Zara PESTLE Analysis - Detailed PESTEL Factors | MBA Skool 29/12/2023, 14:38

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Zara PESTLE Analysis

Published in Companies category by MBA Skool Team

Zara PESTLE (or PESTEL) Analysis assesses the brand on its business tactics across vari
parameters. PESTLE Analysis of Zara examines the various external factors like political, e
social, technological (PEST) which impacts its business along with legal & environmental fa
us start the Zara PESTLE Analysis:

Quick Glance:

Political Factors
Economic Factors
Social Factors
Technological Factors
Legal Factors
Environmental Factors

Political Factors:
The political factors in the Zara PESTLE Analysis can be explained as follows:

Zara is a Spanish brand that was born out of the European union and has successfully esta
operations all over the world. The country has a well-established framework of extensive tra
agreement which helps Zara to import raw materials and export finished products. The fram
aids Zara in exporting merchandise across the world involving little effort and low cost. The
union is UK’s biggest export market for textiles and clothing. The industry accounts for 74%

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exports of EU and hence it gives access to Zara to a broader customer base within all Euro
countries without paying extra border tariffs which helps to boosts its sales.

Financial regulations of the country also have a great impact on the smooth functioning of a
business. Asian countries like India and China post major challenges in front of the busines
of red tapism. Another major factor that affects the market is political disruption as it affects
economy and disrupts supply chain. Zara overcame this problem by limiting its supply chain
Courses
in its home country and some neighboring nations.

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Image: Wikimedia

Economic Factors:
Below are the economic factors in the PESTLE Analysis of Zara:

Since Spain has one the highest rate of unemployment and Zara is a Spanish brand, it enjo
benefit of low cost of labor especially in comparison to other western European countries su
France, Germany and the United Kingdom. Even though Spain experiences a slow growth
economy, Zara is one of the most popular brands in the country.

The ability of the brand to cater to the needs of the majority of the shoppers helps Zara to e
loyal customer base. Zara is a relatively less expensive brand in comparison to other Europ
which rewards Zara a greater market share in comparison to its competitors. A complex we
economic activity across the world can seriously deteriorate the financial health of the organ
rise in labor or overall production cost can put the company under financial distress. The Br
from the EU, also known as Brexit has lead to a decline in the value of pound resulting in hi
rates and less disposable income in the hands of the consumers to spend on clothing. Thus
reduced the sales of Zara and overall sales of the clothing industry.

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Read more about Zara

Zara SWOT Analysis

Zara Marketing Strategy & Mix
Zara Porter Five Forces Analysis
Zara Competitors

Social Factors:
Following are the social factors impacting Zara PESTLE Analysis:

Volatile social trends have a huge impact on demand as well as supply of the company’s pr
also has a huge impact on the availability and willingness of individuals to work. Since, Zara
huge market and makes a variety of products it is quite unlikely that there will a shift with re
such social factors. The company isn’t focused upon a niche market rather caters its produc
different segments although the company doesn’t enter any new market without doing its pr
research. Culture influences buying decisions of consumers especially in the clothing secto
product that the customers cannot identify with doesn’t find acceptance in that particular cu
Zara makes its products rhyme with the local culture as it doesn’t believe much in experime
brand is also invested in a variety of initiatives for the society. To conserve energy, Zara hav
on eco-friendly approaches in managing its stores.

Technological Factors:
The technological factors in the PESTLE Analysis of Zara are mentioned below:

The brand has the money as well as the customer base to extract the most out of the data.
huge amounts of money in order to understand and analyze huge data sets to find efficient
appeal to its customers. The company has a popular website through which it interacts with
from the entire world. The company communicates with the customers through both online
personal touchpoints. Zara established a successful partnership with Toyota applying conce
and Lean facilities across its manufacturing operations. Technology also increases a firm’s
responsiveness to customer.

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The company has implemented RFID technology to track its goods and inventories.

Legal Factors:
Following are the legal factors in the Zara PESTLE Analysis:

Zara is a brand that has prioritized its emphasis upon ethics and sustainability. Their focus i
establish these principles across the entire line of their operating business as well as supply
brand names like Zara have to follow certain rules and regulations. The company provides

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to its workers for which they have developed separate laws. Concurrence with legal laws is
requirement for the brand and the company has invested for the same through its supply ch
management. In order to introduce clothes in line with the latest trends, the company has ru
some copyright infringement issues in the past. The brand has been accused of stealing de
clothing concepts from that of Adidas and Balenciaga. The outdated legal doctrines are one
reason brands are able to copy each other without facing any significant repercussions. At t
time these brands such as H&M, Zara also need to strongly enforce copyright laws as the c
they launch in the market involves investment of time, effort and money.

Environmental Factors:
In the Zara PESTLE Analysis, the environmental elements affecting its business are as belo

The entire world of fashion is wrongly associated with wastefulness as the customers chang
and preferences easily. This can be a major factor for a fast fashion brand like Zara to come
customer scrutiny. Since today’s customers are growing more eco-conscious than ever bran
Zara need to adopt sustainable ways in order to avoid the negative impacts. Zara has been
& planning to make all stores 100% eco efficient. The plan charts out various policies throug
the brand focuses to reduce its energy and water consumption. The brand has actively sho
commitment to climate change and energy, biodiversity, sustainable materials, animal welfa
other environmental issues in depth. The company has ensured to remove all kinds of haza
waste from its supply chain system.

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The company Inditex has also decided to join the pact to reduce their carbon footprint. They
decided to achieve 17 goals on Sustainable Development in order to overcome the problem
change. Issues related to poverty and inequality are also covered under the umbrella of the
goals.

To conclude, the above Zara PESTLE Analysis highlights the various elements which impac
business performance. This understanding helps to evaluate the criticality of external busin
for any brand.

This article has been researched & authored by the Content & Research Team
& published by the MBA Skool Team. The content on MBA Skool has been created for edu
academic purpose only.

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