Porters Analysis of Zara Essay

1928 Words Oct 2nd, 2011 8 Pages
MGT136- Management Themes and Perspectives

Provide an analysis of an organisation explaining the relative importance of each of Porter’s Five Forces for the organisation’s strategic position. You should support your arguments with evidence from the company and/or the relevant literature.

Zara has been the major pioneer of ‘disposable’ fashion; which makes up over 12% of the UK clothing industry. Zara outperforms its rivals in profitability, brand identity, and its successful business model.
I have used Porter’s five forces model (Porter, 1995) to analyse the industry and Zara’s strategic position. I have applied the theory of this model and its determinants to my research of Zara; providing evidence to form
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The importance of quality of supplies and the ethics and responsibility is important to Inditex; all suppliers must comply with Inditex code of conduct for external manufacturers and suppliers. (Inditex, 2010).
Overall my analysis of the fast-fashion industry concludes that Zara is superior to its main competitors; in its business plan, brand identity and achieving a higher strategic position. By using porter’s five forces, I have evaluated; Zara dominates its rivals by large industry growth, a consumer based business model and a strong brand identity, Zara can reduce the threat of new entrants by its ability to utilise its business plan to increase barriers to entry, Zara uses locally sourced suppliers, with low transport costs to help meet the demand of its consumers, Zara successfully reduces buyers’ propensity to substitutes by improving customer service and increased buyer information, and Zara lessens the threat of substitutes by differentiation of products and services, customer service and its strong brand identity. Zara fulfils many determinants of Porter’s five forces model and therefore boasts a superior strategic position to its competitors.

Michael E Porter’s Five Forces Model
Porter identifies that the key element to a firm’s profitability is industry attractiveness. He states that all managers

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