zara financial analysis

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Quizzes test your expertise in business and Skill tests evaluate your management traits. Lopez, C and Fan, Y (2009) “Internationalisation of the Spanish fashion brand Zara”, Journal of Fashion Marketing and Management, Vol. The overall strategy for the company, referred to as the corporate strategy, looks at the general approach which the company should take, before going on to consider, in more detail, the business level strategy that can be used to achieve ongoing success (Doherty, 2004). Zara has overcome this threat by reducing the time frame within its supply chain. Since today’s customers are growing more eco-conscious than ever brands like Zara need to adopt sustainable ways in order to avoid the negative impacts. Coyne, K.P. It might be shirts, it might be pants, it might be dresses or party wear or whatever. Economic pressures are likely to remain substantial, across the whole industry. Moreover, with increasing competition emerging throughout the industry, buyers are looking for cheaper prices, continuously, and any attempt at raising the price is simply unlikely to retain the favour of the existing customer base. As noted in the case study, customers will tend to visit Zara stores considerably more frequently than competitor stores, due to the fact that new products are continuously being launched. This naturally pushes the consumers to visit the store again and again to check out the latest designs. However, although it is not necessary, at a low level, to invest large amounts of capital, the issue of economies of scale is playing an increasingly important role, with consumers constantly demanding cheaper prices. In this context, consumers are reducing the amount of expenditure on items such as clothing and, in particular, fashion items, thus putting pressure on retailers to provide cutting edge fashion at a budget price, something which Zara has become particularly good at and is using this to gain success during difficult economic times. The companies are not associated with MBA Skool in any way. ‘ZARA’ is Inditex’s first as well as the most profitable brand. This means that an organisation such as Zara can retain a large customer base, by continuously improving its range and developing new products, on an ongoing basis. Error, group does not exist! Although the company seems to be working with unions, in order to improve the position, the report clearly had an impact on the way in which the company was viewed, with concerns now being shown over the treatment of staff, as well as the treatment of individuals in developing countries who are producing the products, in the first place (Balchin 1994). Opportunities are continuously presenting themselves within the fashion industry. Opportunities in the SWOT analysis of Zara. In the Zara PESTLE Analysis, the environmental elements affecting its business are as below: The entire world of fashion is wrongly associated with wastefulness as the customers change trends and preferences easily. This has made the market, in general, much more competitive and has encouraged all organisations within the industry to look towards reducing costs and attracting a broader customer base.
23 Issue 9, pp.947-97. Politically, there has been a general opening of the market, with textiles now being readily available and not subject to quotas. The framework also aids Zara in exporting merchandise across the world involving little effort and low cost. Murphy, J. M. (1990), Brand Strategy, Director Books, Cambridge.

Some customers dedicate their complete wardrobe to Zara clothing. If it does not, then competitors will eventually affect the brand equity of Zara because of their sheer power of penetration. Zara is an international fashion retailer which has gained considerable acclaim, being one of the leaders of the high-street fashion industry, and regularly producing new products for the market, at a rate that is quicker than its competitors can achieve, due to the strong supply chain in place.

The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand. Despite this, it is important that the organisation recognises the forces that are impacting on the external market and uses its own internal strengths to ensure that it retains a competitive advantage, thus enabling it to maintain its position within the market, as one of the brand leaders. I love writing about the latest in marketing & advertising. The political factors in the Zara PESTLE Analysis can be explained as follows: Zara is a Spanish brand that was born out of the European union and has successfully established operations all over the world. When looking at taking the mass-market competitive approach, substitution may simply be down to price issues, whereas designer boutiques may be able to offer a different type of product, which again will offer a competitive substitution for the consumer (Moran and Riesenberger 1994). Several future strategies are now suggested for Zara, moving forwards. One of the key ways in which Zara has achieved a competitive advantage in the market is to bring the lead-time of new products down from approximately six months to just two months, which means customers are able to obtain the very best fashion designs at high street prices. This has been achieved with full recognition of the external environment and competitive pressures being faced by organisations of this nature, something that is particularly relevant during the difficult economic times, when consumers have less disposable income available in order to purchase fashion clothing items.
Another area of growing concern within the fashion industry, with Zara not escaping media attention in this respect, was that of human rights’ concerns, such as the new staff sweatshops in developing countries used to produce products at a cheaper rate than would be possible within the more developed regions. As a result, a customer who might visit other stores twice or thrice a year to check out the latest in fashion, might have to visit Zara every month to see whats new in Zara.

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