Zara is considered as one of the most renowned trade name, which is famous for its attractive designs in the world (Tungate, 2008). The brand is also famous for its most modern designs and has been ranked among the leading 100 best international trademarks globally. Zara applies a unique strategy that numerous companies find it strange where it particularly adopted zero advertisement strategy and makes sure that investments using revenues generated in order to establish new stores worldwide. The company has recently become a popular brand that sells its products to both the young and old generation mainly because it is universally known to be a manufacturer of a fashion line that is both comfortable and affordable. It can be clearly analyzed that Zara has been able to victoriously live up to the required values because of its two retail styles that have always succeeded. The first strategy that has ensured Zara’s success is the fact that the company has been able to maintain its fashion line all through. Another strategy that Zara has adopted is reduction of prices which has consequently resulted in a mixture that has been successful in reaching out to their clients. In 1977, Amancio Ortega established the first Zara’s store in Central Street which is located in Spain. Others owners of Zara’s successful stores include Bear, Massimo Dutti and Pull.
Considering the nature of competition and the requirement for sustainability in human beings, operating a brand or a business cannot be considered as a task that is easy to undertake. With the presence of the current brands which are busy and big in the universe, it requires more than what one needs to create a name for them and to thrive in it. Appropriate management and effective marketing approaches are needed together with the comprehensive know how of the economy as well as the spending and earning of a particular locality or the GDP of a country which are used to determine the economy of a country and its ability to grow and spend (Bryce, 2017). These factors are important in determining the ability of a country to develop which should be recognized prior to taking a step and embracing the universe. This paper mainly focuses on Zara’s mode of entry into the Indian market and whether the approach that the company adopted can be beneficial to its operations. This is determined by conducting a PESTEL analysis of Zara in India.
The economic guidelines of a country are considered as the most significant political aspects that have an effect on the policies of a nation (Gilpin, 2016). India, for instance, does not have a similar viewpoint on trade as other companies which are one of the most important aspects that Zara should consider before venturing into the Indian market. In India, the red tape can be considered as a main hindrance to the entry of foreign brands into the country. In the same way, there are other hindrances that are present when a foreign brand that is aiming to expand or enter in an Indian market. India’s political environment might affect the business conditions and operations. Therefore, a peaceful and safe political environment in India will ensure that the brands that are being operated there are happy.
On the contrary, political disturbance of the market has an effect on the economy. Political chaos causes disruptions to supply chain and causes certain complexities for the brands. Zara has the ability to rise above hardships of this nature by edging its operations in the supply chain to its country and the neighboring countries. Zara has ensured that this limitation has been taken care of by controlling its supply chain functions to its country of origin as well as other neighboring countries. In this manner, the company will have the ability to minimize the danger of being exposed to political disturbance. In case there is political turmoil in India, businesses are adversely affected and are usually placed under danger. Additionally, there are state policies that can result to hindering the issue of diverse brands in case they are not friendly. Zara therefore requires a friendly political environment in India to operate.
The economic activities in any country or its market majorly affect the manner in which a business operates in that particular location (Babatunde ; Adebisi, 2012). Zara is supposed to formulate a grand approach in India which can effectively ensure that the company is able to attain affordable pricing. In case the economic activities in India reduce and most individuals decide to cost-cut, they might change from brands which are luxurious to Zara mainly because the company offers its services at affordable costs. A stronger Indian currency means that the profits made through trading with other countries becomes significantly reduced. Therefore, Zara should consider the economic conditions of India before venturing into the Indian market.
Social factors are considered to be significant in a business venture. Businesses cannot be considered to be separated from the society that they are operating in. Zara perfectly fits into the Indian market because preliminary research indicates that the culture and markets of India favors new products. The cultures of the Indian people positively influence the people’s buying decisions in India mainly because they believe in purchasing new products.
Technology is considered as a significant aspect in businesses mainly because it has been able to transform business operations on a global scale by making them take place at a quicker rate in form of transport, communication or other features of everyday business (Christopher, 2016). Zara should take advantage of India’s technological advancements in marketing supply chain and manufacturing because they are affected by technological advancements. Zara should also take advantage of analytics and data in India’s businesses to make helpful decisions because technology boosts the responsiveness of a company.
Zara is supposed to consider sustainability as a business concern when venturing into the Indian market. This can be achieved by making sure that the company makes its warehouses and stores 100% eco-friendly through consumption of less water and energy compared to other ordinary stores. Zara should also make sure that all its dangerous waste that is obtained from its supply chain structure in India becomes eliminated. Zara should work together with other companies in India that have invested in the green business to ensure that it takes care of the environment.
Every country is governed by a set of laws which ultimately affect business operations either positively or negatively. India has favorable laws which can allow Zara to focus on sustainability and ethics across the company’s supply chain and business. India also creates a brand image for Zara that is ethical and that ensures compliance to local legislations and local markets.
Drivers/triggers for doing business in India
Having various stores in India would help Zara company to target the young generation in their early twenties as well as individuals who consider themselves young at heart. This would guarantee a wide customers base as a result of other clothing companies ignoring the impact of a young generation in favor of mature customers. The business can use unique approach of involving the generation in their promotions (Michalski, 2015). Through these campaigns, the company will be identified as an influential clothing dealer for the next generation whose it users are also far away from their rivals. There is a prospect of the Zara Company establishing its image in India as the best clothing company dealing with cloth of current generation. This is because the buying power of young generation and the marketing command of superstars are comparable. Through this strategy, the company is likely to garner a significant profit. Overall, the population expansion, economic growth, and the cumulating disposable income and quick development of organized retail infrastructure are some of the main reasons the India market seems to be lucrative.
In India, clothing business has emerged as one of the most significant sector that is witnessing revolution at very high pace. The commencement of clothing revolution is as a result of a new entrant in the market, and a result the retail market is expected to grow rapidly in the next couple of years. One of the triggers causing the market to grow is as a result of increasing number of individuals in India, thus increasing the consumer base and also profit margin. The growth of the organized retail market is encouraging many investors where it is estimated that it growing with 3.5 percent annually (Laufs ; Schwens, 2014). It is thus justifiable to note that the current retail business in India is at the point of inflection where various organizations are planning to invest in it. The industry is large in regards to value and size where organized trade is anticipated to gather about 16-18 percent of the entire retail market (the US $ 65-75 billion) in the next couple of years which is very encouraging to various investors planning to invest in India.
Barriers/risks for doing business in India
Nevertheless, introducing various Zara products in the Indian market face some challenges which need to be outlined before implementing any plan. One of the challenges is the present guidelines on FDI in Indi which outline that any foreign single-brand dealer is obliged to surpass a 49% stake to an occupant subordinates (Laufs ; Schwens, 2014). This entails the company disclosing some of its confidential information to the government. Also, franchising suppliers infer that the trader loses a particular jurisdiction over how things are operated, which many businesses fear as it may destroy their brand. This means that various retailers such as single-brand stores are frequently watchful of inflowing in Indian market. For a company like Zara, more consideration comprises the comparative need of cyclical alteration and the separate combined means of dress amongst Indian females that varies suggestively to Zara’s offered varieties. Another challenge that may be faced in the market is to do with logistics and infrastructure (Laufs & Schwens, 2014). The lack of better distribution channels and proper infrastructure in the nation may cause inefficient processes. This would emerge as major interference for traders as non-efficient supply passage is very hard to handle and if not solved may cause huge loss. In India, concerning infrastructure, they lag behind among the most developing countries in the world. Human resources problems are also a major issue facing the Indian market as it is difficult to find trained individuals as well as paying more to preserve them and this also decrease Indian traders profit margins.
Zara Company could use various strategies to enter the Indian Market Such us, subsidiaries, franchising and joint ventures. A joint enterprise that would be very crucial for the progress of the company is allowed by the Indian Policy regarding Foreign direct investment. Forming a joint venture with another company in the clothing industry is of grave importance.
A joint undertaking is a very crucial strategy where the manufacturing services and the company reputation as well as its expertise of the affiliated local company in the clothing field , in regards to such an antagonistic industry where it is extremely difficult to acquire resources to construct retail channels or regions that have other kinds of difficulties that need an association with a local corporation to which Zara reputes its retail as one of the connected basics in its corporate model.
A major issue that can affect the company that must be taken under consideration in its effort of entering the market is the issue with cultural and demography concerns. Recent sidesticks shoe that India has a population of 1.2 individuals and its ix expected that the income in India will increase thus increasing the demand in quality of clothing. Prior entering any foreign market, it is crucial to take under consideration the cultural concerns beliefs and perspectives of that country. Since all the above will play a significant role in the development and establishment of the company in that market.
Zara’s strategy is to promote and market local clothing lines in addition to international clothing lines. Zara being established as the key brand in the country, would contribute massively in achieving company targets. As new company, ZARA in any market would attempt to target the large positions comprising the initial or subsequent position in the whole of the marketing wear lines (Ang, et.al.2015). To that affect, obtaining one of these positions would help the company in generating an extraordinary level regarding respect to manufacturing, distribution, and marketing. As a result, these positions would form a stage where Zara may vend their wear lines, and other unique cloth wears.
Moreover, to establish the clothing positions of the company, a good marketing strategy will have to be established in a broad spectre of the filed using multimedia advertisement, internet and traditional advertising products such us brochures that would cover the needs in all layers of clientele in India and the nearby locations but focusing and giving priority to the clientele located in India and the main cities. During the entire complain ZARA should utilize its fashionable and quality clothing lines to infiltrate the Indian market an example can be the Spanish market. The company will surely face great challenges that will have to overcome this can be done by utilizing effectively positional and promotional strategies that are created to support large profit margins but furthermore establishing fashion trends. Zara should utilize local associates helping the business to minimize expenses.