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Scenario:
There is a foreign clothing retail brand (for e.g.
ZARA, NEXT, PRIMARK etc.) that is planning to start its operations in Pakistan.
This information will be used by Board members in a meeting where they will
look into stakeholder, national and global environments and the effect it has
on business and will decide their future direction.
Task 1:
● Design
a mission statement, vision, goals and objectives for your clothing retail
brand. Keep in mind the above scenario while designing the objectives for the
firm. (Pre-submission: 30/04/13)
MISSION STATEMENT OF ZARA:
The mission statement of ZARA is about that “ZARA
walks at the pace of society, dressing ideas, trends and tastes that society
itself has matured.”
VISION STATEMENT
OF ZARA:
The vision statement of the ZARA is “to give the
customer an exclusive choice of fashion by providing a quicker turnover of new
stock than other fashion retailers”.
GOALS:
Goals of the ZARA are mentioned as;
● ZARA
wants to create a community around brand while allowing individuals to feel
connected to ZARA fashion and values.
● ZARA
through its unique business models and stores has proved its business can be
successful with little or no advertising.
● They
always innovative their products to enhance shopping experience and provide new
designs at affordable costs made from quality materials which follow latest
trend.
Objectives:
● ZARA
as a foreign clothing brand retail brands wants to start a successful
operations in Pakistan in December 2013.
● They
will decide their future direction while look into stakeholder, national and
global environments and the effect it has on business.
● ZARA
wants to develop a consumer focused product line and marketing strategy.
● ZARA
wants to reinforce customer focus as the key driver of the ZARA brand.
● Zara
should focus on increasing potential consumers and frequency of current
consumer.
Conduct an environmental and organizational audit
(resource audit) for the firm. Perform PESTLE, Porter five forces, and resource
audit for the firm.
PORTER FIVE
FORCES:
1.
Bargaining
Power of Suppliers:
The bargaining powers of suppliers of ZARA are such
as given;
·
Its computer controlled the cutting
machine which cuts up to 1000 layers at a time. It then sends the cut materials
to suppliers who sew the pieces together. The suppliers work is relatively
simple and many suppliers can do the swing.
·
Thus,
the pool of suppliers is expanded and Zara has greater flexibility in choosing
the sewing companies.
·
Further s because Zara dyes 50% of the fabric
in its plant, it is less dependent on suppliers and can respond more quickly to
mid season changes in customer color preferences.
2.
Threat
of Substitute Products:
The threats of substitute products of the ZARA are
given below;
·
Zara forces on meeting customer
preferences for trendy, low cost fashion. It has the highest sales per square
foot of any of its competitor.
·
It does so with virtually no advertising and
only 10% of stock is unsold.
·
It keeps the inventory levels very low
and offer new products at an amazing pace for the industry.
·
Zara has extremely efficient
manufacturing and distribution operations.
·
The Threats from substitutes such as new
fashion designs of ZARA are controlled through offering all range of clothing
and customer loyalty.
·
Further it has bring online trading it
is noted that the competition is low than in other industries.
3.
Threat
of New Entrants:
The threats of New
Entrants of the ZARA are given below;
·
The ZARA IT supports is strongly join
group of designers, market specialists, production managers and production
planners so the New entrants are unlikely to provide IT to support
relationships that have been built over time.
·
Further it has rich information about
customers that would be hard to imitate.
4.
Bargaining
Power of Buyers:
The bargaining power of
buyers of Zara are such that;
·
Zara boasts more than 11000 new designs a year
where as competitors typically offer only 2000 to 4000.
·
Further because of the low inventory
that the Zara stores stock, the regulars buy products they like when they see
them because they are likely to be gone the next time they visit the store.
·
More recently Zara has employed laser
technology to measure 10,000 women volunteers so that it can add the measurements
of real customers into its information storage.
This means that the new products will be more likely to fit Zara
customers.
·
Since the ZARA Company offers new and fashionable
products the bargaining power of the customer is low.
5.
Rivalry
Among Existing Customers:
The ZARA Company faces severe competition from
competitors such as M&E, GAP. Due to the low growth in the fashion industry
in Europe this competition has become more severe. So there are two kinds of
competitors existing among the customer that is Global competitor and local
competitor.
PESTEL ANALYSIS:
Political:
The political factors have also affected the ZARA
Company. Some Political factors are given below;
·
Reduce of restriction of import quotes
to Europe and USA
·
The
civil unrest in the middle east region
·
Free
trade policy in European union
·
Import tariff are four times high when goods
are imported from developing countries to developed countries.
Economical:
The Economical impact of the ZARA is such as that
the ZARA should have to reduce the following;
·
Interest rates
·
Taxation changes
·
Economic growth
·
Exchange rates
·
Tariffs.
·
The higher borrowing cost and the
financial crisis exist in the European region.
·
With increase in the interest rates the
inflation will increase and buying power of the customer will decrease.
·
Increase of fuel prices due to the civil
unrest in Middle East may increase the transport cost and affect to margins of
the company.
Social Culture:
The culture around the ZARA business is so modern
and the consumers are also updated. So it is a competition market but it is
very easy to launch the new product in the market.
·
The ZARA would have to work accordingly
to the trend and satisfy customers demand due to changes in the generation
choices.
·
New trend among younger generation in
Europe and USA for fashion.
·
Low growth in the population in Europe.
Technology:
ZARA is base on the use of technology from the year
1970. So ZARA have the following technology;
● Coping
with the change.
● Just
in time manufacturing system.
● High
tech distribution system.
● Online
shopping
● Bar
coding
● And
Computer Aided Designs
● Auto
CAD & Auto CAM
Environmental:
The Group environmental commitments of Zara have a
direct impact on their shop, products and policies. So they have to improve the
following things include as;
·
High demand for environmental friendly
garments.
·
Effect of global climate to organic
cotton production.
·
Attention of areas such as sustainable
development.
·
Carbon
footprint of the company.
Legal Factors:
The Legal Factors of the ZARA is given below;
·
Laws and regulation relating to fashion
and clothing.
·
Child labor and rules and regulations
relating to labors.
Resource Audit
of the ZARA:
Tangible
Resources:
Physical
Resources:
1.
Stores:
1,688
in 77 countries
2.
Factories:
20
3.
Total
selling area: 488,400meter/squares
Financial
Resources:
Invested
capital: 1050 million (Euros)
Human Resources:
92,301 from more than 140 nationalities
Intangible
Resources:
Brand: is amongst the three
most recognized brands in spain.
Image: ZARA is a fast fashion
clothes company.
Economic goodwill: Excellent reputation in quality and
price.
·
Apply SWOT, Ansoff and BCG matrix
techniques to define the strategic position of the given organization.
SWOT
ANALYSIS OF ZARA:
STRENGHT:
● Vertical
systematization of Product Process.
● Ability
to recreate fashion
● High
turnover of Product.
● Active
use of Stores.
● Brand
Loyalty
● Brand
Awareness
WEAKNESS:
● Middle
Priced Goods
● Repeated
Sales of Out of Stock
● Low
Quality
● Lack
of E-commerce
●
