Assignment Sample on Global Strategy And Sustainability
Part A: Business Report
Introduction
International businesses focusing on development of effective approaches of marketing and service management activities have assisted in maintaining competitive positioning of brands in a globalised business environment. On the other hand, increasing challenges of global and climate crisis due to its exploitation and ineffective use of sustainability approaches was incorporated by businesses to improve environmental elements. This study has focused on critically analysing different aspects of business operations of Zara UK. Critical discussion of external and internal environmental elements, strategies in global performance improvement and its corporate strategy would be represented. Further, ethical and CSR strategic development opportunities along with development of effective recommendations for Zara UK would be described in this report for management of better operational improvement scope.
Task 1– The External and Internal Environment
Analysis of external and internal environment for Zara
External environmental analysis: PESTLE
| Factors | Influence |
| Political | ● Comparative stable political environment in UK has assisted in managing low corruption challenges for businesses.
● However, UK has decreased its rank in corruption index from the top 10 countries to number 11 in 2021 (TRANSPARENCY, 2022). ● This would increase challenges in management of effective approaches of business management activities. |
| Economic | ● COVID-19 and Russian Ukrainian war creating serious challenges in international economic environment has increased challenges for management of effective approaches to economic growth globally.
● United Kingdom has experienced a 7.4% GDP growth rate in 2021 (DATA TOPICS WORLD BANK, 2022). ● Persistent fluctuation in consumer pricing index has resulted in increasing UK’s inflation rate to 10.7% in 2022 (ONS, 2022). |
| Socio-cultural | ● Current population at UK was estimated at 67 million (DATA TOPICS WORLD BANK, 2022).
● UK is the leading consumer of fast fashion products in Europe. ● It was estimated that around 2 tonnes of clothing was bought in UK each minute from fast fashion segment (OXFAM, 2022). |
| Technological | ● UK improving its technological efficiencies has assisted in improvement of organisational capabilities in fast fashion to improve their supply chain and manufacturing activities.
● UK has invested approximately £45 billion to improve its textile and clothing manufacturing industry (FASHION UNITED, 2022). |
| Legal | ● “UK Corporate Governance Code”, “Health and Safety at Work etc Act 1974 (c. 37)” and “Equality Act 2010 (c. 6)” are essential for businesses in UK to continue operating without any legal obligations. |
| Environmental | ● UK has been experiencing a serious challenge of landfill in management of environmental elements.
● Fast fashion businesses in UK was required to follow “Environment Act 2021 (c. 30)” to manage its operation and decrease environmental issues faced by this country. |
Table 1: PESTLE Analysis
(Source: Influenced by DATA TOPICS WORLD BANK, 2022)
Internal environmental analysis: SWOT
| Strengths | Weaknesses |
| ● High mobility in manufacturing, supply chain and showcasing at store has assisted in increasing its sales continuously.
● Low cost strategy and highly fashionable products have assisted in attracting a wide range of customers. ● More than 7,000 locations internationally as well as online operation management in Asia, Europe and America. |
● Continuous requirements of production with changing fashion trends
● Increased wastage of due to short term demand for a particular product ● Harmful operations damaging environmental elements ● Inefficiency in recycling excessive productions ● Lack of practical sustainable approaches in production activities |
| Opportunities | Threats |
| ● Incorporation of advanced technologies such as Big Data Analytics to identity quantitative requirements of its production
● Managing an effective approaches of production and serving relevant products to customers ● Incorporate effective approaches of sustainability in improvement of operation strategies ● Focusing on educating customers and improve its brand image globally |
● Increasing competition from other fast fashion brands such as H&M, Forever 21, Speedfactory as well as traditional fashion brands like Gucci, Nike and many more.
● Lack of effective management of environmental friendly approaches created issues of serious brand reputation damage. ● Changing trading policies and regulations creating issues in management of smooth operations in every 96 countries of operations. |
Table 2: SWOT Analysis
(Source: Inspired by ZARA, 2022)
3 most critical factors emerging factors
Most critical factors affecting Zara’s operations were identified as online integration of sales management activities would be beneficial for this organisation in reaching out to a wider range of customers. However, challenges of management of sustainability approaches in operation management as well as vicious production requirements of new products in every 2 weeks have created challenges for this organisation in managing its operation effectively.
Zara’s current sources of competitive advantage
Zara being able to integrate its overall supply chain activities to produce highly fashionable products while managing a low price strategy. As narrated by Stone et al. (2020), incorporation of low price strategy has assisted organisations in increasing its demand elements while gaining greater access in overall sales management activities. This has essentially assisted Zara to manage better operational elements to gain sustainable competitive advantage opportunities in this highly competitive globalised business environment.
Task 2 – Strategy in the Global Environment
Foreign market entry strategies
Figure 1: Foreign market entry strategies
(Source: Influenced by Tien, 2019)
Market entry strategy can be described as businesses operations developing efficient marketing and sales framework to enter international market. As per the study by Tien (2019), incorporation of effective market entry strategy guides organisations to increase their product awareness to attract a wide range of customers in international markets. Generally organisations use “exporting, licensing, partnering, acquisition, and greenfield venturing” foreign market entry strategies in management of effective approaches of business expansion in international markets. This included Zara’s opportunities to manage its resources, technology as well as distribution system improving sales opportunities. Zara has been operating in more than 96 countries while providing similar products and services in management of effective approaches to sales opportunities in each country.
Zara has used joint venture, direct exporting strategies to enter new international markets. As mentioned in the case study, Zara directly opened its brick and mortar store in countries such as throughout Spain. USA, UK and China have incorporated a direct exporting technique. On the other hand, joint venture activities have also assisted Zara in management of its operational practices effectively. For example, Inditex Trent has partnered with Tata Group for exposure in India (ECONOMICTIMES INDIATIMES, 2022). All of these practices according to changing national and international business expansion legislation and ownership strategies have assisted Zara in maintaining a successful business operation management internationally.
Recommendation of three appropriate Global Entry Strategies
Direct Exporting
Zara UK managing a direct exporting business while travelling through air has assisted organisations in management of effective approaches of international business performance management activities. In the views of Katsikea et al. (2019), businesses using direct exporting approaches a market entry strategy assists in taking extensive control over products. This would be assisting Zara in management of high levels of profitability and while attracting buyers in a marketplace. It has also benefited Zara in maintaining a direct communication with suppliers for attending to needs to customers increasing overall competence in exporting activities. Decreased complexities of developing new distribution systems or developing new products direct exporting activities decrease operational complexities of expansion to international markets. However, these activities creating challenges for limited market knowledge would be creating inefficiency in managing nationalised pricing and quality management activities overall.
Joint Venture
Figure 2: Benefits of Joint Venture
(Source: Inspired by Huang and Farboudi Jahromi, 2021)
Joint venture or partnership as a market entry strategy has benefited Zara in management of effective approaches of business expansion activities in a culturally diverse market such as India. As reported by Huang and Farboudi Jahromi (2021), joint venturing activities assists an organisation in sharing risks with its domestic partner resulting in increased organisational resilience in an international market. This has assisted Zara in management of its distribution effectiveness while attracting a wide number of customers. Further, venturing with companies such as Tata Group has assisted this organisation in gaining access to advanced technologies, new staff as well as special understanding of an international market. This has indicated that Zara focusing on joint venturing activities for a competitive market would be essential for management of effective approaches of organisational competence improvement internationally. Further, it would be effective for improvement of overall business resilience, cost effectiveness and improved marker knowledge for positive sales opportunities at its priority.
Greenfield Venturing
“Greenfield Venturing” market entry strategy focusing on establishing new and wholly owned subsidiaries in an international market would be critical for management of effective business development opportunities internationally. In the opinion of Pugliese et al. (2021), development of Greenfield venturing attributes in a business expansion activities helps in taking excessive control on service and brand management activities. This process including staffing activities while improving its manufacturing, distribution and trading management opportunities has extensively assisted in management of long term benefits for Zara. On the contrary, changing national and international policies in business performance management activities would create serious issues of financial management while operating internationally in modern era.
Task 3 – Corporate Strategy
Critical analysis of processes Zara can improve its supply chain globally
Inditex has partnered with approximately 824 suppliers while partnering with 7210 factories spread in 47 countries and employing over 750 designers. Effective integration activities in its national and international supply chain have helped Zara in management of its international businesses effectively. This organisation generally takes 15 days to design, manufacture, ship and display at a store. As narrated by Shenshinov and Al Ali (2020), management of effective raw materials sourcing, support from human capital helps businesses with strategic approaches of distribution practices. Zara was able to manage effective vertical integration and outsourcing activities for improvement of its operational activities on an internal platform.
Vertical integration in business supply chain management can be described as organisational arrangements assisting in taking control over different supply chain stages. Zara’s supply chain was identified as a “virtuous circle this approach sustains includes more frequent shopper visits to stores, fewer sales on markdown and faster cash conversion cycles” (FORBES, 2022). This organisation being able to vertically integrate its supply chain activities has increased fast fashion effectiveness and attending to customer’s needs and requirements in a seamless manner. This activity using advanced technologies associated with PDAs (personal digital assistants) has assisted in maintaining prompt traction between this organisation and customers. Zara also focuses on linking with the stores with “backwards to internally-controlled production and fulfilment systems, which means demand data flows unimpeded to the supply chain”.
Zara eliminating cheap production scope for Asia has essentially assisted this organisation in eliminating challenges of reputational damage in supply chain activities. It was estimated that 50% of Zara’s products were manufactured in Spain while over 26% were outsourced from different countries of Europe and around 24% from Africa (FORBES, 2022). This international supply chain management activity with use of digital technology has helped this organisation in maintaining real time efficiency in supply chain activities. Essentially, advanced development of its supply chain has help Zara to become a pioneering organisation in the world and spreading fast fashion attractiveness overall.
Theoretical Intervention: Resource Dependence Theory
“Resource Dependence Theory” refers to an organisational theory assisting businesses to focus on effective engagement opportunities in every aspect of transaction for acquisition of resources. As opined by Arenberg and Lowrey (2019), “Resource Dependence Theory” helps in supporting businesses in operational improvement while managing resources as its source of power. Most of the time businesses becoming dependent on its resources create challenges in management of business operations. This has assisted in development of a clear understanding of potential challenges for Zara creating issues in management of appropriate approaches to business sales and profitability aspects. However, Zara developing a wide range of supplier base and multi sourcing opportunities has assisted in management of challenges of resource dependency in overall organisational performance improvement.
Recommendations
Zara developing an effective corporate strategy including sustainability approaches in its well organised supply chain would be essential for management of greater perspectives of operational improvement. In the opinion of Alnamrouti et al. (2022), effective organisational strategy including sustainable approaches in organisational goals development assists in management of better organisational sales and profitability management. This would be positively guiding Zara in utilisation of its advanced technologies as well as development of suitable implementation plan for management of effective approaches of operational performance improvement. However, lack of stakeholder interest in management of greater approaches of supply chain management and sustainability activities would be challenging for this organisation to integrate with its existing business model.
Task 4 – Strategic Purpose – Ethics and CSR
Evaluation of Zara’s CSR strategy
Fast fashion has encountered backlash in recent times due to its impact on the environment. Production of over 20,000 new styles in each year, Zara has created over 450 million waste creating serious waste management issues (BUSINESS INSIDER, 2022). Additionally, challenges such as high energy and water consumption have also increased challenges for this organisation in management of effective approaches of organisational performance management in an environment friendly manner. This would create challenges for organisations in fast fashion industry to face serious brand reputation damage as well as losing environmentally conscious customers. This has encouraged Zara to incorporate sustainable manufacturing and sales management activities to protect the environment while providing highly fashionable products to targeted customers.
Zara has incorporated effective corporate sustainability approaches to take initiative on green sourcing and manufacturing of products. CSR strategy in Zara was identified as “ensuring environmental sustainability, ecological balance, conservation of natural resources and maintaining quality of soil, air and water” (ZARA, 2022). This has essentially assisted this organisation for management of greater approaches of diversity and inclusion as well as improvement of business governance management in overall production activities. Further, inclusion of sustainability approaches in manufacturing and production opportunities would be required to practically implement in management of better approaches of CSR in Zara.
Triple Bottom Line
“Triple Bottom Line Theory” can be described as an organisational theory guiding to understand success metrics criteria while improving its contribution in environmental health, economic development and social well-being. As opined by Sargani et al. (2020), implementation of “Triple Bottom Line Theory” guides businesses in maintaining effective approaches of cost management while improving profitability aspects in future. Zara focusing on decreasing its manufacturing effectiveness, integration of sustainable approaches of production and logistics management practices would be beneficial for improvement of effective approaches of organisational performance improvement. Further, integration of technological aspects in monitoring business and customer needs would be essential for maintaining an efficient “people, planet, and prosperity” through these triple bottom line aspects.
Application of “Triple Bottom Line Theory” assisting organisations in management of a positive working environment would be beneficial for retaining a large number of employees. As reported by Sargani et al. (2020), high employee retention rate increasing human capital in an organisation assists in increasing innovation and creativity approaches. This would be guiding Zara to manage highly efficient organisational processes for management of sustainability efforts in operational improvement through reduction of organisational costs. However, ineffective guidelines of processes to develop social and environmental prosperity activities in a business have created ambiguity in businesses such as Zara to manage triple bottom line practices.
Discussion of main ethical issues in Zara
Zara developing a fast fashion culture along with constant consumption of its products has created challenges in management of ethical approaches of operation management. Euro News reported “brands like Zara are responsible for perpetuating a culture that encourages people to consume as much clothing as possible, allowing them to continue producing tonnes of clothing every day” (EURONEWS, 2022). This has increased challenges for increased consummation, throwing out unused clothes resulting in serious landfill challenges. Further, increased emission of greenhouse gases with short term lifecycle of its products has sincerely increased hurdles for Zara for maintaining an effective and ethical approach in business performance management. Further, harsh working conditions of workers around the world have also increased issues for ethical operational practices for Zara.
Recommendations
Incorporation of highly effective organisational production facilities, automating its production and manufacturing activities as well as increasing awareness among customers would be essential for improvement of ethical approaches in business management in Zara. As noted by Taboada and Shee (2021), interpretation of advanced technologies in logistics assists businesses to identify needs in supply chain and manufacture effectively. This would be beneficial for Zara to identify a trend and produce appropriately to meet the needs of the customers. Essentially, this would decrease challenges of ineffective production activities while not disrupting existing business models and sales opportunities. Improving working conditions of Zara factories and providing minimum wage activities would be essential for this business to decrease challenges of unethical business performance management in future.
Concluding remarks
From this business report, it can be concluded that Zara developing effective approaches of supply chain management and operational effectiveness has assisted this organisation in fast distribution of products. However, disrupted macro and micro environmental factors have significantly increased challenges for this organisation in improvement of operational activities in sales activities. Increasing inflation, changing trading requirements as well as environmental elements effected in management of possible approaches of operations. Zara managing direct exporting and exporting activities has assisted this organisation in improvement of operational control for overall business expansion management. Including vertical integration and outsourcing activities in supply chain has increased effectiveness of organisational performance management opportunities in international regions. However, issues related to increasing CSR and ethical challenges for this organisation have increased hurdles in maintenance of greater approaches of sales and profitability management. Increased landfill challenges, ineffective working conditions, wage payment has further increased issues for this business in management of appropriate business activities. Integration of advanced technologies in improvement of supply chain, manufacturing and production activities would be essential for these businesses in decreasing ethical and sustainability challenges. Therefore, incorporation of better awareness campaigns and developing practices implementing approaches of sustainability and technological inclusion would be beneficial for improvement of global business strategy in Zara while increasing its sales as well.
Conclusion
From this presentation, it can be concluded that Zara facing challenges in sustainability and CSR management activities has created challenges in management of appropriate approaches of performance improvement. This organisation focusing on improving its operational elements and waste management would be beneficial to improve sustainability approaches in future.
References
Arenberg, T. and Lowrey, W., (2019). The impact of web metrics on community news decisions: A resource dependence perspective. Journalism & Mass Communication Quarterly, 96(1), pp.131-149.
Businessinsider.com (2022). Shein, Zara Fast Fashion Environmental Impact Piles up at Holidays. Available at: https://www.businessinsider.com/fast-fashion-christmas-shopping-clothes-returns-shein-zara-waste-mountain-2022-12. [Accessed on: 26 December 2022]
Chun T’ing, L., Moorthy, K., Gunasaygaran, N., Sek Li, C., Omapathi, D., Jia Yi, H., Anandan, K. and Sivakumar, K., (2021). Intention to reduce food waste: A study among Malaysians. Journal of the Air & Waste Management Association, 71(7), pp.890-905.
Datatopics.worldbank.org (2022). World Development Indicators. Available at: http://datatopics.worldbank.org/world-development-indicators. [Accessed on: 25 December 2022]
Economictimes.indiatimes.com (2022). Inditex Trent, that runs Zara in India expands 61% during FY22. Available at: https://economictimes.indiatimes.com/industry/cons-products/garments-/-textiles/inditex-trent-that-runs-zara-in-india-expands-61-during-fy22/articleshow/91581944.cms. [Accessed on: 25 December 2022]
Euronews.com (2022). Clothes made from ‘carbon emissions’: Why Zara’s new line is just more greenwashing | Euronews. Available at: https://www.euronews.com/green/2022/06/26/clothes-made-from-carbon-emissions-why-zaras-new-line-is-just-more-greenwashing. [Accessed on: 27 December 2022]
Fashionunited.uk (2022). UK fashion industry statistics. Available at: https://fashionunited.uk/uk-fashion-industry-statistics. [Accessed on: 24 December 2022]
Fashionunited.uk (2022). Zara owner Inditex posts sales and profit growth. Available at: https://fashionunited.uk/news/business/zara-owner-inditex-posts-sales-and-profit-growth/2022091465134. [Accessed on: 28 December 2022]
Forbes.com (2022). Zara Uses Supply Chain To Win Again. Available at: https://www.forbes.com/sites/kevinomarah/2016/03/09/zara-uses-supply-chain-to-win-again/?sh=775cd7d21256. [Accessed on: 25 December 2022]
Howson, P., (2020). Building trust and equity in marine conservation and fisheries supply chain management with blockchain. Marine Policy, 115, p.103873.
Huang, A. and Farboudi Jahromi, M., (2021). Resilience building in service firms during and post COVID-19. The Service Industries Journal, 41(1-2), pp.138-167.
Katsikea, E., Theodosiou, M. and Makri, K., (2019). The interplay between market intelligence activities and sales strategy as drivers of performance in foreign markets. European Journal of Marketing.
Ons.gov.uk (2022). Consumer price inflation, UK: November 2022. Available at: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/ovember2022. [Accessed on: 24 December 2022]
Oxfam.org.uk (2022). New Shocking Facts about Fast Fashion | Oxfam GB. Available at: https://www.oxfam.org.uk/oxfam-in-action/oxfam-blog/new-shocking-facts-about-the-impact-of-fast-fashion-on-our-climate/. [Accessed on: 24 December 2022]
Pugliese, R., Bortoluzzi, G. and Balzano, M., (2021). What drives the growth of start-up firms? A tool for mapping the state-of-the-art of the empirical literature. European Journal of Innovation Management, 25(6), pp.242-272.
Reuters.com (2022). Inditex profit jumps as Zara owner lifts prices – Reuters. Available at: https://www.reuters.com/business/retail-consumer/inditex-9-month-profit-jumps-increases-fashion-prices-2022-12-14/. [Accessed on: 28 December 2022]
Sargani, G.R., Zhou, D., Raza, M.H. and Wei, Y., (2020). Sustainable entrepreneurship in the agriculture sector: The nexus of the triple bottom line measurement approach. Sustainability, 12(8), p.3275.
Shenshinov, Y. and Al Ali, A., (2020). The tools of increasing efficiency of human resource in the lean production environment: Conceptual study. International Journal of Core Engineering & Management, 6(7), pp.1-18.
Stone, M., Aravopoulou, E., Ekinci, Y., Evans, G., Hobbs, M., Labib, A., Laughlin, P., Machtynger, J. and Machtynger, L., (2020). Artificial intelligence (AI) in strategic marketing decision-making: a research agenda. The Bottom Line, 33(2), pp.183-200.
Taboada, I. and Shee, H., (2021). Understanding 5G technology for future supply chain management. International Journal of Logistics Research and Applications, 24(4), pp.392-406.
Tien, N.H., (2019). Comparative analysis of multidomestic strategy of P&G and Unilever Corporation. International journal of foreign trade and international business, 1(1), pp.5-8.
Transparency.org (2022). United Kingdom – Transparency.org. Available at: https://www.transparency.org/en/countries/united-kingdom. [Accessed on: 24 December 2022]
Zara.com (2022). CORPORATE SOCIAL RESPONSIBILITY POLICY OF INDITEX TRENT RETAIL INDIA PRIVATE LIMITED. Available at: https://www.zara.com/static/pdfs/IN/csr_policy/CSR_India_Policy_20220525.pdf. [Accessed on: 26 December 2022]
Zara.com (2022). Official website. Available at: https://www.zara.com/uk/. [Accessed on: 24 December 2022]
Know more about UniqueSubmission’s other writing services:
