Assignment - Prepare Situation Analysis Report.

Based on the feedback received on your Situation Analysis Report you will now proceed to a Final Strategic Recommendation for your chosen company in which you will be required to detail not only what your strategic recommendations are but also what specific steps at the business and corporate level are necessary to implement those strategies as well as how you will monitor and control the performance of the company as it goes forward. You will incorporate in your report those parts of your Situation Analysis as are appropriate to produce a full strategic report.

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Answer - SITUATION ANALYSIS OF ZARA

2. Executive Summary

The blow discussion has been based on the ZARA Company, which works under fashion industry. The situation of the company under this industry has been analysed. It is a multi-billion dollar industry and many key players are involved. The market share of Zara Company is healthy and it has the necessary knowledge to operate under any condition. Its management is operating in an efficient manner and all its products are priced very strategically. It has few competitors who can actually possess a threat to the company. This industry is growing at a fast rate and has the potential to take over the food industry by 2025. Its 19.5% rate of growth cannot be hard to compare with any other industry. The contribution this industry makes to the overall Australia GDP is extraordinary.

3. Introduction to the topic

3.1 Company Budget

Zara Company has over 2000 stores worldwide (Zara is part of the biggest fashion company in the world. Meet the other brands it owns, 2019). It operates in over 96 countries worldwide and has a sales turnover of more than 30 billion dollars. If its intentions are to penetrate into the Australian market, which is growing at over 19% every year, it has to make significant investment. Its primary aim should be to capture as much as market share as possible.

The below table is going to be based on the overall budget for one retail outlet in Australian market. Zara Company can consider it as a standard amount of investment for any retail outlet. The budget for market analysis is not shown in the below table and the advertisement cost for the company is also not provided.

Table 1: Company Budget

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3.2 Aim of the research

The research takes a close look into the fashion industry operations. Particularly in the Australian market where the growth rate is over 19%. It is perhaps one of the fastest growing sectors within the country hence the entry of Zara company into this country makes much more sense. It is being divided in two different parts and they are primary and secondary.

• The primary research helps in analyse and understand the current situation of the market and provides an overall idea about how much a company should invest in order to make business in the country.
• The secondary research analyses the amount of investment for a retail shop in order to have a smooth functioning within the country. The Australian market is very much matured and developed compared to any other country. However, the growth in the fashion industry is mesmerizing. The discussion makes analysis of Zara Company's entry into the Australian market.

3.3 Summary of the paragraph

The Zara Company is one of the best companies in the world. Originated from Spain and currently operating in over 90 countries worldwide. The research provides a close look into the company while it is penetrating the Australian market. It is becoming one of the largest markets for fashion industry. The growth rate in this sector is high and the research provides data and other related information regarding the overall market. The possible challenges and success this company can achieve is being discussed thoroughly. The corporate performance by this company can get to the next level while operating in the Australian market.

4. Situational analysis

4.1 Market Size & Trends

The Australian consumer market stands at the 15th position worldwide. It is one of the largest markets for most of the commodity sold worldwide. According to Tuite, (2019), the Australian fashion industry is likely to get higher than ever before. Its predicted sales revenue is also showing promising results. Its retail sales growth is likely to grow at 3.7% for the year 2020. Not only the fashion industry but also the overall retail industry is growing at a fast rate. Here are some of the reasons that explain the current situation for Australian market.

• It is one of the most urbanized country in the world. Over 90% of its population are living in the urban areas making the perfect environment for the retail industry to grow.
• Its per capita income is very much high, giving the higher purchasing power in the hands of the consumers.
• Even though the housing debt is increasing along with low salary and wages, the retail sector is gaining pace in the country due to the pop culture.

According to ("Australia's fashion industry shrinks as global brands move in", 2019) the high-end fashion industry is shrinking with every passing month. The competition is getting tougher due to the e-commerce sites. The market share for every brand that are selling luxury fashion accessory are shrinking as the overall market shrinks. However, Zara has nothing to worry about as because it sells products that are not only fashionable but also affordable for most of the Australian consumers.

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4.2 Financial and Corporate Performance

The financial and corporate performance of Australian market is facing yet another 10 negative years of economy fall. This economic fall have been noticed within the country for over a century. Back in 1890 to the 1900 this fall hit the Australian market which was observed during the 1st and 2nd world war. However, according to "Shares have gone nowhere for 10 years", (2019), the dawn fall of economy is ending. The county will soon notice major economic boost and gain the much-needed economic growth.

5. Strategic Options

Business strategies tend to orient to the lost track of the business operations in the appropriate manner. The marketing trends are aligned with business goals so that outcomes are able to potentially match the customer requirements and demands (Hsiao et al. 2019). Similarly, in case of Zara's fashion industry operations necessary business strategies have to be laid down to meet Australian market requirements. Some typically performed business strategies that shall be suggested for Zara to take consideration of in PESTEL Analysis, SWOT Analysis and Porter's Five Forces. As a result of strategies adopted Zara shall gain proficiency in leveraging their supply chain operations to generate increased quality deliveries to be easily available. Despite the constant constraint faced in terms of environmental threats through disposables generated from fashion industries Zara is expected to keep their sustainable conducts as priority to stabilize sales by obtaining customer faith even during market crisis periods.

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5.1 Business strategy

For Zara to become equally successful in their venture in Australia as a prominent fashion retail organization, certain business strategies have to be endured.

SWOT analysis

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PESTEL Analysis:

5.2 Corporate strategy

By Corporate strategies there are typically three major domains talked about. Growth, stability and renewal are taken into account for Zara operating in Australian fashion industry markets (Payne, 2016). In order to attain competitive advantage in Australian fashion industry corporate strategies are necessary to be undertaken by Zara.

Growth:

• In terms of domestic market of Zara in Australia about AUD 28.3 billion is marked as the size (Xu, Gao & Hammond, 2017).
• The annual sales for Zara in terms of clothing, apparels and accessories within the Australian business industry is accounted to mark AUD 21 billion
• Sales generated through retail conducts of the brand account for $ 21 billion in an annual level.

Stability:

When the stability attribute is raised as concern against Zara's operations in Australia it is accounted that these brands occupies to be the major contributor in the Australian market. As the overall contribution made by fashion industry within Australia accounts to be limited by 2.3 percent, Zara accounts to make a significant account within that (Molinillo, Ekinci & Japutra, 2019). Being a strong contender through fast fashion brand 0.3 percent of GDP produce of the country is generated from this brand. With new opportunities of creating jobs every year by 37,000 Zara accounts for huge employment stability hub for the country of Australia. Restoring a pricing stability through stable sales outcomes shall be beneficial for Zara. Economic scopes need to be explored optimally by transferring core competencies.

Renewal:

Neutral diversification sales approaches, pricing approaches shall be effective for Zara. Increasing costs and reducing the revenues per sales through articulation of Australian regulation, lowering tax laws to control uncertainties shall be established (Tan, 2019). Adhering to maximum sustainable conducts through reduced waste generated and optimized waste management shall foster the challenge from getting threatening any further.

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5.3 Innovative strategy

• Diversification in designs, styles, innovation keeping in mind the competitors moves in mind shall prove effective for Zara to meet the challenge (Mo, 2015).
• Zara is often accused of lacking in creativity, originality and innovation in their fashion collection. Encouraging talents from new fashion institutes incorporating fresh new ideas shall bring about dynamism to lead Zara as the fastest as well innovative fashion industry brand.
• Innovation shall be more strengthened to beat the threat from its closest rivals in market. Zara needs to block opportunities for rivals like H&M to penetrate through Australian fashion industry as effective blocks shall be established. Heightened supply chain power dominance and achieving optimized customer trust factor shall enable vertical integration reducing competitive forces to act upon Australian fashion sector (Perlacia, Duml & Saebi, 2016).
• The fashion industry in the Australian markets is predominantly functioned by power generated from women and girls adhering to occupy the maximum segment, hence this area needs to be explored greatly to infuse innovation.

6. Recommendation

6.1 Final recommended strategy

Zara has been identified as a powerful and market leader within the fashion industry in each country it has spread its operative mechanism. However, for Australian markets Zara it certainly not expected to break the legacy. As evident from business strategies and corporate strategies undertaken certain specific domains need improvement. In order to gain effectiveness and advantage over competitors in the market of Australia certain areas have to be worked upon (Kanwar, 2018).

The market shares are necessary to be heightened in terms of occupying a strong position in Australian fashion industry. The pricing policy needs to adhere to Australian regulations to suit the remuneration schemes, employee wage rates and tax rates. Zara often encounters with complaints regarding traditional and age-old designs being remodeled (Tuite, 2019). Innovation infused by giving chance to new designers and fresh talents within designing and idea supplies shall meet the demand. Allocating increased cost towards promotional campaigns in terms of digital means of social media and news magazines shall help Zara gain supremacy over close rivals in Australian market.

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6.2 Implementation of Final Strategy

The strategies that are recommended as above are expected to get actualized as soon as possible for Zara to obtain maximized competitive advantage and edge over other in the fashion industry. Taking the strong goodwill legacy forward Zara needs to establish supremacy and dominance upon the supply chain management tasks. This will lead to keep control over market dimensions in terms of cost allocation, distribution of sales and using the sales channels effectually (Verma, 2018). Customer oriented needs to meet seasonal, festive and gender specific demands shall be optimally met. Each of the innovation strategic outcomes have to be operationally implemented so that designs, collections and patters express newness and fresh outlook with the perfect blend of innovation and originality.

6.3 Monitoring and Control of Future Performance

When each of the areas of strategies outcomes are necessitated to be implemented adhering to future performances of Zara it is expected that proper monitoring and assessment are equally conducted. In order to implement efficacy in cost and pricing advantage the competitor analysis needs to be performed from time to time. Parallel monitoring with respect to Zara's pricing policy shall be providing a holistic picture of the supremacy that the brand is capable to maintain. In terms of innovation touch of modern designs, originality and Zara's signature patterns shall get revealed (Gupta, 2018). The sales outcomes revealed from the data statistics received on annual reports shall be elaborating the stability or improvement that is able to obtain. The efficacy level achieved in terms of market share enhancement shall be vivid from annual data reports. Controlling them through implementation of corporate and business strategies from time to time shall foster this process. Attaining Australian market control in fashion industry by Zara is possible through such monitoring and assessment.

7. Conclusion

The above discussion is based on the Zara Company, which wants to invest into the Australian market. The size of the market along with its current situation makes a perfect platform for the company to penetrate. The fashion industry is rising however; the high-end fashion industry market is shrinking. Even though the Australian consumer hold good purchasing power, the low to mid-range fashion sector is growing at a fast rate. The budget to operate a retail shop for Zara is being provided in details. The company has a good future in the country if its management makes the much-needed strategic decision and capture the large share of the market.

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