Zara’s Political Challenges in China and Public Affairs Strategies for Sustainable Fashion Operations Case Study

Introduction to the Case Organization

Zara is one of the largest fashion brands in the world and has had a good business foundation for more than ten years. It can use all the opportunities available to businesses based in the European Union (Ferguson, 2018). The European Union’s many trade agreements are a major benefit of doing business with Zara. Thisnot only streamlines the process of bringing in supplies and shipping out finished goods within the European Union but also allows Zara to ship its wares to customers worldwide at a reasonable price. This research paper analyzes Zara’s political challenge and requires public affairs to solve it.

Through its development, the company set a goal of transforming into the greatest fast fashion retailer in the world. Today, Zara has expanded to 2,251 stores, all located in key cities across 96 different countries (DiMaggio, 2019). Its founder, Amancio Ortega, is currently ranked as the sixth richest man on the planet by Forbes magazine (DiMaggio, 2019).

A key competitive advantage for Zara is the company’s agility in responding to the ever-evolving demands of its customers. According to Barney and Harrison (2020), Zara’s founder and business model have found tremendous success in the United States. Zara’s organizational framework results from a centralized strategy that prioritizes speed and responsiveness to clients and their purchasing habits, oversupply, and production costs.

The look and ethics of the company are reflected in Zara’s clothing lines, which are perfect for the consumers they are aimed at. Zara’s rapid production process is continually being fed new ideas, allowing for a short time between creating a new item and its availability for purchase. Zara’s rapid expansion has allowed it to overtake many of its competitors and shift the fashion industry’s emphasis to more timely styles.

Presentation and Analysis of the Issue

Whether Zara should prevent the adoption of stricter limits is a political challenge that Zara may encounter in the Chinese business environment. This challenge requires public affairs action to be taken to ensure the smooth running of the company. The issue with which the organization has to deal occurs at its maturity stage. Based on the findings stated by Freeman et al. (2021), imposing stricter limits on partnering companies is a crucial issue because many stakeholders are struggling to reap the benefits from other countries (Freudenreich et al., 2020). The issue of preventing the adoption of stricter limits is at an early stage, and the company is finding out whether it is better to prevent them.

As the company is placed under more scrutiny and attention, it may encounter other issues, such as consumers and regulators questioning Zara’s ethics. It has been noted that Zara’s products have a history of failing quality tests in China, which creates problems for its reputation and increases the need for public relations efforts. Besides, it remains to be determined whether the problems are with the quality of products or with the tense relations between the retailer itself and Chinese associations that deal with corporate social responsibility (CSR).

As the organization engages in improved CSR efforts to meet the demands of the strict quality control regulations in China, it does not mean that the problem will disappear. The standardization of quality will continuously be changed and updated, which means that Zara will owe it to various new stakeholders and media sources to communicate the current production practices to a wider public (Jha & Verma, 2022). Therefore, Zara’s position on the issue has been firm as the company’s representatives have continuously attempted to maintain its reputation in the Chinese market.

Identification of Affected or Affecting Stakeholders

There is always an issue side to a social problem (in that it involves a disagreement over the distribution of resources and positions) and a stakeholder side (in that it affects or addresses several actors, all of whom will inevitably have a vested interest in whether and how the problem is resolved). As opposed to being narrowly focused on strategy, social problems have far-reaching effects. To be considered “strategic,” an issue must be linked to a specific entity, usually a company (Shamir and Howell, 201). There may be parallels between social crises and campaigns throughout the history of social change. If not addressed promptly and appropriately, they can develop into a social movement.

Time allows for dividing issues management from stakeholder management. Future-focused, long-term assessment by the firm (and others) of what potential issues (differences in facts, values, or policies) are most likely to gain traction in the marketplace of ideas, impact the organization in what is perceived as negative or limiting ways, or to take advantage of opportunities presented by a specific issue (Smith, 2020). The management of stakeholders is currently addressing a pressing issue. In other words, the problem is no longer one of the “possible future” challenges but rather one that has emerged and necessitates action from the organization.

Stakeholders

It should be noted that customers, colleagues, communities, suppliers, industry peers, non-governmental organizations, inter-governmental organizations, policymakers, and investors are the main stakeholders directly cooperating with Zara. However, it is evident that clients and media (for example, advertisers) are the parties most involved in public affairs issues concerning the company. As practice shows, this group sees the situations and the problems from the point of view of implementing effective advocacy and radical changes in terms of protecting interests and establishing connections between the company, customers, and media (‘Examining the importance of stakeholders,’ 2022). Consequently, public affairs issues can affect Zara and designated stakeholders equally, negatively, and positively.

Changing the Situation

In order to eliminate existing problems and change the situation for the better, stakeholders both in the past and now continue to actively work on promoting the brand and collections. Zara is an object of close public attention, and recently, the firm’s products have been covered most often on social networks and other online platforms for communication. In general, stakeholders’ positions about Zara have not changed over time, and all they want from the organization is stylish and high-quality clothing coupled with first-class service. Accordingly, they expect politicians to have a more “favorable” attitude towards the company, allowing Zara to realize the most daring ideas in the fashion industry context. This moment directly concerns the policies and standards related to trade and fashion.

Solution

Getting feedback and establishing strategic communication are among the most acceptable solutions to public affairs issues. The advantage of this approach will be to increase reputation and loyalty, as well as the establishment of a warm, trusting relationship between the brand and stakeholders. Accordingly, the disadvantage of this tactic may be the need for additional resources, such as time and money, for the full implementation of the idea. In general, these decisions can have positive and long-lasting consequences for all parties since, for the most part, there will be a holistic understanding and fulfillment of the needs of both the company and stakeholders. Undoubtedly, the solution will be beneficial not only to the organization but, for example, to customers since their interests and desires will be taken into account. It is assumed that the presented methods will not cause additional damage to anyone.

Identification and Discussion of Different Arenas

The idea of multiple-issue arenas has been introduced to denote the variability of interactors that stakeholders and organizations may have. The current challenge is that Zara covers the political and economic arenas, with political actors using the agenda of legislation and high standards in the Chinese market to frame the agenda on the problem (Luoma-aho & Vos, 2010). Economic actors aim to illustrate the financial implications of the challenge, such as the company losing competitive capacity due to the restrictions imposed in the political sphere.

Managers of Zara suggested that it is realistic to divide the political and economic arenas differently. They risk missing out on fresh dangers and opportunities from outside their settings or stakeholders who promote an issue but have no connection to the main organization if they limit their attention solely to their present collection of stakeholders (Mahon, 2017). Their reputation may suffer if they are overly reactive to political problems rather than proactively preventing them.

When resolving political conflicts, it is not usually the wealthiest or most numerous groups or individuals who win. The system’s immediate ability to respond to issues and problems can be drastically reduced during a temporary stalemate brought on by other mechanisms and forces that may serve as predictors of success (Villa et al., 2019). For example, techniques can increase the visibility of an issue with a wider audience or the emotional content of an issue like abortion.

In these situations, irrespective of other advantages of other actors in the competition, the actor who promptly engages a sufficiently large audience and persuades it of their perspective will prevail. It is important to consider timing, including the optimal moment to energies a bigger audience and the best way to make pleas to them. This necessitates some comprehension of the problems.

Identification and Discussion of Policies and Regulations

At the core of its legislative environment, China has clearly communicated a focus on consumer health and safety issues. The rules and standards embedded in the country’s business environment significantly differ from those of other jurisdictions, thus having a major influence on retail operations. Notably, as reported by Xi (2021), China does not have a specific legal framework governing the development, manufacture, and supply chain for fashion goods.This means that the legislation applicable to the fashion industry does not differ from that focusing on other consumer products. Thus, being a lightly regulated industry, most business operations are established and managed with the help of various agreements and standards, such as the distribution and agency in the sales field.

However, it is common for fashion retailers to experience significant pressure on the part of social responsibility requirements. Importantly, legal requirements in this area include the Labor Law of the People’s Republic of China (revised in 2018), the revised Labor Contract Law of the People’s Republic of China (2012), and the Law of the People’s Republic of China on Occupational Disease Prevention and Control (revised in 2018) (Xi, 2021). Thus, when Zara is subjected to scrutiny regarding the quality of its items, its actions are checked in accordance with the Product Quality Law and the law protecting consumers’ rights and interests.

Economic freedom, as measured by wage and price flexibility, protection of private property, and the absence of government interference with business, has been shown to correlate positively with GDP growth (Hörisch et al., 2020). However, 146 of the 190 economies analyzed by Doing Business 2020 had land registries that do not provide full geographic coverage of privately owned land. Due to economies, property transactions and land administration have become more streamlined (Hörisch et al., 2020). More open data, more dependable infrastructure, and lower taxes and fees were property registration reform’s most often cited benefits.

Five theories are used to discuss issues in the Zara organization. They include public interest, capture, special interest, and money for nothing, and bootleggers and Baptists offer viable explanatory frameworks to utilize when analyzing regulatory aspects (Luthans & Doh, 2018). According to Jones and Wicks (2018), the original and oldest theory is the public interest theory. Its findings suggest that politicians and the people they select consistently work to advance the interests of the public instead of advancing the interests of certain groups to the detriment of the public.

Public Affairs Solution

This issues-lifecycle suggests two sets of external strategic actions that a corporation can pursue. Zara wants to put the issue on the agenda for resolution. The first set of techniques that Zara applied was to prevent the issue from gaining widespread audience recognition and support (Smith, 2020). In the latter scenario, Zara tried to spread awareness of the problem among many people. The action of spreading the issue of whether to prevent the adoption of strict limits has the best chance of success when undertaken in the early stages of the issue life cycle, specifically in the gestation and widening of the issue states and the early part of the third stage (Villa et al., 2019). These strategies deal with the management of conflict and the building of relationships.

Being at the maturity stage of its life cycle, the company is challenged by having to manage the pressure of public affairs from multiple sources simultaneously. In this instance, Zara is tasked with dealing with legislative and regulatory bodies as well as community organizations once the issue has come to surface (Smith, 2020; Klüver et al., 2015). The public affairs tactics that the organization chooses generally influence the outcomes and procedures used to resolve the problem. It must be made clear that addressing the problem at this point runs the risk of being “re-ignited,” redefined and changed, leading to the emergence of a whole new problem.

First off, by definition, political circumstances and political systems are where political concerns are settled. Second, societal expectations for the issue, the decision-making process, the issue’s content, and the results of these decisions (expectations and content) require just as much managerial attention as the issue’s resolution (Smith, 2020). The kinds of political agendas and the strategies used to communicate a problem to the aforementioned bigger audience are particularly important.

Regulating how an issue is defined is vital, but more is needed to keep it under control to make plans for the organization’s operations. Specifically, once it has become known to the public that Zara experiences difficulties adhering to product quality and safety standards in China, the organization must show proactivity in tackling the issue promptly (Smith, 2020). Immediate action is necessary because information regarding malpractice or unethical actions reaches the public very quickly and may significantly hinder a company’s reputation in the eyes of potential consumers.

When the problem becomes widespread, it becomes a matter of public concern. The educated and literate populace comprises the first type of audience, known as the “attentive” public. If the organization cannot keep the problem at bay at the attention-group level, or if the problem is highly generalizable and symbolic, it may eventually make its way to this group (Smith, 2020). Unless some interest group, organization, or political official/body seizes control of the issue and directs attention to a specific set of actions, the response of this public is often unorganized, poorly channeled, and unfocused.

Zara, an organization that kept an issue off the agenda, stands a greater chance of success and is defined as exercising maximum corporate discretion to deal with the issue, with minimal public and media involvement (Smith, 2020). Failing that, the second-best strategy is to seize the initiative and take control of the issue and its definition and place it on an agenda of the organization’s choosing. The stakeholders were organized based on direct and indirect orientation. The issue was diffused by creating a committee to investigate the adoption issue to prevent the imposition of stricter limits (Villa et al., 2019). The attack group was the next step, and it questioned the authority motives and legitimacy of the group regarding the issue of imposing stricter limits in China.

Suppose the company cares at all about keeping a problem under control and preventing it from spreading to other, more problematic areas. In that case, it will need to address this particular set of interest groups as soon as possible. The National Coal Policy Project is an example of an initiative that has met with some degree of success in this area (Smith, 2020). The project was an effort by the coal industry to address its most well-informed and outspoken critics out of the public eye (Villa et al., 2019). A number of significant discoveries came out of the group discussions, the most important of which was the realization that neither industry workers nor environmental activists were the embodiment of evil.

In terms of the reactions of regulatory bodies that scrutinize the practices of the organization, it is recommended to liaise with them as privately as possible to reduce the negative reputational impact on the organization. Therefore, reducing the corporation’s window of vulnerability requires a more nuanced comprehension of the issue and its many aspects. Within the business community, public policy and regulation are far too complex to be widely publicized. Instead, they require careful consideration and deliberation by trained professionals (Smith, 2020). Until an accident occurs or a focus group alters the issue’s definition and emotionalizes it in the public domain, any regulatory and other challenges could be resolved without being widely released.

Reflection on the Implications

Instead of companies or other entities, problems and subjects should be considered the focal points of any conversation. Stakeholders can reach more people with their messages and establish stronger bases of support thanks to the proliferation of new social media. The article presents the concept of various “issue arenas,” gathering places for organizations and stakeholders to meet and discuss issues. According to the paper, in today’s quickly evolving markets, where businesses do not often live as long as they formerly did, the function of corporate communicators and public relations (PR) professionals is more closely related to the survival of businesses than ever before.

Some have argued that the static nature of the environment assumed by stakeholder theory is unrealistic, while the problems management literature more effectively accounts for growth and development. Merging them might give a fuller picture of the environment in which businesses operate. In other words, issues are not issues until “the battle is joined and conflict occurs,” so issues management is spotting potential crises and diffusing them before they become full-blown disasters. One of the first-time management issues is mentioned in the context of preventing a “legitimacy gap,” or a gulf between an organization’s actions and the norms of society (Smith, 2020). These may develop because of shifts in public opinion about the organization’s conduct or how they are viewed.

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