Business Environment Factors - Zara

LITERATURE REVIEW

Zara is a part of a retail group Grupo Inditex, known to be one of the fastest and largest growing clothing retail organisation in Europe. The group has various divisions or brands which are popular for offering high quality products to customers. Zara has a great market position and also has high demand in terms of luxury products and apparel. The clothing industry is currently the second largest sector in UK retail. The market-place has been increased recently with fashion products and brands as many Supermarket chains have launched their own clothing brands, The entrance of new brands in the market has enhanced the competition which has affected many companies to develop effective strategies which can help them sustain in the market. The companies are using international business concept which assist them in growing their market share by entering into the global market. Zara is a very popular brand and known for its high-quality and designed apparel, it was among the top 100 international brands in 2015. In respect to the Indian regulations on foreign direct investment, the Inditex group combined with the Tata Group, India to create new joint venture in 2009. Inditex owns 50% of this partnership on the other hand Tata's subsidiary Trent ltd holds 49% of share because of various challenges the organisation is facing. According to Zara professionals Indian market is a top priority among all the countries in Asia. The most effective method to enter in Indian market is to collaborate or develop a joint venture with an Indian brand which already has an impressive brand value or image in the market. With regard to this observation Inditex, Zara's parent company used the method partnership and develop a joint venture with Trent ltd, a Tata Group company. Trent ltd is one of the most popular clothing distributor and has a high value in the market both locally and globally. The major concerns Zara has while entering into Indian market were culture and demography, Speaking of demography India has a high population of 1.2 billion. According to the target market income becomes higher in India. Culture is a major concern while entering into a new or foreign market, it must evaluate the beliefs and perspective of the culture. In India social security is given high attention therefore, Zara considered Indian culture and beliefs while expanding its business.

ZARA is lacking good marketing skills and techniques which they would be using or utilizing so that weakness could be reduced. As it could be said that ZARA is having its operations in about most of the countries of world which would be hampering their quality of work. The economic and political conditions in India is hindering ZARA’s ability to manufacture as the demand for company and its products are been diminishing or fluctuation on very regular bases (author). This would be one of the reasons as to why company is planning to establish their manufacturing unit in India which is emerging economies of world.

This kind of technique if they are using and applying with their decision making process then it would be easy for them that they are increasing all strength which are there. ZARA could be saving their time in way when they are using this strength part they could be getting more time utilising in more important and other parts. Whereas if they are not looking at their weakness which are hampering them so it would not be focusing on what are the weakness which company is having author. SWOT is methods of analysing what could more company find about their negative and positive points and how could they gain all opportunities that is there.

Other than this there are also some factors that are not been under control of company as they are not been able to regulate those elements. These factors are analysed with help of PESTLE which is mainly done in order to solve what the dimensions are of global leading firm ZARA in India. As market of India is very much dynamic where many new type of technologies and innovations are taking place as it could be included as most technological advance nation author. Other than this there are also many other factors like that of support of government, inflation, changes in tax rates and climate changes that are occurring within country or market of India. Company which need to decide over what they should be doing in respect of changing environment or policies of country like that of India.

There are many factors like that of political stability within the markets of India would be treated to as most important and essential part which is creating opportunity to other companies to come into country. There are minimum hindrances from side of Indian government with also including many free trade agreements. There are many other nations who are interested in investment within India as it is known to as technically advance countries of world. These kinds of agreements would be leading to improving operations of ZARA with other nations as well which is giving opportunity to improve their market penetration. On the other hand if government of supporting eco-friendly products within markets of India then this is also regarded to as opportunity for ZARA to satisfy demand of customers. Other than this it was looked that ZARA is having opportunities like that of mergers and acquisitions which is helping company in gaining stronger base of customers. Other than this advancement in technology is also one of the most important technique which ZARA is to use. This would be clear opportunity with company that they are having and analysing need of customers with help of technology. For organizations it becomes essential that they are helping or enabling to identify various kinds of business environment which would be influencing them. It is very much important that company is maintaining their position into market at global level so that they are leading with effective methods. External factors or environment is that which is not into the control of company as compared to those of internal one. This would be including factors like that of strengths, weakness, opportunity and threats which company is having or facing. Strengths are those elements of company that are enabling them to work in very good image or profits for company. Like that ZARA is making new investments in India would be helping them in improving their profits. Business environment are those which is influencing all functions and operations of ZARA like that of employees, policies, legal and political environment in which company is working author. External factors would be like those of related to tax, inflation, legal policies of country within which they are working and all together impacting the level of market or their decision making process. This analysis of market environment could be done on the basis of PESTLE and SWOT tools which are most important in way of identifying factors and their impact on decision making. Internal factors are those which are able to be controlled by firm itself as it is the one who is formulating plans and policies for company so that it is able to operate in smooth from. This would be including like that of resources which they are having, knowledge of employees and their skills. In order to analysis what are the internal factor that could be impacting company and its functional areas managers should be using statistical approach like that of SWOT. 

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