Pestle Zara

Pestle Analysis of Zara SOE11108 Sources of Competitive Advantage Assessment 1 Group Presentation PESTEL – Analysis [pic] Contents 1 Introduction 3 2 Overview 3 3 Business Environment 3 4 Political 4 5 Economic 4 6 Social 5 7 Technological 6 8 Environmental 6 9 Legislative 8 10 Conclusion 8 References 9 Introduction The global apparel market is a consumer-driven industry. Also, globalization and new technologies have allowed consumers to have more access to fashion. As a result, consumers are changing, competition is fierce, and companies are evolving to meet these demands.
Zara, a Spanish-based chain owned by Inditex, is a retailer who has taken a new approach in the industry. With their unique strategy, Zara has the competitive advantage to be sustainable. In order to maintain that advantage and growth they must confront certain challenges and face traditional retailers in the apparel industry. So, now our group will analysis the PESTLE of Zara Company. (Lopez & Fan, 2009) Overview Zara is one of the largest international fashion companies and belongs to Inditex, which is one of the largest fashion retailers worldwide.
Inditex operates in textile design, distribution and manufacturing. (Inditex, 2011 b) Zara operates in 78 countries worldwide with 1557 stores in the world’s largest cities. (Inditex, 2011 c) The company is founded in 1975 by Amancio Ortega, located in Spain and had in 2010 a net sale of 8. 088 million of euro. (Inditex, 2011 a) The have worldwide 1557 stores in 78 different countries. (Inditex, 2011 a) Aim: democratize fashion, offering latest fashion, medium quality and moderate price (Lopez & Fan, 2009)

Structure: customer oriented, satisfaction of consumer needs (Mazaira, Gonzalez, & Avendano, 2003) Business Environment Global textile and clothing industry (Lopez & Fan, 2009) with 900 billion Euro in 200 worldwide (Ghemawat & Nueno, 2006). Main competitors: H&M, Gap and Benetton (Ghemawat & Nueno, 2006) Dynamic and innovative sector (Nordas, 2005) High quality fashion market vs. lower quality products (Nordas, 2005) Production in Europe vs. Production in low cost (Nordas, 2005) Political
Internationalisation: The key pull factors that explain the internationalisation of Zara include Spain’s entry into the European Union in 1986, the globalisation of the economy and thus potential economies of scale, the homogenisation of consumption patterns across countries – Zara’s belief is that “national frontiers are no impediment to sharing a single fashion culture” – and the abolition of barriers to export as well as the development of information technology (Lopez & Fan, 2009). Indian Market:
India provided open market for Zara as Indian government is willingly to provide foreign investment in their country, but Indian Govt. Has their own policy which are to be adhered by organizations as Zara formed joint venture with TATA (Shah, 2011). Economic Production NOT transferred to low cost locations Zara resisted the industry-wide trend towards transferring fast fashion production to low cost countries like for example China. Zara states that this gives the greater control as it controls most of its steps on the Supply Chain, designing, manufacturing and distributing of products (CNN, 2001).
In the UK 50% of the product Zara sells are manufactured in Spain, 26% in the rest of Europe and 24% in Asian and African countries > clothes with longer shelf life like for example basic t-shirts are outsourced to low cost suppliers mainly in Asia and Turkey (Business Week, 2006). Zero Advertising Policy The most unusual company policy is its’ no advertising policy. It is worth noticing that Zara competitors rely heavily on costly advertising campaigns. However, Zara prefers to invest money in opening new stores instead (CNN, 2001). Producer of about 11 000 items annually
The product range of Zara company is significant. It produces nearly 11 000 items annually whilst its competitors produce only about 2000 – 4000. Moreover, Zara changes its designs every 2 weeks which encourages customers to repeated visits and builds the brand loyalty. An average high street store in Spain expects customers to visit three times a year. It is 17 times for Zara. (The Guardian, 2002). Shortening Product Life Cycle Additionally, Zara needs just 2 weeks to design a new product and get it to the stores whilst industry average is 6 months (Business Week, 2006).
To sum up, Zara breaks all the rules but this strategy proves to be successful as Zara is one of the biggest retailers in the industry. REFERENCES LIST entrys Social Rising of income With the rising of disposable personal income, people began to pursue a high quality and comfortable life. This tendency provides Zara quite wide market share. Personalized consumption become the mainstream of society. The strategy of ZARA, “a small amount, variety, cheap,” is a major guarantor of its success. Fast fashion
Regarding the design strategy, an article in Business world magazine describes it as follows: “Zara was a fashion imitator. It focused its attention on understanding the fashion items that its customers wanted and then delivering them, rather than on promoting predicted season’s trends via fashion shows and similar channels of influence, which the fashion industry traditionally used. ” There will be a 0. 7% depreciation of fashion products every day. A new product, from design to produce, logistics operation and the final sale, only need 2-3 weeks in Zara. Affordable fashion
An increasing number of people pay more attention to fashion. But fashion is a masterpiece of top designers, only a few people can afford it. The designers of ZARA will follow these fashion elements and design their own product, which most consumers can afford it (Baidu, 2010). Technological R&D and Production 1. Fast production: Deliver within 6 weeks instead of 6 months which is the delivery time from Zara’s competitors (Ghemawat & Nueno, 2006). 2. Zara has only 20 suppliers which accounted 70% of their products. The other companies have for example more than 200 different suppliers.
Therefore it’s easy for Zara to control their suppliers. Logistic 1. Own distribution centre with an order to delivery time of 24 hour for Europe and 48 hours to USA and Asia (Tokatli, 2007). 2. The shops receive two deliveries from distribution centre. That allows the shops to have low inventory and a high turnaround within the shop (Lopez & Fan, 2009) (Ghemawat & Nueno, 2006). Flexible Supply Chain 1. Vertical integrated and controls its entire production chain. One important effect of the control is to re reduce the bullwhip effect. (Ghemawat & Nueno, 2006) . Zara has very short lead times. The Agility of their supply chain enables Zara to deliver from product design to sale within 2 weaks for repeat or 5 weeks for new products (Mazaira, Gonzalez, & Avendano, 2003). Environmental Zara wants to help the sustainable developments of the society and the environments with which it interacts. This commitment to the environment is a part of the Inditex group corporate social responsibility policy. Objectives and Actions: At the sores: Zara saves energy and lot of care has been given to make the stores eco efficient.
Development of efficient management models for their stores that proposes measures to be applied to all processes, from the design of the store itself, the lighting heating or cooling system equipment, to the possible recycling of furniture and decoration. Use of paper or biodegradable plastic bags 90% of the bags Zara gives out to customers are made of paper. 1. Reduction of waste and encourages recycling Millions of hangers and security tags are processed each year additionally both the cardboard and plastic used are recycled. 2. Increasing awareness among the team members
Heighten employee’s awareness of the need for sustainable practices such as trimming energy consumption, using sustainable transport or modifying habits. With the product 1. Use of ecological fabrics, like organic cotton. Zara Supports ecological agriculture and uses organic cotton in the production of selected items of clothing (100% cotton, completely free of pesticide, chemical agents and bleaches). With a distinctive label these products can be identified very easily at the stores. 2. Producing PVC –free footwear No petroleum derivatives or non-biodegradable materials are used in producing the footwear.
In the transport Zara’s fleet of Lorries transport over 200 million items of clothing annually and uses 5% biodiesel fuel, reducing emission of CO2 into the atmosphere by more than 500 tones. Animal welfare policy All the animal products, including fur and leather sold at Zara come exclusively from animal reared in livestock form and never from animal sacrificed for skin sale. (Zara, 2010) Legislative Plagiarism plagiarism in the fashion industry has become a huge issue. Trends are often copied and cheaply as well as illegally sold in the street. Global expansion
As the European market has a well working trade and legal system facilitating business operations in member countries, other countries globally will not offer the same securities, especially in communistic countries the threat of losing a private run company to the local government is very real. REFERENCES ? Conclusion ZARA was just a small Spanish dress shop, but now, the little-known brand has grown into a leader of the apparel market. Now the footprints of ZARA have around more than 60 countries. The big design group, unique strategy, environmental management idea and other operational strategies make ZARA success.

Don't use plagiarized sources. Get Your Custom Essay on
Pestle Zara
Just from $13/Page
Order Essay
Achiever Essays
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.


Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.


Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.


Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.


Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.

Live Chat+1(978) 822-0999EmailWhatsApp

Order your essay today and save 20% with the discount code RESEARCH

slot online