Zara’s Growth Strategies

Based on the article: Why Zara Is The Most Exciting Retailer Today

Heller, L. (2017, March 15). Why Zara Is The Most Exciting Retailer Today. Retrieved from https://www.forbes.com/sites/lauraheller/2017/03/15/why-zara-is-the-most-exciting-retailer-today/#446a7f385cd3

Zara, a multinational fashion brand is the most exciting retailer according to the Forbes, here is why.

Zara considers the customers to be at the heart of their unique business model, which includes design, production, distribution, and sales through our extensive retail network. Hence, the growth strategies instated by Zara makes them the most exciting retailer today.

The following are the growth strategies adopted by Zara which is being displayed through Ansoff matrix grid.

Ansoff matrix

Market Penetration:  Zara’s new business plan focuses on designing and promoting the accessories. Zara has been working on an innovative technology named “the color weaving hair” (CVH). The primary feature and property of CVH technology is that they can alter the color and design according to the users wish. Zara fits microtechnology in the hair strands and then views them to strengthen them which makes it cost efficient. Zara has only introduced CVH for their accessories and their business plan includes opening exclusive stores for accessories. In my opinion, this growth option may not be successful because the excessive cost of production may increase the price and it would be a onetime cost for the customer as the primary feature would help them wear it umptieth of time which can lead to less stock turnover and high buffer stock.

Product Development:  Zara’s ‘diffable’ project is the most talked about lately. It is targeting a new customer segment of differently abled people. Zara’s clothes collection for this has been specially designed which focuses on convenience of wearing, style and comfort. Therefore, this growth strategy of Zara can be successful because it is cost efficient and can also be considered ethical adding on the brand reputation of Zara can also help market the new product range, however this may make the customers feel inferior to the other customers.

Market Development: Virtual Trials are the most modern and advanced facilities introduced to the fashion world by Lenskart in the spectacles market and now this technology has been instated in the trials rooms of Zara in US which are the first of its kind in the world. This expansion policy of may not be successful because the installation of the virtual trial technology would be very costly with no revenue generating from them, though they would enhance the shopping experience and increase the speed of the purchase process.  But they would not be profitable in the long term.

Diversification: Zara has been planning to diversify its business in the new market of Home Décor with its new product range of the décor items, this may be profitable because home décor is a business which has a lot of potential and with Zara’s Brand reputation and economies of scale this would be a feasible and profitable option.

Citations

• http://www.businessinsider.com/zaras-retail-strategy-is-winning-2015-6
• https://www.zara.com/us/en/info/company-c11112.html
• http://www.academia.edu/5492552/The_Strategic_Management_Analysis_of_ZARA_Relative_to_the_Case_in_Developing_Countries_

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Ewww……thics.

Today this realm of Earth encompasses of countless businesses, innovative startups, life changing ideas which have led to an inordinate spring of development towards the highest yet there is sadness in the world……. WHY? because individualism has overpowered collectivism, people have become greedy for money and find it difficult to differentiate between good and bad morals. Ethics is defined as the moral principles that govern the behavior of an organization or an individual.

Many organizations in this era focus only on making a profit by good or bad means and ignore the negative externalities which they can cause however, on the other hand, there are many non-profit organizations whose goal is the welfare of society and create positive externalities nevertheless the non-profit organizations occupy just the 1/10^th of the gigantic business world.

There are also for-profit organizations who have established policies that welfares the environment or the society which is an ethical behavior. Ethical behavior in the terms of business can also be said to satisfy the corporate social responsibility (CSR). CSR is defined as a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders. CSR is a concept with many definitions and practices.

Below are some examples of ethical business practices:

• Rolex donates 90 % of its profits to the needy and poor.
• Taco Bell offers a discount to its kind customers.
• Apple Inc. conducts regular water and food checks for employees.
• Google promotes “no plastic” hence have distributed google hands bags among the employees as a substitute for plastics.
• Microsoft provides free medication to its employees at the headquarters.

Below are some examples of ethical business practices:

• Thomas Edison/Radio Corporation of America – Attempting a monopoly of patents.
• McDonalds used to use the same dishes to cook vegetarian and non-vegetarian food.
• Toshiba decided to fudge its financial results.
• Volkswagen cheats emissions tests
• Exxon Mobil deliberately misleads the public about climate change.

About the Article

Apple relies on child slave labor that is working in dangerous conditions, for ten hours each day while being exposed to cancerous vapors. The conditions at the manufacturing plant Foxconn are bad enough that they had to install “anti-suicide nets.” The workers live in horrible conditions and experience unreasonable workloads and humiliating discipline. Apple has reduced some of their work with Foxconn, but they still rely primarily on them. This is an unethical practice by the organization as child labor is prohibited and the working conditions are harmful to the employees. Here Apple Inc. is taking advantage of not muck educated labor and is putting them to a job which can risk their lives and create a negative externality leading to the welfare loss to the society.

Though Apple Inc. relies on Foxconn but they cannot afford to risk their employee’s life, I would be better for the organization to let go of Foxconn which would help the brand image of Apple Inc. in the long term though the production would stop for a while but the cost in the long term would be reduced.

This step can also help the organization improve its brand image, act ethical and satisfy the corporate social responsibility.

Bibliography

https://www.enkivillage.org/unethical-business-practices.html

https://www.inc.com/will-yakowicz/biggest-big-business-fails-of-2015.html

https://blog.udemy.com/business-ethics-examples/

http://lexicon.ft.com/Term?term=corporate-social-responsibility–(CSR)