1.0 IntroductionFrom a global point of view, the international economy continues to grow in all aspects from size to diversity in terms of the products introduced in the markets. Continuous development and growth of the various industries of business also contribute to this economy. The development of an organization or international company is, therefore, defined by the success of the marketing strategies and competitive forces that it employs. Exploration of new foreign markets is a necessary and an almost inevitable strategy that almost every retail manager embraces. Nevertheless, it is not a guarantee this report seeks to analyze the competitive issues and strategic issues that Zara uses to enhance its performance, customer satisfaction, public respect and earn appreciable returns.
Consumer decision making process to buy a product involves a number of factors including internal aspects. Attached to this process is the overall effect of firing up competition amongst the providers of the subject product. Consequently, competitive forces are tools that complement strategic management to oversee a realization of the set goals and objectives of an organization. This report approaches the analysis by applying the Porter’s Five Forces model to supplement a detailed critical analysis of the competitive forces and strategic issues that shape Zara’s operation.
2.0 Company BackgroundZara operates in design, manufacture, production and supply of clothing across preferences to its customers of the textile industry. Founded by Amancio Ortea Gaoa, whenever a person talks about Spanish fashion, the name of Zara comes up almost immediately, as a retail clothing company. The Zara clothing company is one of the most famous Spanish companies in the world and their Spanish clothes and fashion can be found on nearly every continent in the world with most of them in the Arab regions.
It was first founded in 1975 (Pearson 2008) and since the first store it has grown almost unstoppable. At first, Zara extended throughout the Galicia region as a trigger of growth pulled in the immediate five years. As written by Hansen (2012), the Zara clothes company began to expand outside of Galicia throughout the rest of the Spanish territory by exploring northwestern Spain and later on further parts. Within the first decade in the retail industry Zara had spread substantially through Spain and as reiterated by Pearson (2008), currently the company has 331 clothing stores distributed throughout Spain.
So therefore Zara management implements strategies and concepts to ensure its growth through the industry but then leaves the strategic control of Inditex Corporation, which it belongs to. As theorized by Kotler, Armstrong, Wong and Saunders (2008), for a particular company to survive and participate effectively in the international market, efforts of improving management effectiveness are necessary. However, interest is in the competitive forces and strategies put in play by Zara as a member of Inditex to ensure a sense of decorum in its operation. 3.0 Porter’s Five Force ModelIt is an all-inclusive, and by style incorporation, leadership that is good leadership to wisely make decisions on what business analysis model to adopt.
These models are theoretically based on competitiveness. Porter’s Five Force Model is an analysis model which examines the profitability of an industry, the business industry. This model of analysis provides an insight on the impacts of external factors on the competitive nature, and information on how the organizations compete internally.
Importantly, a firm can use this model to establish and harness their competitive advantage. The five forces in Porter's model are the bargaining power of buyers and suppliers, threat of new competitors, threat of substitute products by other firms and competitive rivalry (Porter 2008).