In this report, the case study titled ‘Zara: Fast Fashion’ will be evaluated in order to understand the key issues arise in the case relating to global warming. This report will analyse how the operations and processes of Zara have failed to consider their impact on the environment which results in created challenges for everyone. Various recommendations will be given in this report which can assist in addressing the ethical and sustainability issues raised in this case of Zara while considering their implications for governments, producers and consumers. Lastly, the challenges and opportunities which are inherent in the recommendations relating to ethics and sustainability will be identified within the retailing industry.
In the case study of ‘Zara: Fast Fashion’, details regarding the operations of Zara are given which assist Inditex (the parent company of Zara) in becoming a key player in the fast fashion retailing market. The corporation offers its products and services in 96 offline markets and 46 online markets. Inditex has generated a competitive advantage in the fast fashion based on its responsive supply chain which enables the corporations to offer new and designer products to its customers every week. The supply chain assists the corporation in changing more than 75 percent of its merchandise display in its stores situated across the globe within a period of 3 to 4 weeks (Corfton and Dopico, 2012). The key competitors of Zara include GAP, H&M and MANGO. The supply chain of these competitors is not efficient enough to ensure that they are able to change their offering within a period of 3 to 4 weeks. Companies such as GAP take around 6 months to change its entire offerings due to which they are unable to provide competition to Zara. Zara is able to achieve efficiency in its supply chain because it uses both in-house and outsources manufacturing process to manufacture its products (de Jorge Moreno and Carrasco, 2016).
The corporation produces around 50 percent of its products through the in-house manufacturing process. The corporation outsources 26 percent of its manufacturing process to countries in Europe and 24 percent to Asian countries (Corfton and Dopico, 2012). Due to this supply chain, the company has been able to ensure that it maintains high quality in its products and supply them within relatively less time. However, this business strategy did not consider the impact of Inditex on the environment. This fast pace supply chain leads to creating wastage of products and raw materials which is negatively affecting the environment. In order to continue to serve their customers, the corporations are failing to implement relevant policies to reduce their carbon footprint. Inditex started to implemented environment policies in the organisation to address the issue of waste and pollution caused by the enterprise. The company looks at every section of its supply chain in order to reduce its energy consumption. Currently, 41 percent of the global energy consumption sources of the enterprise comes from clean sources which result in reducing the carbon footprint of the enterprise (Inditex, 2018). However, these actions are not enough to ensure that the company is able to reduce its carbon footprint and other steps must be taken by the enterprise to ensure that they are able to address the issues such as global warming.
The importance of compliance with ethics and sustainability policies has increased substantially for corporations across the globe as the issues of climate change, and global warming become more significant. The actions of corporations directly create challenges for the environment by increasing their carbon emissions; however, these challenges can be reduced by implementing sustainability policies in the company. Implementation of business ethics and sustainability policies are important to ensure that the management of the company avoids acting unethically when it comes to implementation of environmental policies in the company (Quarshie, Salmi and Leuschner, 2016). Increasing number of waste across the globe is a major reason for climate change. The problem is associated with methane which is produced from anaerobic decomposition of organic materials which is a primary cause of global warming. The fast fashion industry uses different chemicals and raw materials and their waste increase methane in the environment which resulted in causing global warming (Hoskins, 2017). There are various actions which can be taken by corporations to ensure that they are able to reduce carbon emissions and implement sustainability policies in the enterprises.
The corporations operating in the fast fashion retailing industry should evaluate their impact on the environment to find out different ways through which they increase their carbon emissions. The environment and its resources suffer due to the production of clothes and accessories in fast fashion industry which resulted in increasing waste across the globe (Akrivou and Bradbury-Huang, 2015). A large number of clothing products and raw materials are thrown by corporations such as Zara, Forever 21 and GAP which leads to off-gassing which means those materials leave toxic chemicals while decomposing. Since there is a rapid turnover rate in the fast fashion industry, the number of wastage of products is fast as well which contributes to global warming. Consumers also contribute to this wastage by throwing clothes which become old which adds up and leads to a large detriment effect on the environment (Cooper, 2018). Thus, corporations should evaluate their impact on the environment to find different areas through which they can reduce their carbon emission.
Corporate social responsibility or CSR is referred to a self-regulatory framework which is implemented by the corporations to manage their business processes to have an overall positive impact on society (Tai and Chuang, 2014). This strategy assists the corporations in maintaining a balance between the interest of their stakeholders and it assists in fulfilling social responsibilities of the enterprise. The corporations operating in the fast fashion industry should implement a CSR model to achieve sustainable development. The CSR model will require them to maintain transparency in their operations and enforce them to made continuous disclosures to their stakeholders. These periodic disclosures contain information regarding the actions taken by the board of directors of the organisation to maintain a balance between the interests of stakeholders. In these disclosures, corporations such as Zara should include details regarding their impact on the environment and the actions taken by the enterprise to reduce its carbon footprint (Gupta and Hodges, 2012). The government can also implement regulations which enforce corporations to adopt CSR structure to ensure that they comply with business ethics and sustainability policies.
The SSCM or Sustainability Supply Chain Management is referred to a model of production and supply chain which is focused on reducing carbon footprint of the corporation by making changes in different supply chain operations (Ahi and Searcy, 2013). These changes are made in the process to increase the efficiency of operations and reduce unsustainability in the processes. The SSCM focuses on integrating aspect of SSM with economy, environment and society ensure that pollution, wastage and carbon emission can be reduced on different levels of the supply chain process. Small steps such as relocation of the supply chain can have substantial impact on the sustainability approach of the enterprise. For instance, changing the local of manufacturing can result in reducing the transportation mileage which comes from the rapid turnover of clothes. The corporations can also use materials and supplies in their manufacturing process which did not produce toxic chemicals while decomposing which assist them in reducing their carbon emission (Brandenburg et al., 2014). Companies such as Zara can focus on recycling in their operations to ensure that they use the products which are not purchased by customers to create new ones which will reduce their wastage.
The manufacturing processes of fast fashion retailers consume various energy sources which usually include fossil fuels. Due to the use of non-renewable energy sources, the carbon emissions of these corporations increase substantially. The use of these energy sources reduces the number of natural energy sources on earth which are already in limited number. Organisations can use clean energy sources to power their operations in order to reduce their carbon emissions. Zara has factories situated all around the world which continuously works to produce a large number of products; the company also have retailing stores situated in many countries which consumes energy sources as well (de Jorge Moreno and Carrasco, 2016). The corporation can change these energy sources from cleaner and renewable energy sources to ensure that they reduce their carbon emission. This change also assists corporations in protecting the environmental resources such as fossil fuels to protect the environment. The company can also use renewable energy sources to power its stores situated across the globe. Along with changing the energy sources to renewable energy sources, the company can change the materials which it uses to manufacture its products. Zara can use recycled materials and alternative greener options in order to improve the sustainability of its supply chain.
While implementing a sustainable and ethical approach in the organisation, there are various strategic and operations dimensions which corporations have to consider. In order to reduce global warming and its impact on the world, large enterprises should take initiatives to reduce their carbon emissions. The board of directors of the corporations should engage in the strategic procedure to find different sources through implementing business strategies in order to ensure that they are able to link the business strategy along with ethical and sustainable policies (Corfton and Dopico, 2012). Zara should implement strategic policies to incorporate the above mention recommendations in its business strategy to ensure that it implements a sustainable approach. The board of directors of the corporation should change the mission and vision of the organisation to align it with ethical and sustainability goals. The vision of the company should reflect regarding how it is focused on maintaining a balance between different stakeholders of the enterprise. The mission of the company should also ensure that it is responsible for different stakeholders of the enterprise.
Implementing the strategic policies are not enough, and the corporation is required to continuously monitor these policies to oversee their implementation. Continuous reporting is necessary to ensure that the strategic policies which are implemented by the corporation are followed in different operations such as production, manufacturing and others (Orcao and Perez, 2014). In the case of fast fashion retailers, they can achieve sustainability by ensuring that evaluate their operations and find different areas where they can improve to adopt a sustainable approach in the business. The corporation can also change their suppliers to find new ones that produce and manufacture products ethically. A good example is the cotton industry in Australia which is mostly operating by families. Australia is a major cotton producer country which provides employment to many companies, and they conduct their operations in ethical manner while contributing to sustainable development of the nation (Cotton Australia, 2018). Zara should purchase products from these ethical sources and use them in their operations to ensure that they are able to align their strategic policies with business ethics principles.
Without adaptation of a strategic framework which is linked with environmental goals a company, sustainability cannot be achieved. Effective CSR model also plays a crucial role in ensuring that companies are able to achieve their sustainability target. In the case of Zara, the corporation has not adopted a CSR model which is focused on promoting environmental policies. Although the company is focusing on reducing its carbon emissions by changing processes in its supply chain, however, these policies are not enough, and the corporation should implement other strategic policies to achieve this objective (Gamboa and Goncalves, 2014). The company should change its mission and vision statement to incorporate sustainability policies in them and issue a statement in which it must describe the ways which are adopted by the enterprise to promote sustainability. The company should also change its locations in Europe for in-house manufacturing to reduce transportation time which will reduce pollution and increase efficiency. Zara should also ensure that its outsourced operations are also managing in an ethical and environmentally friendly manner to promote sustainability.
There are various opportunities which will be received by Zara if it complies with the above-mentioned recommendations. The company can maintain a balance between the interests of its stakeholders through this approach to ensure that their needs are fulfilled. The corporation will be able to discharge its responsibility towards the environment by adopting these recommendations. An effective CSR model will ensure that the company is responsible towards its stakeholders and it made continuous disclosure to them regarding the actions taken by the management to protect their interest (Wilson, 2015). The adaptation of sustainability policies will result in creating a positive brand reputation of the enterprise in the public which will increase its sales. The awareness regarding climate change and global warming is increasing across the globe and customers are more likely to purchase products for corporations which take actions to protect the environment. According to Curtin (2018), 73 percent millennial customers are willing to spend more money on sustainable products. The adaptation of a sustainable approach will assist Zara in increasing its sales by promoting its products as sustainable. The company can also charge higher prices for its products which are environmentally friendly which provides various growth opportunities for the enterprise.
The key risk associated with adaptation of sustainability policies is that it resulted in increasing operating costs of the enterprise. Zara will have to change its manufacturing and production process completely to adopt a model which is based on 100 percent renewable energy. It will increase operating costs of the enterprise which will reduce its profitability (Joy et al., 2012). The ability of the enterprise to produce products with efficiency will suffer due to adaptation of a sustainable supply chain which will reduce the responsiveness of its manufacturing process. Implementation of a CSR model and effective compliance is a difficult process which requires companies to invest extensive resources and time. The process of changing the strategic policies will result in changing the market reputation of the enterprise and it will also change its mission and vision which will ultimately destroy the competitive advantage which Zara has generated over its competitors. However, effective compliance with these policies will result in generating a competitive advantage by the enterprise in the long run which will increase its profitability.
Conclusion
In conclusion, the evaluation of case study of Zara provided that the company has sustained competitive advantage in the fast fashion retailing industry, however, the corporation has failed to adopt a sustainable approach. The company produces a large amount of waste which contributes to increasing global warming. Its production processes also use energy sources which are non-renewable which resulted in increasing the carbon emissions of the company. Various recommendations are given for the enterprise which can assist it in implementing a sustainability approach such as the implementation of a CSR model, sustainable supply chain management, use of clean energy and greener products and evaluating their impact on the environment. Strategic policies are given in this report which can assist the company in complying with these recommendations. Opportunities of compliance with these policies include positive brand image, increased sales and profits. The risks include increased operating costs, reduced efficiency and difficulty in implementation. Compliance with ethical and sustain policies enable corporations in reducing their carbon footprint and sustain their future growth.
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