Posted: August 12th, 2013
Zara SWOT Analysis Table
|Wide Labor force: Regardless of the global economic downturn experienced in every country, Zara possesses a significant employee base. The parent company employed 10000 employees leading to the total number of employees in the firm to be 109000. Zara provides professional opportunities for current employees making it possible for easy integration, assimilation and cohesion of employees both newly recruited and existing.||Recruiting Challenges: Regardless of Zara being able to reach potential individuals as employees, the retailer has been unable to recruit potential personnel completely. This is because the retailer’s strategy in taking advantage of selling fashion apparel online is met by low recruitment of personnel who will operate online operations. For instance, Zara has been able to employ 21 percent of the new recruitments, who were mostly online specialists.|
|Strong Human Resource Management: In order to take advantage of the global emerging trends, Zara, through Inditex, has taken advantage of utilizing online recruitment in order to recruit a wide and diverse array of employees. Additionally, Zara is able to recruit talented young personnel in various parts of the world through its international stores. For instance, there are selection and recruitment centers in London, Barcelona, Moscow and Madrid. These centers allow Zara to recruit, select and train diverse individuals.||Garment Deadlines: Online transactions increase the number of garments per day. Additionally, online transactions facilitate transaction with people from different countries, which requires personnel to learn different languages. This causes further delay in meeting deadlines since newly recruited personnel are unable to transact in different languages with different personnel. Therefore, much of the challenges that online personnel face is based on meeting deadlines by customers.|
|Efficient Supply Chain and Management: Zara has an innovative and flexible supply chain. This is attributed to low inventory costs and offsetting of higher labor costs by enhanced flexibility. Moreover, the warehouses and distribution centers are not located far from the production plants. Moreover, the supply chain management vertically integrates most processes such as operations, manufacturing and logistics. Moreover, the supply chain is governed by an efficient and strict Supplier Code of Conduct, which ensures that suppliers are audited through their performance as well as breaches.||Delays in Supply and Delivery: Usually, products require transportation over considerable geographic distances. Due to long distances, distribution is affected and it affects the end users of the supply chain: client and supplier. Moreover, other factors also lead to delays in delivery. Factors such as trade restrictions, work stoppages, congestion of infrastructure and transportation of availability affect retailers, especially those situated in novel markets. These challenges can lead to differences between the suppliers and the firm leading to unethical acts.|
|Potential Global Markets: Zara possesses the capability to enter and take advantage of other foreign markets. For instance, there are many numerous growth opportunities in foreign markets. This is evidenced by the number of stores opened in 49 markets, which amounted to 107. Moreover, Zara was available for sale in the Japanese markets through online business.
|Competitive Retailers: Regardless of Zara’s considerable global market share, the retailer faces stiff competition from three multinational garment firms. They include H&M, Gap and Benetton. These firms operate numerous retail stores around the globe. For instance, H&M operates over 2000 global retail stores. The Gap operates 3300 global retail stores while Benetton operated 3200 stores by the conclusion of 1985.|
|Potential Entry and Expansion of Segments: Through Inditex, Zara is able to penetrate different market segments over the globe. This is indicated by the expansion of the retailer in the African sector, through penetrating South Africa. Moreover, the retailer has taken advantage of online sales and even initiated transactions in the United States. Moreover, the retailer, which possesses great financial performance, indicated by growth in overall sales, net income and dividends to stakeholders, allows it to expand globally.||Foreign Challenges: Zara operates in various foreign countries that have different challenges. For instance, different countries possess various employment conditions, legal requirements and operating necessities. Moreover, natural disasters such as earthquakes and floods can also hinder the retailer in operations. Additionally, crises such as epidemics and political instability also cripple operations.|
|Online Marketing and Retail: The emerging trends have led to the importance of using online marketing and retailing to an advantage. Zara is capable of using online retailing and marketing due to its resources and global presence.||Internet Challenges: Online commerce can also be a threat to the retailer. This is because of the rapid and unusual increase in the use of mobile devices such as smart phones to transact businesses. Additionally, the Internet provides an ample platform for customers to provide views regarding a company’s product, which can be highly negative for the company since negative views can directly affect a company’s performance.|
Various recommendations can be made for Zara, depending on the SWOT analysis performed. Much of the factors making up the SWOT findings are based on the human resource management, supply chain management, online commerce and competition. Thus, the strategic problem to be addressed revolves around supplier ethics and maintenance of the retailer’s performance irrespective of stiff competition. Is Zara capable of conducting its suppliers and maintaining a competitive edge? Much of the problem presented for Zara revolves around Inditex suppliers. In 2011, 92 of the suppliers were discarded for breach of the Supplier Code of Conduct. Moreover, problems involving suppliers have negatively promoted the firm leading to negative press.
The recommendations revolve around the company’s strengths and opportunities and serve to minimize threats and weaknesses. Foremost, the retailer can initiate cost leadership strategies in its online transactions. Since there is no large cost in doing e-commerce, Zara can allow consumers to access their products for low internet costs in order to encourage advertisement and marketing. Additionally, through its efficient supply chain, Zara can initiate cost leadership strategies by constricting suppliers to pricing and initiating value chain management through working with sellers to lower inventories. Secondly, since most Zara consumers possess medium and high purchasing powers, differentiation strategies can be applied since consumers are not price sensitive. Mostly, Zara can apply image differentiation and take advantage of branding and use of patents to gain an edge over competitors. Zara can also utilize horizontal expansion strategies in order to expand its market share. The parent company can also initiate horizontal integration by acquiring another medium enterprise in order to protect operations and absorb risks especially in regions that are prone to unavoidable risks such as political instability and natural disasters.
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