Organizational Design And Structure Of Zara: Insights And Conclusions

TMAS5110 Managing Technical Business Growth for Organization Design

Introduction about Zara

This report is focused on organization design and structure of a multinational clothing brand: ZARA. Besides, the readers of this journal will be able to assess introduction about brand, their scope as well as recent marketing problems which they are facing in the international clothing market. Zara was founded in Spain as a fashion & accessories retailer having over 2,000 retail sites all around the world. Zara is owned by Inditex and hence became a highly successful fashion brand, majorly due to their fascinating supply as well as distribution strategies (Zara, 2019).

In this way, paper will offer insights over the organizational design of Zara along with drawing conclusions on Zara’s status in the international business strategy space, as well as on the organizational design of structures for straddling geography. In the context of scope of the clothing company, Zara has been hugely successful with their adopted approach. Its scope is no more restricted as its parent company, Spanish firm Inditex is now become the world’s greatest clothing retailer (Zara, 2019). On the other hand, few U.S.-based apparel firms are now happily following suit which is clearly depicting that nobody can stop Inditex to become world’s top first clothing manufacturer (Zara, 2019).

The successful clothing firm Zara is working under the management of Inditex parent company. Hence, Zara offers a dynamic and global work environment to their employees. Organization culture at Zara greatly values quality training, job stability, as well as internal promotion to motivate their employees at work ( Kozenkow, 2018).

As per the above figure of organizational structure and design of Zara, functional departmentalization works at the firm. Zara is further divided in Women, Men and Kids with various designers as well as products. However, at Zara distribution, logistics and other departments are common. Besides, the major qualities of the organization structures of Inditex and Zara include horizontal differentiation while communication takes place easily. In addition, a global organization emphasizes on regional trends and demands which helps form to get easily adapted to every market within they operates.  

Organization structure of Zara with lesser layers of supervisory levels suggests that Zara’s staff easily communicate with each other and hence the retail stores become the heart of marketing process. When customers have some complaints about the products they purchased, then their staff will collect the items and rapidly pass to their commercial as well as design teams. In this way, work culture and structure of functioning makes this process quick, and clothing company receives satisfaction from their customers in order to be successful (Tiwana & Konsynski, 2010).

Scope of the clothing company

There are three important types including functional, matrix and multi-divisional corporate structures which are adoptable for the Zara Company to get successful in international fashion industry. The above mentioned organizational structures describe the values, customs as well as traditions of the corporate. The selection of the proper organizational structure is critically important because when an organization does not incorporate a well-structured design to be followed by their people, then the reputation of the firm is ruined (Bolman & Deal, 2017).

Organization structure of Zara being a hierarchical flow of sub ordination of functional departments is a well- systematized structure. The first strategy of chosen structure is that by looking at its functional organizational structure, employees of the company can easily find who to report to, and how to communicate with the colleagues. Therefore, this organization structure would enhance the efficiency of overall working by making work easier and enhance productivity of the employees (Cooren, Kuhn, Cornelissen, & Clark, 2011). Zara’s organization structure is mixed because few functions are shared with many brands, not only for Zara. Under functioning with the exclusive management of parent company Inditex, Zara has an international staff of 70,000 professionals. Out of these international professionals 82.8% are young women of an average age of 26 years. Moreover, Inditex’s organization culture is majorly based on teamwork, high level of demand as well as an open communication. At Zara, people want buying clothes from its retailing shop again and again. The reason behind above is that Zara’s management focus on fulfilling high demand with effective teamwork and open communication which offers a dynamic as well as international setting to work in (GalbRaith, 2014). Moreover, second strategy which its functional structure utilise is low inventory strategy. The idea behind this strategy is that low-inventories generate a sense of insistence among their customers. This works as people think they should better buy the dress as there are only few left. Third strategy level contains easier monitoring and supervision takes place at Zara due to its functional structure. The fourth strategy of Zara’s functional organizational structure is adopting efficient communication channels and ways to communicate customer demands with the company’s manufacturing and designing departments ( Kozenkow, 2018).

On the basis of the organizational structure which Zara have chosen, here the advantages and disadvantages of the structure are discussed based on Zara’s growth opportunity.

Increasing efficiency of the operations of the Zara’s business is one of the major advantages of functional structure. In addition, when employees can focus on sole specific functional area, then they can attain significant efficacies from the perspective of process flow as well as managerial methods. In the context of Zara, it is advantageous to have a department which contains experts in their relevant fields like accounting or product (Lumen Learning, 2018).

Organizational culture at Zara

Moreover, the chain of command in Zara’s organizational structure is very clear, hence everyone is aware of which decisions they are permitted to make as well as whom to report along with the number of employees who are reporting to them. At Zara Company, with the help of functional structure, setting career paths as well as programmes for their employees and monitoring employees’ progress near the goals is much easier (Cooren, Kuhn, Cornelissen, & Clark, 2011).

By utilising functional structure, training at Zara is made easier as it is easier to outline the training requirements of employees, along with monitor and update the training programmes of Zara workers (Tiwana & Konsynski, 2010). Additionally, below list is containing major advantages of functional organisational structure:

• It maintains prestige and power of major organizational functions of Zara
• It follows important principles of professional specialisation at Zara
• It helps in logical reflection of organizational functions of Zara
• It simplifies job training at Zara
• It furnishes ways of tight control at the top management of Zara Company (Lumen Learning, 2018).

Apart from the above mentioned advantages of the functional structure, so many disadvantages and challenges are involved with this (Bolman & Deal, 2017). Firstly, the whole system is disadvantaged with bureaucratic bottlenecks on account for hierarchical nature of decision-making. As we know that usually, prior decisions are made, desired files must pass from assured officers in the hierarchical chain, even though no value would be added. Hence, these time-taking processes inadvertently delay jobs (Ashkenas, Ulrich, Jick, & Kerr, 2015).

While using this organizational structure and design, it is difficult to amateur responsibility for an act on a single employee prior a final decision is made ( THOMPSON, 2018). Another challenge while using this organization structure is that there is a tendency of poor communication across the functional silos in Zara organisation, which possibly declining flexibility as well as innovation. In addition, sometimes functional areas may face difficulties while working with rest functional areas (Alexis , 2018). Moreover, other challenge of the functional structure is that there is a tendency for Zara’s employees of taking a specialist perspective within organisational matters. Furthermore, within a functional structure there is none unequivocal method to determine the effectiveness of distinct functional managers as each function subsidises jointly to the Zara‘s ultimate output. Thus, no way of evaluating the fraction of profit which was contributed by each exists. Moreover, the major disadvantages of the functional organisation structure are as follows:

• This structure de-emphasises Zara’s inclusive objectives
• The structure overspecialises as well as narrows views of major personnel at Zara
• Structure reduces co-ordination amid functions of Zara Company
• The responsibility for gained profits by the Zara firm is at the top level only
• It slows adaptation to modifications in the working environment (Zott & Amit, 2010).
• It limits growth and development of general managers of Zara

The critique of the effectiveness of the Zara’s current structure will provide an improved organizational structure design suggestions in order to make the firm top first clothing supplier world-wide (GalbRaith, 2014). In this context, VRIO framework can be utilised to analyse the current strategies of the Zara Company in following way:

• Zara’s products and services are undoubtedly valuable.
• Zara’s services and delivery as well as organization’s working environment is rare among entire clothing industry world-wide.
• Zara’s products are costly to imitable.
• Zara’s organization is well-managed from the customers, employees, other staff point of view (Cooren, Kuhn, Cornelissen, & Clark, 2011).

Although the organizational structure adopted by Zara Company is well-structured, designed as well as organized yet there are some suggestions in order to further improve the productivity and revenues of the company within the international market. The suggested new organizational structure is divisional one ( Kozenkow, 2018). Furthermore, the writer of this paper suggesting that following are the brighter sides of adopting a divisional organizational structure:

• By adopting divisional structure Zara can implement more strategic targeting of female buyers as different divisions will be responsible for the distinct area customers.
• Knowledge and Info regarding customers’ increasing and changed demands can be passed easily to the manufacturing unit without a need to be passed through channels.
• Divisional structure will further provide an Asian Market Invasion
• If Zara Clothing Company uses divisional structure then continuous improvement of QR system will take place as in functional structure innovative ideas take longer time to be implemented.
• By adopting divisional organization structure Zara will have Industrial diversification at a large extent (Deloitte Insights, 2016).  

Conclusion

In conclusion, the report has successfully identified different important organizational designs and structures for the betterment of the chosen clothing company; Zara. We have identified three organizational structures as functional, matrix and multi-divisional to identify a better organization design for the future growth of Zara Company. Furthermore, advantages, challenges as well as disadvantages of functional structure have been discussed in detail so that readers can easily get the reasons why Zara has chosen the organizational structure and what are the major keys to success in an international market. Strategy analysis of Zara has been done with the help of VRIO framework while utilising SWOT analysis of Zara’s current strategies. Finally, this paper has successfully identified the present organizational structure, design and culture of Zara Clothing Company while suggested a new organizational culture for the future growth and opportunities.

References

Kozenkow, J. (2018). Types of Organization Structures. Retrieved 12 02, 2018, from https://yourbusiness.azcentral.com/types-organization-structures-4470.html

THOMPSON, A. (2018). McDonald’s Organizational Structure Analysis. Retrieved 12 02, 2018, from https://panmore.com/mcdonalds-organizational-structure-analysis

Alexis . (2018). Different Types of Organizational Structure. Retrieved 12 01, 2018, from https://smallbusiness.chron.com/different-types-organizational-structure-723.html

Ashkenas, R., Ulrich, D., Jick, T., & Kerr, S. (2015). The boundaryless organization: Breaking the chains of organizational structure. England: John Wiley & sons.

Bolman, L., & Deal, T. (2017). Reframing organizations: Artistry, choice, and leadership. London: John Wiley & Sons.

Cooren, F., Kuhn, T., Cornelissen, J., & Clark, T. (2011). Communication, organizing and organization: An overview and introduction to the special issue. Organization Studies, 32(9), 1149-1170.

Deloitte Insights. (2016). Organizational design. Retrieved from Deloitte Insights: https://www2.deloitte.com/insights/us/en/focus/human-capital-trends/2016/organizational-models-network-of-teams.html

GalbRaith, J. (2014). Organizational design challenges resulting from big data. Journal of Organization Design, 3(1), 2-13.

Lumen Learning. (2018). Common Organizational Structures. Retrieved 12 1, 2018, from https://courses.lumenlearning.com/boundless-management/chapter/common-organizational-structures/

Tiwana, A., & Konsynski, B. (2010). Complementarities between organizational IT architecture and governance structure. Information Systems Research, 21(2), 288-304.

Zara. (2019, 03). Company. Retrieved from Zara: https://www.zara.com/in/en/z-company-l1391.html?v1=11112

Zott, C., & Amit, R. (2010). Business model design: an activity system perspective. Long range planning, 43(2-3), 216-226.

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order