GRAMMAR CHECKING

1. Introduction

In the modern society, all the enterprises in the face of increasingly complex social environment, fickle and variable current social situation in economy, politics, culture and other factors bring both opportunities and challenges to enterprises. To develop in intense market competitions, be prepared is the foundation of all the business activities. To walk on the right way by a clear direction to reach a right goal, planning must be an indispensable and significant process of the business operation.

Strategy is defined as a plan of action designed to achieve a long-term or overall aim by Oxford Dictionary. A strategy is a series of integrated, coordinated action that designed to help organization develop core competencies and access to competitive advantage. Business model is an abstract representation of some aspects of a firm’s strategy; it helps people to understand how a firm can successfully deliver value to its customers. Unlike strategy, business models do not consider competitive positioning. Business strategic model could help organization to set direction and priorities in less resource and time by a scientific way.

In this report, mainly to explore two different strategic models(SWOT analysis, Porter’s value chain) from several aspects including introduction of strategic model, application of models, analysis and comparison about two models. At last, make a short reflective conclusion about the strategic models.

2. SWOT Analysis

2.1 What is SWOT Analysis model

Today’s organizations find themselves operating in an environment that is changing faster than ever before, SWOT analysis is a method for organization analyze the implications of these changes and modify the way to react to the changes. SWOT analysis is a method based on internal and external environment of the organization analysis or a procedural or structural components analysis thereof embodied in establishing the main strengths, weaknesses, opportunities and threats. (Verboncu, 2016). As a basis of strategic analysis and formulation,

SWOT analysis by analyzing the competitive advantage of the firm itself (Strength), competitive disadvantage (weakness), opportunities and threat, this model helps the enterprise get better know about the opportunities and challenges facing themselves, at the same time, it has vital significance for the development of the public division and formulate the future development strategy. Figure 1. SWOT matrix

SWOT matrix (Figure 1) is made for considering four components; important SWOT analysis’s results of the enterprise should be listed in the table. The combination of the four elements defining this model (the model of "fitting" or the model of "alignment") generates, according to experts, four modes of analysis of internal and external factors, as the basis of specific strategies. (Verboncu, 2016) These four factors come into being different strategy combination like SO, ST, WO and WT. (Figure 2)

Figure 2. SWOT Matrix

(Source: Helfer, 2010)

2.2 Applicant of SWOT analysis

This part mainly analysis ZARA by SWOT model. Zara is one of the largest international fashion companies. It belongs to Inditex, one of the world’s largest distribution groups. (Zara, n.d.) ZARA brand can be called an alternative brand in the fashion industry, the fast fashion ZARA created are highly respected and has became a major mainstream.

ZARA is one of the popular fast fashion brand around the world, it sells fashion for men, women and kids, welcoming shoppers in 86 markets with over 1700 strategically-located stores in main cities. (Inditex Group, n.d.) ZARA uses designers as group instead of individual to quick update products at a great extent, besides, company keep low inventory in stock because each new product is supposed to be sold within 10 days. ZARA constitutes around 80% of Inditex business (8 companies) which means a failure in ZARA can put the whole group at a risk. (Inditex Group, 2014) Base on the research, the following is analysis of ZARA by SWOT model.

· Strengths: Good enterprise management status and economic status; Good development space; The broad consumer groups (men, women, children); Great brand attractiveness; Powerful design capability; High speed of product renewal; Parity strategy;

· Weakness: Supply chain; Similarity to other brand (H&M); Low product quality; Store coverage.

· Opportunity: Global market; Development of IT technology; Fashion trends.

· Threats: Fierce competition; Economic crisis, Inditex over dependence on ZARA.

2.3 Evaluation of SWOT analysis

· Advantages: SWOT analysis is beneficial because it helps organization decide whether or not an objective is obtainable by visually show the analysis results. We can clearly see the results in four parts, it helps organization gather information maximum. Completing a SWOT analysis brings basic understanding and direct feels of ZARA, even without accurate data supported, this model can also draw convincing conclusions. Based on the SWOT matrix, strategies options like WO, WT, ST, SO to be selected.

· Disadvantages: Because SWOT is simple to use, the results defects that are not accurate enough. Where the same point was recorded under two or more categories (e.g. as both a ‘strength’ and a ‘weakness’), no reconciliation was made to explain the apparent contradiction. (Hill, 1997) For example, global market could be both opportunity and threat for ZARA. The distinction between internal (strengths and weaknesses) and external (threats and opportunities) was not always preserved. (Hill, 1997) It is difficult to divide internal and external influence in supply chain department, the interdependence relationship exists between enterprise and the environment.

3. Porter’s Value Chain

3.1 What is Porter’s Value Chain

The Porter’s value chain is an internal analysis method in business, created by Michael Porter in his book. This value chain model is to identify key value-generating activities within the organization, and how resources and core competences add value and deliver synergistic benefits. Porter’s model consists of a series of activities which could help a company to achieve a competitive advantage; the Value Chain emphasizes the differentiation of core processes and support processes and organizes a company’s value activities in two classifications – primary activities and support activities (Kaplinsky.R and Mirris.M, 2011).

Figure 2. Porter’s value chain

(Source: The Business Owner Journal, 2014)

Porter’s primary activities are consist of five basic processes: inbound logistics, operations, outbound logistics, marketing and sales, and services, there are related to company’s production and service. Support activities in Porter’s Value Chain consist of primary activities including procurement, technology development, human resource management and firm infrastructure, which are not directly involved with the production of products.

3.2 Applicant of Porter’s value chain

ZARA has built a strong relationship between its designer and the consumers through the creation of an efficient supply network that is supported by the Value Chain model.

· Inbound Logistics: 60% of ZARA’s materials comes from the Supply Chain Network which consists of 1592 suppliers located in third world countries while 40% from the INDITEX Network. (Fernie. J, Sparks.j, 2009) ZARA’s manufactories are also established in the developing countries like Turkey, China.

· Operations: As was mentioned in above, a strong relationship between designers and consumer to bring new fashion quickly, ZARA use group of designers instead of individual designers. New fashion designs are shipped at a rapid rate, there are few basics and reorders are rare. The customer knows that she should buy an item she likes when she sees it. (Leob, 2015)

· Outbound-logistics: ZARA’s activities include all of the process from the factory to consumer. ZARA has good supply chain and ZARA has highly efficient logistics system.

· Marketing and sales: ZARA has no advertising campaign. What are they marketing skill. The things ZARA did for marketing are ensure the ZARA store located in the primary shopping mall.

· Service: ZARA has recycle plan that their new boxes are made of old boxes for online store. ZARA introduced reliable and efficient customer services in order to increase consumer demand by advertising on Facebook, Instagram, Twitter and Pinterest. ZARA’s designers are therefore intimately connected to the customers since they employed a specialist team to receive feedback from them (ZARA, 2014).

· Support activities are closely connected to the primary activities.

3.3 Evaluation of Porter’s value chain

· Advantages: Most organizations like ZARA engage in hundreds, even thousands, of activities, these activities can be classified generally as either primary or support activities. Porter’s value chain is a good tool for company to understand their business and determines costs and affects profits. It is a flexible model that all businesses must undertake in some form.

· Disadvantages: Porter’s value chain is a relative professional analysis model, people who are not experts in its use might not benefit from this tool.

4. Conclusion

Like ZARA posted on their official website, they believe that the customer is at the heart of our unique business model, which includes design, production, distribution and sales through our extensive retail network. (ZARA, n.d.) ZARA’s core competencies are related to planning processes and meeting their customers’ needs. Company analyze business by Porter’s value chain can meet the requirement of customer and market better than SWOT analysis. SWOT analysis is an easy model that everyone can use it to get the basic understanding of business, the terms used to describe factors were general and often vague. In the dynamic and turbulent fashion industry, ZARA in the face of complex challenges and opportunities as the most valuable brand in the INDITEX and one of the most popular fashion brand, markets are unsuited to the inherent rationale of the SWOT approach. The dynamic nature of demand and the increasing proliferation of segments has resulted in markets which are characterized by diversity rather than homogeneity, and instability is the predominant characteristic. (Hill, T., Westbrook. R, 1997)

To sum up, Porter’s value chain analysis is a better business strategic model for ZARA.