Zara Swot Analysis Essay

Zara is a profitable company run by Inditex, which is the one of the largest fashion groups in the world. Inditex was founded by Amancio Ortego Gaona in the early 1970’s. Inditex operates eight different chains which include: Zara, Massimo Dutti, Pull&Bear, Bershka, Stradivarius, Oysho, Uterque and Zara Home. Each chain addresses a different part of the market which allows Inditex to dominate a complete market, while not competing against each other and cutting out profits. The goal of Zara and Inditex is to dominate each segment of the market using a flexible business but also being able to expand that model onto an international scale. Zara began on a small street in Spain and has experienced a tremendous amount of growth over the years.

The greatest way they are able to protect and grow its strengths are by continuing to use their business model and plan. Zara should also be focused on growing its strengths by exploring new markets, distribution centers, and marketing options. To improve their weaknesses they must first recognize that they have weaknesses. Every company has weaknesses and isn’t perfect. It is paramount that Zara monitor these weaknesses constantly as their surroundings are changing with a changing world. Also, Zara should utilize a better marketing strategy to help greater increase company revenue. A key to this is through online marketing. With a changing society in which consumers now have smartphones, tablets, and laptops a lot of shopping is done online. This being said Zara currently only advertises in its store windows. By having advertisements on social media or search engines this could help increase profits, enhance brand loyalty, and create a sense of importance. This benefit could help grow their opportunities as it will allow Zara to reach markets in which they are currently not in, or don’t have expansion plans for. Everything todays is at the palm of our fingertips and I believe the quicker Zara realizes this and emphasizes online shopping

Pros of keeping the existing system would be millions of dollars saved on new construction, development, and training for the new center as well as thousands of man hours saved for training of the new facility. By saving these costs Zara is able to reinvest in its current distribution center as well as its product development or marketing. Cons to staying with the current distribution are the amount of costs they can incur with continued growth. This will definitely affect margins and make shareholders unhappy because with diseconomies of scale if we reach a certain point of growth Zara will be unable to efficiently maintain its edge. Although it’s not necessary for Zara to change their distribution center system, I would definitely recommend that they expand their distribution centers. The reason I say this is because the cons are going to be extensive costs and training in the long run the profits will be tenfold. By expanding you are asserting your presence and dominance of new markets, as well as creating an easier distribution to customers with minimized costs of airfare or sea travel. Granted that Zara and Inditex are already one of the biggest companies in the world, through this expansion I believe their dominance will be