Strategic Review Report for ZARA Company Essay Example | Topics and Well Written Essays - 4000 words

Strategic Review Report for ZARA Company - Essay Example The external environment covers the analysis globally in apparel industries (Cunningham, 2012:34). External environment analysis The external environment will have an analytical review using the PESTEL and Porter’s five Forces model. Political segment-The current increasing political instability among many nations does not do any favors to business people. The war in many nations in Europe, for example nations in the Middle East like Iraq forces businesses to close down and others end up losing their items through theft. Thus, for an investor investing in another country it leads to double loss, which may impact so negatively to the trader such that closing down the business, may end up being the result. In addition, some powerful political figures in other nations where a trader may want to invest or has already invested may order the business not to have a permit to operate in that country or to close down immediately if it is in operation (Hill, 2010:63). This helps to serv e the interests of the politician if they had a business similar to the new one in operation or the one to start operating, since by so doing they will have ensured that the competition is low if other such kinds of businesses operate in the country. This hinders the general growth and development of any business, hinders competition and the result is high prices for commodities, and consequently this is a practice that should remain disregarded completely in the society. Furthermore, employee’s rights and child workforce regulations remain vital to consider facilitating a legal and maintainable job environment in production. Moreover, since the growth of global trade, most producers have their bases in developing nations. The price influence of import and export taxes on the apparel organizations directly influences the progress of global retailers (Schermerhorn, 2011: 56). Economic segment- Because of weak currencies, low workforce costs and the chance to be near to custome rs, a business ought to look into the techniques to reap benefits from a different site. This is so because competition has already penetrated the newer market and persistently tries to balance the gains related to these markets. This has a great influence on the profits of the enterprise. The attainment of a stable economy has remained a big challenge to so many countries and thus current economic trends like inflation, unfavorable balance of payments among others pose a great threat to business people in many countries. These trends affect both the growth and profitability of the organization (Pahl, 2008:72). For instance, the purchase of clothing may simply remain a luxury rather than a necessity. Thus, when an economic recession occurs, it may cause a reduction in customers’ disposable earnings, and hence leading to reduced expenditure on clothing. Moreover, a higher rate of individual savings may have a negative influence on demand in the apparel industry (Cunningham, 20 12:14). Socio-cultural segment- customers appear to use much money on electronics, travelling, healthcare, education, and leisure and spend less on clothing, which makes apparel industries to establish their organizations ecologically to meet customers’ demands. Many workers in the company are females, and they mainly do spinning, weaving, or hanging fabrics jobs whereas males take over technical works like machine supervision.