External environment
Consumer tastes and preferences is one of the macro environment factors that influence performance of Zara in the target market. This means that the organization cannot control consumer tastes and preferences. In many cases, this leads to losses where organizations are left with stocks that cannot sell in a given market after changes in consumer preferences.
It is evident from the case study that organizations need to observe changing trends in the market in order to cope with the competition (Carroll and Buchholtz, 2011). For instance, preferences for Zara increased gradually after the dress was worn by a celebrity during her honeymoon.
The company has very effective strategies to ensure that consumer preferences are given priorities hence expanding its market share by retaining customers.
This is evident where the company opens stores in various countries where demand is high. In fact, this has helped the company to achieve much of its operational goals since its managers understand what consumers want. In addition, they understand environmental changes that trigger change in tastes and preferences for Zara.
Secondly, changes in government legislations also affect operations of organizations in various ways. There may be positive or negative effects of government legislations to operations of companies. For instance, if governments exempt some import or export duties businessmen tend to enjoy since they can purchase and sell more items to foreign countries.
This is because government policies encourage their activities by providing a friendly platform for carrying out their business activities. From the case, it is evident that government policies affect profitability of businesses since they have a direct impact on revenue. For example, foreign governments have played key roles in success of this company by allowing the sale of Zara within their territories.
If these countries had negative opinions towards foreign investments, the sale of Zara in could be impossible. Government policies have impact on the textile industry in a great way because they guide operations of all players in the industry. Governments may come up with policies that victimize players in the industry making it impossible for them to survive in the business. Some policies are friendly to investors hence leading to improvements in performances hence enabling them to survive in the industry.
Another macro environment factor is economic conditions and these affect businesses whenever they change. This means that organizations can do nothing about changes in economic conditions, in any country. For instance, inflation can alter lifestyles of people in a given population leading to hardships and rise in cost of living. Zara’s demand is affected by changes in economic conditions because whenever people have enough to spend and save, tend to have better spending habits hence stands better chances of buying.
This means that individual buying behavior is influenced by economic constraints in any economy of the world (Carroll and Buchholtz, 2011). Economy affects costs of raw materials hence affecting prices of finished goods. For example, in 2011 cost of cotton increased causing the price of garments to increase hence exerting pressure on retailers to raise their prices, as well. This shows how slight changes in economic conditions translate to a lot of pressure on buyers downstream.
For example, prices of finished goods may go up due to high production cost caused by high cost of acquiring raw materials. Economic conditions affect the industry in general because inflation affects all players in the market. All players use raw materials from the same source hence having to pay more due to changes in the economy.
Key Success Factors
Some of the key success factors for this company include globalization. This is the joining of people from all parts of the world to do business and socialize. Globalization has opened a lot of opportunities for business people in the world today. This is due to enhanced movement of individuals from one place to another conducting their daily businesses.
People learn from one another as they interact as a result of globalization. Demand for Zara has been triggered by globalization where by people all over the world want to buy one for their loved ones. This can be attested by the fact that the company has opened stores in many countries of the world.
Business activities across local borders have been emphasized by the need for globalization, and this has created a friendly business environment for the company. The company has been able to establish their businesses in several countries without fear of losing their property to strangers. This has been possible because countries in the world have agreed to work together and promote each other (Carroll and Buchholtz, 2011).
Technology is another factor that has contributed to the company’s success in carrying out its business activities. For example, the company has used internet to market its products to potential customers. Since the majority of fashion conscious people have access to the internet, the company has been able to take advantage of the internet to create awareness in the market. In addition, the company has collaborated with the Apple Company to enable customers to purchase Zara through application in their mobile phones.
In fact, this has contributed to organizations’ success in a great way because customers can purchase Zara from their homes and pay through internet payment methods. Through technology, the company has been able to receive electronic funds hence enhancing security for their cash.
References
Carroll, A. B. & Buchholtz, A. K. (2011). Business & Society: Ethics, Sustainability, and Stakeholder Management. New York: Cengage Learning.