Part 2- Company Strategic Analysis
Submission Date: 18th March 2010
Current & Future Macro- Environment of the Retail Industry 4-7
Zara’s current position within the competitive marketplace 8-10
Strategic options and recommendations for Zara 11-13
It can be found that the fashion retail of Zara is the flagship brand of Spanish group Inditex which is currently trading internationally. There are over 400 Zara stores around the world, with year on sales increasing at around 25% over the last years; it has become one of the world’s fastest growing retail. In this report there will be an in-depth analysis the retail industry’s current and future macro environment, and to identify the major factors for change. Further more; look into the company’s position within the competitive marketplace both in the UK and abroad including the strategy currently adopted. Critically evaluate the strategic options available to Zara. Strategy refers to top management plans to attain outcomes consistent with the organisations mission and goals. One can look at strategy from three vantage points: (1) strategy formulation (developing the strategy), (2) strategy implementation (putting the strategy into action), and (3) strategic control.
Every organisation exists within a complex network of environmental forces. All firms are affected by political, legal, economical, technological, and social systems and trends. Together, these elements comprise the macro environment of business trends because these forces are so dynamic; their constant change presents a myriad of opportunities and threads or constraints to strategic managers. The macro environment of the retail industry will be discussed below.
Current & Future Macro- Environment of the Retail Industry of Zara
Political, the General Agreement on Tariffs and Trade (GATT) has designed to promote world trade by reducing tariffs and other international trade barriers. A major trade issue is the Republic of China who flooded the US and EU markets with cheap products due to the end of a world trade agreement. If further restraining action is not imposed Zara may face further price competition as other retailers outsource more of their production to china. The removal of protectionist trade barriers in China has allowed Zara to carry out its expansion strategy into Asia easily. Zara has reached an agreement with Spain’s government, to standardise women’s clothing. A number of major fashion designers have agreed in order to promote healthy body images, promising not to use clothes smaller than a size 38 which is a UK 10 in window displays. Furthermore, the government legislation law on corporation tax which is 28% at national level. Also involves the planning regulations for building and buying new outlets which requires retail spaces and public spending decisions. (www.inditex.com- Annual Report/ W.P Kroll. P 22)
Economic forces also have a significant impact on business operations. It focuses on the impact of growth or decline in gross national product and increases or decreases in...