ZARA Expansion Strategy – Examining Internal and External Business Environment

ZARA Expansion Strategy – Examining Internal and External Business Environment
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Introduction
ZARA is a leading fashion brand worldwide based on its market presence, market capitalization, and target audiences. The company has more than 12 inventory turnover during each fiscal period, which is matched by only a few competitors globally. The short-term inventory turnover allows ZARA to perform analysis accurately and shift business strategies with agility. Currently, ZARA announced its expansion strategy for Eastern Europe and Asian marketplaces (SCM-G 2020). ZARA intends to focus on women aging between 24 years and 35 years. The brand is setting stores in town centers with high female concentration. The expansion strategy uses integrated marketing communication (IMC) tools to create impulse buying behavior among the target audiences. Besides, ZARA is gaining a manufacturing advantage through its expansion strategy. The brand has outsourced production units to different Asian countries, which offers a cost advantage. Penetration through the current expansion strategy in such markets would provide price supremacy to ZARA in the long run (SCM-G 2020). This report's objective is to critique ZARA's expansion strategy based on the internal and external business environments.
Discussion
Internal Environment
ZARA is a reputed fashion brand worldwide. The company generated EUR27.72 billion as turnover for FY2021. The company has a widespread supply chain network. ZARA outsourced its manufacturing units to different Asian countries, particularly Bangladesh. The outsourcing allowed ZARA to enjoy a price advantage over competitors, especially during the pandemic. Besides, ZARA is capable of adopting paradigm shifts in the market dynamics. For instance, ZARA understood the buying patterns and behaviors of mass audiences during the COVID-19 outbreak. ZARA introduced Store Mode functionality in the European market, allowing consumers to witness in-store experiences using a mobile application (Shearsmith 2021).
External Environment
The global fashion industry experienced a pandemic effect after the COVID-19 outbreak. The fast-fashion culture is depriving, and consumers prefer sustainable fashion sol...