ZARA CASE ANALYSIS

I. Situation Analysis

Zara, founded by the Inditex Group on May 1975 was created with the concept of fast
fashion in Spain which has been gradually growing in the industry through serving its customers
with high fashion clothing and accessories at an extent of a lower cost which then brought the
brand into the spotlight as the world’s fastest fashion retailer by sales. One of the advantages of
ZARA is that it is able to rapidly restock inventories mostly manufactured in Spain and less
outsourcing from overseas which enables them to quickly respond the increasing demands of
the public through creation of designs of ever-changing fashion trends and mass producing at
lower costs. Despite the increase of brand awareness and sales overseas, the business has
been facing issues such as plagiarism, unpaid factory workers, brand’s e-commerce site
backlash, and force closure of 1200 stores due to pandemic which was gradually and rapidly
solved by the administration, however, the issue that heavily scrutinized the company for years
is its operation’s negative impact towards environment. Despite its attempt to cut back, there’s a
need for ZARA to plot down administrative strategies to cut back even more percentage of
environmental damages due to its large-scale operations.

II. Statement of the Problem (max 50 words)

Aside from the already existing implemented strategies such as launching of Join Life
label, what other administrative strategies should ZARA initiate to cut back even more
percentage of contributors of environmental damages brought by its large-scale operations and
ensure sustainability?

III. SWOT Analysis

Strengths and Opportunities

ZARA is known by the public for its fast fashion concept at low costs and its rapid
product and stock replenishment due to its accessible product manufacturers which is also
headquartered in Spain (S1, S2, S4, S7). Due to its rapid operations, it enables the company to
quickly adapt to fashion and technological trends for the company to broaden brand awareness
and access to global market (S5, S6).

The impact of the diverse technological influence would provide the company
several insights on further promotion and distribution of products along with development of
product designs based on current trends at lower cost which was the very goal of the company
(O1, SO1).

Strengths and Threats

Rapid production of inventories is considered as greatest strength and edge of

ZARA among its competitors in the market (S1). As most of the manufacturers of the brand is
located in Spain, it becomes time-efficient to produce inventories at shortest time possible(S2).
However, despite its rapid production, imitation of products costed at even lower price is
considered as threats especially in times of global health crisis where importation and
exportation of products are mostly restricted and shoppers in physical stores are highly limited
(T1, T2).

As competitors pull away ZARA’s huge number of consumers due to product

imitation, one way which the management could implement to even prevent huge loss of market
can be the continuous innovation of products of high fashion and current trends (ST1). The
continuous release of high fashion, high quality, low-cost products would create boundaries
between ZARA’s products and its counterpart imitations from competitors. This innovation would
also include product markings which are hard to imitate to assure that customers are purchasing
authentic products from the company.

Weakness and Opportunities

One of the weaknesses of the company is that it has already faced several
issues such as plagiarism, non-payment of factory workers and e-commerce backlash (W2)
which greatly affected the performance of the brand in the market as it has received negative
reviews from consumers.
 Additionally, as the company produces overwhelming amounts of products to
cater to their markets, both locally and internationally, comes the same overwhelming amounts
of textile wastes and dyes as contributions to the negative impacts of the environment (W1,
W3).

To bring back the trust of consumers, redesigning management can be done by

the company (O2) as issues has been pointed out due to lapses of management and further
address the issues as well as prevent future issues like these (WO2). Furthermore, ZARA could
also collaborate with environmental organizations (O3) to resolve the current environmental
issues and seek further insights on how to gradually and constantly alleviate operation’s
negative impacts (WO1). The company should also increase customers’ awareness of their Join
Life and encourage everyone to participate in the said project.

Weakness and Threats

Competition in the industry becomes a great issue as it has become highly

saturated. Despite the rapid restocks of inventories, the global health crisis (T1) is limiting the
brand’s exportation of products paving way for competitors to create product imitations, selling it
at an even lower price (T2), environmental issues (W1, W3) also add to the burden of the
company as consumers are becoming more environmentally conscious due to impacts of the
health crisis.

With respond to the problems, the company can start producing innovative
products as well as promote strategic operations to still promote product development while still
abiding safe environmental protocols (WT1) to further address issues regarding environmental
damages cause by ZARA’s operations.

IV. Critical Success Factors

As the study implies enforcement of change in the organization, Business Process Re-
engineering (BPR) Strategy is used to aid the company in the recreation and restructure of
management forces it is also utilized to achieve improvements in critical aspects like quality,
output, cost, service and speed.
 Based on this strategy, the following critical success factors are conceptualized. The
course of action in dealing with the company’s operations with regards to the impacts of the
environment must have impact on production, quality, and speed.

Impact on Production

ZARA has been known to cater its market rapidly than its competitors. With the
fact that the manufacturers are located in Spain creates efficiency for the company to acquire
manufactured products within two weeks as compared to competitors where its outsourcing
would give them months to receive the products.

Impact on Sustainability

As social and environmental issues are arising, companies are now aiming for
sustainability to avoid drastic depletion of natural resources. Additionally, the concept of
sustainability is also perceived as a must-have factor of companies where ZARA has been
gradually promoting sustainability as part of its commitment to the people and the environment.

Impact on Profitability

Every business inclined organizations’ goal is to achieve profitability and ZARA

for one, aims profitability in its operations. As profitability measures the performance of the
brand in the market, ZARA has become the leading fashion retailer due to its rapid strategies in
making the consumers buy their products.

V. Alternative Courses of Action

A. Limited Production

Limit number of produced inventories to reduce number of excess textile waste.

The overwhelming number of excess textile waste contributed by the company is

due to consumers disposing off old garments along with the plastics from man-made fabrics. As
this product takes several years to fully decompose, limiting the total number of productions
would lessen and take control on the total wastes being thrown off preventing more harm to
people and environment.

Advantages and Disadvantages against CSF.

One edge of ZARA among its competitors is the number of turnover days of
manufacturing a certain product which takes only a week or two from the start of production
using raw materials to its end products. Limiting the number of produced inventories would
mean even shorter number of turnover days for the company. This then would improve the
process of manufacturing along with the quality assurance for improved quality. This alternative
will gain 9 out of 10 for the impact of production.

With the controlled number of produced products, this means that the number of
raw materials, by-products and end-products are also reduced and limited which would imply
lesser damage in the environment. However, despite limiting the numbers of production, there
will also be damages in the environment especially in the procurement of the raw materials and
the process of manufacturing itself through immersion of greenhouse gases. With this, the
alternative impact on sustainability is 8 out of 10.

Despite the impacts on sustainability, these limitations would provide higher

possibilities for increase in profitability. The limited number of inventories directly means that
there will be lesser chances to avail the certain product as ZARA tends to change entire stocks
regularly with the concept of “buy it now, or never” which would attract consumers and buy the
certain product immediately due to its low prices and limited stocks. This alternative result 9 out
of 10 in the impact of profitability.

B. Manufacture High Quality Fabrics

Utilizing high quality fabrics for prolonged product life reducing disposal.

As one of the concerns of the company is disposal of product as it rapidly reached its
limits, incorporating even more high-quality product to the stocks would mean extension of
quality life thus reducing the possibilities of disposal. High quality fabrics would lessen not only
product disposal but also bleeding of textile dyes which is considered as one of the largest
polluters of our oceans.
 Advantages and Disadvantages against CSF

Producing inventories using even more high-quality raw material means that total
production of products will remain the same but with entailed high quality end products. This
then implies assured higher quality without affecting the turnover days of the products. In terms
of sustainability, higher quality products tend to not easily wear off in terms of quality having
more product life than those with less quality implying less possibilities of being disposed rapidly
lessening textile wastage and bleeding of textile dyes saving the environment from these factors
taking one step ahead in saving biodiversity as these products can be easily repaired and
recycled. This alternative takes out 8 out 10 for the impact on production and 9 out of 10 for the
impact on sustainability.

With the movement of the alternative, incorporation of high-quality raw materials

to the stocks and inventories, profits of the company is likely to increase. Despite being known
as a fashion retailer who adapts rapidly to changes in fashion, one of the concerns of the
consumers is on the use of low-quality fabrics which is highly prone to disposal adding more
wastes to the environment. With this alternative, high quality products would promote repair and
recycling which becomes subject for the lessening of these environmental concerns giving more
fashionable insights to customers allowing them to mix and match clothing. However, attaining
these high-quality products would mean additional operating costs and expenditures of the
company. This alternative takes out 9 out of 10 of the impacts on profitability.

VI. Recommendation (max 300 words)

For ZARA to properly address heavy concerns about the overwhelming negative impacts
on the environment with its operations, incorporating high-quality raw materials would provide
solution in alleviating these impacts.

Despite the foreseen operating costs and expenditures in the acquisition of the
materials, the further benefits of implementing this alternative would overpower the costs as the
company also aims for sustainability as the very core of its operations and promoting the
protection of biodiversity.

Implementing this alternative would not only promote consumers to repair and recycle
used products but also lessen product wastage and plastic production implying less damage for
the environment as viewed by a cost-benefit analysis.
VII. Implementation, Evaluation, and Control (max 500-600 words)

As the public’s eyes are focused on the preservation and conservation of the
biodiversity, ZARA’s negative impacts would greatly affect brand image especially when the
company leads the fashion retailing industry. In order to bring back the trusts of the market, the
following are to be implemented by ZARA and its global outlets and shops to still continue
producing products but with even fewer negative impacts in the environment.

IMPLEMENTATION

PRODUCT DEVELOPMENT

The improvement and development of its products while addressing the

concerns of consumers is ZARA taking another step forward towards gaining more trust from
consumers. Being able to provide product that lasts longer in terms of quality while still bringing
out high fashion would encourage consumers not only to by the products but also promotes
recycling and repair. This would give them insights how recycling products instead of disposing
off is a step closer towards conservation and preservation of the environment.

MANUFACTURER AND SUPPLIER RELATIONSHIP

One of the most important factors which should be preserved and promoted
during the implementation of the chosen alternative would be the manufacturer and supplier
relationship as these are the labor forces that aids in creating high quality raw materials and end
products. Improving effective supply chain also highlights ethical employment, proper
compensation, job security as well as healthy working environment.

EVALUATION AND CONTROL

 ZARA should establish an effective evaluation and control system in order for the
company to be able to review effectively the recommended and implemented alternative which
is the manufacturing of high-quality products.

Manufacturing Review on its Impact on Production

The company is to evaluate productions in a monthly basis to identify the total

number of products being manufactured. As the company takes pride in its rapid turnover days,
monitoring and evaluation of the products produced as well as the machinery used is critical as
status of these machines should be checked to identify its working conditions building control
over inventories and stocks.

Review on Sustainability

With the chosen alternative implemented, the company is bound to abide to the
regulations and standards of alleviating negative impacts in the environment. Reviewing
sustainability in a monthly basis would aid the company to overview on how well the alternative
is achieving the goal which is to lessen negative impacts on the environment and on how further
will the company go in achieving the desired sustainability as the core of its operations.

Review on Profitability

With the cost-benefit analysis, the chosen alternative aims to highlight benefits of
acquiring high product materials incorporated in the manufacturing basis. The review on
profitability will be done in a monthly basis to give insights on how will the expected costs and
expenditures would affect the brand’s performance in the market. This review will further
conclude the impacts of implementation of the alternative to the brand image of product and on
how well the market would further accept the product development done by the company.

VIII. Appendices

I. SWOT Matrix

STRENGTHS WEAKNESSES
1. Rapid product and stock 1. Generation of excess
replenishment. textile waste.
2. Accessible product 2. Involvement in plagiarism,
 manufacturers. non-payment of factory
3. Fast adapter of technology workers, and e-commerce
4. Low-cost, high fashion backlash issues.
products 3. Contribution of negative
5. Broadened brand impact on the environment
awareness through company 4. Closure of outlets and
operations stores
6. Quick implementation of
latest fashion trends and
technologies.
7. Fast fashion concept
OPPORTUNITIES S-O STRATEGIES W-O STRATEGIES
1.Diversity of technological 1. Utilization of advanced 1. Collaborate with
influence technology to aid expansion environmental organizations
2. Redesign management of brand awareness and to address the company’s
structure distribution and rapid involvement on impact of the
3.Collaboration of development of product environment and seek
environmental organizations designs accommodating insights on how to alleviate
global consumers with recent the contributions (W1, W3,
fashion trend (O1, S3, S5, O3).
S6, S7). 2. ZARA needs to redesign
management to respond
addressed issues and
prevent these kinds in near
future. (W2, W4, O2)
THREATS S-T STRATEGIES W-T STRATEGIES
1. Global health crisis 1. Continuous innovation of 1. Innovation of company
2. Imitation of products at products of high fashion and operations and products
even lower price current trends is possible in abiding safe environmental
reducing imitations (S4, T2) standards (W1, W3, T2).
2. Implementation of latest
technologies lessens face to
face interaction (S6, T1)
 II. ALTERNATIVE EVALUATION MATRIX

Alternative 2
Alternative 1
Manufacture High-
Limited Production
CSF Weight Quality Fabrics
Raw Weighted Raw Weighted
Score Score Score Score
Impact on
30% 9 2.7 8 2.4
Production
Impact on
40% 8 3.2 9 3.6
Sustainability
Impact on
30% 9 2.7 9 2.7
Profitability
Total 100% 26 8.6 26 8.7