Introduction
For expanding business internationally, Zara faces several practical and legal challenges as well as employment relations issues that need to be mitigated through appropriate strategies.
Overview of Zara
Since 1975, Zara has been serving and in the Inditex group, it has now become one of the leading companies in the world. Inditex group operates globally and Zara is a part of the Inditex brand. Zara’s business model is slightly different from others in the fast fashion industry. Internationalization of this company has some driving factors such as economy of scale, development of technology, different barriers of exports and so on.
While expanding its business to different countries, the company faces several challenges from its competitors thereby making it necessary for the company to formulate effective strategies to stay away from competition and make more business profits. Providing effective services to customers is the main focus of Zara. They grow favorable relationships with potential customers by solving their queries as soon as they are received. Join-life collections along with eco-stores are two examples of sustainable practices of Zara.
Due to the sudden outbreak of COVID-19 pandemic, an increasing number of customers have become dependent on online shopping due to pandemic restrictions. The net sales gained by Zara from the e-commerce business are too little. With a rise in ultra-fashion and due to increased pressure of competitors, Zara is facing severe challenges. Hence, proper overcoming strategies should be implemented.
Zara has already many subsidiaries in other countries and wants to expand further. While doing so, there exist some challenges between employers and employees. Payment, attendance issues and so on are the main reason for disputes among employees. Tax issues can be controlled through tax structuring advice. For entering a new market, Zara needs to comply with all legal factors for successful business outcomes.
Expanding business globally can provide companies with a lot of opportunities but challenges as well. Conflicts occur in the laws or principles of different foreign countries. If the legal challenges are not tackled effectively then Zara can go through a severe economic crisis. This can result in the failure of a business.
Uppsala model
This is one of the popular models, which describes the internationalization process of the organisation. According to Dow et al. (2018), the model suggests that the company firstly choose to enter the nearby low market, therefore increasing the competitive advantage as per the requirements of the markets. Therefore, the company also gets to know about the political, legal, social-economical factors of the country. According to Rani (2021), this condition will help the company to enhance more in the strategy
The model has four stages
Stage 1: stop the regular activities
Stage 2: export the international products through independents logistics department
Stage 3: establishi9ng the foreign subsidiaries in order to enhance the business level in the international level
Stage 4: manufacturing the foreign production
Concept
Therefore, using this model will be beneficial if the company Zara enhance its business entity globally
Network approach
The network approach theory is a model to develop effective relationships around the same workplace in order to achieve the company goal or success. According to Liñán et al. (2020), this model is worked like a tool that is helping to gather more people at the workplace. The tool also helps to engage the relationship between the leader ad the other employees. The model is helping to decentralize the people to accommodate each other while working in the workplace. This model helps to enhance the quality relationship, which reflects the understanding of each other, needs, requirements. Therefore, the employees also share the goals, innovative ideas, interests and accountability, which further helps the company to grow in the global market.
The advantage of this model is that,
Therefore, implementing this model concept will help the company, Zara, to enhance the level of globalization as well as also helps to increase the level of the employee’s relationship
Dialogues and communication are required as the most important tools for improving relationships in the organisation which Zara can adopt for achieving positive business outcomes. Certain emotions can affect the relationships between employers and employees which can demotivate employees and can lower down productivity. Employment relationship issues can damage brand reputation and many candidates may apply for jobs in the company due to these factors. Employees are the main assets who are responsible for increasing workplace productivity thereby leading the company towards success. So if there are not enough employees in Zara, then it is not possible for the company to make significant success in other countries. Hence, Zara needs to consider organisational missions and values and incorporate employee relationships into them. Employees need to be valued to enhance retention rates.
Employment relations issues can take place due to a lot of factors including inadequate payment. Rewards should be provided to them which may not be monetary. It can be non-financial rewards as well. Both kinds of reward arrangements can be beneficial in this aspect. Recognition is essential which money may not do. A career development plan can strengthen employees’ capabilities and they can perform more work with greater efforts efficiently. This can make other candidates aware of this fact provided by Zara thereby attracting more talents in the process.
Employees should not be overburdened with work and there should be a balance between work and personal life which can help employees to stay positive in the workplace. This would help to reduce workplace conflicts and favorable relationships can be developed among employers and employees which is important to enhance brand reputation. It would make other candidates aware that effective operations are conducted and work-life balance is maintained in the workplace thereby attracting more tainted and skilled employees.
Conclusion
Proper strategies are required to help Zara customer relationship overcome the challenges, it is facing in the present context. This would benefit the organisation by making them stay away from competition and would also provide the company with the opportunity to give tough competition to other fast-fashion companies such as H&M, Burberry and so on. If the company’s operations run smoothly then it can help to improve brand reputation thereby attracting more employees and customers.
Positive business outcomes are inevitable for this company if challenges are successfully overcome. Brand reach to different customers across the world can increase. Both sales and business profitability are more likely to increase in the same manner.
Reference
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