BUSINESS ENVIRONMENT

Business Environment



Introduction1

Discussion2

Zara's Business Model and Its Strategic Objectives2

Primark's Business Model and Its Strategic Objectives3

Stakeholders and Organizations3

UK's Economic System and Its Effects on Business4

Impact of Fiscal and Monetary Policies5

Competition policy and Regulatory mechanism6

Determination of pricing and production decision7

Influence of the Market forces on Organizational response8

Business Environment9

Cultural Environment9

Effects of International trade on UK organizations10

Impact and role of EU policies and directives11

Conclusion12

References13

Business Environment

Introduction

Zara clothing company is a chain of stores which is a flagship brand of Spanish retail group, Inditex SA, founded by Amancio Ortega Gaona. The first shop of Zara started operations from Spain in 1975 and since then the company has witnessed multifold sales increase over the years. It is now among the world's fastest growing retailers with stores located at major cities worldwide across Europe, America, Africa and Asia.

Zara opened its stores in United Kingdom in 1998 targeting young females and teen girls. It targeted this segment because younger females could purchase budget-friendly clothes. Similarly, teenagers could purchase fashionable clothes from Zara easily. Reason for Zara's success, which differentiates it from competitors, is that it produces a collection of clothes twice a week thus compelling customers to visit it on a regular basis and also preventing a reduction in price.

Almost ninety percent of Zara stores are company owned thus customers who visits them in any city finds themselves in the same environment. It follows a strict guideline which depicts their commitment to the environment and also towards the people it interacts with. It focuses on energy saving, eco-friendly shops, fewer wastages and knowledgeable teams. This helps in extending a message that Zara is environmentally committed and its physical evidence further strengthens the “eco-friendly” brand image. In this regard, it is essential to highlight the fact that Zara has always focused on building stores which are sustainable and environmental friendly. It plans to utilizing cutting edge technology in energy consumption and saving. Also, the merchandise it sells must comply with health and safety requirements based on clear to wear and safe to wear standards (Lopez, 2009, pp1-3).

Discussion

Zara's Business Model and Its Strategic Objectives

Zara's chain of retail stores is unique in terms of its business model. First and foremost, Zara is relying on a "zero advertisement" policy i.e. it does not incur any marketing and advertising expenses. However, this frees up a lot of financial resources which are used to open new stores. In this regard, it can be concluded with quite certainty that Zara is pursuing an extremely aggressive expansion strategy. At this point in time, it is essential to highlight this fact that Zara is the only clothing and accessories retail store which does not have a marketing and advertising budget. The conventional marketing theories argue that these expenses are essential for growth. However, the case of Zara seems to override such conventional scholastic theories. This strategy leads to the second unique aspect of Zara's business model i.e. aggressive expansion policy. As stated earlier. Zara is constantly building upon the momentum of growth and geo-spatial ...