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Strategic Management For Zara Add in library

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Question:

1.Demonstrate critical understanding and application of relevant theories associated with global corporate policies and strategies.

2.Understand the holistic nature of strategy and apply analytical techniques to solve complex problems in real life organizations.

3.Demonstrate knowledge of the strategic decision making process through critical analysis of how strategic decision making enables an organisation to relate to its global business environment.

4.Critically evaluate and monitor the business mission, objectives and policies of international organisations.

5.Use critical reflective skills to reflect on the impact of their understanding on the problem solving process.
 
 

Answer:

Introduction

Competition has encouraged the management to adopt and introduce effective strategies for improving the business performance. In this process, the challenges associated with the business execution and development are analysed. This helps in implementing the changes that are considered to be essential for improving the performance of the company. The challenges involved with the business performance and adopting better methods for increasing the performance for the company needs to be analysed. This will help in implementing the changes that are considered to be essential for introducing the changes. Through this method, the management of the company introduce effective measures which would help in the business development (Brenner, 2009).

The strategic changes related to the business development and the process that would be followed for the same would be analysed. This will help in implementing the changes that are considered to be important for the successful business changes. Every business houses aim to expand the business activities and reach out to the clients from national and international market. For this, the required changes are introduced by the management. Through this process, the required changes are introduced within the company.

1. Competitive in the fashion industry

Competitive landscape as compared to Gap Inc., Hennas & Maritz (H&M)

ZARA is a powerful brand name, which has influenced the buying behaviour of the customers from different parts of the market. The company has operational activities in the USA, Europe, Asia, and Africa. ZARA works in close relation with the clients, and constantly work towards developing new products. The product design time required for the company is 2 weeks, which is not the case with the rival companies like Gap Inc. and H &M. Buyers constantly have wide range of new products, which keeps the buyers connected with the company. In order to increase the sales for the company, the management has proposed to venture into the international market, through which the goodwill can be improved. For this, the management has proposed to implement effective strategies through which the shipment costs and the production expenses have been reduced (Arsenau, and Chugh, 2007).

The company didn’t transfer the production activities to the low costing countries, which was done by the rival companies. Instead of doing so, the company designed effective production activities that helped in retaining the quality of the production process, without increasing the operational expenses. The mission of the company was to cater the needs and preferences of the client, located in different parts of the market. Management of the company was aware of the demand of the customers for new products (Burgers, 2009).

This was one of the reasons the management of Zara quickly located the operational activities, into countries where the production activities were feasible and could be carried out without increasing the operational expenses. For this, the management introduced innovative production strategies which also included improving the supply change management system. Through this method, the management had attempted to increase the production activities and improve the sales process, which was one of the most important factors for reaching out to maximum number of clients (Campello et al., 2009).

In order to handle the needs of the clients, the company had grouped expert designers from different parts of the world. This was done for introducing new designs and trends for the existing and new customers. In this process, the price of the goods and services were kept low, and the management had intended to upgrade the quality of the products that were maintained by the company.

GAP and H and M had hired the services of individual designers instead of hiring group designers. This had affected the quality of sales and productivity. Zara stores were owned by the company, and this had made the difference. The stores were effectively integrated with the retail stores, through which the sales could be made.

In order to venture into the international market, the management of the company had proposed to keep the cost of inventory as low as possible. Through this method, the changes required to be implemented for improving the performance of the company were introduced by the management. This change had increased the sales of the products for the company during the years. The annual production for the products were higher than 11,000 annually. Stocks or the inventory of the products were kept at the lowest possible, and the products were sold with 10 days. The old stocks were replaced by new one, which was done to attract the clients (Dhar, and Sundararajan, 2009).

The rival companies didn’t follow such rules, and this had affected the sales for the products and services. Through strategic planning and implementing process, the company had ventured into the foreign market, which was one of the key requirements for the successful business conduct. In this process, the company introduced effective logistic methods, through which the sales for the products were drastically increased. Clients were offering online services, which had increased the sales for the company. Potential clients could easily reach out to the company, and corrective measures could be implemented for increasing the sales process. The management had introduced online logistic system, through which the required changes within the system could be implemented. For improving the online sales process, the management had introduced the mobile applications, which enabled the management to access the necessary information about the products through online method (Deans et al., 2009).

 

How strategies helped the management to increase the profit?

Unlike the rival companies, the company had attempted to handle the requirements of the clients in the best possible manner. Through this method, it was possible to effectively handle the requirements for the company. Strategic changes enabled the management to expand the business activities in more than 77 countries across the world. This included developing around 5,000 stores. Such factors improved the profit earning margin for the company, which increased up to 42 per cent in the first 6 months of 2010. In order to improve the sales for the company, the management proposed to maintain strong and long term relationship with the clients, suppliers, wholesalers, and others. The quality of the clothes and other products had drastically improved and the changes were closely monitored by the company. This had positively affected the sales for the management. Such factors improved the profit earning margin for the company, which was around 15 per cent higher than GAP and H&M.

The company had proposal to venture into the international market, for which the needs and preferences of the clients were analysed. Through this process, the required changes and the strategic changes for the business development were introduced by the management. By analysing the expectations of the clients, the management had proposed to develop new market, which was essential for the business development. The strategic business expansion plan was monitored and the corrective steps were introduced for increasing the profit earning margin for the company (Dhyne et al., 2006).

2. International business expansion

The international business concept is an important term, which enables the management to adopt and introduce changes that would help in increasing the profit earning margin. Through the business plan, it is possible for the companies to improve the sales, which is done after analysing the risks involved with the process. In this process, Zara has adopted and introduced effective sales strategies through which the sales for the company can be improved. Pricing strategies is one of the positive aspects for the company. Through this method, the management develops and introduce corrective strategies, which would help in introducing the better quality products at the lowest possible price. The improved marketing strategy needs to be developed and introduced by the management, which will help in approaching the clients and increase the profit earning margin. Through this process, it is possible to analyse the expectations of the clients, and introduce better changes that would help in increasing the goodwill for the company (Davies, 2000).

The management has adopted and introduced value creation method, through which the sales process for the company is improved. In this method, the input is taken in the form of capital, which is necessary for the business expansion. The strategic changes and the changes in the business activities are developed and introduced by the management in an effective manner. This would help in developing and implementing effective changes, through which the changes in terms of the business development can be introduced. Business plans includes long and short term goals which is meant to help the company to develop and introduce effective strategies. Value for the products is created by developing new products, which will attract the clients. In this process, the changes and other factors associated with the business growth is developed and introduced by the management (Fang and Rogerson, 2007).

Zara introduce new products within a time span of 2 weeks. Within this period, the products are also launched into the market. This makes the marketing process quite important as this will enable the management to introduce the changes that will help in the business development. The facts and figures related to the customer preferences and changes in the production activities are designed and implemented by the management. Through this process, the necessary changes in terms of the business development and strategic changes related to the same are designed and introduced by the management. New products are introduced within the market after analysing the changing fashion trends, which is one of the important factors, through which the plans for the business expansion can be developed and introduced by the management (Filatotchev, and Toms, 2003).  

For this, the management has planned and introduce continues business development process. This includes analysing the challenges and implementing changes that would be useful in introducing the business changes. Zara has been able to expand the business activities into the international market, due to the strategic planning and implementation of new business plan. With the help of the value creation process, the management of the company could develop and implement changes that are associated with the promotional activities for the company.

Supply chain management system

In order to keep the production costs as low as possible, the management of the company has proposed to implement changes for marketing and promoting the products for the clients. In this process, the management plans to introduce an effective supply chain management system. Through this method, the company proposes to procure the raw materials required for the production activities at the lowest possible price. This would help in reducing the operational expenses, which is a concern for the management. With the help of the supply chain management system, the company ensures to adopt the best method for distributing the goods and services to the clients at the lowest possible price. Such a factor plans an important role in distributing goods to the clients located at different markets (Ghemawat, 2009).

International growth plan includes developing strategies for expanding the business activities to different parts of the market across the globe. The strategic goals for the business process includes –

  1. Developing new products for handling the clients requirement

  2. Introducing changes through which the production activities can be improved.

  3. Handling the data, which is required for supply the products to the customers from different parts of the market (Hall, 2008).

The rivals of the companies are GAP and H & M. such companies have been working towards recapitalizing the profit share in the market. For this, the management has been working towards rendering the best possible services, through which the clients could be provided with the best options. In this process, the challenges and other factors related to the raw materials and labour handling has been taken care of in the right manner. The needs of the customers have been changing due to the availability of different products in the market, and economic crisis. The company intends to approach the clients from various markets, and for this, the challenges associated with the business expansion has been planned and introduced in the right manner (Glyn, 2006).

 

Retailing process

Through the retailing process, it is possible for the companies to develop and introduce better strategies for increasing the sales. In this process, the product changes are introduced by the management of the company after analysing the expectations of the clients. For this, the changes and production activities are planned and introduced in the right manner. The changes in the business activities are communicated with the clients. An effective feedback is taken from the clients, as this would help in implementing the changes that would be useful for the business development.

The business cycle consists of different steps or factors like –

  1. The procurement of the raw materials

  2. Production process (Kleshchelski, and Vincent, 2007).

  3. Introducing the products for the clients and collecting feedback

Business cycle model

The product market is quite competitive and the challenges involved with the process are quite complex. Business cycle model concentrates on developing and implementing effective strategies through which the products can be sold to the clients in the right manner. The competitive markets are analysed and accurate information related to the business strategies are adopted and introduced by the management. With the help of such a system, it is possible to analyse the external and internal changes that can affect the business performance (Messina, 2006).

3. corporate social responsibility, environmental dimensions, and strategic leadership

CSR

In order to tackle with the CSR factors, the management of the company has adopted environmental friendly methods for packing. Through this method, the required changes related to the business development have been analysed. This would help in implementing the changes that are considered to be essential for the business development. In this method, the company proposes to use recyclable materials for manufacturing the products. This would cause less harm to the environment. In the similar manner, the packing materials selected by the company are intended to cause less harm to the environment.

The information related to the production activities are shared with the stakeholders and clients. Through this process, the management intends to improve the information sharing method which is considered to be necessary for the business development.

Environmental dimensions

The production and distribution method proposed to be adopted by the company is meant to help the management to adopt and introduce better methods for increasing the production activities. Through this method, the changes and other challenges related to the business development is proposed to be implemented in the right manner. In this method, the strategic changes related to the business development have been introduced after analysing the challenges involved with the environmental dimensional factors (Christiano et al., 2005).

Strategic leadership

Through the leadership factors, the management of the company proposes to introduce changes that would be useful in improving the performance. The members of the company are motivated to work towards the goal achievement, which is one of the important factors for the business development. Through this process, the necessary changes and other factors associated with the business development process are designed and introduced by the management in an effective manner. This would help in implementing the changes that are considered to be essential for the business development. The strategic changes are related to the future goals and important business changes that are opposed to be implemented by the company. The leaders believe in sharing the information related to the business strategies. Through this method, the changes related to the business challenges are associated with the implementation of strategic changes. The members or the staffs of the company are encouraged to participate in the discussion process, which is one of the most important factors through which the corrective steps can be introduced by the management. The challenges associated with the production activities are well designed and corrective measures are implemented for achieving the set target (Cloke, 2009).

 

4. Personal reflections on learning

Strategic leadership and well-designed business plan helps the business to achieve the set target without affecting the operational expenses. The process adopted by the management depends upon the objectives of the company, and the challenges that are associated with the steps. In this method, the strategic changes and other factors associated with the business process needs to be analysed and corrective measures needs to be introduced by the management. Through this process, the management of the company could analyse the challenges and introduce effective strategies through which the right measures can be introduced for achieving the target. The challenges involved with the business development have to be analysed, as this will help in implementing the changes that are considered to be important for expanding the business to different markets.

The value creation method enables the management to design and adopt better process, through which the corrective measures can be introduced by the company. In this process, the challenges and other factors associated with the business execution needs to be developed and introduced in the right manner. The strategic changes related to the business development needs to be analysed as this will help in reaching out to different markets. Business expansion plan is quite challenging and the necessary changes related to the business development needs to be implemented. Through this process, the challenges related to the business development have to be developed and the corrective measures needs to be analysed. Through this method, the challenges existing with different markets can be analysed, and corrective measures for improving the production activities can be introduced. In this process, the challenges and opportunities can be developed and introduced by the management. This is one of the important factors through which the necessary changes can be implemented to develop the business (Cooke, 2002).

 

Conclusion

The changes related to the business development needs to be planned and implemented in the right manner. Through this process, it is possible to analyse the challenges and introduce corrective steps which would help in the business development. The complexity related to the business development has to be analysed as this will help in introducing the changes that would help in the business development. Complexity related to the business development needs to be analysed as this will help in analysing the challenges and corrective measures can be introduced by the management. Through this process, the strategic changes related to the business development can be introduce after evaluating the future goals of the company.

 

References

Arsenau, D. and S. Chugh (2007). Bargaining, fairness, and price rigidity in a DSGE environment. International Finance Discussion Papers, No. 900, Board of Governors of the Federal Reserve System.

Bils, M. and P. Klenow (2004). Some evidence on the importance of sticky prices. Journal of Political Economy 112(4), 947–985

Brenner, B. (2009) 'The Value of Increasing Investment in Employee Benefits during an Economic Downturn', Journal of Financial Service Professionals, 63, 1, 29‐31. 

Burgers, W. (2009) 'Marketing during economic downturns', Financial Times, Managing in a Downturn Series, February 5, online at: https://www.ft.com/reports/managingdownturn

Campello, M., Graham, J. and Harvey, C. (2009) 'The big freeze', Financial Times, Managing in a Downturn Series, February 5, online at: https://www.ft.com/reports/managingdownturn

Christiano, L., M. Eichenbaum, and C. Evans (2005). Nominal rigidities and the dynamic effects of a shock to monetary policy. Journal of Political Economy 113(1-45), 346–353.

Cloke, J. (2009) 'An Economic Wonderland: Derivative castles Built on Sand', Critical Perspectives on International Business, 5, 1/2, 107‐119

Cooke, H. (2002) ‘Survival strategies for corporate real estate in uncertain times’, Journal of Corporate Real Estate, 4, 4, 365‐374. 

Davies, K. (2000) ‘The Asian Economic Recession and Retail Change: the Implications for Retailer Strategies in Asia’, International Review of Retail, Distribution and Consumer Research, 10, 4, 335‐353.  

Deans, G., Kansal, C. and Mehltretter, S. (2009) 'Making a Key Decision in a Downturn: Go on the Offensive of be Defensive?', Ivey Business Journal Online, Jan/Feb

Dhar, V. and Sundararajan, A. (2009) 'Plugging in to transformation', Financial Times, Managing in a Downturn Series, February 5, online at: https://www.ft.com/reports/managingdownturn

Dhyne, E., L. Alvarez, H. L. Bihan, G. Veronese, D. Dias, J. Hoffmann, N. Jonker, P. Lünnemann, F. Rumler, and J. Vilmunen (2006). Price changes in the Euro Area and the United States: Some stylized facts from individual consumer price data. Journal of Economic Perspectives 20(2)

Fabiani, S., M. Druant, I. Hernando, C. Kwapil, B. Landau, C. Loupias, F. Martins, T. Mathä, R. Sabbatini, H. Stahl, and A. Stokman (2006). What firms’ surveys tell us about price-setting behavior in the Euro Area. International Journal of Central Banking 2(3), 3–47.

Fabiani, S., C. Loupias, F. Martins, and R. Sabbatini (2007). Pricing Decisions in the Euro Area: How Firms Set Prices and Why. New York: Oxford University Press.

Fagnart, J., O. Pierrard, and H. Sneessens (2007). Microeconomic uncertainty and macroeconomic indeterminacy. European Economic Review 51, 1564–1588.

Fang, L. and R. Rogerson (2007). Product market regulation and market work: A benchmark analysis. NBER Discussion Paper 12981

Filatotchev, I. and Toms, S. (2003) ‘Corporate Governance, Strategy and Survival in a Declining Industry: A Study of UK Cotton Textile Companies’, Journal of Management Studies, 40, 4, 895‐920

Ghemawat, P. (2009) ‘The Risk of Not Investing in a Recession’, MIT Sloan Management Review, Spring, 31‐38.

Glyn, A. (2006) Capitalism Unleashed: Finance, Globalization and Welfare, Oxford University Press, Oxford

Hall, R. (2008). General equilibrium with customer relationships: A dynamic analysis of rentseeking. mimeo.

Kleshchelski, I. and N. Vincent (2007). Market share and price rigidity. manuscript.

Messina, J. (2006). The role of product market regulations in the process of structural changes. European Economic Review 50(7), 1863–1890.

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