ZARA

Table of Contents

Introduction..........................................................................................................................................4
 TASK 01: The External and Internal Environment of Zara............................................................5
 Zara External Environment.......................................................................................................5
 PESTEL Analysis of Zara.............................................................................................................5
 Political Factors.....................................................................................................................5
 Economical Factors...............................................................................................................6
 Social Factors.........................................................................................................................6
 Technological Factors............................................................................................................6
 Legal Factors..........................................................................................................................6
 Environmental Factors Affecting Zara...................................................................................6
 Zara Internal Environment........................................................................................................6
 Primary Activities......................................................................................................................7
 Inbound Logistics...................................................................................................................7
 Operations.............................................................................................................................7
 Outbound Logistics................................................................................................................7
 Marketing and Sales..............................................................................................................8
 Service...................................................................................................................................8
 Secondary Activities..................................................................................................................8
 Infrastructure........................................................................................................................8
 Human Resource...................................................................................................................8
 Technology............................................................................................................................8
 Purchasing.............................................................................................................................8
References..........................................................................................................................................10

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Introduction

In 1975, Amancio Ortega, a local clothes manufacturer who had worked his way up from being a
delivery boy at a shirtmakers, opened a modest Zara store in A Corua, Galicia, Spain. This was the
germ that grew into Inditex, an empire that overcame Spain's financial difficulties to become the
greatest fashion retailer in the world (Butler, 2013).

The key to Zara's success is its ability to copy the hottest catwalk trends, get new things into shops in
less than 15 days, and do so at laughably low prices (KWAN, 2011).

Figure 1 Zara Headquarters / Arteixo, A Coruña (SPAIN) (Conti, 2019)

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 TASK 01: The External and Internal Environment of Zara

Figure 2 Internal and External Environment (iEduNote, 2017)

 Zara External Environment

In this case study, I'll analyse Zara's pestle analysis. How the corporation is affected by
macro-environmental elements, such as politics, the economy, society, technology, law, and
the environment.

 PESTEL Analysis of Zara

 Political Factors

One of Zara's main benefits is the advantage of having a European brand is that it enables
the company to market and sell its products throughout Europe. Zara operates across a
number of countries in the world. Politically driven financial regulations are crucial to the

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business's sales and profitability. For instance, China and India have very strict banking
regulations. For the company, they serve as bureaucratic red tape that hinders its ability to
conduct business as easily as it does in Europe.
 Economical Factors

In COVID-19 pandemic Zara's only option is to shut all its retail stores throughout the world.
One of the finest decisions the company has ever made was to go online. Europe's biggest
exporter of Zara clothing is the UK. However, Zara was heavily impacted by the Brexit
accord. Clothing and garment sales have dropped significantly. The company cut back on
production and fire more workers because of the decline in sales. The suggested retail price
of the company's products increases when raw material costs rise. The higher retail price
would reduce Zara's sales.
 Social Factors

Zara's customer base is huge and quite varied. Customers can browse the company's huge
product selection.  When a niche market first emerged, it was an unwelcome and strange
idea. The client market has, however, grown considerably more cutthroat in recent years.
They increasingly choose companies that provide a wide range of goods within a single
category.
 Technological Factors

Business closures occurred when the COVID-19 outbreak first appeared. Zara moved swiftly
to invest in the e-commerce and online retail sectors.  Zara uses RFID technology in its
stores to address its logistical and inventory problems. In addition, Toyota and other
producers of technology and mechanical engineering are important partners and allies of
Zara. As a result, Zara was able to boost the rate of client response.
 Legal Factors

Zara has a complicated history with copyright and patent challenges. Zara has regularly been
charged with stealing Balenciaga and Adidas clothing and designs. Without regard for
anything else, the brand continues to do it. Zara should consider enacting copyright and
patent restrictions to safeguard its digital and creative assets.
 Environmental Factors Affecting Zara

Zara has made a public pledge to provide environmentally friendly products. The firm has
also shown its commitment to environmental issues such as clean water, biodiversity, and
animal welfare. Customers would be more loyal to the business if it took environmental
concerns seriously (Shaw, 2020).

 Zara Internal Environment

1. Primary Activities

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 2. Secondary Activities

Figure 3 Zara Value Chain (Edraw Max, n.d.)

 Primary Activities

 Inbound Logistics

Zara's inbound logistics department transfers and distributes raw materials used in
manufacturing, allots those things, and maintains inventories of supplies, raw materials, and
finished goods for sale in stores. Zara's inbound logistics demonstrate its command of the
supply chain.
 Operations

The primary design departments may be housed here, making it easy for them to
communicate with the procurement branch and make swift changes and selections,
according to an examination. Zara's headquarters are in Spain, where the company is based.

 Outbound Logistics

Zara's clothes are often distributed during the start of fashion seasons, which correspond to
real weather seasons. Zara's ultimate objective is to shorten the process from makers to
purchasers as much as feasible.

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  Marketing and Sales

Zara spends less on marketing and promotion than other firms and brands because they
apply a variety of savvy commercial methods. Zara owns the majority of its stores, but due
to cultural differences, it is also open to joint ventures and franchising in "high risk" nations.

 Service

The first rule that Zara follows is to prevent lengthy lineups or wait times in stores. Zara
adheres to numerous rules to sustain consumer pleasure and interest.

 Secondary Activities

 Infrastructure

The CEO, who keeps close contact with headquarters, which is in charge of brand
management, human resources, information technology, transportation, and real estate.

 Human Resource

Human resource management is critical to Zara's business strategy. They prioritise staff
training, which normally lasts at least one week across all sites.

 Technology

Zara made considerable IT expenditures to develop various evaluation tools, such as their
Personal Digital Assistance programme, which is used in shops to maintain the supply chain
up to date with data from sales and distribution, allowing for swift response to market
changes as needed.

 Purchasing

Inditex Group obtains raw materials through regional divisions and offices in Europe, Asia,
and Australia. They also buy certain inputs and finished items from outside vendors, who
frequently operate in low-cost input marketplaces. In addition, they have a large plant in La
Coruna where they swiftly convert the textiles they own throughout Spain into their own
produced things in order to ensure a regular supply of products to be marketed in
accordance with their business plan (EdrawMax Online, n.d.).

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Figure 4 SWOT (edrawmind, n.d.)

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References
Anon., n.d. s.l.:s.n.

Butler, S., 2013. Inditex: Spain's fashion powerhouse you've probably never heard of. [Online]
Available at: https://www.theguardian.com/fashion/2013/dec/15/inditex-spain-global-fashion-
powerhouse
[Accessed 15 Dec 2013].

Conti, S., 2019. Zara’s Green Agenda Sees Zero Waste, 100% Sustainable Fabrics by 2025. [Online]
Available at: https://wwd.com/business-news/business-features/zaras-green-agenda-zero-waste-
100-sustainable-fabrics-1203220857/

KWAN, B., 2011. Marketing. [Online]

business jargons (2019). What is Internal Environment? definition and factors- Business Jargons.
[online] Business Jargons. Available at: https://businessjargons.com/internal-environment.html
[Accessed 8 Dec. 2022].

EdrawMax Online (n.d.). Zara Value Chain Analysis. [online] Edrawsoft. Available at:
https://www.edrawmax.com/article/zara-value-chain-analysis.html [Accessed 8 Dec. 2022].

edrawmind (n.d.). SWOT Analysis of Zara. [online] Edrawsoft. Available at:

iEduNote (2017). Internal and External Environment Factors that Influences Organizational Decision
Making. [online] iEduNote.com. Available at: https://www.iedunote.com/organizational-
environment-elements [Accessed 8 Dec. 2022].

Shaw, A.A. (2020). PESTLE Analysis of Zara. [online] SWOT & PESTLE Analysis. Available at:
https://swotandpestleanalysis.com/pestle-analysis-of-zara/ [Accessed 8 Dec. 2022].