Positive and negative factors and dimensions of the Zara brand
The main factors that can affect a company are the following economic, political-legal, educational, sociocultural and half-environment dimensions. Zara is a profit company and therefore goes to the markets that are better economically, such as European countries, America and some countries in the Middle East and Asia.
Zara if you want to expand needs to know how the political system works to see if it is stable to settle and on the other hand see if the laws of these countries convinces them to enter that market, since the taxes or rights and obligations of the company They are an important factor that can affect your decision to enter that market.
Companies need workers and Zara is no exception. They need qualified people and with knowledge in a respective field and to be a company in different markets need different languages to know. That is achieved through a good educational structure, but its investment is expensive for some countries. Because of this Zara goes to countries with a good educational structure and at the same time obtain technology to help you in your production.
Zara wants their garments to be sold, but no person can be done, since we all have different tastes, but we have similar patterns due to our society and culture and Zara like any company tries to take the largest sector in society to be able to Sell more, in this case they chose a fair.
The last factor that seems the least important, is really the opposite. Nowadays with the awareness of society with the environment, people care how companies act regarding the environment, as well as their workers and business policies. Which give more reputation or less, which influence their sales. Zara aware of this try as much as possible to take advantage of all the raw materials that are provided and reused as well as not polluting their environment with residual materials and respecting the environmental regulations of the respective countries.
Another factor that Zara has in his strategies is in the demography of the countries he operates. Zara due to its great market amplitude needs to do age, sex, rent, etc. in order to adapt your products to your needs. Zara has other competitors in its market, to put some examples mango, primark, h & m, etc.
But how strong is the intensity between them?. To know we can see some factors, which helps us find out such as the exit barriers, the growth rate of the industry, current competitors, the possibility of product differentiation and the strategic interests of competitors.
Competitors usually large companies installed in different countries which have much of the market, but on the other we have the small merchants of local stores or markets, so the competition between competitors is strong, since on the other hand the products do not They are very different, so they seek the quality of the product and the power of the brand, at the same time it is a market that when you grow is very difficult to leave due to its output costs (machines, transport, facilities, etc.). On the other hand it is a market in constant growth because everyone needs clothes and globalize help that can be sold more garments to different countries, which means a market increase and as a consequence an increase in competition.
The new competition can be easy or difficult to enter depending on how they want to start. You can buy the garments from a supplier and sell them in your store. This involves a relatively low cost compared to the cost that your own garments would create, since it requires a higher initial investment (machines, workers, space, etc.), In addition to a higher output cost. In the case of Zara its potential competitors would not appear until they had a high production and distribution capacity, as well as a well -formed brand. As the power that distributors have and customers we have to see four made. Recurrence, dependence, differentiation and information available.
On the one hand distributors do not have much power in Zara because the raw material they need can find it in other hundred suppliers, although on the other hand the recurrence of the purchase is constant and they need it constantly, so that in the short term they would suffer losses. On the otherly. It is a concentrated sector because it is some companies that have most of the market and competition between it is high to take its part of the market. This is favored due to output costs, the low of product differentiation and the low transport cost
It is an important sector because it is a primary need for humans to dress us, this makes it a basic sector in every society. Due to the age of this industry it is a mature sector, but with innovation it can have growth phases. Finally we have to talk about why Zara has managed to revolutionize its sector as well as maintain its market share even increase it. Amancio Ortega the creator of Zara, I create a totally innovative system to create new garments every fifteen days called "Fast fashion", fulfilling the need for the market not to wait for each station to acquire new clothes. But this can be copied for its competitors, so Zara needed something more apart from his idea.
Its main source source of income is customers, so they need workers aimed at doing a great service to buyers, at the same time they are employed with great knowledge in their field, which do not stop training thanks to training courses offered by Zara and in general Inditex. Another strong point of capital is its ability to retain it because they give part of their shares to their employees. A strong point of Zara is the supply chain which the distribution center is located in Galicia and the products are taken to all the stores and factories in the world. Which leads to minimizing restoration, because having all parts of the chain entails that you know in real time how the stocks and reduction of production costs are going due to an economy. Due to the technology they know in real time all the logistics and distribution of the company, as well as those of its stores and their orders with the suppliers which are in the vicinity of the production factory.
Zara has been able to create a luxury and innovation brand thanks to its history, know where to place your stores to give that image and the quality of your products. Partly thanks to that and the fact that their employees know how to treat their customers make more people feel great for the company and decide to buy more times in Zara. An important point of Zara as well as the entire Inditex group is its relationship with its suppliers which are usually local and as I said previously very close to the production centers, but Zara is very demanding in their outputs so they study the supplier before Before doing any Zara business belongs to the Inditex group, which entails having relationships and alliances with all of them, in logistics, information, distribution issues. Outside Inditex they have alliances with NBA, Apranga, Alibaba, etc. One of the ways to get customers is to take advantage of market trends using the strategies "the minute" and "last fashion", as well as improving customer experiences thanks to technology and with stores with more and better characteristics.
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