EXTERNAL ANALYSIS

Zara is a clothing company that deals with the production and selling of clothes.  The company has grown over the years to become among the leading cloth manufacturers and sellers in the world. The company has used a strong marketing strategy to market its cloths amidst competition from other companies that produce cloths in various countries around the world. The company has used various marketing and operational strategies to help the company deal with various challenges that it faces while in operation. The company produces various types of foods depending on consumer needs to meet the demands.

Opportunities

There are various opportunities that Zara Fashion Company can utilize in order to make more profit and increase the customer base.  The opportunities give the company the opportunity to continue serving the customers with the clothes to wear. The opportunities that the company has included using the online platforms that are now available to market the clothes to the new market. Online platforms give the business new opportunities that never existed before in terms of marketing. Online marketing platform doesn’t have boundaries; therefore, the company will not have a geographical limit in terms of the area that the marketing can cover.

There also online platforms such as Alibaba that give Zara fashion company the opportunity to sell its products through the platform. The platforms give the company the opportunity to increase the sales of its products by enabling the company to access markets that it never had before. Competitor companies are using online platforms to sell their products; hence Zara can also take their competition to online platforms.

Threats

The company also has threats that it has to deal with in order to be able to survive the threats, the company needs to be aware of the threats in order to come up with strategies to counter the threats. Among the threat that the company face includes the threat of competition. Some companies have come up offering similar services. The new companies offer similar services at lower prices as their strategy to take the customers that previously used to be customers of other established companies. The competition is pushing Zara Company to its extreme when it comes to dealing with competition.

The company also face the threat of increased operational costs; the demand for raw materials is increasing as more companies enter the market offering similar clothes. The increase in the price of raw materials will force the company to increase the price of its products. The customers are used to a certain price for different products; therefore when the prices are increased more than the normal price they might look opt to purchase products from competitor companies. Increase in the cost of production will make the company reduce the profit margin.

STRATEGY EVALUATION

Competitive Advantage

Zara clothing company recognizes the stiff competition that exists on the market. Therefore, it has come up with strategies of ensuring that it enjoys a competitive advantage over other companies. Among the marketing strategies that ensure the company has a competitive advantage over other companies is by creating a strong brand with several portfolios that are unique from those of competitors (Johnson et al., 2017). Having a strong brand makes it difficult for competitors who might want to copy the cloths produced by Zara Company. The customers know the brand; therefore they cannot be manipulated into purchasing clothes that are not original and manufactured by Zara. The strong brand that is associated with quality high-end cloths makes customers buy Zara clothes to be associated with the brand. Customers buy Zara clothes not only because the clothes are of high quality but also because they want to be associated with the brand. This increases the competitiveness of the brand in the market.

The more significant portfolio that is made up of eight brands also improves the competitiveness of the Zara brand. The eight brands increase the range of products the customers choose from, thus ensuring that the competitors don’t have a niche that they can use to begin their competitive attack on Zara company. Zara clothing company focuses on areas that have a high demand in the market (Johnson et al., 2017). The broad portfolio also ensures that the many needs of the customers are covered; hence the customers do not need to purchase clothes from other companies to supplement those sold by Zara clothing company. There are different clothes for different parts of the body that helps in meeting the needs of the customers. The company has won the loyalty of many customers that keep on buying clothes manufactured by the company. The competitive advantage has enabled the company to survive competition from other companies that enter the market offering similar products.

Branding

Zara clothing company also recognizes the importance of branding and has created a brand that is unique from other companies offering similar products. The company focused on creating a brand that it could rely on when it comes to reputation in the market (Grant, 2016). The brand marketing strategy is very important when differencing the products of the company from those of competitors. The brand that the company created represent the dreams of the people when it comes to clothes that they want to wear.

Branding has enabled the company to create a trust with its customers because they always get quality products. They get value for their money (Grant, 2016). Trust in the brand also enables new customers to trust the clothes manufactured by the company are of high quality. The company is committed to continuing designing clothes of high standards. The branding strategy also helps in marketing the products sold by the company. The products market themselves based on their high quality. The customers market the products through referrals after they get quality services offered by the clothes that they buy.  Customers who have bought clothes manufactured by the company cannot resist purchasing the goods again because of the quality of service that they get and the taste.

Zara Fashion Company spends little money on promotion because it has already created a brand that customers can trust purchasing items from. The sales that the fashion company makes keep on increasing even though the company does not do promotion. The brand market for itself because the company has created a customer base that it can rely on. The little promotion that the company makes usually occur when the company is opening branch in foreign countries where the company is not known.

Customer Service

The way a company treats its customers determines whether the customer will purchase the products from the company store again. Zara fashion recognizes this fact hence the reason why it has come up with different ways of appreciating the customer and making the customer feel valued (Grant, 2016). The primary goal of Zara Fashion Company is to meet the needs and desires of the customers; therefore it focuses on carrying out this objective the best way possible. The customer is guaranteed the best products whenever he/she buys the company’s clothes.

Porter’s Five Forces

The five forces explain the various aspects any company put into consideration in order to remain competitive in the market. The five forces push the company to the limitations affecting the operations and success of the company (Carraher, 2018). The company needs to take appropriate measures to ensure that the forces do not influence the success of the company. Porter’s five forces determine the structure of the industry in terms of the stakeholders producing goods and services that they sell to the consumers. When producing companies are active in terms of competing with each other to ensure that they become innovative in order to continue delivering quality goods to consumers.

The five forces of porters cover broad range aspects when it comes to dealing businesses operating in specific industries; the aspects include the structure, the size, and needs of the customers and the distribution channels of the products that the company is producing.  The Porter’s five forces include the competitive rivalry, supplier power, buyer power, threat of substitution and the threat of new entry.

Competitive Rivalry

The competitive force deals with the ability of Zara fashion clothes to compete with other products in the market. The company aims at producing companies of high quality as a strategy to compete with other products in the market (Carraher, 2018). Zara companies face stiff competition from other companies in the industry; hence Zara needs to strategize on how to face the competition. The competition might make a company close down after the consumers fail to purchase the products. The customers choose the products that suit themselves in terms of meeting their needs and being affordable.

Threat of Substitution

Zara Fashion Company just like other companies faces the risk of its products being replaced by customers by substitutes in meeting their needs (Carraher, 2018). Many factors make customers to substitute the products, among the reason is when they but cheap substitute because they can have the quality products which prices a relatively high. Substitutes are a significant threat to Zara clothing company because the company risks losing its customers.

The threat of New Entrants

New entrants in the industry pose a threat to existing companies including being able to displace the existing companies. The new entrants might sell their cloth products at low prices, and the customers might opt to buy the ones sold at low price affecting other companies that sell their products at relatively higher prices.

References

Johnson, G., Whittington, R., Scholes, K., Angwin, D. and Regner, P. (2017) Exploring Strategy: text and cases. (11th Ed.) Harlow: Pearson Education. Chapter 7.

Grant, R., 2016. Contemporary Strategy Analysis: Text and Cases Edition, 9th.

Carraher, S.M., 2018. An examination of an instrument to measure Porter’s Five Forces Model. In International Journal of Arts & Sciences Conference at Harvard University.