Global strategy and sustainability

Contents

Task 1 -The External and Internal Environment.......................................................................2

External environment analysis:....................................................................................................2

Internal environment analysis:.....................................................................................................3

Critical Factors:............................................................................................................................4

Task 2 – Strategy in the Global Environment.............................................................................5

Internationalization Strategies of ZARA.....................................................................................5

Recommendations:.......................................................................................................................5

Conclusion:.....................................................................................................................................5

References.......................................................................................................................................6

List of figures:

Figure 1 Five forces model Sources: (Planium Pro, 2021)..............................................................2

Figure 2 SWOT analysis Source: (Pruitt, 2021)..............................................................................3

Zara is grown to become one of the most successful retail brands nowadays. The brand’s

accessories for men, women, and children extend into the textile industry (Planium Pro, 2021).

Fusion at Zara Home. Zara strives to "provide what customers want, before anybody else" and

conducts business in accordance with the company's fundamental principles of beauty, clarity,

usefulness, and sustainability.

1.1 External environment analysis:

As more businesses enter and compete in the market, the fashion retail sector is becoming more

and more crowded. In order to achieve its goal of being the fastest to meet consumer demand,

Zara places a high priority on investigating the external forces affecting the garment business

(Pruitt, 2021).

Porter’s five forces:

Using a high, medium, or low evaluation scale, porter's Five Factors examines the competing

forces in the external environment in which Zara competes.

Competitive rivalry (high):

 This industry is extremely competitive due to fragmentation.

 Zara may compete and garner customer loyalty based on features and quality.

 Luxury companies and well-known brands may charge much higher prices (Anon, 2020).

Buyers power of bargaining (medium):

 Customers have little direct negotiating power

 Due to the severe competition and availability of products buyers have many options

and flexibility to find what they're looking for (Pruitt, 2021).

Supplier power of bargaining (low):

 Suppliers have very little negotiation power in the retail fashion industry.

 The bulk of garment firms outsource their material production to developing nations like

China, Bangladesh, Vietnam, and India because of the oversaturated market (Sudhakaran,

2020)

New Entrants threats (low):

 There are so many companies selling identical items in the fashion retail sector

 It is difficult for new entrants to stand out and attract customers. As a result, the danger of

new entrants is low (Sudhakaran, 2020).

The internal investigation now analyses Zara's company operations and strategy with a focus on

the surroundings. The SWOT analysis will highlight the clothing retailer's advantages and

disadvantages (Leidiger, 2017).

Figure 2 SWOT analysis Source: (Pruitt, 2021)

SWOT Analysis:

Strength: Weakness:

Zara, as an industry forerunner, has the most Zara's biggest flaw is that it can't strike the

cutting-edge supply chain strategy and right balance between quick fashion and

management techniques. sustainability.

Zara is present in 202 different markets with Zara's decision to reduce the number of its

96 of those markets having physical Zara brick-and-mortar stores was hastened by the

stores. Zara, the Spanish clothing retailer, pandemic. Yet, despite a rise in internet

with a grand total of 2,249 stores (Team, purchases, total sales are just 89% of their

2020). 2019 levels.

Opportunity: Threat:

On average, customers will make 17 trips to a Shein, a fast fashion behemoth in China, is
 Zara location per year. This is due to the fact the largest fashion retailer in the world. With

that Zara quickly adapts to new fashion only 2 million downloads in the same time

trends. span, Zara needs to be wary of its digital

competitors (Team, 2020).

1.3 Critical Factors:

 Based on internal research conducted by Zara, the company has concluded that satisfying

the Buyer's need for more value at lower prices necessitates constant vigilance in

achieving and maintaining peak efficiency across the supply chain (Leidiger, 2017).

 Zara's external research suggests the company has a chance to compete in the market and

win customer loyalty because of innovative design and high quality. Prices from luxury

retailers and well-known brands may be significantly more (Zara, 2021).

Sources of Competitive advantages:

 Due to its streamlined supply chain, Zara can quickly adapt to shifting fashion trends than

its rivals.

 Since clothing is always in high demand, the company only makes a limited number and

rarely replenishes the stock.

 Shorter production times allow for more options, more design iterations, and a higher

success rate.
 Task 2 – Strategy in the Global Environment

2.1 Internationalization Strategies of ZARA

Zara can use a global strategy for expanding the vertical model of manufacturing, centralized

control over the production process, adaptability to the environments of different markets in

different countries, and the diverse and frequently changing preferences of the customers, are at

the heart of Zara's international market strategy (Zara, 2021).

2.2 Recommendations:

 Zara needs to invest more time and energy into digitizing Zara to meet the needs of its

customers. This new technology could considerably boost Zara's ability to compete with

its rivals. Zara needs to pause plans to build more stores (Leidiger, 2017).

 If Zara wants to do live streaming, it should team up with these KOLs. From 2017's $19

billion to 2018's expected $1 trillion, live streaming proved a lucrative venture (Pruitt,

2021).

 A Zara factory in China would be a great idea. By swiftly determining the shared network

of Zara, production levels can be adjusted to avoid overproduction of individual goods,

which in turn reduces transportation costs and improves the company's ability to respond

to market demands promptly.

3 Conclusion:

According to the report's results, Zara's global and corporate strategies have allowed it to become

one of the most recognized brands worldwide and the most successful manufacturer of electric

vehicles. This project includes a comprehensive SWOT analysis and a Porter Five Forces

analysis of these strategies.

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https://www.ukessays.com/essays/marketing/fast-fashion-and-new-product-development-

marketing-essay.php.

Leidiger, N. (2017). GRIN - Internationalization Strategy of Fashion Retailer ZARA. [online]

www.grin.com. Available at: https://www.grin.com/document/393049.

Planium Pro (2021). Porter’s Five Forces Analysis: Assessing The Competitive Environment.

[online] Planium Pro. Available at: https://www.planiumpro.com/blog/porters-five-forces-

analysis-assessing-the-competitive-environment/.

Pruitt, B. (2021). SWOT Analysis During COVID 19: 4 Steps of SWOT Analysis in a Pandemic.

[online] www.rhythmsystems.com. Available at: https://www.rhythmsystems.com/blog/4-steps-

to-swot-a-pandemic.

Sudhakaran, A. (2020). Zara SWOT Analysis 2020: Ultimate Guide. [online] PESTLE Analysis.

Available at: https://pestleanalysis.com/zara-swot-analysis/.

https://www.mbaskool.com/five-forces-analysis/companies/18278-zara.html.

Zara (2021). Zara’s Internationalization & Multi-Brand Strategy | Free Essay Example. [online]

StudyCorgi.com. Available at: https://studycorgi.com/zaras-internationalization-and-amp-multi-

brand-strategy/#:~:text=Zara [Accessed 3 Nov. 2022].