The study is focused towards analyzing the case study in regards to Zara and answer the questions concerning the various functional aspects of the organization. Zara is one of the largest fashion retailers in the world. However, the organization faces the same challenges that can affect the operation of any other large corporate organization.
Performance objectives help to build essential frameworks for systematic growth and development of organizations. Zara has to focus on five performance objective to strive towards performing optimally within the market operations. It needs to be assessed how the 5 generally accepted performance objectives are treated by the company.
Speed- This is a very important aspect of operation of Zara. This is because it has stores at various places across the world, it becomes necessary that the right supplies are provided to the right places at the right time. Zara has various clothing related outlets. The products need to be supplied based on the buying trends among the customers. One of the reasons for the success of the organization is the wide range of products that are available. The requirement of speed in the organization is large because of its multi-national operations. This is mainly because large number of products need to be delivered speedily to its various stores across the world. The requirements of speed is different at different places (Azevedo and Sanchez 2015). This is different from the other retailers that rely on the effectiveness of their outsourced suppliers for enhancing their speed rather than managing the entire operations themselves.
Quality- Quality is an important aspect of Zara. Being the leading fashion brand of the world, quality is essentially considered by the brand. Starting from the usage of fabric to the maintenance of brand quality with respect to the prevalent fashion trends, quality need to be essentially maintained. Moreover, quality is not only about conforming to generally acceptable specifications. Hence, the brand has to effectively focus towards how they can add features to the products that will make them desirable for the customers (Ayd?n and Zehir 2017). In this case Zara are different from the other enterprises as they have to constantly change the quality requirements that they will conform with. The company has also signed agreements with various environmental outfits for the manufacture and sale of non-toxic clothing. The difference with the other brands is that other brands as they do not keep on changing their quality requirements as per the given trends.
Costs- Costs refer to the unit of expense of a product measurable considering the various factors that include the variety of available products available. Normally higher variety of products indicate higher cost per unit. This is much the same with the production functions of Zara. In the organization a large variety of products are available for customers. Despite this fact Zara plans to keep products that can be afforded by customers. The price range fixed for the products are different and there are largely affordable products at the lower cost range. This is important as one of the reasons for the company’s status in the market is the availability of higher value and affordable products at the same time. This is a unique feature that is not implemented by others. Hence cost functions are well managed in the operational area of the organization (Azevedo and Sanchez 2015).
Flexibility- the Company employs the system of just in time in order to enhance the functional competency of its business operations. A degree of effective self-containment is achieved through this system through the various stages from manufacture to distribution across worldwide stores (Anwar 2017). In order to enhance its flexibility, the major part of its business operations are done in and around Spain. The larger markets are located in Galicia region of Spain, Portugal, and Turkey. The products that have longer shelf lives are transferred to Asian markets. This also helps in gaining much speed for the operations as the markets with larger potential are catered to with better speed. Hence, the company is actually able to circumnavigate its distribution and cost.
Dependability- the Company is greatly dependable as its products enjoy great popularity throughout the world. The company due to its effective utilization of just in time operation strategy to enhance the functional competency of its business operations works well (Inditex.com 2018). In all Zara can be said to be an effectively managed business that caters to the requirements of a large number of customers. This has enabled the company to function for a long time in the intended direction of its business objectives. The dependability is more than many competitors as the quality, distribution, availability and trends are effectively maintained.
As mentioned previously, Zara uses an effective store and manufacturing operations. This is mainly don through the use of an effective just in time operations strategy. The strategy helps Zara to effectively integrate its major operational functions towards the achievement of crucial business goals. The difference in operation is in regards to the strategies that are implemented by Zara that tend to be very different from the competitors. This has helped the company to reap the benefits over the years of smooth operational strategies.
The most significant aspect of manufacturing and store operations of the company is vertical integration. In this operational design the outsourcing of the various supplies is given the least preference (Inditex.com 2018). Hence, the company mostly procures the resources through its own supply chain systems without depending much on the outsourced materials. This helps the company keep in pace with the manufacturing process without having to depend on a large number of outsourced suppliers. The organization can tract its production functions. Functions that are essential for the organizations such as design, promotion, production, shipment, sales and feedback are mostly controlled by the parent organization. The acquisition of sales data is precise and effective. The company does not have to consider too much about the competencies of the suppliers. Fluid coordination is also maintained between the operational divisions of the organization due to this strategy. The product cycles are smoothened due to these processes that are implemented by Zara.
Another significant aspect of the operations are the focus on the European market. The sales of Zara are the largest in Europe. Approximately 66% of the sales of Zara is concentrated in the continent (Inditex.com 2018). Hence, to stabilize profitability the company locates most of its stores across Europe. However, Zara does have profitable markets in Asia and America. The company manufactures its products in Europe and sends it to the stores located in Asia and other markets. Other companies focus on gathering their supplies from the overseas sources. However, Zara utilizes the cost that it saves from the potentially expensive manufacturing functions in the overseas market to spend more towards the manufacturing process in Europe. The manufacturing facilities in Europe tend to be better than the processes that are implemented by outsourced manufacturers. Despite leaving out the cheaper labor costs and materials from overseas suppliers, Zara is able to save enough through the more effective European manufacturing processes. The company can then directly ship its produced goods across the world stores depending on the demand for its products (Steenkamp 2014).
The company also effectively partakes in replacement cycle of its products. The organization can effectively change its designs and quality in order to fit the requirement of the changing market trends. The product replacement considering the changing consumer demands is the fastest for Zara. Moreover, the company keeps on changing the product offerings. This is a strategy that is utilized by the company to generate effective consumer demand. The shop management system is effectively done by the organization (Ibidunni, Ogunnaike and Abiodun 2017). The clothes are not kept for long periods of time. This means that the time for which a given product is available before it is replaced is very short. Hence, customers that are attracted to a certain product rush to buy it before it is replaced resulting in the maintenance of constant demand across the stores. Moreover, when customers are attracted to a certain king of clothing product they can buy it instantly considering that they can go out of stock very soon. This is very unique strategy that is implemented by Zara and most of the competitors do not have this functional ability. It can be said that low inventory function and less outsourcing of operational aspects of the organizations are two effective strategies implemented by Zara.
The two distribution perspective of Zara’s operations that greatly affect its productive functions are the quality management and environmental impact. These two attributes connected with the distribution feature of the company make it perform effectively in the changing fashion market.
The first perspective is the quality perspective. It is already known that Zara is one of the largest fashion retailers in the world. Quality becomes one of the most important parameters on which the effectiveness of the organization is judged. Hence, Zara pays increased attention toward the maintenance of quality across its stores around the world. The maintenance of quality relies on various important functions that the organization has to maintain (Oyemomi et al. 2016). The company utilizes effective IT software in order to tract the relevant fashion trends of a given time. The software tracks the fashion trends that are prevalent in each of the various stores that the company has across the world. The software analyzes the sales of the product across the various stores with regards to the amount of buying and selling that have taken place. The real time data in regards to which products are being bought more by the customers are provided to the organization (Goetsch and Davis 2014). This helps to form effective perspectives in regards to the quality management of the products. Products that have high sale value are given importance when considering quality requirements. There are dedicated teams that handle the production design functions and ensure that the quality is as per the requirements of the standards. The smooth functioning of the quality process takes places due to the effective alignment of the business functions of the company with the operations. Moreover, as mentioned earlier Zara maintains most of its manufacturing functions in the European countries like Portugal and Spain (Christopher 2016). This helps to keep the quality of its products intact. Moreover, as the materials that are used by the organization very much remains the same Zara does not have to worry about the quality variations at different areas of the world. The quality maintenance team is effective due to its direct control by the organization.
Zara is one of the fashion brands across the globe that takes the impact of its products on the environment very seriously. The environmental efficiency of the company is kept in place by considering the usage of ecofriendly products for the manufacture of goods (Bolman and Deal 2017). The company has also signed agreements with various environmental outfits for the manufacture and sale of non-toxic clothing. The company has associated itself with the global environmental organization Greenpeace. The company negotiated with the organization to ban the use of toxic elements that are used in the manufacturing of clothes. The company took part in a detox campaign in order to remove all kinds of substances that were harmful to the environment from their clothing manufacturing processes. The company has achieved significant progress in the field of environmental effectiveness. All kinds of hazardous releases are to be eradicated from the supply chain of the company till 2020 (Inditex.com 2018). The company has greatly converted its previous manufacturing processes into newer more environment friendly systems. The parent company of Zara is Inditex and it is recently utilizing a repair and reuse program. In this the customers have the option to drop their old clothes in the stores of Zara. The clothes are then recycled and reused by the company in the manufacturing processes. Moreover, the company utilizes greenhouse gas protocol in order to create an effective framework for measuring the carbon emissions of the company. The supply chain functions of the company have been greatly optimized in order to include environment friendly processes (Baruah and Ward 2015). The company has faced certain allegations in the past in regards to some of their outsourced companies utilizing unfair working conditions for workers. The company has since taken steps towards revamping many of its manufacturing processes to ensure that the laborers get to work in environment friendly working conditions. The company does not use animal products in its clothes.
Staff decision making is an important function of organizations. It becomes much more important for a large enterprise like Zara to effectively consider the factors related to acquiring human resources. The modern HR theories concern the recruitment of people that will be able to add greater value over the course of longer periods of time to the organization (Brewster, Chung and Sparrow 2016). The most important challenge faced by Zara with regards to the HR management functions is that it has to look towards the effective recruitment and deployment of workers belonging to diverse cultural backgrounds across the world.
The HRM system utilized by Zara focuses on acquiring creative, flexible and independent people and subsequently deploying them in important roles across the organization (Laudon and Laudon 2016). Most of the employees that take part in the manufacturing processes are from Europe. This is because most of the manufacturing facilities are located in Europe. People that can effectively operate within multi-cultural environments are employed by the company. The focus is towards recruiting people that would have great communicational levels. The company greatly focuses on acquiring people that are well versed with the usage of IT systems. In the stores the employees are hired on the basis of the locality of the particular stores. The most important functional areas of the company where people are hired are, manufacturing facilities, stores, supply chain and inventory (Bratton and Gold 2017). The candidates are required to be customer oriented and effective team workers. The company focuses of recruiting people that are geographically flexible. This helps toward the effective running of its businesses across various parts of the world. The company does a lot of internal promotions and greatly values the experience factor of its existing employees.
The training functions of the company encompasses all the functional roles that an employee is required to take. The store HR candidates go through effective store training. The company utilizes on job training in order to improve the real time effectiveness of the acquired human resources. The training mechanisms greatly depend on feedback and direction. Entry plans are devised along with language training. The employees in stores in particular need to have effective communication levels in order to be efficient in the work they do. The employees working at the manufacturing facilities are covered through various CSR initiatives by the organization. The employees are treated well in the facilities of Zara. The company believes in facilitating the growth and developmental aspects of the people working with it. The company’s general training policies encompass the aspects of Corporate Social Responsibility, environmental training, accident prevention training at workplace and online personality test (Albrecht et al. 2015). The company wants to focus on inducing responsible behavior among its employees, reduction of absenteeism and integration within the work culture of the organization. According to the Human resource theories cost effectiveness, leveraging potential, matching needs and maintaining good relationships are the main objectives of HR. Authentic leadership enhances the prospect of effective human resource management and is implemented across organizations (Gill et al. 2018).
Conclusion
It can be said that like all major organizations across the world, Zara also essentially considers effectively integrating its operational aspects towards increasing productivity. However, the steps taken by the company to ensure the constant success of its operational productive functions vary greatly. The organization have utilized effective management systems in order to optimize much of its functions.
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