This sample will let you know about:
- What is Situational Analysis?
- Discuss the types of resources.
- Discuss the advantages of SWOT Analysis.
INTRODUCTION
Corporate strategy is a highest strategic plan for an organisation that duly defines organisation overall directions as well goals along with the way in which they can be achieved. Goals and objectives of company are unique that are mainly formulated as per according to the current market situations (Davies, 2016).
Present report has been conducted on, Zara. Company conduct their functioning as a leading fashion entity while operating their services in retailing organisation. In this report formative discussions has been made on Five Force analysis as well as PESTLE in order to evaluate external environment. While for internal analysis VRIO is being covered in this report. Lastly, in this report SAFE criteria is being applied which is being applied as one of the future strategies of entity.
External and Industrial analysis to identify Opportunities and Threats
Zara perform their operations as main brands of Inditex. Company marked themselves as a leading entity within fashion retailing segment. Company offer offer latest and fast fashion apparel to customers with of high quality. Zara parent company is a leading and one of the biggest global brand operating in fashion retailing industry.
It is important for each and every organisational unit despite of their size and scope to effectively determine business environment as to decide strategic course of action for company growth and welfare. In order to evaluate external environment, Zara manager undertake of Industry and PESTLE analysis:
PESTLE Analysis
PESTLE analysis, a strategic tool that that aid an organisation to identify its strength, weaknesses, threats and opportunities in order to gain competitive advancements. Companies within retailing sector by undertaking advantage of PESTLE analysis with an aim to increase their consumer base via applied corporate as well as newly designed strategies.
Political:
It involves factors like entry mode policies, political stability, taxation regulations andmore. In this it is essential for organisations those perform their functions in retailing segment to effectively evaluate factors within this factor as to perform operations in a well defined manner. Elements that are prevailing in political factor impact of functioning of entity in number of ways. This factor duly involve threat as well as opportunities that are being defined below:
Opportunity: United Kingdom political condition is strong that provide boost to companies within retailing sector those who come up with speedy innovations.
Threat: Factors like political instability, trade wars, adverse political situations, terrorist attacks pose threat to organisation on their sustainability. This will lead towards fluctuations in demand,supply and price of raw material. This significantly affect functioning of organisation.
Economic:
Foreign exchange rates, economic growth, interest rates, inflations are involved in this factor. Thus, it is essential for entities those who conduct their services in fashion retailing segment to have proper understanding of all these factors and formulate strategies to overcome negative impact while undertaking advantage of positive one. This will benefit to ensure their significant growth in respective sector.
Opportunity: United Kingdom is having stable economic growth rate that duly provide significant opportunities for relating organisation to expand their operations and market share holding.
Threat: BREXIT impact of performance of organisations within UK in a vulnerable manner. In order to overcome this, entities within retailing segment are required to undertake use of pricing strategies which is affordable to every economic section within society.
Social:
Constant fluctuations and changes within taste, preferences and trends within customers lifestyles are covered in this factor. In order to serve society at its best, companies within retailing segment must ensure that they have effectively evaluated preferences and perceptions of individuals within society in best effective manner. With the help of this, they can effectively able to ensure competitive positioning is respective organisational sector.
Opportunity: As to determine dynamic trends and changes within customer lifestyle, entities involved in retailing segment are required to conduct effective market research and fulfil demand of customers as per according to their preferences.
Threat: Retailing segment involves highest threat, as in this it takes a minute for customers to give a tag of “outdated” to organisational offerings. This lead organisations involved within this segment towards a pressure in which they are required to constantly involve in the process of offerings new and unique to their customers.
Technological:
It involves rapid change in software and technical tools and techniques. With the rapid change in technological segment there is constant change in tools and well as technologies that are required to be duly determined by entities within fashion retailing sector. This will effectively allow them to save themselves from being get outdated among customers mindset and marketplace.
Opportunity: UK is technological advanced nation that give boost to entities to make significant increase in their sales and performance. By taking advantage of upcoming innovations and technologies retailing organisation can significant able to gain more competitive advancements. In addition to this, it is essential for entities to implement newly advanced software within their departments as to serve customer within marketplace in best effective manner. It further allow them to gain more effective manner.
Threat: Technology is very dynamic that makes entity to conduct constant research as to determined new trends within technology that provide formative assistance to organisation to safe themselves from being get obsolete. Major threat that revolves around this factor is that, as to implement new technologies on regular basis firm required large amount of funds.
Legal: Laws related to employment safety & health, patent violation, import & export regulation etc. are covered in this factor. By abiding all legal rules and well as regulations entities performing their operations in retailing organisational segment can operate their functioning without facing any legal hindrances from government institutions and authorities.
Opportunity: By abiding all legal obligations and laws organisations within retailing segment can provide healthy workplace environment to their workers and can further build positive image among public that maximise their global market share. In addition to this, it has been evaluated that by applying all relevant legal laws into consideration organisations can not only serve customers in best effective manner but can also help them to ensure their strong marketplace.
Threat: Breach of any law will lead organisation to loose their goodwill and market positioning that further lead towards hampering loyal customer base of organisation.
Environmental:
This factor include organisation attitude towards waste disposal, environmental concern, energy consumption and more.
Opportunity: By having positive attitude towards environment company can ensure long term sustainability and good market positioning.
Threat: Negligence of environmental concerns lead organisation to affect their overall organisational functioning. Thus, it is important for organisations to ensure that they did not neglect to frame strategies for ensuring environment as it will significantly aid them to gain better goodwill in marketplace.
Further, company top management is intending to conduct Porter Five Force analysis as to gain knowledge of the respective sector in which they operate their functioning.Get Assignment Writing Help from our experts.
PORTER FIVE FORCES
Porter’s five forces is a analytical tool that aid an organisation to gain formative insight about industry in which they operate their functioning (Herrmann and Felfe, 2014). Top management of Zara has planned to undertake use of Porter’s five forces as to make significant improvement in their market performance by evaluating threat and opportunities in retailing industry:
Threat of new entrants: In context with retailing industry, this has been evaluated that Zara is facing low threat of new entrants. As company positioned themselves as leading organisation an as a well known brand with having bulk of loyal consumers. (Lam and O'Higgins, 2012) Apart from this, as to enter into retailing sector organisation require large amount of funding and time to settle down as well known entity. Thus, it has been evaluated that, there is less threat of new entrant for Zara in respective industry.
Threat of substitutes: Zara operate their functioning in fashion retail industry with having high threat of substitutes. As number of organisation coming up with alternative services and products as to lure customers. Thus in order to generate new consumer base and retain loyal ones, Zara is required to use innovation and uniqueness of continuous basis as to offer new clothing range of consumers.
Bargaining power of customers: Within retailing sector, bargaining power of consumers is high as they are major source for revenue generation of every entity and if they do not get satisfied by organisational offerings they switch their preferences towards other brand in fashion retailing sector. In context with Zara, it is essential for organisation to offer qualitative products to customers at low pricing. This is due to the presence of other entities those who offer their products and services to customers in an affordable price range. This makes customers to change their shift from company that depicts presence of high bargaining power of consumers.
Bargaining power of suppliers: Supplier offer raw material to organisation on regular basis that males company to conduct their functioning of production in well effective manner. This has been evaluated that, bargaining power of supplier is low in fashion retailing industry. ZARA continuously give bulk order to their suppliers that automatically benefit suppliers with long term business functioning (The State of Fashion 2019: A year of awakening, 2019). Thus, as to maintain this relationship suppliers does not negotiate much upon price and quantity that signifies low bargaining power of suppliers for ZARA.
Competitive rivalry: It has been analysed that competitive rivalry within retailing industrial sector is high. Thus, it become essential for entities engaging within retailing sector to analyse strategies and policies of competitors. In addition, to this it has been evaluated that by merging with other companies market lead can be duly ensured in best effective manner. It will not only aid entities to make significant improvement in their market share holding but also benefit them to attract attention of large base of customers towards organisational products and services. Further, it also benefit them to make significant increase overall sales ratio
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