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Political Forces
Government: An organization must be able to consider issues such as how stable the political environment is and what government regulations influence the policies that regulate or tax the firm. Zara having a global presence, they must take this into account when entering a new market.
Zara is a Spanish brand, so it enjoys all of the benefits of operating a business out of the European Union. In a political context, one of the biggest pros of running a company in the EU is the countrys extensive trade agreements. Not only does this make it incredibly easy to import raw materials and export finished products within the European Union, but it also means that Zara can send its merchandise across the world with little effort and for a low cost. Overall, the EUs free-trade policies are massively beneficial for Zara; lets just hope the Union continues to thrive!One of the biggest environments that can cause you to alter your products, ads, or even your overall brand perception is a countrys political views. While we like to think of the Internet as a global space, the social media and search engine platforms popular in your local market may not be the same as another country. For example, Facebook has been blocked in Iran, Vietnam, and North Korea. Twitter is currently banned in several other countries. This means if you’re a business using Facebook in these areas, you cannot use these advertising options and it is less likely that your target audience can see your updates. It also means you need to consider local alternatives, for example, Sina Weibo in China and Facenama in Iran and Afghanistan.
Economic Forces
As mentioned previously, Zara is a Spanish brand. Since Spain has one of the highest unemployment rates within Europe, this means that it has a relatively low cost of labor especially in comparison to other Western European countries, such as France, Germany, and the United Kingdom. Zara manufactures a good fraction of its products in Spain, so this low labor cost allows them to minimize costs and, in doing so, improve profitability. Again, the low cost of labor in Spain is definitely a positive for this brand!
Zara is a well-recognized brand, so those less familiar with its products might think theyre quite expensive. On the contrary, Zara is considered a relatively affordable brand in comparison to other European high street fashion names. This allows the company to thrive even in poorer countries; for example, despite Spains slow economy, Zara is still one of the most popular clothing brands in the country. Indeed, Zara has some more expensive products, but whats most important is that it can cater to the majority of shoppers with the rest of its clothing lineup.
Recession: Inditex sales in Spain in 2019 accounted for 25%, which was 6.8% less than in 2018 (Inditex annual report). However, thanks to its global presence, the firm has been able to offset the slow-down in Spain (El País, 2019). The Span-ish company is increasingly aiming at the global market because of stagnant results in its mother country due to the heavy re-cession in Spain. Price: Differences in prices between establishments of the same brand from one country to another and the likely response of local customers, for example Zara Japan and Zara Spain.
Sociological Forces
Despite its affordability, Zara is a fashionable name for most shoppers. This is where you can only praise the company for its hard work. Zara delivers a good-quality product for not a lot of money. And thanks to the brands clever marketing efforts, it feels rather exclusive for buyers. Overall, this strong, positive brand presence allows Zara to collect healthy profit margins for its shareholders, while buyers still feel like theyre getting a great deal.
Theres no doubt that online shopping is a major trend in the 21st century. Although clothes shopping might not be the best fit for the web, consumers now want to order their garments with the tap of a button, and from the comfort of their own homes. This isnt necessarily a bad thing for Zara, since they already have a popular web shop. However, Zara will have to pay close attention to the performance of its online store, since consumers preferred channels are definitely changing.
Zara being a global brand, it operates in countries with strong cultural and style differences. Socio-cultural factors are extremely important when entering a foreign market. For example, people in Bangladesh do not change their ward-robe too often and a strong preference for bright colors dominates, as opposed to blacks and whites, more worn in China.
Technological Forces
Zara is one of many brands looking to use technology to expand its reach. As one of the worlds most popular fashion retailers, the company has both the money and the audience needed to get the most out of data. As a result, Zara is looking to big data the study of analyzing huge data sets to find better ways to reach and appeal to consumers. With both online and in-person customer touch points, this isnt a straightforward task. But if Zara can pull off some successful data analysis, you bet theyll be able to propel their powerful business even further. Social media: Having a presence in social networks such as Twitter or Facebook allows access to live information involving the consumer and making him/her feel more connected to the brand.
Online presence: Zara.com has become one of the brands most popular storefronts thanks to their permanent sections such as Look book, where the latest of the chains articles are shown, or People!, an initiative in collaboration with the customers, who send photos of their own fashion displays from the latest Zara trends (Inditex, 2018). This involves the customer emotionally and creates a more interactive way of shopping.
New technologies: Information and communications technology is at the heart of Zaras business. Information on customer needs and demands flows daily and is fed into a data.
Legal Forces
Like all of us, Zara has to operate within the bounds of the law. For all fashion brands, copyright law is one of the scariest legal branches out there. Since Zara loves capturing hot clothing trends and making them more affordable, its bound to run into some issues with copyright. In fact, the major retailer already has. Its been accused of stealing designs and clothing concepts from the likes of Adidas and Balenciaga. In past cases, Zara has largely been able to weave itself out of uncomfortable legal situations like these, but who knows if the behemoth brand will continue to have such good luck.
Plagiarism: High street retail-ers create affordable garments in-spired from the catwalk and luxury, brands. However this is sometimes a concern for the latter. Zara was sued in 2008 by Louboutin for sell-ing an open-toed red-soled shoe which it claimed was similar to its Yo Yo model (Retail Week, 2012) Sweatshops: In August 2011 Zara was accused of sweatshop facto-ry conditions and the employing an underage worker (The Guardian
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