BSBMKG507 Interpret Market Trends and Development

2. What does Zara take into consideration when researching for a potential new market or opening up a new store? List 2 and explain. (2 marks)

1. Market Size: This involves population size and market density
2. Consumer Profile: If the Zara product attracts the consumer to this new market and if it is affordable for their purchasing power.

Workbook Activity 2 (10 marks)

Instructions: Write answers to the 4 questions of Activity 2. This activity is to be completed in class and is due Week 4.

3. Evaluate each of the growth strategies you answered on Question 1 and determine the impact of each of these opportunities to Zara’s customers. (4 marks)

4. Identify and explain 2 external factors that may affect Zara’s growth strategies. (2 marks)

Economy: The economic situation of the country is extremely significant, since a country with a weak (or decreasing) economy makes purchasing power smaller, with inactive consumers.

Labor laws: The new labor rules make the worker more expensive, increasing the value of the product, or decreasing the profit margin of the company.

5. Identify and explain 2 operating costs of Zara. (2 marks)

1. All work - from factory workers to managers to employees in stores. All of them need to receive a salary and receive at least minimum wage or above.
2. Rental of shops around the world - Zara is always in prime locations and best known shopping centers in the world and has to pay rent for its prime location, which has a cost.

6. Identify and explain 2 business risks of Zara. (2 marks)

In economically unstable countries, Zara runs the risk of having insufficient sales, causing profits to diminish or, in the worst case, to generate losses.

Another risk is the issue of legislative compliance. If the new legislation is implemented, Zara risks not meeting the requirements. For example, if labor costs increase, Zara may need to raise the price of products, thus making them less accessible to the end consumer.

Workbook Activity 3 (10 marks)

Instructions: Write answers to the 4 questions of Activity 3. This activity is to be completed in class and is due Week 5.

7. Research two current and/or potential competitors of Zara in the Australian market. Briefly describe these companies. (2 marks)

8. In 2017, Zara’s fixed costs in Westfield Sydney Central Plaza amount to $80,000* and variable costs per unit sold is $10*. Selling price per unit is $50*. How many units must be sold for Zara to break even? (1 mark)

*Figures are fictitious and for assessment purposes only.

Break even = 80000 / (50 – 10)

= 2000 units must be sold for Zara to break even.

9. Below is a table of Zara’s yearly sales. Use 2 period and 3 period moving average forecasting technique to forecast 2017 sales. Also, compute for mean absolute difference. Show your solution. (4 marks)

*Figures are fictitious and for assessment purposes only. 2015 and 2016 are actual figures.

Period 2 error: 2015 + 2016 / 2 = 2017 … 222 + 256 / 2 = 239

period 3 error: 2014+2015 + 2016 / 3 = 2017 … 221 + 222 + 256 = 233

mean absolute difference:

Mean of the data set: 225.3

mean of absolute difference = 0,03

10. Using the table of Zara’s yearly sales on Question 9, identify the following measures of central tendency:

1. the mean 3 (1 mark)
2. the median 5 (1 mark)
3. the mode 222 (1 mark)

Workbook Activity 4 (10 marks)

Instructions: Write answers to the 3 questions of Activity 4. This activity has a remote observation requirement that has to be done outside class time. This activity is due Week 6.

11. Visit your favourite clothing retail shop and visit Zara’s retail store in Westfield Sydney Central Plaza, Pitt St. Perform a qualitative analysis on the business aspects provided on table below. Describe each aspect and identify which retail shop did better. (6 marks)

12. From your qualitative analysis on Question 11, identify and explain 2 potential opportunities for Zara. (2 marks)

The location is a good opportunity for Zara as it is very visible to all who enter and even outside the shopping center. This is strategic and common for the brand stores around the world.

The quality of the products stand out and hold the price, which is a little high amis. Consumers like this and this is an opportunity for Zara to maintain and grow its customer base.

13. From your qualitative analysis on Question 11, identify and explain 2 threats for Zara. (2 marks)

A threat to Zara is that there are stores that offer cheaper prices for very similar products. New consumers tend to opt for the cheapest.

Another threat includes consumers who do not price as a purchase decision. These conumidores look for brand and quality. There are also shops that are not as competitive in terms of prices but have a lot of shops with the quality of clothing differentiated in this locality.