Strategic Analysis of Zara


Seminar Paper, 2015
15 Pages, Grade: 85.00/100.00

Excerpt

Table of Contents

1. Part A
1.1 Stakeholder grid
1.1.1 Visualisation
1.1.2 Discussion
1.2 Competence map
1.2.1 Visualisation
1.2.2 Discussion

2. Part B
2.1 Further analysis
2.2 Realisation and stretch of existing goals
2.3 Key uncertainties
2.4 Recommendations for the strategy intervention

References

1. Part A

1.1 Stakeholder grid

1.1.1 Visualisation

illustration not visible in this excerpt

1.1.2 Discussion

Process

It soon became evident that a good understanding of the organisation’s strategic goals is needed to identify those stakeholders that should be included in the map. Hence, it may be said that the top management team (TMT) with which this exercise should be conducted in reality needs to be aware of and understand its firm’s strategy before any meaningful stakeholder analysis is possible. This is consistent with Ackermann and Eden’s (2011) notion that stakeholder management, i.e. the managerial task stakeholder analysis aims to facilitate, can only be carried out properly in relation to a firm’s goals. Throughout the creation of the map, knowledge of both Zara’s strategic goals and the way in which it intends to achieve them also helped keep the number of stakeholders to a visually and practically manageable level, as several groups, organisations, and individuals, e.g. advertising agencies, that might be considered as stakeholders of firms similar to Zara could quickly be excluded.

Another insight was that a stakeholder’s absolute position on the grid can be said to be less important than its position relative to others. The nature of stakeholder’s power and interest may differ, and it is hard to think of measures for the two concepts that are applicable across multiple groups, organisations, and individuals. However, since effective stakeholder management implies the prioritisation of some stakeholders over others (Mitchell et al., 1997) and allocating management time accordingly, a stakeholder’s relative position seems to be more important than its precise power and interest levels.

Lastly, it became obvious that experience gained through interaction with stakeholders cannot be substituted by desk research. It turned out to be very difficult, in fact impossible in most cases, to identify a certain individual as a stakeholder as opposed to a group of individuals or an entire organisation, both of which are probably much more difficult to manage, as well as any informal relationships, which may not even be publicly known. In a ‘real’ stakeholder mapping exercise, the consultant should therefore actively attempt to utilise the experience-based knowledge of the participants.

Content

Four out of the seven stakeholders that may be clearly categorised as ‘players’ – supply chain managers, in-house designers, store managers, and managers of the company-owned production facilities – are employees of Zara. This is due to Zara’s business model, which builds upon vertical integration, empowered store managers who regularly communicate customer feedback to headquarters, and the design of a very responsive supply chain, which enables Zara to design, produce, and deliver designs within a short period of time (Ferdows et al., 2004; Buck, 2014). Thus, it is obvious that the creation of suitable organisational circumstances for key employees, e.g. a stimulating working environment and a generous reward system, should be an integral part of Zara’s stakeholder management approach.

Another important outcome is the need for Zara to closely monitor those stakeholders that were categorised as ‘context setters’. Most notably, major online-only fashion retailers such as ASOS and Zalando deserve management attention. While online sales still constitute only a small proportion of Zara’s overall sales (Burgen, 2014), the firm is quickly increasing its international online presence (Faull, 2014). Consequently, the interest of these powerful competitors is likely to grow in the future, which will turn them into ‘players’ with significant potential to sabotage Zara’s strategy.

1.2 Competence map

1.2.1 Visualisation

illustration not visible in this excerpt

1.2.2 Discussion

Process

The first insight gained through the mapping exercise is that it is advisable to first identify a firm’s assets, competences, and competence outcomes without linking them. Immediately attempting to establish links between concepts involves the risk of only including those concepts for which obvious connections may be established, or those that may be linked based on the researcher’s current knowledge. Throughout the exercise, however, it was frequently the case that links were identified either as a result of a newly acquired specific piece of knowledge or because of a gradually improving overall understanding of Zara’s business model. With respect to an actual strategy intervention, it may thus be concluded that discussions within the TMT can reveal links between previously unconnected concepts, and that the discovery of these links is impossible if the relevant concepts are not included at the time they are first mentioned because they appear to be isolated.

Moreover, it became obvious that the process of creating the map may be more valuable than the outcome of the process, i.e. the actual map, in terms of gaining insight into a firm’s network of assets, competences, and competence outcomes. While the actual map only visualises the result of an in-depth analysis of the organisation, be it based on discussions within the TMT or based on desk research, it does not show the thought processes that were necessary to identify the concepts and to establish the connections between them. However, these processes seem to generate more insights and be of a more permanent nature than the actual map, which may also be subject to change over time.

Content

As to the content of the map, it can be said that Zara benefits from a self-sustaining feedback loop (see dashed circle on the left), which is a powerful source of competitive advantage, as it encompasses as many as four distinctive competences. The ability to transfer not only hard sales data, but also anecdotal information based on oral customer feedback in a quick and uncomplicated manner enables the company to rapidly analyse the feedback and, based on this analysis, identify new fashion trends faster than the competition. This in turn allows for a quick reaction to the previously defined fashion trends and, consequently, the frequent introduction of new designs. These designs are again evaluated by customers, and thanks to Zara’s ability to transfer rich information from its stores to its headquarters, the virtuous circle can start anew, resulting in a “never-ending cycle of iteration and innovation” (Buck, 2014) that makes the average Zara customer visit the firm’s stores 17 times per year versus three visits for Zara’s competitors (Kumar & Linguri, 2006; Hendriksz, 2013).

Furthermore, the map shows that the competences and competence portfolios that cause Zara’s success, such as the feedback loop described above or the ability to design, produce, and deliver a garment within an extremely short time period, are based on a careful configuration of assets that is much more difficult to copy than any particular individual asset, but that, on the other hand, also requires a holistic management approach. For instance, the speed with which Zara designs, produces, and delivers a garment is not only contingent on a degree of vertical integration that is unusually high in the fashion retail industry, but also on a remarkable organisational discipline, which enables the entire company to operate based on a strict rhythm with which orders are placed and received, customer feedback communicated, and garments shipped (Ferdows et al., 2004).

[...]

Excerpt out of 15 pages

Details

Title
Strategic Analysis of Zara
College
University of Strathclyde  (Department of Management Science)
Course
Strategy Modelling & Management
Grade
85.00/100.00
Author
Year
2015
Pages
15
Catalog Number
V300959
ISBN (eBook)
9783668000964
ISBN (Book)
9783668000971
File size
687 KB
Language
English
Tags
Stakeholder grid, Competence map, Resource-based view, Stakeholder analysis, Zara, Strategy process
Quote paper
Marvin Mertens (Author), 2015, Strategic Analysis of Zara, Munich, GRIN Verlag, https://www.grin.com/document/300959

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