customers by relying on the reference. To achieve success in business, consumer-oriented logistics support plays a significant role (Waller, 1998). Zara until the date has only used the strategy of exhibiting their lucrative designs at their outlets. Zara did not apply any other marketing technique to date to convince its customers.
3.1 Environmental analysis
The brand Zara has its origination in Spain and operates from there. This segment will deal with the competitive pressures, conditions of working, surroundings of industry and other related factors that may influence the environmental analysis of Zara. This segment examines the possible choices relating to probable threats and opportunities that are present in the contemporary environment.
3.1.1 Industrial Analysis
Zara recognizes the significance of undertaking an acute assessment of the environment prior to the framing of goals and expanding their Enterprise before deciding for the future. Zara has analyzed the related factors with the help of PESTEL, which may be discussed below.
3.1.2 Political Factor
In a country, political parties and government constitute a political environment. The government constitutes the policies, which assist the industry that plays a significant yet reserved role in this scenario. Zara has been playing a major role in Spain with the majority of distributing centre in European countries. The expanding development plans in other countries have to be considered by Zara keeping in view the support of political parties and the method of functioning in those Nations. Europe has presented an anticipated environment of the economy, which provides the leading brand Zara to avail the expansion plan in European countries.
3.1.3 Economic Factor
Zara conducts its operations in the market with single available currency from the day of its Inception. Zara has remained immune with a recession that has affected the economies of the world. Zara has been successful in availing the greatest market share even after the recession of the market. This was possible because Zara performed its operation in the safest currency other than dollars. Prior to the market entry in an economy, Zara has always conducted in-depth research about the rate of currency and the prevailing condition of the economy in a particular Nation to assess and review the impact of the recession. Demand created by the consumers and a study drawing market has been identified in Spain.
3.1.4 Social Environmental Factor
Spain has displayed economic and social leverage on the operations conducted by Zara, which had a positive impact. Spain features affluent aesthetics and lavish traditional inheritance. The stain has always been favoured as an influential destination that caters various traditional cultures of the world. The nation presents socially peaceful ecology that attracts tourism, thereby creating a huge base for Zara to retain its customers with the policy e of satisfying them with the qualitative products. The tourists choose the brand Zara as it attracts the as it attracts them and converts them into customers with their strategy of consistently modifying their collection, which they promote at a lower affordable range. It is fortunate that Zara has no restriction with the traditional roots of its country.
3.1.5 Technological Input
Retail companies in Spain continuously upgrade their technological process. The competing companies of Zara also introduced there sale manufacturing techniques, whereas the strategies implemented by Zara was to launch environmental friendly outlets with the new developed Technology. Zara followed the diversification of the tasks, which included a simple way of production divided into small machine operated performances and the assembly of products which was handled by workers effectively.
3.1.6 Legal Factors
The industrial progress in the nation with its promotion and assistance is provided by the effectively formulated rules of the Government of Spain. These rules provide assistance in the development of business, which also protects the transaction of Logistics in the business.
3.1.7 Environmental Issues
The ecology of business comprises of some factors, which includes the competition companies, combined factors of the customers and other internalized factors of the company. The growth and expansion of business of Zara have been considered positive and beneficial, yet now it has to be a venture in boundaries and adopt new initiatives for the promotion of its brand.
3.2 Internal Analysis
Now we may review the Incorporation of Porter’s Three Generation strategies that were implemented by Zara. This strategic concept by Zara provided three segments, which included differentiation strategy, segmentation and cost leadership. Zara has achieved the incorporation of the best possible combination of all the three segments, and this marks the brand as an example. Zara has segmented its line of production, which is divided into three sections, namely the kids' section, men’s section, and women’s section. However, comprehensive evaluation has not been undertaken by Zara to depict the clothes for middle-aged women and for the teenagers. Instead, the emphasis was laid on the latest trends in Vogue, providing 10000 latest designs with huge revenue yearly. Zara has innovated the system of the low producing cost that ensures delivery of new designs at affordable prices to the consumers even though the products are modified according to the daily evolving trends.
4. SWOT Analysis
The SWOT analysis depicts the technique of assessing the strengths, weakness, opportunities and threats related to the enterprise in a business environment with the presence of its rival companies or involvement of other factors. According to the SWOT analysis of the enterprise Zara, it has been reviewed that the motivational strategies adopted by the concern have enhanced the staffs to provide effective and efficient service to the organization and their contentment was aligned with their service to accomplish the targets and aims provided by the organization.
The prime strength displayed by the organization was the achievable target setting, the upright implemented structures and the goal-oriented, enthusiastic and positive commitment of the workforce towards the organization. The reasonably realistic and achievable decisions that were implemented by the organization proved to be beneficial over the competition for the growth of the business.
The weakness that has been featured in the analysis is the fact that Zara has made no initiation of promotion of its brand name neither it has shown any effort in the creation of brand name in the market. They have followed this strategy as they believe that by highlighting or marketing the brand name may cause a gap in communication between the enterprise and its customers. The strategy followed by Zara in this respect is the Eurocentric developmental model that believes in not promoting the activities like brand promotion, offers of sale etc. just to draw customers towards the company.
The opportunities available for accessing new markets for Zara can be highlighted in this segment, which is the wide avenue of the different untried locations in the world with potential customer base with the customer-oriented commodities to be offered. The company can create more segments in the available range of products and marking the special range for offer. The company can utilize the opportunity of recruiting workforce with lower wages considering the criteria for workforce required by the company according to the image of the company and its management. Effective communication and base of customers can be availed in the United States of America that can provide the immense prospect for Zara.
The review of the study also marked the potential threats that can be categorized as the supersaturating condition in the current market encountered by the companies, major fluctuating factors and increased rates of exchange and overall the production can be obstructed by the natural calamities affecting the entire marketing process of the company.
5. Strategic Options
Zara has chosen the base in Spain for the operation of assembling the various components required for the manufacturing of the clothes. The company has discarded the idea of outsourcing of the operations to any third party. The company, with exceptional efforts, has carved a niche in the domain of quality of management. Now it may focus on delving into new avenues and territories for the sale of their products employing the innovative processes. This effort must be directed with precision and carefully considering the fact that in the process various queries and doubts may be approached to the process of the company related to the management of quality and management of the workforce. Zara must employ an excellent system to outshine in the global market.
The other strategic option pursued by the enterprise Zara is the incorporation of environment-friendly techniques and strategies in the management of the company. It has also created outlets with the concept displaying eco-friendly approach. The highly honoured certificates of Leadership in Energy and Environmental Design (LEED) for producing environment-friendly and environmentally efficient products have been awarded to the group of Companies, Inditex. The company has provided information about the same in its statement of mission and has gained a competitive edge over the rivals. The rivals try their best to achieve the landmark that has been established by Zara while it focuses on breaking through untried avenues. Zara has now concentrated with the penetration marketing strategy by operating on the area of inaugurating latest and fast styles in trend. An intriguing fact that has been revealed in the study is that the sales personnel at the outlets are assisted with the system of Personal Digital Assistant (PDAs) which assist them in communicating with the fashion designers from Spain. This promptness aids in satisfying the ever-growing consumer demands by Zara. It is reported that the designers’ team comprising of 300 fashion artists are facilitated with the feedbacks and information. This promptness in communication results in speedy analyzing of the market trend by the stylists who endorse the designs and the customers can receive the latest outfits within ten days of their imagining about the design that they wanted. Zara has succeeded in achieving this competitive edge by making efforts to know the customers’ taste and preference and actualizing their dream into reality, which the competitors take almost six months to give a realistic shape. The primary thought behind this approach is to stay communicated and connected directly with the customers being their end-users. Zara recognizes the exact needs of the customers, and they manufacture the same as thought by the end-users to satisfy their demands. The carved niche by Zara has been achieved by following the process of providing the products at short span and reducing the cost of operating methods.
Now, it is considered as the apt time for Zara to venture into an extended and perennial fashion trend that will be meant to satisfy the customers for an elongated period. Zara has not yet ventured in the same strategy before. It is intriguing that there exist such customers who are willing to shell the money for such areas of interest. In the market, a common section deals or seeks qualitative clothes that can be supplied to the customers for a long period. Zara can explore this scope of business for expansion for the company can bring in a range of affordable outfit, which remains in vogue for a period of six months or one year and can be made accessible to the customers throughout the seasons.
As a global brand, Zara has acclaimed its position in different nations. However, there are restrictions on launching new outlets in various nations. The set targets have been accomplished by Zara, which now leads the company to formulate fresh strategies of expansion as the company is facilitated with the proficient task force across the globe. The entire operation regarding the manufacturing and other activities are performed at its base in Spain. Zara must consider the fact of sustainable development for a longer period, which may push the company towards a risk of surviving with the same strategies. Zara needs to diversify its operations in the countries that provide a favourable business environment to Zara. This may result in opening up of the latest ideas of fresh style for a range of commodity supplied by Zara. The new culture and traditions and interaction with the new market will help in exposing the company to draw up innovative ideas and holistic development for the employees of the company. There remains a chance of facing obstacles regarding the new policies formulated and the workforce, however. The proficient workforce may ease out the process in dealing with the issues. The expansion of the goal-oriented market and the latest styles will get wider exposure globally. The difference in the nations, their styles, preference and choice of outfits if not appreciated in one nation may be well received by other nations if the scope of expansion is given serious consideration by the company.
To enhance the feedback of the market on the operation of a corporate enterprise, it is advised to reinforce the image of a brand name in the global market. Van Rekom (1997) has identified the corporate as,” the group of implications that a subject permits to be recognizedand the means through which it permits the group to demonstrate, remind and connect to it,” The image created by a brand assists the enterprise in assuring a sustainable environment and its viability in the market. The competition in the market can be succeeded if the company is capable of creating a durable image of the retail organization. (Burghausen and Fan, 2002; Kennedy, 1977). The loyalty of the customers can be gained if the corporate is in well-maintained and well-associated form. (Balmer and Gray, 2003). As a result, the emphasis must be laid on creating and maintaining a powerful image of the company as well as not neglecting the essential aspect of the process of achieving the thing, which is marketing the same. As Zara is considered for an expansion in the upcoming days, it must concentrate on the creation of good and substantial relations with the end-users by opting effective marketing techniques and strategies. Being the leader in the fashion industry, Zara has the advantage of availing the best options from the market that are easily obtainable.
6. Implementation Issues
The execution of the reviewed opportunities that is available is a challenging job. Therefore Zara is in need of a team comprising proficient workforce in the strong management of its operations. The industry knows that the founding father of the company Mr. Ortega has incorporated the bold, courageous decisions successfully. The strategy, which will be followed by Zara, is to employ workforce comprising of a strong and skilled team of professionals to introduce various ranges of products at a low price as the entrant in the new location of outlets.
The consistency in maintaining an image in the market with the perspective of the company requires its presence at routine intervals. The focus of the company needs to be on the management of the workforce as any discrepancy in the management of the human resources of a company may lead to the adverse reputation of the company and its brand name in the market. There may be issues in entry at a new location with the supply chain management as Zara does not possess an adequate centre of distribution of its products. The development of environment-friendly outlets, as well as maintaining the manufacturing process of qualitative products, may increase the investment costs if there is a deficiency in the supply chain management of the company. The entire process may be adversely affected.
7. Conclusion and Suggestions
Zara, beating all of its rivals in the competition, enjoys the position of a leader in the market. Mr Ortega has been nominated as the richest entrepreneur of Spain. The modified strategies must be adopted by Zara in the entrance of the new markets and availing the best opportunities to induce some changes in the management system. However, it is also suggested not to haste with the decisions. The changes implemented will require some time to gain response and reaction from the users and Zara must allot that time to the users for the feedback. Zara case study assignment help is available from our experienced writers from top universities which let us to provide you a reliable case study writing services.
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