Internal and External Analysis of Zara

1. Introduction

2. External Analysis

2.1 Company Profile

2.2 PESTEL Analysis

2.3 Porter´s Five Forces Analysis

3. Value Chain Analysis

3.1 Value Chain - Conclusion

4. SWOT Analysis

4.1 Strengths

4.2 Weaknesses

4.3 Opportunities

4.4 Threats

4.5 SWOT – Conclusion

5. Conclusion / Guidance

Appendix

References

Introduction

“The customer is at the heart of our unique business model, which includes design, production, distribution and sales through our extensive retail network” (zara.com)

Zara´s mission statement already states some of the key factors that make out its success. With its unique business system Zara has managed to become one of the leading fashion brands in the world. No other retail chain has been more successful in the last few years and has just recently been ranked number 44 of the most valuable global brands 2011 (inditex.com).

The following report provides an external analysis, examining Zara´s macroeconomic environment with the help of a PESTEL analysis and its competitive environment using Porter´s Five Forces analysis. This is followed by an internal analysis, using the Value Chain analysis after Porter and finally concludes with a SWOT analysis.

External Analysis

Company Profile

The fashion retailer Zara is one of the world´s largest fashion companies and today operates 1723 stores in 75 countries. It is the most popular and successful subsidiary of the Inditex group and makes out about 82% of Inditex’s net Income (Gallaugher, 2009). It is headquartered in La Coruna, Spain, from where it operates almost all steps of the supply chain. In 2010 Zara‘s Sales were € 8.1 bn (Inditex Growth Opportunities 2010).

PESTEL Analysis

In the wider macro environment the factors that have most impact are economic, socio-cultural, technological and legal. Being a multinational company, Zara, in terms of economic factors, is affected by the current instability of the EURO and some of the EU nations...