Strategic management Essay Example | Topics and Well Written Essays - 3000 words - 1

Strategic management - Essay Example New York Times has identified that Zara has the capacity to replenish stocks twice a week (Lutz, 2012). What Zara Really Do Zara has crafted their value chain in a demand flexible manner with an intention of enhancing forward and backward integration in the operation (Lancaster and Massingham, 2010, p. 195). The company has implemented integration in various value chain activities such as managing lead time, stock replenishment, incorporating latest fashion in designing and raw material tracking with an intention of achieving sustainable business growth. The company has decreased steps of value chain in order to decrease total turnaround times. More than two hundreds fashion professionals supervise the product designing phase in order to offer customer superior quality cloths and decrease probability of getting outdated in contrast to latest fashion trend. Zara emphasizes on establishing stable relationship with value chain partners in order to decrease lead time in product offering. The company has decreased turnaround time to only 14 days with the help of superior synchronization between forward and back integration. Zara offers fashion apparels for three types of customers such as men, women and children. Currently the company is offering products in more than five hundred cities across the world. External Analysis PESTLE Zara is a Spanish company hence it will be viable to do macro environmental analysis of the company in their home ground. The report will conduct PESTLE analysis of Spain in order to understand strategic position of Zara. Political PP is running the government of the country and public has rejected for ruling party PSOE in last year election. The country is suffering from various problems like high unemployment rate, high public debt and low GDP growth. Spanish government has implemented austerity measures of â‚ ¬65bn in order to reduce the financial deficit to 3% within next two years. Zara is facing a financial tumultuous period in hom e ground hence it will be interesting to see effect of austerity measure in their business. Spanish government structure can be understood by the following diagram. (Source: Market Line, 2012a) Economic Research conducted by Marketline shows that annual GDP growth of Spain will be reduced by 1.07% within next one year and other factors like retail sales, domestic consumption and industry output will be decreased by more than 3.5% within next one year. Economic recession has triggered the unemployment rate of the country to 20 year high 24.4%. All these factors are indicating that Zara will face a demand crunch in the home country. Stagnant GDP growth rate of the country can be explained by the following diagram. (Source: Market Line, 2012a) UNCTAD or United Nations Conference on Trade and Development has pointed out that FDI in Spain has decreased from $40.8 to $29.5bn in last two years. Dwindling FDI condition of the country can be understood by the following diagram. (Source: Mark et Line, 2012a) The country is suffering from increasing inflation rate which is hampering overall growth rate. Fluctuating nature of inflation can be analysed in the following manner. (Source: Market Line, 2012a) Staggering unemployment rate of Spain can be explained by the following diagram. (Source: Market Line, 2012a) Social Government has reformed the existing pension scheme and which can increase savings 3.5% of GDP by 2050. Spanish labour market reform will provide flexibility and competitiveness to retailers