The aim of Macro-environment analysis is to examine the factors which influence the changing in demand, the way of manufacturing and distribute the goods, the prices and availability of resources and the method of competition in the industry. The tool which we are going to use for this purpose is PEST analysis. (Appendix 1)
Porter’s five forces framework:
The industry environment analysis provides a framework of factors which affect more directly the strategic competitiveness and growth of returns. In order to assess the attractiveness of apparel industry we are going to use Porter’s five forces framework. , , , ,
Industry and Competitors
Fashion industry is characterized with short product life cycle, high variety, high volatility, unpredictability and high level of impulsive buying, because of which this industry hide a risk of shortage or surplus. The fast fashion competitors in high streets are becoming fierce, trying to meet the constantly changing demand of customers. Zara, as the most renown representative of fast fashion strategy, is faced to compete on home and global industry level with fast fashion brands like: Mango, Topshop, New Look, Hennes & Mauritz and with non-fast fashion industry like Gap, United Colors of Benetton, Uniqlo, and Espri. In contrast to the traditional retailers, Zara do not target its customers by segmenting them on the bases of age, sex or race, as its target is for women, men, and youth, from infants to age 45. The success of its international strategy is led by Zara’s conviction that, despite the differences of cultures and generations, “national frontiers are no impediment to sharing a single fashion culture.” Zara, offering mid-market chic at down market prices target customers that have a specific respect for fashion, sensitive of latest trends and searching for affordable prices.
II.Resource and Capabilities
The resource-based view of strategy examines the organization’s capabilities which provide the competitive advantage and superior performance of the company. Michael Porter’ proposed a generic strategy frame work, which suggests that Zara, as company which offers fashionable goods at relatively low prices, using integrated cost leadership/ differentiation strategy. According to Bowman’s Strategic Clock the integrated cost leadership/ differentiation strategy is called Hybrid Strategy. We are going to examine how Zara’s capabilities fit to it
Apparel industry is characterized as labor-intensive...