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fashion industry gallery is heading towards the path of fast fashion, which is making this industry to grow and evolve with the constantly changing dynamics. Zara is one the global fast fashion brands which has made its footprints in almost every country in which it operates in. Zara with its strategies has positioned itself in the global market and with sustainability and tactics it is heading the path of growth. With the dynamics and the trends infashion, Zara is the first name that people prefer for fast fashion brands. The study will emphasise on the external and internal environment of Zara, the strategies that the company can integrate into for developing the global market and stay a step ahead in the competitive world (Chowdhury, et al., 2021). Then, the next sections in the report will study on the corporate strategies for Zara to grow and enhance its profitability and then the strategic purpose of its operations. Zara strategies and the path of its growth will be the major area of focus in the study.
Task 1- The external and internal environment
With global presence, Zara needs to have a follow p with the prevailing political pressures in every country which can mark a negative impact on the overall working.
Purchasingcapacities of the customers pose a direct impact on Zara, and even it is affected by the currency fluctuations.
Zara is into fast fashion brands, and the present-day society has the urge towards this fashion. With this Zara is making its growth in the societal perspective.
High technology is integrated by Zara and is even planning to grow with its technologicalperspective making the online presence to grow with impactful e-commerce.
Zara is adopting the sustainable ways to operate and thus making it as a high preference by the consumers who are environment friendly.
Zara needs to have legal compliances met with every country policy to operate without interruptions. All intellectual laws,and the laws of labour protection needs to be complied with.
Porters Five Force Analysis
- Threat of new entrants- Zara has a strong position embedded in all the markets, and thus the barrier of entry that Zara has is moderate.
- Bargaining power of suppliers- The brand is into vertical integration that is making Zara to work in a highly close proximity with the suppliers and making them a huge gain in the costs and the quality that they offer. Thus, a high power.
- Bargaining powers of buyers- The brand is into fast fashion brands and thus the powers are low with the buyers because of the trendy clothing segment the brand is offering with sustainability.
- Threat of substitutes- The world of fashion industry gallery is highly competitive, and Zara is into a huge threat of substitutes, even with its unique business propositions (Aftab, et. al., 2018).
- Industry Rivalry- A highly competitive position is held by Zara with the competitive businesses that exists.
Present competitive position of Zara
- Zara is into the model of shein fast fashion workers and keeps itself upgraded with the evolutionary market trends.
- The string supply chain is into consideration making the company to grow its supplies.
- Decentralization model for decision making which is making the Zara to make quick and effective decisions at every level and get the business upgraded with the market demand (Dowsettand Ringstrom, 2017).
Strategies by Zara to maintain its competitive position
- Zara should focus on making eth constant investment in research and development, grow its technologies and making the innovative work culture to stay on the top and get better responses.
- As the customer concern in the present era is growing towards sustainability, and thus to grow Zara should constantly focus on to get the sustainable options and making the integration of fashion with ecology.
- Zara should explore the options pf omni-channel supplies to fulfil the market demands arising globally.
- Zara should focus on to get in with the consumer demand so that it can stay in integration with the customer preferences and have the leading position in the market (Ghemawat, et. al., 2019).
Task 2- Strategy in the global environment
Purpose of International Expansion
- Zara is working towards the business expansion on global level making the high accessibility and reach to the potential customers and having the business to tap the chances of growth that flow to the shein fast fashion workers brand and stay on the top of the competitive businesses that exists (Gheorgheand Matefi, 2021).
- Zara is into taking the new resources towards it making it to grow operationally and have a better cost ascertainment, making a high profitability to flow in its way.
- Zara is focusing to build its network which is making its technological growth and a better retail position even in the growing competitive world.
Impact on the company strategies that prevail
- The market diversification will make the business to focus on the multiple revenue stream and growing the fluctuating dynamics also (Gheorgheand Matefi, 2021).
- The supply chain that already exists needs to be strengthened by aligning the work and making the cost effectiveness also to ensure high profit flows.
- Zara should focus on its sustainable growth options, to raise awareness in the market and also focus to create a high contribution towards environment.
Recommended global strategies for Zara
- Franchises option
- Get into joint venture with existing businesses
- Direct investment in the international markets
- The option of franchise makes the business to reach into international market quickly and with ease and can grab its potential growth prospects in the market. The franchise will also have the local market details and knowledge which will also be helpful to the brand is facilitating its position and grow with ease in the international market (Segran, 2019).
- Joint venture business integration is helpful in making the business to get in accessibility with the local businesses, experts and market, and get into market (Gheorgheand Matefi, 2021). Zara will this plan can get into with low risks options, less investment and an enhanced reach in the market it is planning to get in.
- Direct investment is the business strategy which makes the Zara to make investment in international market to expand directly, this leads a higher control with the brands, ensuringbrandmaintenance, and its prospects of customersatisfaction to be followed. This will make Zara to have the strong strategic presence and maintain the better brand standards at every store it is opening.
Task 3- Corporate Strategy
For the growth in the supply chain and posing an overall improved situation, Zara should focus on the following frameworks to grow and sustain its position as:
Horizontal integration- Zara to improve supplies can get into with this to acquire partnerships with other businesses in fashion industry gallery. This will make Zara to plan its brand expansion, and gain better economies of scale. The careful consideration shouldbe planned to make cultural fit and integration of challenges andalso the focuson the potential brand dilution (Segran, 2019). This can make Zara to make its business reach.
Vertical Integration- Zara already is into the practice of vertical integration on a wider scale to a huge level as it owns and controls most stages of its supply chain ranging form designing, manufacturing and distributions (Ghemawat, et. al., 2019). For making further improvement in the supply chain working, Zara can focus on making the vertical integration backwards by making acquisitions and partnerships with the manufacturing businesses. This ensures the reduced lead time, quality standards, cost benefits, this will also make brand more feasible and growing.
Outsourcing- Zara is already in the model of supply chain vertical integration model as it is making a selective approach but can get into the non-core business activities in to improve the business efficiency level and enhance flexibility (Jha and Matefi, 2021). Zara majorly is into the outsourcing of the services of logistics, warehouses, and non-core production. By getting in to partnerships along wit these services with the viable and reliable providers. Zara ha its primary focus on the resources on to core business activities as designing, trend settings, and high responsive fashions.
Strategic alliance- Zara can get into strategic alliances to get in the complementary businesses in enhancing the supply costs. Zara can even make collaboration with the transportation business and into logistics by optimizing it supplies, and reduced cost analysis. The focus should be on aligning with better values.
Recommendations for enhanced profitability of Zara
- Zara should focus on to get in with the principles of lean manufacturing as JIT, which will be helpful to Zara in controlling its wastes, reduction in its lead time, optimizing the production (Sitaro, 2020). Zara with this can minimize its overstocking issues and making the issues of under stock to be avoided by reducing the marks and high profitability level.
- Zara shall focus on making a high investment in the models for demand analysis and forecasting and making the better consumer prediction and optimize the product level in business (Tokes, 2022). By making an active forecast, Zara can have better product analysis, managing work and balancing the business operations.
- The supply chain of Zara should be built with agility and making a higher response for market trends and demands. Zara will leverage the real-time responses, making the production processes and improve the supply contracts by capturing the sales prospects (Ghemawat, et. al., 2019).
- Zara can also strengthen its position with high customization with better initiatives, high loyalty plans and interaction with the customers to increase their belongingness towards the brands and leveraging towards the high profitability for long-term.
Task 4- Strategic Purpose
Analysing and evaluating the strategies of the Zara’s CSR and making the identification of the issues in the business requires better ways to work in and making the theoretical framework. The CSR policy of Zara along with its recommendations are as follows:
The relevance of the theoretical model for accessing the CSR strategy of Zara is by applying the Carroll’s CSR Pyramid model which is having the four dimensions includes economics, legals, ethical, and the philanthropic responsibilities (Zhang, et. al., 2021).
- Economic responsibilities- Zara is fulfilling the economic responsibilities by generating higher profits, generating employment, and making the economic contribution to grow economically by the operations and sales growth in the business.
- Legal responsibilities- Zara is adhering the legal needs which includes the effective consideration of labour laws, intellectual property rights, high consumer protection, and the environmental protection acts.
- Ethical responsibilities- the ethical responsibilities of Zara are involving to go beyond the legal needs and take its operations on ethical aspects.
- Philanthropic responsibilities- Zara is this category is working towards the voluntary actions to giving back what they have towards the society and making active contribution towards the charitable trusts, active donations, and taking community initiatives (Zhang, et. al., 2021).
Zara is having a high contribution towards the CSR strategies and is working actively towards the society and the environment, and particularly working in enhancing the labour practices, controlling the carbon footprints, and on ensuring the supply chain transparency and working.
Ethical Issues and recommendations
- Zara is been highly criticized by the issues of labour conditions that it offers, and also making low wage payment, more hours of working, and improper working conditions(Chowdhury, et. al., 2021). To cope with this issue, Zara can apply following recommendations as:
- Ensure the fair pay policy
- Work conditions to be created safe
- Regular suppliers’ audits for better compliance
- Sustainability aspects- Zara has a significant impact on the environment, and needs to considerably work upon its sustainability by making eco-friendly practices. This can be ensured by:
- Use of sustainable clothing and materials
- Waste reduction
- Better recycling chain to be incorporated
Zara has various ethical and economical responsibilities, it faced a few challenges that needs to be corrected by deploying better practices to ensure the overall growth (Chowdhury, et. al., 2021).
Zara in the past decade has grown exponentially and has marked its presence globally. the companyhas the motive to have international expansion by various aspects and to get its market position stable and penetrated. Zara with all these strategies and growth plans is focusing on to stay on the top and lead the fashion industry. Even with multiple issues faced,Zara is constantly working upon them to correct it and maintain its reputation in the market.
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