suraj cw 2 V1

docx

School

NMIMS Global Access School of Continuing Education *

*We aren’t endorsed by this school

Course

276

Subject

Business

Date

Nov 24, 2024

Type

docx

Pages

Uploaded by MateBookRhinoceros10

INTERNATIONAL BUSINESS STRATEGY

Contents Introduction ........................................................................................................................................... 1 Internal Environment: SWOT Analysis ................................................................................................... 1 External Environment: PESTLE Analysis ................................................................................................. 3 Strategic Goals ....................................................................................................................................... 6 Porter’s Generic Strategy ................................................................................................................... 6 Strategic Recommendations .................................................................................................................. 7 Marketing .......................................................................................................................................... 7 E-Commerce ...................................................................................................................................... 7 Sustainability ..................................................................................................................................... 8 Conclusion ............................................................................................................................................. 9 References ........................................................................................................................................... 10

Introduction With a brand value of $14.7 billion and projected revenues of $21.9 billion in 2020, Zara has established itself as among the most profitable retail fashion companies currently. The company has expanded into the textile business with the merger of Zara Home, which offers clothes, footwear, and products for men, women, and children ( Allam et al., 2020). The company has grown to become the most dominant international fashion label, with a presence in 96 countries and close to 3,000 retail locations throughout the world. Inditex, which includes Zara and other brands including Bershka, Pull&Bear, and Massimo Dutti, employs approximately 176,000 people and dominates the retail industry. Founded on the principles of "give customers what they want, and bring it to them faster than anybody else," Zara operates based on the principles of elegance, simplicity, efficiency, and durability (Runa, 2022). Internal Environment: SWOT Analysis Strengths - Zara's many competitive advantages have made it not just the most successful and widely recognised of Inditex's many brands, but also a major player in the global fashion retail market. - Since the company's online and retail collections are updated twice weekly, new styles may be introduced to the market in less than 15 days, and shipping to any country takes no more than 48 hours thanks to its 10 distribution hubs. With 2,118 locations throughout 202 countries, they dominate the world's retail fashion industry (Inditex) (Segran, 2019). - More than 700 talented designers work with Inditex to translate shoppers' wishes into products. Zara's designers release 50,000 new creations annually to keep up with the fast fashion industry. Their three-week product development cycle is in stark contrast to the months it takes for other firms to get their items to market. Customers are pleased with both the variety of high-quality clothing options and the low prices ( Gheorghe and Matefi, 2021). - The company's mission is summed up as meeting the needs of the customers through the great experience," putting the customer at the forefront of all they do ( Saraswat, 2018). Weaknesses The fast-fashion industry is dominated by Zara, yet the company has its shortcomings. - Clothing quality is low because it is difficult to strike a balance between replacing outdated styles with new ones and a dedication to sustainability.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

- Furthermore, Zara's wide variety of clothing and accessories for guys, females, and children is diffuse and unfocused. Zara's wares are timeless basics that reflect current fashion trends. As a result, customers may look elsewhere, perhaps toward labels that focus on specific product categories, such as denim or clothing (Su, 2020). - When people all over the world were quarantined and forced into social isolation in 2019, Zara's reliance on its brick-and-mortar stores became obvious. - Zara, unlike many of its competitors, spends relatively little money on advertising and instead relies on social media and PR to build its brand. It has achieved widespread popularity by successfully appealing to and satisfying the needs of its target market. Nonetheless, it lacks a robust marketing plan and will face future hurdles as competition becomes more intense (Giri et al., 2018). Opportunities - The retail industry in the digital age is predicted to be drastically altered by the predicted $36.8 billion in global AI revenues by 2025, up from 2016's $643.7 million. A new era of retail may be upon us thanks to its investment in and use of artificial intelligence and related technologies (Mehta, 2021). The use of these advances could lead to more comprehensive data collection, which in turn could pave the way for more personalised client experiences or even the creation of virtual ones. - Zara relies heavily on its retail locations, but the company may find success by expanding its business online. As more people start using smartphones, tablets, and laptops for online communication, digitalization is altering the way we conduct our daily lives. The number of individuals using the internet to shop increased to 1.92 billion in 2019, with online retail sales reaching $3.5 trillion around the world. However, buyers often complain that Zara's website is too cluttered, poorly written, or otherwise unusable. More effort put into digital marketing and improving the e-commerce sector's functionality could increase the brand's consumer base and the number of items sold ( Schaich et al., 2021). - Zara can also develop its retail infrastructure in less developed nations. Though it is well- known in other countries, its popularity in Malaysia, India, and Singapore is quite low. A huge population and promising business climate make these countries an attractive market for Zara as it seeks to expand its global presence. Threats

- When it comes to potential dangers, Zara has to worry most about the abundance and quality of rivals in its field. Zara now has to compete with a plethora of new entrants, many of which operate solely online and provide identical goods at lower prices than Zara does. Businesses like Shien and Romwe, which offer tees for as little as $5, have cropped up to meet the surging demand for reasonably priced, on-trend garments. Because of this, Zara's business model is in jeopardy as it attempts to compete with cheaper imitations (Feiglová, 2019). - Due to its global presence and competitiveness in 202 markets, Zara is vulnerable to the impact of trade restrictions and foreign business legislation. To operate legally, the corporation must adhere to all applicable labour and business laws in each jurisdiction in which it operates. Many European countries shut down their borders and businesses when the virus first hit. Because of the lockdown procedures, manufacturing processes and supply links were severely disrupted. As the pandemic continues to spread, Zara must take precautions as she readjusts to the new reality and prepares her business for post-pandemic operations (Runa, 2022). External Environment: PESTLE Analysis Political Factors The retail sector is strongly influenced by political concerns. The ability of retail brands to conduct business globally is highly sensitive to the political context. Widespread free trade policies and trade pacts facilitate trade between companies and the movement of goods. Although overseeing production and other abroad businesses can be difficult, supply chains and sales can be readily disrupted by high taxation and trade obstacles. In light of this potential increase in taxes, the government may encourage citizens to shop locally for supplies. Economic Factors Consumers' willingness to spending is influenced by numerous variables, including the state of the economy, which can either stimulate or chill outlays of cash. Spending increases and consumers have more faith in the value of their dollars when the economy is doing well. Customers are now in a stronger opportunity to invest in their aesthetic by buying clothes and accessories. On the flip side, pessimism is more common during economic downturns and periods of high unemployment. When money is tight, the basics, like food and shelter, have to be paid for first. There could be a drop in retail sales and earnings. There is more opportunity for profit from retail prices as the economy improves (Gheorghe and Matefi, 2021).

Social Factors The retail industry feels the long-term effects of rapidly changing demographic and socioeconomic groups. Since the advent of social media, particularly among the younger generations (millennials and Gen Z), consumer tastes have been known to shift swiftly. It is projected that by 2023, 3.43 billion individuals will use social media, and that these users would consume an average of 144 minutes per day engaging with content across all platforms (López et al., 2022). Businesses are adjusting their customer service strategies to take into account the growing importance of social media. Paid advertisements, celebrity endorsements, and public relations efforts all help the major players in this industry gain more attention and customers. Instagram, Tik Tok, Facebook, Pinterest, and Twitter are just a few of the most popular social media platforms where people can readily obtain fashion ideas and current trends. Since fashion fads spread like wildfire and fade just as rapidly, consumers are perpetually on the prowl for fresh fast-fashion offerings. Consequently, making good use of social media and keeping up with the latest trends is crucial to your success (Schaich et al., 2021). As there are so many businesses to pick from, and consumers have so many options, marketers are focusing more on the quality of the customer experience they provide. Customers have cheap switching costs, so if they have a bad experience with a brand, they are likely to stop patronising it. Alternatively, if customers are happy with their interactions with the firm, they are more likely to be repeat buyers and spread the word about the company, which in turn can boost sales. The revenue generated from a totally content client is 2.6% higher than that of a customer who is only "slightly satisfied," and the revenue generated from a customer who is "somewhat dissatisfied" is 14% higher. Keeping an established clientele is much less work and more cost-effective than bringing in new ones ( Feiglová, 2019). Technological Factors Sales, distribution networks, and customer care have all benefited greatly from technological advancements. The proliferation of fashion retail businesses is a direct result of the lowering of entrance barriers made possible by developments in digital technology. Online retailing allows companies and individuals to bypass the need to set up physical locations for product distribution. By 2021, online shopping is expected to be responsible for 18.1% of overall retail sales worldwide, which poses a serious threat to traditional stores (Mehta, 2021).

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Big Data tools, such as blockchain technology, make it less cumbersome and more cost-effective for businesses to store and maintain data like product histories, transaction records, and when and where goods were made. Since today's tech-savvy consumers expect greater candour from retailers, More so, upcoming technological advancements are anticipated to have revolutionary effects on the retail sector and the consumer experience ( López et al., 2022). Legal Factors As more companies produce their goods overseas, issues like worker rights and child labour restrictions have come into the spotlight. Full-time and part-time employees in the business sector as well as federal, state, and municipal governments are covered by the Fair Labor Rules Act, which mandates basic wage, overtime qualification, documentation, and child labour standards. Supporters of laborers' rights, such as the protection of basic human rights and the restriction of forced labour, should be given prominence on a global as well as a local scale. If a company is exposed using sweatshop labour, it can do serious damage to its reputation because consumers will see the company as unethical and may choose to boycott the product ( Feiglová, 2019). Environmental Factors Living a "Green" or eco-friendly lifestyle has gained popularity in the modern era. Consumers are becoming increasingly conscientious and knowledgeable, with many fretting over the potential environmental consequences of their choices. Customers are paying closer attention to retailers that stock eco-friendly and ethically made products. According to research by McKinsey & Company, the majority of consumers (67%) consider a company's commitment to environmental responsibility (63%) to be a major factor when making purchasing decisions (Gheorghe and Matefi, 2021). In order to appeal to environmentally aware shoppers, more and more textile producers are adopting sustainable practises like greener sourcing and longer-lasting packaging (Allam et al., 2020).

Strategic Goals Porter’s Generic Strategy Figure 1: Porter's Generic Strategy Zara's overall business strategy is to be a cost leader. The brand has an advantage over its rivals since it can compete with higher-priced labels yet having a more accessible price point. Nonetheless, these are but a few examples of how Zara is different from the others. It is committed to what it calls the "whole cycle of life," or the way in which a product maintains or increases its worth by careful and ethical treatment throughout its entire life cycle (Mehta, 2021). Therefore, the ultimate aim is to provide in-store and online customers with high-quality items that were produced in an ethical manner at every stage. The following intermediate and short-term objectives will help bring about this objective: Short-term goal Improving its advertising methods and building a stronger online storefront are two priorities Medium-term goal Focus on incorporating sustainable business practises into its operations in the near future Long-term goal To provide in-store and online customers with high-quality items that were produced in an ethical manner at every stage

Strategic Recommendations Marketing If it wants to keep its dominant position in the expanding fashion retail industry, Zara will need to take steps to strengthen itself against potential threats and capitalise on emerging opportunities. The store mostly advertises on Instagram and Facebook, and also uses its brand on the shopping bags. It employs anti-marketing strategies by enticing rather than pressuring customers to buy its wares, and it devotes just about 0.3% of its sales on advertising (Allam et al., 2020). In order to compete with the many new companies that are likely to appear in the near future to attempt to replicate Zara's success, the company will need to develop an effective marketing plan. Rival H&M uses SMS vouchers and mail sales campaigns, as well as collaborations with high-end designers and celebrities to attract customers to its stores. Given Zara's large internet following, the company could benefit from participating in influencer marketing (Runa, 2022). E-Commerce Zara also needs to expand its internet presence. In terms of the company's overall strengths, Zara's online store is not a particularly shining example. The company should improve the site's usability. The current design places too much emphasis on visual appeal, which makes it difficult for the user to browse the site and identify the advertised goods due to the model's minimally expressive expressions and the distracting nature of the design. Other people have mentioned that the online shop's tabs are hard to navigate and that the site's layout doesn't translate well to mobile devices. The website may benefit from a cleaner look and a more streamlined way of browsing products as a whole without sacrificing any of the unique personality that made it successful. Zara's online storefront needs more personalised service from either in-house or contracted user interface/user experience designers or other experts in order to match shoppers' expectations ( Allam et al., 2020). Sustainability Two concepts that don't go together at all: fast fashion and sustainability. However, Zara faces competition from a subset of the fast fashion industry due to its commitment to environmental sustainability. The extent to which Zara will adhere to its promise to the environment through responsible and ethical sourcing and manufacturing is a matter of some conjecture. Zara might further demonstrate its commitment to sustainability by inviting customers to help shape the brand's future eco-friendly offerings. Knowing you're supporting a sustainable company is nice, but getting involved is where the real change happens. Zara might implement an upcycling programme similar to H&M's clothes collection, in which customers receive a 15% discount on their next purchase in exchange for donating their gently worn apparel. Customers could return their lightly used, but still wearable, Zara apparel for recycling or distribution to developing nations (Runa, 2022).

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Technically Correct Politically Supportable Organizationally Implementable Improving its advertising methods and building a stronger online storefront are two priorities This strategy will help to address the issue of competition because effective marketing is very important to go ahead from competitors like H&M This strategy will help to maintain good customer relationship Zara is a massive company with an annual revenue of $21.9 billion in 2020. Hence, it have the capacity to invest in promotional activities Focus on incorporating sustainable business practises into its operations in the near future Sustainable business practices have become a necessity to protect environment Government itself is promoting sustainable practices in clothing sector There are many sustainable alternatives available in fashion industry. To provide in-store and online customers with high-quality items that were produced in an ethical manner at every stage This objective focuses on well-being of customers and environment Government support ethical business practices. Zara have a strong presence globally and financially and its brand image is also strong. Hence, it can provide high-quality products in sustainable manner Conclusion The Spanish clothing company Zara has expanded rapidly since its founding in 1975 to become the largest fashion shop on the planet. Worldwide, the company's stores and e-commerce platform dominate the fast fashion market because of the advantages it has from vertical integration and low prices. However, the sector as a whole is expanding at a quick rate, so Zara will need to work hard to keep up with the competition by strengthening its marketing, expanding its online presence, and maintaining its dedication to environmental sustainability.

References Allam, I., Scagnelli, S. and Corazza, L., 2020. Sustainability reporting, a new type of companies’ hypocrisy: Zara and Volkswagen cases. In Responsible Business in a Changing World (pp. 195-211). Springer, Cham. Feiglová, M., 2019. Attitudes of Generation Y to Fashion Comsumption: The Zara Case. Gheorghe, C.A. and Matefi, R., 2021. Sustainability and Transparency—Necessary Conditions for the Transition from Fast to Slow Fashion: Zara Join Life Collection’s Analysis. Sustainability , 13 (19), p.11013. Giri, C., Harale, N., Thomassey, S. and Zeng, X., 2018. Analysis of consumer emotions about fashion brands: An exploratory study. In Data Science and Knowledge Engineering for Sensing Decision Support: Proceedings of the 13th International FLINS Conference (FLINS 2018) (pp. 1567-1574). López, T., Riedler, T., Köhnen, H. and Fütterer, M., 2022. Digital value chain restructuring and labour process transformations in the fast fashion sector: Evidence from the value chains of Zara & ‐ H&M. Global Networks , 22 (4), pp.684-700. Mehta, M., 2021. Study of Supply Chain Strategies implemented by various companies in Fast Fashion Industry (Doctoral dissertation, School of Petroleum Management). Saraswat, S., 2018. Strategies v/s Consumer Perception of Brand Zara-India. IITM Journal of Management and IT , 9 (2), pp.68-80. Segran, E.L.I.Z.A.B.E.T.H., 2019. H&M, Zara, and other fashion brands are tricking shoppers with vague sustainability claims. Fast Company , 8 . Su, Y.Z., 2020. The Internationalization Strategies of Fast Fashion Clothing Retailer Brands: A Cases Study of ZARA, H&M, UNIQLO, and Gap. Schaich Graniel, D., Finnell, A., Hopkins, C., Salters, C., Baez, E., Hernandez, L., McIntyre, M. and Lee, R., 2021. Zara: Facing Fast Fashion Challenges in China. An International Marketing Case Study. Runa, C.R.N.W., 2022. Business Model Canvas (BMC)-ZARA (No. 9p8yw). Center for Open Science.

suraj cw 2 V1

Related Documents