- Because 100% of Zara's profit comes from Fashion, we can easily see that Zara is implementing Single-bussiness strategy. •Single business strategy – corporate-level strategy in which the firm generates 95 percent or more of its sales revenue from its core business area.
The Advantages of Single Business Strategy
- Using a single strategic business strategy cans benefits your subordinates, management staff, and the relationship between your company's departments.
- Integrating Multiple Departments
A single business strategy can help Zara integrate different departments and workforce, including your sales force, IT professionals, and management staff. This allows Zara to act as a more cohesive entity and achieve higher levels of productivity, because all departments of the company are working on the same goals and objectives in the same involved in the specific standards of the department. This can also alleviate the sense of competition among the various workforce in Zara and create a lot of team spirit.
- Strategic focus is higher
Take advantage of Zara's efforts for a single business strategy that allows the management team to create a more comprehensive plan. The company can achieve this level of planning because your management staff only has a vicious strategy to focus their efforts. According to Rex C. Mitchell, a business professor at California State University Northridge, "There is little ambiguity about the organization's focus and direction with a single business strategy. This enables employees to gain knowledge of the company's policies and procedures, creating a larger workforce over time. "
- Approval of new plan / activity
Approving and rejecting Zara's new business plans and small business activities is easier with a business strategy, because the company only has one set of rules to follow. It is not necessary to check how the marketing department's proposal influences the strategy of the product development team or sales team because all departments work on the same strategy. Zara can consider what is best for them as a whole without the price of a specific part of your company through the other.
- Changing strategy
Business strategies must be part of a dynamic strategic management process that will allow ZARA to streamline operations to keep up with the changing landscape of the modern business world. Working from a single business strategy gives Zara the ability to adjust the overall business plan quickly because they also do not have to refine individual business strategies and operational procedures for all departments of the company. This mobility capability can make competition more and more feasible and reduce the downtime of different departments of the company to make changes.
The Three Levels of Strategy for a Single-Business Company
- The three levels of strategy for a single business company are company, business and function. Corporate strategy focuses on identifying the businesses the company should join. Business strategy develops competitive advantage in a business segment. Functional strategies at the marketing, operations, and financial levels to ensure that each division of the company has business support strategies. For Single business firms, such as Zara, the company's strategy includes a continuous assessment of the benefits of maintaining a single business versus becoming active in complementary industries.
Corporate Strategy: Zara has the advantage of focusing and reacting quickly but are vulnerable to issues in their industry.
Business strategy: Business strategy sets goals for performance, evaluates competitors' actions, and identifies actions the company must take to maintain and improve its competitive advantage. The typical strategy is to become a cost-leadership, and differentiation to achieve quality or other desired features or focus on advertising.
Functional Marketing Strategy: In companies, marketing strategies at the functional level affect their other functions and strategies. A typical marketing strategy is to identify the needs of customers in the area where the Zara has a natural competitive edge.
...(download the rest of the essay above)