PESTEL Analysis - Zara

Extract

[...] From the economic environment to the political, social, technological, environmental or legal framework, all these factors have a very profound impact on companies. ZARA has invested in several aspects to manage some of these forces, such as technology, social and sustainable development. Its affordable pricing strategy has also enabled it to address economic pressures. In terms of legal and statutory forces, ZARA is also behaving prudently. This analysis shows how and why ZARA has been able to successfully establish itself at the forefront of the ready-to-wear fashion market by investing intelligently in all or most of these areas. [...]

[...] Zara PESTEL Analysis A. Political It is the economic decisions of a country's government and financial regulations that affect the way a company operates: • Changing interest rates • Financial regulations • Foreign Direct Investment • Local laws concerning the entry of a foreign company: partnerships with local brands are mandatory, for example in China • Administrative barriers for foreign trademarks e.g. in India and China • Political stability and a friendly political environment leads to a more serene development for a local and/or foreign brand • Political turmoil: supply chain disruption. [...]

[...] Zara Pestel Analysis I. Introduction A. Presentation of The Brand 1. Zara • One of the world's best-known brands • One of the largest international fashion companies • The third-largest brand in the apparel industry • Inditex brand clothing line, a world leader in textile manufacturing • Several chains of shops • Head office located in Spain (Galicia) • Their first shop in Spain in Inditex • Zara represents a significant percentage of revenues of its parent company Inditex • Other clothing brands: Kiddy's Class (children's fashion), Pull and Bear (casual clothing for young people), Massimo Dutti (quality and conventional fashion), Bershka (avant-garde clothing), Stradivarius (fashionable clothing for young women), Oysho (underwear chain) and Zara Home (household textiles) • Inditex owns all of Zara's points of sale, with the exception of those places where they are not authorised to own stores 3. [...]

[...] • Sustainability goals: making stores 100% green by 2020. Less energy and water used, efficient recycling • Disposal of hazardous waste from its supply chain • Investment in sustainable wear and tear and creation of the “Join Life” line: clothing made from organic materials (cotton, recycled wool, Tencel) • Production of PVC footwear • Use of biodiesel F. Legal ZARA's focus is also on ethics and sustainability in its business and supply chain. There are a number of laws that companies must abide by. [...]

[...] • Affordability of Zara: limiting sales drops in case of a drop in economic activity and reduced purchasing power (vs. luxury brands) • A strong dollar can make a foreign brand weaker: reduced profits outside the US • Increase in the cost of labour or raw material for the garments • Differences in entry fees and tariffs: product price variation • Inflation and exchange rates in the less developed countries: profit reduction compared to forecasts • Maintaining the clothing budget is less of a priority in the event of an economic downturn C. [...]