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What are the problems that the Industry is facing currently. For example- The Negative Consumer behaviour, low profit, low market share. What would be your recommendations and implementation Strategies to overcome from this situation from the deep analysis of the Australian retail industry.


Issues Faced by Zara in Australia


The retail industry of Australia has been experiencing various challenges over the past five years and the same has been reflecting on the performance of the different retail organisations performing in this industry. As a result of decreased sales and performances, many major retail organisations have been downsizing themselves and have been reducing their numbers of stores, so as to overcome the losses. In addition, the industry competition has intensified due to the expansion of the international retailers in the local markets (Do, 2019). Furthermore, the growth in the online retail market has highly affected the offline stores operating in Australia and Zara is one such organisation to have been experiencing decreased sales and profits, thereby resulting in closure of several stores in Australia. In the following report, an effective strategy shall be developed for Zara along with its implementation plan so as to ensure that that the company is able to gain new foothold in the Australian markets and increase its market shares.  

Issues Experienced by Zara

Zara has been one of the fastest growing fashion stores and have been operating in Australia for more than 8 years. Zara is associated with the sales of a wide range of products and belongs to three major sectors of the Australian retail industry. These include clothing retailing in Australia, personal accessories retailing in Australia and footwear retailing in Australia (IBIS World, 2018). However, the retail giant has been experiencing issue in maintaining its stores in Australia due to poor state of the Australian fashion industry. The arrival of Amazon, the largest online retailer, has further worsened the situation. As a result of the same, Zara, along with several other fashion retailers have been shutting their stores in Australian shopping centres. The other major competitors of Zara in Australian retail market include JB Hi-Fi Limited, Harvey Norman Holdings Ltd, Warehouse Group Limited, Cotton On Clothing Pty Ltd, Myer Holdings Limited and Super Retail Group Limited (IBIS World, 2018). 

Strategy to Overcome the Issue

The most suitable strategy that can be employed by Zara for overcoming the issue that it has been experiencing in the Australian market, would be to diversify its products and improve its online stores, so that the organisation is able to position itself competitively in the online retail market and gain advantage over its competitors, thereby overcome the challenges that it has been experiencing. The strategy of product diversification is fundamentally the practice of expanding the original market for any product. The strategy is highly effective in increasing the sales associated with any existing product line that has been highly useful for the business, however, have been experiencing decline or stagnancy with respect to the sales. Some of the major ways of product diversification include repackaging, renaming, resizing, repricing, brand extension and product extension. The strategy of product diversification provides growth opportunities by increasing the sales amongst the existing consumers or by offering the products to entirely new demographics. With respect to the strategy of increasing and improving online presence, it can be said that the fundamental steps that can be implemented for achieving the same would include targeting those individuals who are ready for the purchase, making individuals ready for the purchase, providing more details with the help of videos through features such as product close-ups, promoting the products in the form of lifestyle shots, building trust with the influencer marketing, testing the website and analysing it using analytical tools such as Google Analytics, offering several lucrative discounts, and eliminating diversions. With the help of these steps, Zara shall be able to implement the strategies of product diversification and increasing online presence and enhancing its online stores, which would eventually enable it to overcome the issue it has been experiencing with respect to Australian retail industry. 

Changes Required

The changes that shall be required to be applied within Zara for implementing the strategies of product diversification and enhancing the online store would include the improving the website of the online store, promoting the online store at the offline stores and various online social media pages and advertisement pages. The other changes that shall be introduced would be changing the interiors of the stores in such manner that it matches with the racking style of the online store, thereby attracting customers towards the stores. If the offline stores are decorated such that they resemble to that of the online stores, then majority of the consumers shall be attracted to try the products directly from the offline stores, prior to purchasing them from the online stores, in this manner, more customers shall be visiting the offline stores, thereby attracting more crowd towards the stores and increasing the chances of sales.

Changes in Organisational Culture and Leadership

The changes with respect to leadership and organisational culture that Zara shall be experiencing due to the enhancement of online stores and product diversification can be detailed as follows.

Leadership changes: The leaders of any organisation play the most significant role in ensuring its success or failure. If an organisation lacks an effective leader guiding the workforce, then the organisation encounters severe downfall, thereby experiencing losses and decline in sales and profits. As Zara has been successfully operating in the offline market and is yet to improve its online stores, therefore, changing the leadership style or direction with the expertise of online marketing and sales would allow the organisation to enhance its online stores. Furthermore, with improved leadership styles, the organisation shall be able to diversify its products as per the requirements of the online consumers, thereby achieve success with respect to the strategies that are to be implemented for overcoming its issues in the Australian market. Hence, it can be stated that leadership plays a crucial role in ensuring successful implementation of the strategies that have been devised for Zara, for overcoming the retailing issues it has been experiencing in the markets of Australia. 

Organisational Culture Change: As Zara has to enhance its online store so that it can gain recognition amongst the online consumers and is able to gain a competitive position and advantage over its competitors, it is important that the same is also reflected within the organisational culture of its offline stores. It is important that the organisation promotes the online site within the offline stores and all the employees are trained with the necessary details so that they are able to update their consumers with the online stores and encourage them to use the website for making their purchase as well. Furthermore, the organisation can also offer promotional and discount coupons at the store for every purchase and the coupons would be valid only for its online stores. The employees shall be trained to promote the online site, highly, amongst the consumers, so that they become familiar with the online store. 

Systems, Skills and Staff Associated with Strategy Implementation

For implementing the strategies of product diversification and enhancement of the online store, Zara would require improving its systems, staff as well as their skills. As the online store is absolutely digital, therefore, Zara is required to employ effective IT team or another organisation that offers IT support for the development and maintenance of the online store. Furthermore, the IT department that is to be maintained by Zara, would require different technologies and systems that would allow the department to effectively develop and maintain the online store. Furthermore, the employees of the offline stores should also be provided with suitable training so that they are able to better serve the customers as well as be able to promote the online store amongst the target consumers and clarify any doubts that they may have regarding the online store. 

Monitoring and Control of Implementation

With respect to monitoring and control of the implementation of the strategies that have been developed by Zara, it can be stated that the following steps shall be ensured.

Monitor the online traffic of the website everyday

Store the data of the visit of every customer for evaluation at the end of the week to determine the products that are preferred more by the consumers

Use the different analytics tools such as Google Analytics, for evaluating the online traffic and other features of the online store

Monitoring the reviews of the customers that are posted on different online media such as social media and networking sites, personal blogs, online store feedback pages and identifying the positive and negative reviews and segregating them for further evaluation 

Replying to all the feedbacks and queries of the consumers so as to maintain an effective customer relationship, thereby promoting a positive image of the brand and organsiation

Issues Related to Strategy Implementation

With respect to the implementation of the strategies of product diversification and enhancement of the online store, there are certain issues that Zara has to overcome, so as to ensure successful implementation of the strategies. The issues that have been identified include altering the interior decorations of the offline stores, as per the designs of the online store, providing comprehensive training to the employees so that they are able to effectively promote the online store, and designing the online store such that the interiors of the offline store can be developed accordingly. As the offline and online stores are interdependent on each other, therefore, the design of the online store is required to be highly flexible so that the interior of the offline store can be designed and altered in the same manner. Furthermore, the management of the organisation is required to ensure that the interior of the offline stores be altered in such manner that although it resembles with the design of the online store, yet it should promote the heritage of Zara, that is, the fast and fresh fashion that changes with the trends. The next major challenge associated with the implementation of the strategies would be providing appropriate training to the employees of the offline stores so that they are able to effectively encourage the consumers to make purchase from the online store. This is highly crucial because the employees must be familiar with all the aspects of the online store so that they able to convey the important information to the consumers while relaying the significance of the online store and promoting it amongst them. Therefore, it is important to effectively train the store employees so that they are able to promote the concept of online stores amongst the target consumers, in an efficacious manner, 

Analysis and Application of Internal and External Information

The internal and external environment of the Australian retail industry has the ability of directly impacting the implementation of the strategies of Zara. The major influence on Zara would be from the clothing retailing in Australia, followed by personal accessor retailing in Australia and footwear retailing in Australia. As Zara is majorly considered as fashion retail therefore, the variations in the clothing retailing in Australia and its associated trends would impact the implementation of the strategies that have been devised for Zara. For instance, the rise in the online stores have been influencing Australian clothing retailers to introduce their own online stores that offer various incentives such as free returns and free delivery (Do, 2019). Furthermore, the online stores have been making the consumers more informed regarding the prices and thereby have been placing pressure in the retail operators. Also, there has been a tremendous rise in the concept of mobile shopping as a segment of online shopping and this has been further facilitated due to the growth in the production and use of smartphones. As a result, the customers are able to compare the prices of the products online while shopping at the traditional offline bricks and mortar stores, thereby making shopping and purchases via mobile more convenient (Do, 2019). With respect to the personal accessory retailing industry, there has been a rise in the issue of weak income growth and volatile consumer sentiment which has affected the spending of the consumers in this industry (Burgio-Ficca, 2018). As a result of the same, Zara has also been experiencing similar decline in the sales of the accessories. Therefore, while developing the online store, Zara has to ascertain that it equally promotes and features the accessories as speciality of the in-house products of the company. With respect to the footwear retailing industry, there has been a mixed response with respect to the operations and sales. However, consumers are reluctant to purchase the products at full price (Miller, 2018). Therefore, it can be stated that Zara is required to offer suitable discounts on the footwears via the online stores, so as to ensure productive sales and profitability. 


Zara has been a successful retailer across the world and therefore has gained high recognition amongst its target consumers. By implementing the strategies of product diversification and enhancement of the online stores, Zara has the ability of overcoming the issue it has been experiencing within the Australian market, due to the downfall of Australian retail industry. Furthermore, with the implementation of these strategies, Zara shall be able to gain new recognition amongst the consumers, therefore, it shall be perceived as fresh fashion among the customers. Furthermore, it shall also add competitive advantage to the organisation, thereby enabling it to overcome its competitors.


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