Dsicuss about the Expanding Domain Of Strategic Management Research.
Zara is a Spanish retailer which operates in the industry of fast-fashion and the company has its base in Arteixo, Galicia in Spain. The organization was established in the year 1975 by Rosalia Mera and Armancio Ortega. Zara is considered to be the main brand of the Inditex Group and is the largest retailer of apparel in the world. The various fashion brands that are owned by Zara include, Massimo Dutti, Pull&Bear, Stradivarius, Zara Home, Oysho and Uterque. Zara manages around 20 collections of clothing per year. The first store of Zara was opened in the year 1975 in Spain (Zarahome.com. 2018).
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Strengths · The designing abilities of Zara are the major strengths that can be used by the organization to create a competitive position in the market. · The elegant and superior quality of the products is a strength of Zara. · The huge presence of Zara in various areas of the world has helped in the increase of revenues (Durand, Grant and Madsen 2017). · Zara has also gained huge brand value in the fashion industry and has been placed at the 53rd position by Forbes magazine. · The effective supply chain of Zara has helped the organization in increasing the revenues in the industry. · Zara has been launching more than 1000 new designs in the market each year in the fashion industry. |
Weaknesses · The collection of fashion apparels that is offered by Zara is quite generalised in nature and this is a reason for the shift of consumers from the products of the organization. · The lack of proper advertising and promotional activities have also been a weakness for the growth of the company in the fashion retail industry. · The safety stock that needs to be maintained by the organization is quite low as Zara is a fast fashion retailer (Frynas and Mellahi 2015). |
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Opportunities · Online e-commerce is a huge opportunity that is provided to Zara in the retail sector. · The flagship designs that have been introduced by the Zara stores are gaining popularity in the market which has provided a future opportunity for the company. · The growth of the market potential of Zara is an opportunity related to the future growth of the company in the industry (Hill, Jones and Schilling 2014). |
Threats · Low levels of advertising can act as a hindrance to the development of the organization in the future. · The competition that is being faced Zara in the fashion retail industry is high. This has further led to the loss of revenues for the company. · Zara needs to increase its reach in the fashion retail industry so that it is able to gain more customers which can be helpful in the future growth (Hubbard, Rice and Galvin 2014). |
Rivalry in the industry – The greatest competitors of Zara in the fashion retail industry are, Benton, H&M and Gap. The sales of these organizations have however been on the same level as that of Zara. The supply chain of Zara is however the most responsive among these. Zara is quite fast in the introduction of new collection of clothes as compared to its competitors in the market.
Potential of the new entrants in the industry – The increasing growth of the fashion industry has created opportunities for the entry of new organizations in the industry. The problems related to new entry been taken by Zara with the help of the low priced products that it offers to the customers. However, the expansion of the industry has created enough space for the entry of new organizations. Zara has however been able to attract the customers towards the organization due to the fast fashion based reputation that has been gained by the company (Ma and Seidl 2018).
Power of the suppliers – The power of the suppliers of Zara is not quite high as the low wages that can be provided to the labour of the third world countries have provided opportunities for the increase in the number of suppliers. However, the suppliers of the organization have high power and are able to control the prices of the raw materials. The high costs related to the switch of suppliers have been a major reason behind their high power (Meyer, Neck and Meeks 2017).
Power of the buyers – The advertising related investment that is made by Zara is quite less as compared to the other retail organizations in the fashion sector. The organization mainly relies on the word of mouth based advertising for the promotion of its products. The creation of a loyal customer base in the fashion industry is quite difficult. The consumers are provided with huge number of choices in the market from which they need to choose. This has further increased the power of the buyers in case of Zara and the fashion industry.
Threats related to the substitutes – The major brand named H&M has the capability to compete with Zara in terms of the affordability and quality. The organization can thereby provide substitute products to the consumers of Zara. This makes the fifth force of the Porter’s Framework quite strong (Mitchell and Leiponen 2016).
The analysis of the capabilities of Zara earlier in the assignment has shown the strengths and the weaknesses of the company. The areas in which the company has opportunities to grow and the threats that are faced by in the fashion industry have been discussed in part A of the assignment. The discussion has revealed that Zara needs to involve in the different areas in which it has weaker operations. The various strengths that are held by the company can be used to gain a better position in the market as compared to its various competitors (Morschett, Schramm-Klein and Zentes 2015).
The key strengths of Zara lie in the ability of the company to create various designs of the products with the help of the large numbers of in-house designers who create new designs for the customers of Zara. The elegant and high quality of the clothes which are provided at the lowest prices is a major strength of Zara in the fashion industry. The organization has created a strong presence in different areas of the world. This is a strength of Zara which needs to be exploited in a proper manner so that the organization is able to create a position in the market. The expansion related policies of Zara will be able to provide advantages to the organization in the future growth. The rank that has been gained by Zara in the fashion retail industry can be used by the organization in the future so that it is able to create its market share (Peppard and Ward 2016). The high brand equity of Zara has been a major strength of the organization which can be helpful for the increase of revenues in the future. The ways by which the brand has avoided controversies has helped the Zara in maintaining its position in the industry. Zara has provided consistent quality and performance in the years of its operations in the fashion retail industry. The reputation of the organization in the industry can be used in a successful manner to improve the position of Zara in the market. Zara has been able to create a loyal customer base with the help of healthy culture that is followed by the employees in the organization. The loyal customers of Zara have been a great asset of the company which can be used for its future growth (Rees and Smith 2017). The strong and well-developed supply chain of Zara is a strength that can be used for the increase of its product line and profitability. The fast-fashion organization has always remained true to its name and has provided the newest fashion products to the customers. This strength can be used in a proper manner to increase the future growth of Zara in the industry. This low cost based products that are offered by Zara to the customers have been a differentiation factor that has helped the company in gaining a position in the industry. The organization needs to use this ability to further grow in the domestic and the international markets (Sakas, Vlachos and Nasiopoulos 2014). The main strength that has been exploited by Zara in the years of its operations by increasing the number of physical stores all over the world. The deep and wide layout of the stores of Zara are a major reason behind the success of the company. Zara has an opportunity to increase its revenues by improving its online presence with the help of its e-commerce website (Wheelen et al. 2017).
The strategy has been used by Zara for the purpose of gaining share in the market is a mix of segmentation, targeting and positioning. This strategy has been useful for the growth of the company and the market is segmented by using the mix of demographic, psychographic and geographic methods. This is useful for the growing needs of customers in the fashion retail market. The organization has been successful in using the targeting strategies so that the products can be made available in the market. The positioning strategy which is used by Zara is customer centric in nature and this has been helpful for the company to satisfy the needs of the customers. The changes that occur in the trends have also been taken care by the usage the positioning strategy (Slater 2015).
Competitive advantage has been gained by Zara with the help of the strong portfolio of products that have maintained by the organization over the years. The company has a portfolio of 8 brands which has helped Zara in nurturing the brands with the strong financial base and experience. The comparison of
Zara with the other players in the fashion retail industry has depicted that the company has been pursuing the competitive advantage during the years of its operations. The parent organization of Zara in the Inditex Group which has helped Zara in maintaining the competitive advantage in the market. The locations of the stores of Zara has been placed in such a manner so that the customers are influenced in an effective manner. The stores of Zara are designed in such a way so that the customers are attracted towards the products that are offered in the stores (Stead and Stead 2014). The distribution related network that has been formed by Zara has been formed in an effective manner with more than 2000 stores all across the world. The organization operates the business and the offers newly designed products to the customers in the leading cities of the world. The exclusive stores of Zara are created to operate the multi-brand retail chains of the organization where the various clothing items and accessories are offered to the customers on a global basis. The supply chain of the organization has been successful in creating the greatest competitive advantage of Zara. The fast-fashion retail organization has been successful in bringing new and improved designs to the stores on a frequent basis. The stores of Zara are created with the help of the new designs and the new designs are brought to the stores within the destined period till the stocks of the company last (Steinbach et al. 2017).
The main highlight of the strategy that has been used by Zara is the concept of fast fashion, where the stocks of the products appear according to the changes that take place in the trends. The company has not spent huge amounts on promotions and advertising. However, Zara has been able to generate high amounts of sales with the help of the amount of advertising that has been performed by the organization in the market. The increase of advertising and promotional activities will help Zara in maintaining the competitive advantage by increasing its reach towards the customers belonging to the various areas of the world. The feedback provided by the customers are given utmost importance by Zara. The organization can thereby develop its ecommerce platform so that it can offer the products to a wider range of customers and further collect their feedback on the webpage that will be created by Zara (Trigeorgis and Reuer 2017). This strategy can help Zara in increasing the revenues that are earned in the different areas of its operations all over the world.
I have analysed the strategy process model of Zara which is a fast-fashion based organization based in Spain. The vision of the organization and the ways by which Zara has formulated its strategies in the market have been analysed in detail by me with the help of secondary research. The strategy process model of Zara has taken me through the various areas of the business operations. The ways undertaken by Zara to gain competitive advantage in the fashion retail is also analysed in the strategy process model of the organization. I have also analysed the business model that has been created by Zara with the help of the strategy process model framework. The strengths and the weaknesses of the company are also a part of the detailed strategy process model of Zara. I have analysed the current business position of Zara with the help of this model. The industry in which Zara operates has also been analysed by me with the help of this model. The various online activities and the e-tivities have taught me that the strategic analysis of an organization is necessary for deciding the future policies that can be suggested. The future policies are thereby based on the previous strategic performance of the organization and the current share that is held by them in the market. My notion regarding the process of strategic management has been changed with the help of the analysis of Zara and its processes. My thinking has been changed by the holistic view that has been provided to me by the analysis of the environment in which Zara has its operations. I had faced many challenges during the learning process related to the lack of knowledge and skills regarding the ways by which the strategic environment of an organization can be analysed. The course has further taught me the ways by which the strategic analysis can help in increasing the knowledge regarding the strategic processes of the organizations. I have also been able to understand the position of the company in the market and suggest ways by which the company can create a strong position in the market in an effective manner. The strategic analysis of the organization has been helpful in providing me with the entire picture of Zara and the various operations that it has in the different parts of the world. The information about the company has been collected by me with the help of the various secondary sources of research which have helped in the collection of information about Zara. The ways of the operations of the organization has been analysed by me with the help of the knowledge that I have gained in the market regarding the strategic management of organizations.
References
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Frynas, J.G. and Mellahi, K., 2015. Global strategic management . Oxford University Press, USA.
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