The business models of Zara and H&M differ in the role of locations. Therefore, they affect these companies’ profitability in the long run.
There are several reasons why the mentioned factor is a key principle in the operations of Zara and H&M. First, as per the principles of value creation, the places of their activity correlate with customer demands (Johnson et al., 2020). This circumstance contributes to Zara’s responsiveness to changing market conditions, whereas H&M’s focus is on the human factor in the first place. For example, Zara’s managers pay more attention to the stores’ location and organization, while H&M is more oriented on various styles (Tyler, 2018).
Second, the emphasis on this principle is explained by the importance of transport planning (Balbontin and Hensher, 2021). According to Balbontin and Hensher (2020), it is combined with the need for well-informed decisions made after comparing alternatives. As can be seen from the case, Zara addresses this task by considering locations, and H&M attempts to match the offers to potential buyers from specific areas.
Third, strategic choices of Zara and H&M are guided by different approaches in this regard, which are, nevertheless, both efficient. Thus, the former uses capability-focused when evaluating situations, and the latter chooses a customer-based perspective for planning their stores (Camillus, 2008). These methods also comply with the requirement for guidance for companies ensuring long-term profitability through designing an effective course of action at the beginning (Hambrick and Fredrickson, 2005). The specified condition is intertwined with the previous consideration, which is the varying orientation of the companies but expands the scope of their activity in terms of elaborating strategies to regular operations.
Fourth, location is critical for the examined business models because it corresponds to the principles of remaining competitive in the market (Chang and Li, 2019). It means that both Zara and H&M strive to use their predicting capability in this respect to increasing profits (Amit and Zott, 2015). Thus, the location’s significance is highlighted by the varying business models, which are, nevertheless, oriented on the same aspects.
Reference List
Amit, R. and Zott, C. (2015) ‘Crafting business architecture: The antecedents of business model design,’ Strategic Entrepreneurship Journal, 9(4), pp. 331-350. Web.
Balbontin, C. and Hensher, D.A. (2020) ‘Identifying the role of stated process strategies in business location decisions’, Transportation Research Part E: Logistics and Transportation Review, 141, 102028. Web.
Balbontin, C. and Hensher, D. A. (2021) ‘Understanding business location decision making for transport planning: An investigation of the role of process rules in identifying influences on firm location, Journal of Transport Geography, 91, 102955. Web.
Camillus, J.C. (2008) ‘Strategy as a wicked problem’, Harvard Business Review, 86(5), pp. 98-112.
Chang, X. and Li, J. (2019) ‘Business performance prediction in location-based social commerce’, Expert Systems with Applications, 126, pp.112-123. Web.
Hambrick, D.C. and Fredrickson, J.W. (2005) ‘Are you sure you have a strategy?’ Academy of Management Perspectives, 19(4), pp. 51-62. Web.
Johnson, G. et al. (2020) Fundamentals of strategy. 5th edn. Harlow: Pearson.
Tyler, J. (2018) We visited H&M and Zara to see which was a better fast-fashion store, and the winner was clear for a key reason. Web.