Higher Nationals

Summative Feedback on Assignment Decision – BTEC (RQF)

Higher National Diploma in Business

Kensington College of Business Centre Code: 10149

Programme Title BTEC Pearson L5 in Business

Student Name and ID ALICE -TATIANA DRANGANAGIU 18830

number
Unit Number and Title Unit 32 Business Strategy

Unit Code: K/508/0574

Academic Year 2020

Unit Assessor Godwin Okpa

Targeted Learning outcomes LO1, LO2, LO3 and LO4

Issue Date 13/01/2020

1st Submission Deadline 23/03/2020

Date submitted: 22/03/20

Group/ Semester. Jan’2020 intakes

Mon Eve session Room: 2:4

Re-submission deadline TBA

Date re-submitted Student to Complete

1st Submission Referred Pass Merit Distinction

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INTRODUCTION:
LO1 Analyse the impact and influence which the macro environment has on an organisation and its
business strategies................................................................................................................................5
P1 Applying appropriate frameworks analyse the impact and influence of the macro environment on
a given organisation and its strategies..................................................................................................5
The Strategic Context of ZARA:..........................................................................................................5
Missions, visions and objectives........................................................................................................5
The definition and meaning of strategy.............................................................................................5
The role of strategy to achieve business objectives and goals, strategic intent................................5
and different strategic direction........................................................................................................5
Strategic Intent Hierarchy..................................................................................................................5
Different strategic planning techniques............................................................................................6
Analytical frameworks of the macro environment:...........................................................................6
Environmental analysis: PESTLE AND Porter’s Five Forces model.....................................................7
PESTLE Analysis.................................................................................................................................7
PESTEL ANALYSIS on Zara:.................................................................................................................7
Five Forces model..............................................................................................................................8
Structure-conduct-performance model.............................................................................................9
Strategic positioning: Ansoff’s growth vector matrix.........................................................................9
Lo2:Assess an organisation’s internal environment and capabilities...................................................10
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks.........................................................................................................................................10
Organisational internal environment:..........................................................................................10
What are strategic capabilities and what are the key components of strategic..........................10
capabilities?.................................................................................................................................10
Swot analysis of Zara:......................................................................................................................11
McKinsey’s 7S model as a management tool.......................................................................................13
Analysis of strategic capabilities using the VRIO/VRIN framework..............................................13
Benchmarking strategic capabilities and value chain analysis.....................................................14
Cost-benefit analysis....................................................................................................................14
LO3 Evaluate and apply the outcomes of an analysis using Porter’s Five............................................15
Forces model to a given market sector................................................................................................15
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector for
an organisation....................................................................................................................................15
Analytical tools and models of analysis:......................................................................................15
The Balanced Scorecard to align organisation vision and strategy..............................................15
 Competitive analysis using Porter’s Five Forces model...............................................................15
Bargaining Power of Suppliers:....................................................................................................15
Threat of Substitute Products:.....................................................................................................15
Threat of New Entrants:..............................................................................................................15
Bargaining Power of Buyers.........................................................................................................16
Rivalry Among Existing Customers:..............................................................................................16
Stakeholder analysis....................................................................................................................16
Applying the Ansoff matrix to product/market strategy..............................................................17
LO4 Apply models, theories and concepts to assist with the understanding......................................17
and interpretation of strategic directions available to an organisation...............................................17
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for a
given organisation...............................................................................................................................17
Strategic choices and directions:.................................................................................................18
The application of Porter’s generic strategies: cost and price leadership....................................18
strategy, differentiation strategy, focus strategy and the extended model of............................18
Bowman’s strategy clock.............................................................................................................18
Hybrid strategy............................................................................................................................18
Diversification..............................................................................................................................18
Vertical/horizontal integration....................................................................................................18
Conclusion.......................................................................................................................................20
References.......................................................................................................................................20
Strategic Management Plan
INTRODUCTION:
A strategic strategy is very important for an company, because it helps to achieve certain goals. It is a
sort of management plan which contributes to the success of an organisation. It shows how goals
can be reached and without this it is impossible to hit with other market players. A strategic plan is
one of the principal management practises. However, there is no guarantee of success because
every organisation has a successful company strategy and that applies. The company is not
responsible for these cases in often very complicated circumstances[ CITATION Mar171 \l 1033 ].

Some internal and external factors depend on organisation, and on performance. That is why
revisiting the corporate plan is incredibly necessary because it is very likely to lose momentum. The
strategy of business leads to business intelligence growth. The study showed that companies face
problems that must be addressed every 5 to 15 years. Business planning helps create a framework to
defend the company against the storm[ CITATION Mar171 \l 1033 ].

Source: www.google-image/zara.com

Inditex (Zara) is the world's largest wear retailer. For years, Inditex has continued to expand since
1974, when the humble apparel firm Amancio Ortega started out. Inditex currently produces more
than 840 million garments annually with more than 6,300 stores with 85 countries. Those figures can
however be easily revised, as Inditex applies a great cost to its annual list of 500 shops. Although
Inditex has not achieved any business activity, unorthodox vertical integration and supply chain
management may be most significant in the wider market driving Inditex's enormous expansion.
Nevertheless, again Inditex does plenty to distinguish the retail apparel market. In this paper, we
discuss the practises of Inditex which are critical to its success: vertical integration, supply chain
management, competitive advantages, main success factors, strategy and

philosophy [ CITATION Mar171 \l 1033 ] .

LO1 Analyse the impact and influence which the macro environment
has on an organisation and its business strategies.

P1 Applying appropriate frameworks analyse the impact and

influence of the macro environment on a given organisation and its
strategies
The Strategic Context of ZARA:
ZARA, an international clothing retail group, plans to commence its operations in Pakistan. This
information will be used by the Board members at a conference, where they will discuss and
determine their future direction on stakeholders, national and global climate[ CITATION tev19 \l
1033 ].

Missions, visions and objectives.

Design the clothing retail company mission statement, dream, priorities and objectives. Hold this
scenario in mind when setting the company's targets[ CITATION tev19 \l 1033 ].

MISSION STATEMENT OF NEXT: Zara is more concerned with its customers ' needs and desires than
just pushing style into the market. Therefore, the organisation spends more time learning about
these' wishes,' telling the designs of its goods. It's what makes Zara unrivalled unknown to other
rivals. The organisation also understands that it enhances their life and builds loyalty if possible by
fulfilling the needs of its customers. In the Spanish and global markets, Zara's innovative supply chain
to accelerate the pace at which new goods are shipped has made it a favourite[ CITATION tev19 \l
1033 ].

VISION STATEMENT of ZARA: Zara aims to show its responsibility for improving people's lives
through its corporate social responsibility. In addition, this organisation funds a wide variety of
initiatives that are environmentally friendly in favour of natural resource security and
conservation[ CITATION tev19 \l 1033 ].

GOALS: ZARA wants the development of a branded community which allows people to feel
connected to ZARA mode and values. ZARA showed its client that its business models and stores
would succeed with little to no ads. They also redesign their goods to improve shopping and deliver
new designs with improved and updated materials at competitive prices[ CITATION tev19 \l 1033 ].

Objectives: ZARA wants to start successful operations in Pakistan in December 2013 as an

international clothing brand retail company. They will decide on their future direction while looking
at stakeholders, domestic and international environments and their impact on business. ZARA
wishes to develop the marketing strategy and a consumer-focused product line. As key driver of the
ZARA brand, ZARA wants to strengthen its customer focus. Zara will concentrate on rising the future
customer and the existing consumer's level[ CITATION tev19 \l 1033 ].
The definition and meaning of strategy.
Strategy is a move that managers take to achieve one or more company goals. One approach involves the
integration of activities and the utilisation and transfer of limited capital into the business environment to
achieve existing goals. It is necessary to remember that decisions are not made in a vacuum in the
development of a strategy and that an organisation is likely to respond from the participants, rivals, customers,
employees or suppliers[ CITATION Gul121 \l 1033 ].

The role of strategy to achieve business objectives and goals, strategic intent
and different strategic direction.
The fundamental theory of the system can be understood as a strategic goal. This means that an organisation's
goal is to be accomplished. This declaration offers an insight into how the company will be driven on a long-
term basis to achieve the dream[ CITATION Gul121 \l 1033 ].

Strategic Intent Hierarchy

Source: www.google-image/ Strategic Intent Hierarchy.com

Vision: Vision is a dream about the organization's potential role. It indicates where the organisation
wants to live. The core of the project is the dream of company and motivation[ CITATION Gul121 \l
1033 ].

Mission: Mission defines the market, priorities and ways the organisation achieves its goals. It
explains why the business was founded. This is intended for prospective shareholders and investors
to boost their knowledge of the industry[ CITATION Gul121 \l 1033 ].

Business Definition: The aim is to clarify the business of the organisation with respect to consumer
needs, target market and emerging technologies. Company understanding will describe the strategic
options for businesses[ CITATION Gul121 \l 1033 ].

Business Model: The business model, as its name suggests, is a framework for successful market
management, an evaluation of revenue sources, the target customer base and the financial
requirements. Competent businesses working in the same sector rely on different business models
for their strategic choice[ CITATION Gul121 \l 1033 ].
Goals and Objectives: It is the basis for the estimate. The targets are the company's final goals. At
the other hand, the targets are time-based steps that can be measured to accomplish the goals. The
strategic goal is extremely important to development and potential success, regardless of size and
nature[ CITATION Gul121 \l 1033 ].

Analytical frameworks of the macro environment:

PESTLE, Porter's five attributes, and scenario preparation are the tools for macro-environmental
analysis. Six major economic, economic, sociological, technical, legal, environmental and
economic factors have influenced the business. The five powers of Porter apply to five factors
that affect competition: new companies, existing companies, customers, suppliers and goods and
services substitutes. Scenario planning explores what the company needs to do to meet its key
goals in an uncertain future. All these processes are designed to protect the company from
outside its influence[ CITATION Ric18 \l 1033 ].
The macro environmental in business is described as the unregulated external factors which
impact the operations, performance and strategies of the organisation. Due to its uncontrollable
existence, the organisation has to follow approaches that help it adapt to the changing world and
continue to thrive[ CITATION Ric18 \l 1033 ].

Environmental analysis: PESTLE AND Porter’s Five Forces model.

Porter's 5 Forces and PESTLE are the instruments that can be used by businesses to boost their
market position. Porter's 5 Forces explores the strength of resources. PESTLE describes the impact
and competitive position of different macro-environmental factors on an organisation[ CITATION
JMa181 \l 1033 ].

PESTLE Analysis
PESTLE stands for financial, commercial, social and technical matters. It is a tool for determining the
effect and attractiveness of external factors on their activities on the market.
The method analyses the circumstances in a country or market and explores how these impacts the
consumer: PESTLE is a PEST variant that only takes account of the first four variables [ CITATION
JMa181 \l 1033 ].

PESTEL ANALYSIS on Zara:

Political: The ZARA corporation also had international implications. The following policy
considerations are several: limits on import quota decreased in Europe and the USA. Middle East
Economic War EU free trade policy. The import tariff is four times higher for goods into developed
countries[ CITATION JMa181 \l 1033 ].

Economical: The economic effect of ZARA is that the following will decrease: interest rates, tax rise,
economic growth, exchange rates and tariffs. Borrowing rates and the financial crisis are higher in
Europe. Interest rates increases increase inflation and the buying power of the consumer decreases.
Rising fuel prices will raise energy costs and effect on the business profits in Middle East civil
unrest[ CITATION JMa181 \l 1033 ].
Social: The ZARA market community is so new and customers are modified as well. It is still a
competitive market but the introduction of the new product on the market is very straightforward.
Owing to shifts in the option of generation, ZARA will have to work to the trend and meet consumer
demand. New fashion trend in Europe and the United States among younger generation. Small
population growth in Europe. Europe[ CITATION JMa181 \l 1033 ].

ZARA is a rather new society, which is often influenced by customers. This is indeed a competitive
climate, but it is very easy to bring the new product on the market. ZARA should operate according
to patterns and satisfy consumer demand due to changes in generation prerequisites. The new
fashion trend of the younger generation in Europe and the United States[ CITATION JMa181 \l
1033 ].

Technology– Technology is an aspect that is constantly evolving. The product is now manufactured
at a very high rate for several days. The data processing became the cornerstone for all businesses.
Zara uses robust technology in its supply chain operations. It contributes significantly to its sales.
Zara uses timely and lean technology in its development process. This increases customer reactivity.
The effective supply chain and logistics relationship to production is assisted. The new technology is
also used in the supply chain to promote inventory reports and customer orders. As a result,
inventory management is efficient. Consequently, Zara is the supply chain management
boss[ CITATION JMa181 \l 1033 ].

Legal– The company must comply with those laws in any business setting. Zara follows values and
sustainability in all its ways. They follow compliance procedures in all their internal processes. This is
responsible for the municipal legislation in the regions this operates. Zara primarily aims at
establishing an ethical picture of the brand[ CITATION JMa181 \l 1033 ].

Environmental– Sustainable development has become a requirement for any organisation to

succeed in a global world. Zara invests mainly in sustainability. In order to 100% keep the shops
running, Inditex is the parent company. It helps to conserve and recycle electricity. This also aims to
eliminate hazardous waste from its production. We also have a pattern wear line that focuses on
sustainable mode[ CITATION JMa181 \l 1033 ].
Five Forces model.
Porter's 5 power five carriers is an empirical model which helps to define an industry's structure and
competitive strategies.
For any market area, the model can be used. Five variables constitute the five forces of Porter,
according to its name. It explains why various industries retain varying levels of productivity. They
are all external and have nothing to do with the internal structure of a company: competition with
the business. Despite increased competition, the power of competing firms is increasing. If there's
little competition, businesses will do whatever it takes to raise their profits [ CITATION Jay14 \l
1033 ].
Fresh leaders of the group. With new (and more) entry into the market, a company's power often
decreases. Many businesses tend to operate in a business or organisation that requires less actors.
Provider access (seller) Command. It explores the use of the power of suppliers to raise the cost of
goods and services. The fewer market vendors, the greater their effect [ CITATION Jay14 \l
1033 ].
Selection control (customer). Select access. If clients are more bargaining, the prices of goods and
services are tracked and regulated.
The possibility of substitution. Products and services are quickly replaced by a competitor as another
barrier to competition in a sector[ CITATION Jay14 \l 1033 ].
When a company's management employs the five forces, it will improve its efficiency, overcome
shortcomings and avoid mistakes, which would give someone else a competitive
advantage[ CITATION Jay14 \l 1033 ].

Strategic positioning: Ansoff’s growth vector matrix.

For strategic marketing planning, the model is relevant in order to research ways of growing
business sales through new products and services or exploring new markets. It is important to
have this model. This is also often called the "Product-Market matrix" rather than "Ansoff matrix."
With this emphasis on growth, it is one of the most commonly used marketing models. The study
assesses client growth efficiency by providing different product and service mixtures of four
strategies for new markets, e.g. the customer and geographical areas [ CITATION Moh10 \l
1033 ].
Taking all the conditions into account, devise a future growth plan for ZARA company, which will
endorse the selected strategy (substantial growth, minimal growth or reduction). Organizational
audit: study of SWOT, metrics of benchmarking [ CITATION Moh10 \l 1033 ].
Lo2:Assess an organisation’s internal environment and capabilities

P2 Analyse the internal environment and capabilities of a given

organisation using appropriate frameworks.
Organisational internal environment:
What are strategic capabilities and what are the key components of strategic
capabilities?
The approach varies from that of structural architecture. This is in several respects key to the policy
rather than strategic planning. In strategic terms, it means to see and to know the larger picture,
where and how the business is heading. This means forecasting and using knowledge to direct
business and challenges and opportunities. The good leader requires strategic thinking.
Nevertheless, strategic dialogue and strategic thinking, practise and learning in the company should
be promoted. It's exactly the same. Ideally, the leader will allow the team to see and understand the
bigger picture even as team members emphasise today's activities [ CITATION Vau131 \l 1033
].
Strategic thinking and action Strategic thought and/or planning consist of three stages: where we are
today; where we want to be and how to accomplish it. Strategic thinking and action Six specific
features are analytical methods, strategic objectives, principles, vision and key goals and action
planning. Every component will be reviewed [ CITATION Vau131 \l 1033 ].
Analytical approaches: The analytical analysis debates use a number of techniques.
The most critical is the SWOT (strengths, limitations, possibilities and menaces). The SWOT summary
is a good way for a team to start or continue discussing what is going on and what isn't working, and
what might be fun or what is important for us in our future planning [ CITATION Vau131 \l
1033 ].
Swot analysis of Zara:
A SWOT analysis assesses the strengths, vulnerabilities, opportunities and risks of the business
objectively. Weaknesses of staff, profitability, financial capital, competitive disadvantage, missing
goods, consumer demand, missed sales. Opportunities to enter free markets, forming partnerships,
raising money, introducing new goods. Weaknesses in the workforce, base client, market place,
market position, financial resources, financial assets [ CITATION Bri152 \l 1033 ].

STRENGTHS:
ZARA is the first and most successful Inditex brand. Quick fashion cycles. This is because it can
challenge traditional wisdom that has turned into a big success in the fashion world. Often
introduced as case-studies in major corporate organisations the ZARA quick fashion model and its
excellent results. The luxury brand has followed a new model and a new balance between demand
and supply has also been identified. There is always something different on the one side in the stores,
but no distortion on the other side. The products are therefore still new and the company gives a
sense of urgency to its customers. Anything what can be seem on the shelf today cannot be found
next week. Like other models with minimal designs, the ZARA is able to manufacture a variety of
fashion cycles thanks to a tightly integrated supply chain and a very professional product design
team[ CITATION Bri152 \l 1033 ].
Solid supply and distribution network: Inditex, owner of ZARA, has a business model that is
integrated. It has developed an IT and other model development framework to enable fast
transmission and data flow. It promotes knowledge exchange and cooperation. Better
communication also means quicker transfer of raw materials and ideas and more flexibility. Greater
versatility is a core feature of the ZARA supply chain. In less than 15 days, the high level of
integration and knowledge flow contributes to the sale of new designs. It reduces its costs and
improves its retail strategy by enhancing collaboration with over 1800 manufacturers and providing
Inditex factories. In addition, the shopping network ZARA has expanded dramatically in recent years.
The number of retail companies was 2,251 in January 2018. Therefore, by November 2018 the ZARA
exchange network entered 48 markets[ CITATION Bri152 \l 1033 ].

The price strategy of ZARA has also helped it to expand its customer base and sell faster. The price
strategy of ZARA. ZARA is the cheapest brand of Inditex. It has also launched several more expensive
brands to serve the higher end of the market. The ZARA pricing plan and affordable designs target
young people and contribute to expanded footprints in ZARA shops and conversion facilities. In
reality, ZARA's price strategy is the beauty of its business strategy. Customers want fashion and ZARA
offers cheaper but still more attractive items to them. The loyalty and success increased [ CITATION
Bri152 \l 1033 ].

WEAKNESSES
There are few ZARA shops in many fast-growing markets like India and Malaysia that are present in
some fast-growing markets. In Malaysia 10 and Thailand 11 only 20 Zara shops exist, and New
Zealand only one. There is only one ZARA shop (Jan, 2018) ZARA has a far smaller number of shops in
the Netherlands, the UK, China, Russia, Spain and many other countries in Europe and the USA. In
India, the growing presence of ZARA is an exciting fashion brand market[ CITATION Bri152 \l 1033 ].

Less aggressive in marketing and sales: ZARA's marketing and promotion is less abusive than most
of its rivals. It sought, rather than trying to force advertising into sales, to attract consumers by
discussing their preferences and needs. But ZARA has gained great popularity without advertising.
The competitive pressures were nevertheless also higher, not only for ZARA but for the entire Inditex
group. ZARA can need to invest in promotional campaigns in the following years to raise sales and
increase its client base when there is pressure[ CITATION Bri152 \l 1033 ].

OPPORTUNITIES
Retail channel expansion: ZARA has a chance to expand its distribution platform to many parts of
the world, including fast-growing Asian markets, such as India. Even though its presence in China is
remarkable, its presence in other markets, including India, Malaysia and Singapore, is still not very
high. India can be a highly competitive market for any fashion brand. It is also a huge market with
tremendous potential, even as the fastest developing country to expand[ CITATION Bri152 \l 1033 ].

Marketing investment: ZARA will broaden its client base and sales by investing in advertisement and
promotion. To date, very little money has been invested on publicity. This has been documented.
Nevertheless, investing in marketing will do ZARA good and further boost its revenue and customer
base with increased competitive pressure[ CITATION Bri152 \l 1033 ].

THREATS
Raw material costs have increased: prices for raw materials have increased higher. It has built a
well-integrated supply chain that meets its raw material requirements effectively. The operational
costs of the company would however be increased by raw materials and labour costs. The business
will adversely affect its revenue and profit[ CITATION Bri152 \l 1033 ].
Concurring threat: The style industry is faced with a rising global challenge. This puts pressure on
ZARA for sales and marketing. While ZARA has a strong reputation, supply chain and distribution
networks, there is intense rivalry between ZARA and several competitors[ CITATION Bri152 \l 1033 ].
Resource-based view strategy as a basis for competitive advantage and the

McKinsey’s 7S model as a management tool.

This model was developed in the late seventies by Tom Peters and Robert Waterman, former
consultants at McKinsey & Company. Seven internal elements of an organisation that need to be
organised to survive have been identified. The framework may be used to evaluate the potential
consequences of a change in the organisation, or to align departments with procedures for
restructuring or procurement[ CITATION Pat141 \l 1033 ].

Source: www.google-image.com

Strategy is the corporate strategy for establishing and sustaining a strategic advantage over its rivals.
Structure is how the organisation is organised, how divisions and teams are formed (including who
reports to whom). Systems incorporate the daily activities and procedures for employees to carry
out their jobs[ CITATION Pat141 \l 1033 ].

These are the core principles embodied by the company's organisational culture and general
business ethics. Shared principles. When the model was first developed it was referred to as the
"supervised objectives." The emphasis of the universal values model stresses the importance of
these concepts for the development of all other components[ CITATION Pat141 \l 1033 ].

Workers (staff with all their skills), Qualifications (the actual qualifications and abilities of the
company's workers) are the key points which incorporate the style on the company (the
organisational approach embraced). The emphasis of the universal values model stresses the
importance of these concepts for the development of all other components[ CITATION Pat141 \l
1033 ].

The model states that the seven components have to balance each other and strengthen for an
organisation to function properly[ CITATION Pat141 \l 1033 ].
Analysis of strategic capabilities using the VRIO/VRIN framework.
The VRIO approach and VRIO model form part of the RBV and examine the relation between the
internal features of a business and its results. In terms of external (e.g. competitive) variable
quantity efficiency and potential benefits, the RBV is also complementary to the Industrial
organisation (IO) (e.g. five strength company resources of Porter can be defined as any assets,
capacity, organisation, corporate assets, company data and expertise which allow the business to
increase its value). In order for organisations to be solid, assets must have four characteristics that
can be demonstrated in the VRIO system[ CITATION Moh10 \l 1033 ].

Source: Mike W. Peng, Global Strategy 2008, p71

VRIO is the VRIN (precious, unusual, difficult, unrepeatable) device follow-up. A further feature was I
and N, combined with O by Jay Barney, VRIN and VRIO Program Architect. Inimitability in the sense
of VRIO means that resources can not be lost because they can not be repeated or substituted by
competition. To order to explain the benefits and weaknesses of the inner variables in this system,
Porter's Value Chain analysis will be applied [ CITATION Moh10 \l 1033 ].

Benchmarking strategic capabilities and value chain analysis.

Benchmarking is a marketing strategy used to associate company processes and goods with the best
performance of other businesses, both within and outside the industry[ CITATION Moh10 \l 1033 ].

"Finding and applying best practise" is literally the benchmarking. Administrators use the tool for
understanding the best practise of other organisations and incorporating it in their own processes to
improve the productivity of the organisation. Benchmarking certainly aims most importantly at
increasing product quality[ CITATION Moh10 \l 1033 ].
Cost-benefit analysis.

Cost benefit analysis is a tool by which organisations can measure or calculate an intrinsic advantage
for policies, procedures or services. The benefit expense analysis is also called this method. The
model is built by identifying the benefits and related costs of an action and growing costs from
benefits. Upon finishing the cost-benefit study, concrete conclusions may be made that draw
practical conclusions on the effectiveness and/or advisability of a decision or case [ CITATION
tev19 \l 1033 ].

LO3 Evaluate and apply the outcomes of an analysis using Porter’s

Five

Forces model to a given market sector

P3 Applying Porter’s Five Forces model evaluate the competitive

forces of a given market sector for an organisation.
Analytical tools and models of analysis:
The Balanced Scorecard to align organisation vision and strategy.
A balanced scorecard is a way to measure the success of an operation against the strategic
objectives of a company. Structured scoring charts are often used in strategic planning to ensure
that the actions of the company adhere to the overall mission and vision [ CITATION Myr151 \l
1033 ].
This has been developed to enable businesses more than simply financially to calculate their
activities using revenue, costs and profits. The diagram provides a balanced view, taking into account
certain expectations of success. From 4 different points of view a traditional balanced scorecard
looks at initiatives of a enterprise: economy, learning and growth, business processes and the
consumer[ CITATION Myr151 \l 1033 ].
These activities are listed in the right buckets with data recovery and analysis steps, priorities and
goals. The interventions can then be measured and analysed accordingly [ CITATION Myr151 \l
1033 ].

Competitive analysis using Porter’s Five Forces model.

Threat of New Entrants
In the industry in which Zara works, economies of scale are very difficult to achieve. This
promotes cost advantages for those who manufacture large capacities. The production of new
entrants is also more costly. This weakens the risks from outsiders [ CITATION Mic09 \l
1033 ].
The differentiation of products is high in the market, where companies are often selling a
standardised product. Customers also search for items that are distinguished. Content and
customer care are both strongly emphasised. The threat of newcomers in this field is made to
be low by all these factors[ CITATION Mic09 \l 1033 ].
Therefore, it is difficult for new entrants to start businesses that the capital requirements in the
industry are high, as high expenses are expected. The cost of capital is high even due to high
cost of R&D. All these factors make the possibility of new entry into the industry a weaker force [
CITATION Mic09 \l 1033 ].

Zara’s possible actions on the Threat of New Entrants

Zara will use the economies of scale in its industry to combat new companies by increasing their
spending by potential steps on the challenge of the new entrants. Zara must focus on innovation
to differentiate its products from those of others. It can invest in ads to define the brand clearly.
It will help keep existing customers instead of attracting new customers [ CITATION Mic09 \l
1033 ].

Bargaining Power of Suppliers

In comparison with the customers, the number of suppliers in the sector in which Zara operates
is high. This results in suppliers becoming less market regulated and the negotiating power of
suppliers being weaker[ CITATION Mic09 \l 1033 ].

The commodity supplied by these suppliers is relatively standardised, less differentiated and
cost-effective. This will enable the swapping of suppliers for buyers like Zara. It rising suppliers '
negotiating capacity[ CITATION Mic09 \l 1033 ].

The manufacturers do not deal in this business-like other good. It ensures that the commodity
cannot be replaced other than that produced by suppliers. This increases the bargaining power
of suppliers within the industry[ CITATION Mic09 \l 1033 ].

Zara’s possible actions on the Bargaining Power of Suppliers

Zara can buy its suppliers at a low cost for raw materials. If Zara does not have the cost or
goods, Zara can switch its suppliers, because of the low costs of switching [ CITATION Ric18 \l
1033 ].

Through the supply chain it will have many suppliers. Zara may have different suppliers for its
different geographical locations, for example. Through this way, the supply chain will ensure
performance[ CITATION Ric18 \l 1033 ].
Bargaining Power of Buyers
The number of companies manufacturing this product is higher than that of the manufacturers
in Zara. It means that consumers are able to select from a number of companies to control
costs. This makes the purchasers ' bargaining power a weaker force within the
industry[ CITATION Ric18 \l 1033 ].
The distinction of the company in the market is strong and customers can not accept the
production of a similar product by alternative firms. This challenge weakens the negotiating
power of customers in the industry[ CITATION Ric18 \l 1033 ].
The industry's purchasers have small profits. The ability to buy at low prices therefore increases
the market's appeal for the consumers. This rising the buying power of customers in the
industry[ CITATION Ric18 \l 1033 ].

Zara’s possible actions on the Bargaining Power of Buyers

To attract more customers, Zara can concentrate on innovation and differentiation. For buyers
in the industry, product differentiation and product quality are critical, and Zara can attract a
great many customers by focussing on them[ CITATION Ric18 \l 1033 ].

Zara has to develop a broad client base, because buyers ' negotiating power is low. This can be
done by means of marketing campaigns to create brand loyalty[ CITATION Ric18 \l 1033 ].

Threat of Substitute Products or Services

The goods that are manufactured in the industry in which Zara works are very few alternatives
available. The few available substitutes are often provided by low-profit industries. This ensures
that the overall income in the market where Zara operates is not limited to businesses. All these
factors are weaker in the industry because of the danger of substitute goods [ CITATION Ric18 \l
1033 ].

The few available alternatives are high-quality but much cheaper. In comparison, in the industry
in which Zara works, companies manufacture with sufficient quality and sell at lower prices than
alternatives. Buyers are also less likely to turn to replace goods. In the industry, therefore, the
threat of alternatives is low[ CITATION Ric18 \l 1033 ].
Zara’s possible actions on the Threat of Substitute Products

Zara should focus on supplying its goods with higher quality. It will encourage consumers to
select goods that are of better quality than alternative products that have higher quality with
cheaper prices at a lower price[ CITATION Ric18 \l 1033 ].

Zara should focus its offerings on differentiating. This would ensure that consumers perceive
their goods as unique and will not easily replace goods with no such unique advantages. By
better understanding consumer desires through market research and delivering what consumer
customer wants, it can give its clients some unique benefits [ CITATION Ric18 \l 1033 ].

Rivalry Among Existing Firms

The number of competitors in Zara's industry is very small. Some of these are tall, too. This
ensures that businesses in the sector will not pass unnoticed. This makes the competition
between established companies a weaker industry force[ CITATION Ric18 \l 1033 ].
Each year the market in which Zara expands and will continue to do so for a number of years.
Good growth in business means that rivals are less likely to take full action because they don't
have to win a market share. The competition between existing companies thus is a weaker force
in the industry[ CITATION Ric18 \l 1033 ].

Zara’s possible actions on the Rivalry Among Existing Firms

Zara will concentrate on differentiating its goods to reduce the effect of competition on its
consumers who are searching for their exclusive goods. As the industry expands, Zara does not
attract those of existing firms, but will rely on new customers. Zara will carry out market
research to understand and avoid overproduction of the supply-demand situation in the
industry[ CITATION Ric18 \l 1033 ].

Implications of Porter Five Forces on Zara

Via Zara 5 forces study, strategic managers can understand how various factors influence the
competitiveness of the industry, under one of the five powers. Strengthening strength means
less profitability, while weaker strength means more profitability. Through this basis, the
productivity of the sector can be measured and used for strategic planning [ CITATION Ric18 \l
1033 ].

Structure-conduct-performance model.
The performance structure-conductance model refers to an empirical framework that describes how
economic and market structure, consumer behaviour and effectiveness are related. The concept or
model of the industrial organisation Economics discusses and explains the connexion between the
organisational structure (environment), the activities of the organisation and the progress of the
organisation (realisation)[ CITATION JMa181 \l 1033 ].
The value of both buyers and sellers influences business output are three factors or business
variables. They are elements of structure, action and efficiency[ CITATION JMa181 \l 1033 ].
The structure of an industrial enterprise, its architecture, training and composition. The world in
which an organisation or company operates is also concerned[ CITATION JMa181 \l 1033 ].

The Conduct describes the behaviour or conduct of buyers and sellers in relation to the nature of the
market. That also applies to buyers ' and sellers ' relationships and their actions[ CITATION JMa181 \l
1033 ].
The Performance refers to the output or outcomes of a specific market or sector. Amongst the
performance variables mentioned in the industry are material quantities, product quality and
production efficiency[ CITATION JMa181 \l 1033 ].
Stakeholder analysis.
Stakeholder analyses are used to classify, evaluate and then develop a high-quality product for
stakeholders. To assess the needs of those concerned, it includes the compilation of qualitative
information. The aim of the stakeholder analysis is a strategic view of different possible stakeholder
issues[ CITATION Gul121 \l 1033 ].
The first step in identifying who the stakeholders are is stakeholder recognition. The next step is to
assess the strength, influence and interest in order to decide who to concentrate on. The final step is
for the most important players to be clearly identified, so that the company can know how they will
respond and how to receive help research on a stakeholder map [ CITATION Gul121 \l 1033 ].

Stakeholders ZARA stakeholder analysis:

ZARA stakeholders lists: managers of the ZARA, funding agencies, supervisors, buyers, vendors,
distributors, local communities, staff, owners, users, suppliers, funders, governments and
stakeholders of the media[ CITATION Jay14 \l 1033 ].
It is difficult for a company of ZARA to survive as a company because of the stakeholder
interdependence without continued involvement by investors.
Therefore, stakeholders and their selection are necessary to help an organisation articulate its
values, achieve its objectives, establish plans, adopt processes and strengthen its
relationships[ CITATION Jay14 \l 1033 ].

The financers of a business tend to get money back, which is paid for a good profit. Company clients
want to use services or money. Many concerned wish to get their goods a good deal, but have to
purchase them at fair rates from customers. With additional orders, the company may wants to sell
large stock amounts[ CITATION Jay14 \l 1033 ].
The local community deals with the impacts of the industry, including traffic issues. Staff want
decent daily pay and health at work. The manager is more effective in handling relations. There can
be more simple strategies and options. The stakeholders will provide input [ CITATION Jay14 \l
1033 ].

Applying the Ansoff matrix to product/market strategy.

The Ansoff Matrix of the ZARA

Market Penetration: In the existing activities of the ZARA organisation, the European market and
other continents activities will be expanded[ CITATION Vau131 \l 1033 ].
Market Development: ZARA will expand its business by expanding operations to new countries or
regions. More promise can be seen by ZARA[ CITATION Vau131 \l 1033 ].

Product Development: The ZARA would spread its products via other innovative stylish apparel to
global markets, including Europe and other nations. The company will expand it to new industries
such as other consumer products with current market operations[ CITATION Vau131 \l 1033 ].

Diversification: The ZARA is diversified with innovative fashion innovations heading to international
markets[ CITATION Vau131 \l 1033 ].

The BCG matrix is a corporate management strategy method designed to illustrate a company brand
or SBU portfolio quadrant along the horizontal axis of relative market share and business
development (vertical axis).

The growth share matrix is the tool for calculating the value of the brand portfolio and suggesting
additional investment strategies by relative market share and industry growth rates
indicators[ CITATION Vau131 \l 1033 ].

BCG MATRIX OF ZARA: An overview of the ZARA reveals that the existing operations of the ZARA are
in the cycle of cash cow with sufficient cash flows for further business expansions [ CITATION
Vau131 \l 1033 ].

The ZARA Organization has global strategic planning in several different ways. The ZARA has taken
steps to extend its global footprint. ZARA opened shops in 25 countries around the world in line with
the 2019 Annual Report of the ZARA[ CITATION Vau131 \l 1033 ].

The strategic strategy of ZARA is to increase consumer loyalty and rising consumer frustration with
larger size and the rate of transactions by larger customers.

The ZARA brand is still rising. Increasing brand recognition and favourable views and several stores
have opened this year[ CITATION Vau131 \l 1033 ].

LO4 Apply models, theories and concepts to assist with the

understandingand interpretation of strategic directions available to an
organisation

P4 Applying a range of theories, concepts and models, interpret and

devise strategic planning for a given organisation.
Strategic choices and directions:
The application of Porter’s generic strategies: cost and price leadership
strategy, differentiation strategy, focus strategy and the extended model of
Bowman’s strategy clock.
Bowman's strategy clock is also a pattern used for business purposes. It aims to permit an
organisation, with respect to its rivals, to determine and appreciate its profitability. It was believed
that the competitive advantage would contribute directly to the cost gain. In four different
quadrants it represents 8 different approaches. The value-added axis is perceived and a price axis is
present. The result is a star, and looks like a clock's face which names the clock [ CITATION Dun10
\l 1033 ].
This approach uses the following main choices in Zara: low-cost / low added value, low-price, hybrid
focus, high risk margins, monopoly profits and loss of market share. Once the different combinations
of perceived profit and cost are evaluated, a organisation may begin to choose an advantage that
makes the most sense of it. It is a wonderful way to explore how to first establish and maintain a
competitive market and economic position. If a organisation is able to understand Bowman's main
positions, it will look at the existing strategy and see if there can be improvements in order to
maximise the chances of success[ CITATION Vau131 \l 1033 ].
Hybrid strategy.

Hybrid approach is often called "best cost provider" emphasising that a business can have less
products than its competitors and put its products at a decent value for its competitors. The
Commission has also noted that in markets that are priced and demand sensitive, the strategy could
succeed and then place Zare itself at the heart of the market by offering consumers medium-sized
quality goods at a low price or by delivering high quality products at a medium price. The strategy is
a very good one. However, they cautioned that the business which is not able to offer advanced
product attributes at lower prices in comparison to its rivals will be unadvised about the hybrid
approach[ CITATION Dun10 \l 1033 ].

Diversification.

Diversification is a technique for risk management that combines a wide variety of portfolio assets. A
varied portfolio includes a mix of different asset types and investment instruments in order to
minimise exposure to any property or risk. A portfolio of various kinds of assets produces long-term
returns on average and decreases the risk of individual holdings or stability. This is the explanation
for this approach[ CITATION Mar171 \l 1033 ].

In Home Décor's new market, Zara is planning to expand its business to include its latest product
range, which can prove lucrative, as home decor is a company with great potential and is sustainable
and competitive with Zara's brand recognition and scale economies[ CITATION Mar171 \l 1033 ].

Vertical/horizontal integration.

Horizontal and vertical integrations are the technique used by firms in the same industry or
manufacturing processes. A business takes over another organisation, which operates in the
horizontal integration process at the same point in the value chain. In the other hand, vertical
integration means the establishment within the same vertical growth of business
operations[ CITATION Sun18 \l 1033 ].

Undernamed may opt to be incorporated horizontally to increase their size, diversify goods or
services, reduce efficiency and achieve economies of scale. The company may want to be introduced
to new customers or markets, even in other countries. For example, a department store may
combine with a similar store in another country to start operations abroad[ CITATION Sun18 \l
1033 ].

If successful, horizontal inclusion would result in more income together than competitors
individually. In addition, a newly merged company will reduce its costs by means of shared services,
marketing, research and development, production and distribution[ CITATION Sun18 \l 1033 ].

An organisation that works in the same industry is purchased by a vertical integration firm. Some
reasons why companies want to integrate vertically include improved supply, lowering
manufacturing costs, increasing upward and downstream sales or exposure to new distribution
channels. One business acquires another business before or after it in the supply chain
stage[ CITATION Sun18 \l 1033 ].

This strategy is important for many companies for a variety of reasons. Not only does it maximise
productivity during the process of production and minimise distribution costs and shipping delays, it
also improves the revenues from newly purchased companies, selling their goods directly to its
clients[ CITATION Sun18 \l 1033 ].

Zara is vertically integrated.

This is responsible for the design, production, delivery, exhibition, promotion, sales and appraisal,
but very little depending on outsourcing. This vertical integration approach gives Zara more control
over how it works. At the other hand, Zara uses this monitoring to ensure that progress and
consistent product quality are correctly accomplished, expected, and carried out. Vertically
integrated communication between Zara Product Cycle stages also makes communication more
flexible: design, manufacture, transportation etc. Zara is a sort of subset of control advantage
because he is able to create effective supply chains. This is a huge gain[ CITATION Cha131 \l 1033 ].

The integrated vertical solution is however costly. Competents may reserve factory space in advance
for less money and higher production promises abroad. In Europe, Zara produces most of its
products where it is more expensive[ CITATION Cha131 \l 1033 ].

But the sales of Zara are mainly in Europe. According to Zara's official website, global area revenues
are 66%, Asia 20%, and America 14%. To return to Asia's largest market, outsourcing would require
very high transport costs. So, by keeping production home, Zara avoids this expense. Some others
will literally do nothing because they rely on cheap labour in Asia[ CITATION Cha131 \l 1033 ].

Contribution towards the design and manufacture of clothing also simplifies and increases apparel
quality through manufacturing processes close to management centres. Europeans are not only
more professional but also more effective in European capital equipment. The combination of better
equipment and trained workers increases the standard of garments. However, Zara will quickly
leverage and grow new products by implementing Zara's second most successful strategy in the field
of vertical integration and market-near positioning.
Zara's quality is the secret to vertical integration as it allows many of Zara's external stratagems. For
example, rapid product replacement cycles contribute greatly to vertical integration. Without good
communication between supply chain units, fast product replacement cycles would not be possible.
That is why other approaches are made themselves by the rapid cycles of product
substitution[ CITATION Cha131 \l 1033 ].

Conclusion

Zara has established herself as a brand, which produces cutting-edge fashion ahead and at low cost,
in a particularly strong position within the fashion industry. However, it is also critical that the
company understands the factors influencing the external market and makes full use of its own
internal resources to ensure that the company maintains a competitive edge in order to remain one
of the brand leaders on the market. The strengths within the supply chain should be given specific
importance, as this makes it particularly rapid for the company to bring goods into the market. Cost
pressure is often imposed on the company that needs the production of designs that are converted
into clothing at a minimal cost, without compromising ethical values, by the design team to be more
effective[ CITATION Dun10 \l 1033 ].

Simply put, Zara will continue with its current job, but better with greater focus on ethical behaviour,
meeting consumers ' expectations for fresh and creative design, while maintaining a lower price for
all facets of its service.[ CITATION Dun10 \l 1033 ]
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