Contents

1.Introduction...........................................................................................................................2
Industria de Diseno Textil (Inditex) is a multinational fashion company and one of the world’s
largest fast fashion distributors. In 1975, the inaugural Zara store was established in Spain.
The store showcased affordable versions of popular and upscale fashion items....................2
2. The External and Internal Environment................................................................................2
2.1. External Environment Analysis (Macroenvironment).....................................................2
2.1.1. Political/Legal factors..................................................................................................2
2.1.2. Economic Factors.......................................................................................................2
2.1.3. Social-Cultural factors................................................................................................2
2.1.4. Technology.................................................................................................................2
2.1.5. Environmental factor...................................................................................................3
2.2. Internal Environnent Analyses (Value Chain)............................................................3
2.2.1. Primary Activities........................................................................................................3
2.2.2. Support Activities........................................................................................................3
3. Strategy in the Global Environment.....................................................................................3
3.1. Internationalization Strategies.......................................................................................4
4. Conclusion...........................................................................................................................4
Bibliography.............................................................................................................................5

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BPP Business School

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Module Name GLOBAL STRATEGY AND SUSTAINABILITY

Student Reference Number BP0278981
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Assessment Title Business Report On Zara (Poland)

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1.Introduction
Industria de Diseno Textil (Inditex) is a multinational fashion company and one of the world’s largest
fast fashion distributors. In 1975, the inaugural Zara store was established in Spain. The store
showcased affordable versions of popular and upscale fashion items.

One of Zara’s notable strengths lies in its remarkable agility to conceive and deliver a new product to
stores within two weeks, whereas other retailers typically require six months for the same process.

This report is divided into Three sections, Section 1 is the introduction. Section 2 will focus on
exploring the external and internal environment of Zara. While section 3 will focus on Zara’s Strategy
in the Global environment. However, due to the global nature of Zara, this report focuses on Zara in
Poland where there’s up to (46) stores in the country as of 2017(De Wit, B. 2020).

2. The External and Internal Environment

2.1. External Environment Analysis (Macroenvironment)

Analysing Zara’s external environment using PESTEL.

2.1.1. Political/Legal factors

Although Poland and Spain are both members of the European Union (EU). Hence it is easy for Zara
to do its business in Poland with little/minimum trade barriers. However, with a fee of 350EU on
community design in Poland (Lazarowicz et al 2016) Zara still must navigate through Poland’s
regulations including labour laws, and taxes. This uncertainty in regional trade barriers can easily
disrupt supply chains.

2.1.2. Economic Factors

Due to high energy prices, weak domestic demand and global uncertainty mean GDP growth is
expected to remain weak in Poland. This could significantly influence consumers' choices. In other
words, leading to low sales for Zara.

2.1.3. Social-Cultural factors

Zara's efficiency in applying its business model and its customer centric approach, has made it
possible to keep up with trends more than competitors. However, with Poland as the fastest ageing
society in Europe, local brands like Reserved prove a major competitor to Zara. And Zara might’ve to
also pay attention to the continual rising need for ethical fashion in the country.

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2.1.4. Technology

Polish consumers do shopping online more often than in stores (Poszewiecki 2022). With the use of
radio frequency identification chip (RFID) Zara has been able to understand their customers better
through feedback, and so doing, making their supply chain more effective than any other fashion retail
brand. Zara should, however, explore e-commerce in Poland more than physical shops.

2.1.5. Environmental factor

A need for a circular economy and sustainability has been gathering momentum in Poland.
Customers are now paying attention to brands that are committed to offering eco-friendly and
sustainable products. With an ethical and circular economy on the rise, Zara needs to adopt a more
sustainable pledge to help them practise activities like proper recycling.

2.2. Internal Environnent Analyses (Value Chain)

2.2.1. Primary Activities

Zara’s efficient inbound logistics has helped them to source raw materials from suppliers globally, and
at same time manage transportation to manufacturing facilities. With its core strength in its fast and
flexible manufacturing operation, quick responses to trends have been possible. And their outbound
logistics ensures efficient inventory replenishment. Relying more on word-of-mouth and in-store
displays made Zara’s marketing and sales strategy effective. Its customer centric approach and a
seamless shopping experience has helped them in providing the best customer service.

2.2.2. Support Activities

Zara’s infrastructure including design studios, its headquarters and manufacturing facilities are
designed to support its fast-paced operation. With its emphasis on human resources, quick decision-
making to foster an agile and responsive culture has been top notch. Zara leverages technology like
RFID extensively for data analysis, trends and communication with stores. Through its efficient
procurement Zara maintained a strong alliance with suppliers.

Value Chain and PESTEL analysis reveals Zara’s source of competitive advantage to their effective
use of hybrid strategy, which involves an efficient balance between differentiation and low-cost
leadership. In addition, its vertically integrated supply chain, extensive leverages of technology,
efficient manufacturing processes and strong focus on customer service, has been how Zara have
maintained and built a strong competitive advantage, and minimize lead time.

3. Strategy in the Global Environment

Evaluating Zara’s expansion motives using Yip’s Internationalisation framework, such as Market
drivers, Cost drivers, Competitive drivers, and Government drivers

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Zara’s decision to expand into the international market was primarily driven by the growth limitations
of the Spanish fashion clothing industry. Moved by market opportunities, competition, and cost
considerations, Zara began its international journey by strategically setting up clothing factories in
Portugal to benefit from lower labour costs. And in New York and Paris to monitor the latest fashion
trends. As a result, factors like cost, market demand, and government drivers played a role in Zara's
early expansion to European countries. As well into the Middle East, Asia, Africa, and Oceania.

3.1. Internationalization Strategies

There are different types of strategies which a firm could utilize for successful global integration.
These include Export Strategy, Multi-Domestic Strategy, Transnational Strategy, and Standardisation
Strategy: This aims to maximise global integration, treating it as one marketplace and providing
standardised products.

Zara adopts the Standardisation strategy to expand into the international markets. Zara addresses the
homogeneity of global customer demands by positioning as a fast fashion retailer brand for global
customers of different ages, by developing standardized products that can be sold in different
countries. However, Zara adopted different entry strategies for different countries such as wholly
owned subsidiary in (Spain, Portugal) joint ventures in (Germany, Japan) and franchising/licensing in
countries with high entry risks and cultural differences (Middle Eastern countries, Poland, Andorra)

4. Conclusion
Despite being a fast-fashion brand, Zara holds a position of superiority over its contemporaries due to
the efficiency of its business model. Furthermore, it could be recommended that Zara adds both Mult-
domestic and strategic alliances to its strategies for more global expansion, not just in the prime
location of countries but as well in the local regions. Making its products available and affordable to
the low-income earners.

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Bibliography
De Wit, B. (2020) Strategy: An International perspective. 7th ed. Andover: Cengage Learning.

Forbes. (2020) About Zara. Available at: https://www.forbes.com/companies/zara/?sh=739df387487.

[Accessed: 24/6/2023]

Mindtools (n.d) PESTEL Analysis. Available at:

https://www.mindtools.com/pages/articles/newTMC_09htm [Accessed: 24/6/2023]

M. Zielinska-Lazarowicz, Kancelaria Rzecznikow and Patentowych J Markieta. (2017) WTR. Protecting

and enforcing design rights: Poland. Available at: https://www.worldtrademarkreview.com/global-
guide/designs/2017 [Accessed: 25/06/2023]

Andrzej Poszewiecki, Joanna Czerepko (2022) New Trends in Consumption in Poland as shown by the
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[Accessed 23/6/2023]

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Eby, K. (2018) How your Business Can Benefit from Value Chain Modeling. Available at:
http://www.smarysheet.com/value-chain-model [Accessed 28/6/2023]

Ha, Jessica, “Zara Strategic Analysis” (2021). Honors Theses, University of Nebraska-Lincoln. 290.
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Porter, M. (1985) Competitive Advantage: Creating and Sustaining Superior Performance. The Free
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Pankaj Ghemawat, Jose Luis Nueno (2006) Harvard Business School. Zara: Fast fashion. Available at:
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Lopez, C. and Fan, Y. (2009), “Internationalisation of the Spanish fashion brand Zara”, Journal of
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World Bank Group (2023) Country Partnership Framework for Poland for the period FY19-24.
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