How Companies Achieve Strategic Alignment - Essay Example

COMPARISON OF HOW COMPANIES ACHIEVE STRATEGIC ALIGNMENT By Introduction The selected companies are world’s leading fast fashion corporation. Fast fashion industry is a very dynamic business that requires consistencies to remain on top. Corporation must work hard to maintain competitive advantage. H&M and ZARA have work exemplary in performance measures concerning behaviour or results of every stakeholder. They have created performance and learning also development opportunities for staffs and other stakeholders. To motivate the workers these companies has a process of performance management that promote non-financial rewards and compensation schemes for outstanding individuals. They both value teamwork performance. The only difference that can be associated with these industries is the uniqueness of the strategies of achieving the above functions. H&M is a retail clothing company that is multinational. It has its origin in Sweden. It majorly deals with clothing for women, men and children and even teenagers. H&M is the second largest outfit retailer globally, after Zara Company. Now, the company has branches in fifty-three countries across the world and has employed more than one hundred and sixteen employees (Hennes & Mauritz 2011). The company was opened in 1947 by its founder, Erling Person at Vasteras in Sweden. At first he only dealt with ladies wear. That’s the reason of its name “Hennes” which is a Swedish word that means “Hers”. The store, however, expanded and started retailing Men’s clothing and its name evolved to “Hennes and Mauritz” in 1968. Now the company has more than three thousand and a hundred stores (Hennes & Mauritz 2011). On the hand, Zara is a chain store Company that also deals with clothing. This store was first named Zorba by Ortega but due to confusions with a club which had the same name; Zorba was rearranged to make Zara. Its owner is the Inditex group. It is ranked as the largest clothing retailer in the world. The company was established by RosaliaMera and Amancio Ortega in 1975 (Adam 2014). The store has women products, men clothing and children outfits. Lesties stores sometimes operate instead of Zara stores. Lesties stores are a low cost fashion brand. The fashion company possesses some brands like the Massimo, pull and bear, Dutti, Uterque and Bersika. The Company started expanding internationally in 1980 via Porto, Portugal and later entered the U.S and France. This Company initiates more than ten thousand new designs annually (ZipfWorks 2014). Currently, Zara has one thousand and eight stores and one hundred and sixty four kiddy’s class stores throughout the world (Bagaria 2014). This company has a unique sense of market approach. Unlike other companies, it specializes in customer needs and specification. This approach wins long term customer trust and loyalty (ZipfWorks 2014). These two companies both deal in clothing and outfit products. They are all in the outfit competition as both have stores across the world. Both are leading clothing companies across the world, Zara being the largest Clothing chain store with H&M being the second leading. The two Companies can, therefore, be used to compare and contrast their approaches towards performance management and high performance works (Adam 2014). Performance Measures (Behaviour or Results) In this section, comparison of high performance work (HPW) and Performance Management (PM) between the ZARA and H&M is accomplished. ZARA is the biggest division and flagship brand name of the Spanish trade cluster Inditex. It vends current fashionability at affordable prices, in stores that are obviously focused on one target market. The first store launched by accident in 1975 because of a large pyjamas order annulment. This characteristically can be said to be a developing approach as the ZARA store currently was not a projected strategy. Vertically incorporated, ZARA controls most of the procedures in the supply chain in a case whereby over 50% of the products are produced in Spain, over twenty five percent in the rest of Europe and twenty four percent in Asian nations. Zara outsources brands of high labour exhaustive processes but sustains in-house resources intensive procedures, protecting acquaintance and expertise. Zara boosted its novelty in a fast transforming market by acclimatising the bottom up aspect of strategy in its functions (Agunis, 2013). This is a main propeller of competitive advantage via constant novelty to develop new-brands that provide consumers with new apparent benefits. ZARA benefits from a management culture that permits risk taking, information exchange, testing and learning from flaws. It has remained concentrated on its fundamental philosophy that inventiveness and quality plan together with a fast response to market requirements will produce profitable outcomes. Its business framework integrates the following operational objectives: 1) To create a system the needs short lead times; 2) To reduce production amounts and inventory and 3) To augment variety of formats and choice. On the other hand, H&M has a supply chain that mirrors ZARA’s though is unique to their objectives. H&M approach is to employ their influence wherever likely to encourage good practice and raise alertness, not just among their suppliers and employees but as well as others along H&M value chain. The industry believes that operating together in corporation is the best strategy they can employ to make a positive divergence. H&M is among the world’s largest fashion corporation and a thrilling place to for individuals to work. With more stores and novel markets surplus annually, the group is continually growing. The corporation believe that people are their success. They are committed to sustaining an inclusive place of work. It’s a work place where human rights are acknowledged, and where they treat everyone with respect, integrity, dignity and humbleness. The company promote multiplicity and equality and do not abide any kind of prejudice or pestering. H&M is dedicated to following all appropriate labour and service laws wherever they operate (The H&M Way 2009). Zara uses a chase demand competence management in it is operations. As new supply delivery schedules are strictly controlled, consumers know when fresh stock is suitable and traffic in supplies is heavier at such moments. As a consequence, the corporation is able to regulate its capital to match the demands as fitting. Procurement and fabrication planners make initial, but crucial, approximates of manufacturing expenditure and accessible capacity (Pearson, 2013). The cross-functional department and team can examine prototype in the lobby, select a design, and entrust resources for its manufacturing and introduction in some hours, if essential. While H&M is one of the worlds’ largest fashion corporation and an exciting location to further a vocation within the fast fashion industry it also has well articulated performance process to sustain its existence. Their business idea is to the consumers fashion and value at the best cost and with additional stores and new markets extra yearly the group is continuously growing. This denotes that they are always looking for fresh talents to bond the team. The H&M Group recruits over one hundred thousand people and there are over 2,800 stores across 49 markets in North America, Europe, North Africa and the Middle East and Asia (Agunis, 2013). Key performance objectives of ZARA and H&M Speed: responsiveness and speed to market, ZARA has transformed the mode clothing industry operates where designing, manufacturing and supply to the distributors requires six months period. The design and supply cycle of the corporation takes only ten to fifteen days in the whole procedure. ZARA’s speed to promote in product growth exceeds the capacities of its main competitors. This in itself offers additional worth to consumers, stakeholders, and stores in providing quality fashion at reasonable prices. The immediacy of their production and operational procedures permits Zara to sustain the flexibility basically to design and generate over 12000 fresh products yearly. This capability permits ZARA to attain their approach of expedited reaction to customer demand. The procedure of obtaining market data and depending on it to design and manufacture teams expedites artefact development by decreasing the throughput time of their goods from design to warehouse or shop (Hadfield 2014). Dependability: because of ZARA’s management and control of manufacturing, they make sure timely liberation and service. Even though most of their shops run out of products, representing that they have low reliability in terms of product accessibility, another viewpoint of dependability in terms of maintenance of modern status with fashion is attained. On the other hand, H&M are a value-oriented, consumer-focused, inventive and responsible fashion corporation (Van der Veen 2013). For them, fashion, entertaining and action are necessary. They are illustrated by ‘the H&M way’ such as their culture, values and strategy which replicate the soul and heart of H&M. “The H&M way” denotes who the company represent, what they do and how they do it. It is like a structure through which they can incessantly manage their performance, embrace team performance and encourage fresh talents as they expand and develop (The H&M way 2009). Quality: Zara product is identical with the cutting edge of style at inexpensive prices. Another Quality benefit is the added sagacity of quality to the brand as the labels would be tagged with ‘made in Europe’ instead of ‘made in China’ because of Zara’s trade-off among Low industry costs in Asia and functioning efficiency (Baron, 2013). H&M is oriented on solid foundations. Their business idea ‘Fashion and quality at the most excellent price’ is as apparent as their values, which are oriented on a basic respect for each person and comprise a firm conviction in their members. Other shared principles are simplicity, teamwork, cost consciousness, entrepreneurial spirit, openness and straightforwardness, as well as determined for constant enhancements. These values symbolize ‘the H&M spirit’ and they are the similar values H&M was initially founded by founding father Erling Persson in 1947 (The H&M Way 2009). Flexibility: Designers of mean age of 26 draw the design sketch then examine it with marketplace favourites and planning and procurement team illustrating a suppleness of concepts generation and on the other hand the enormous number of invents reflects the capability to convene almost all the style requirements by consumers of all age groups. This adaptive structure rather than conventional products is very diverse from its rivals (Van der Veen 2013). Many rivals depend on a small elite innovative team that strategizes both design and manufacturing requirements in advance. Stores have small self-sufficiency in deciding which goods to show or put on sale since Headquarters strategise accordingly and transport quantities as projected. In this context it is very important that no matter what H&M role is, they always live in accordance to their values and strategies and that they are all excellent H&M role structures in everything they do. When they do business “the H&M way” they do so morally, honestly and reliably. They continually promote their suppliers and other business associates to do the same (The H&M Way 2009).The mission of H&M in their function is to deliver the business idea fashion and value at the best price to everybody, and they do so in a sustainable approach today, tomorrow and in the future (Van der Veen 2013). Process of Performance Management In H&M, teamwork is fundamental for them and a normal part of their culture. H&M is devoted to encouraging fair competition and their business is runnel in an environment of a free market. H&M is dedicated to engaging intimately and candidly with the various stakeholders. This comprises providing translucent information objecting to meet the requirements of their diverse stakeholders. All through the year, H&M works to sustain regular communication with their stakeholder strategies like suppliers and their workers (The H&M Way 2009), the societies around the company, non-governmental organisations (NGOs), intergovernmental organisations (IGOs), policy makers, shareholders and industry peers. They do this on a regular basis through usual conferences, devoted researches or their active partaking in several multi stakeholder concepts. The company actively hunt for teamwork with their stakeholders in command to advance H&M’s presentation as an industry and corporate people. (Hadfield 2014). Employees in any organization usually expect a reward of the task and effort they have put within an organization (Agunis 2013). These rewards may be tangible or intangible. Tangible rewards may include cash compensations and benefits. Cash compensation also includes base pay. Under base pay, the employee is paid in exchange of the work performed for the organization. Base pay is usually the same for all employees who perform the same tasks within an organization, regardless of input and contribution (Agunis 2013). Both Zara and H&M give its employees a base pay according to the number of working hours. H&M offers incentives to its employees (Astrid 2010). These are offered in the form of discounts. During the close of the day, employees receive a discount in the form of commission according to the total daily revenues of the stores that they work. All these are direct or tangible returns. Both companies also give its employees intangible reward for their contribution. These returns may include improvement of status and recognition. H&M Company emphasizes on giving its employees tangible incentives, as performance appraisal. The employees are given discounts based on the daily revenue of the stores. Zara however motivates its employees through intangible returns, apart from the normal basic pay. The employees in the company receive promotions and acknowledgment from the superiors and are therefore motivated. Both approaches however aim at increasing the productivity of its workforce so as to achieve the goals of the companies. Performance management is underpinned with the conceptual framework. The major conceptual framework is the motivation theory (Baron 2013). Motivation is the inward desire that causes that arises within a person with the aim of achieving a certain goal. It is a psychological condition that drives an individual towards focusing an individual towards focusing on a particular task. Motivation usually improves the productivity and attitude of employees within the organization. Employees’ motivation can be achieved through several methods. The most common method of motivation is the reward system. Reward system is used to determine and distribute returns to employees within an organization. The returns may be tangible or intangible (Agunis 2013). Tangible returns include salaries and wages, allowances and income protection. Intangible returns include status and recognition, employment security and broad learning opportunities. Once motivated, the productivity of the employees will increase. This is because the employee will find psychological and financial satisfaction within the organization. Employees who are under motivated have low interest within the organization they work. They, therefore, contribute minimal efforts toward achievements of the goals of the organization (Agunis 2013). The H&M Company applies a corporate culture called “the spirit of H&M”. This is based on attributes of simplicity, a down-to-earth approach, entrepreneurship, team spirit, common sense and a belief in individuals and the abilities to use their initiatives. This is a performance management approach (Hadfield 2014). The company has an incentive program which covers its employees in all its countries of the situation. The aims of the program are to motivate its workforce. The incentives are meant to show appreciation to the hardworking employees. They also manage long term commitment to the employees. The incentive also displays a positive image of the company and, therefore, makes the company an attractive employer. The H&M incentive program foundation was established to benefit H&M’s employees (ZipfWorks, 2014). The foundation invests its funds in H&M shares (Hadfield 2014). The foundation aims at paying out employees who are above 62 years old or have worked more than 10 years within the company. The program aims at encouraging employees to take long term commitments. The company, however, never owns any company that produces outfits. The company relies on a number of supplies. Once a buyer makes an order to H&M, the company then places an order with the right supplier (Flat World Knowledge 2014). Zara, on the other hand, applies high performance work approach. The company greatly emphasizes at involving its employees in its activities. The employees are given responsibilities within the organization. The company does training programs to its employees who aspire for leadership roles and those who are in the managerial posts. This training updates and makes the company be able to compete with other retailers. Employees are always reminded of the stores’ daily target. This makes the employees realize the goals of the store and those of the company in general (Flat World Knowledge 2014). The stores ultimately pay a certain commission to its staff so that they get motivated. Behaviour based measurement of performance has a scarce or reduced rate of measure. This means that the behavioural performance measurement cannot be easily quantified or measured. This measurement can also be defined over a long period. Examples of this measurement include selling skills and the interpersonal relationships within the organization. Results based measure can easily quantify the measure of performance. The impact of this method can be easily realized after a short period. This method can, therefore, be used in target setting purposes (Agunis, 2013). The method is also applicable in measuring of profits, the market share of the company, growth of sales and the sales revenue of a company. Both methods of performance measurement are applied so as to influence the behaviour of a company’s sales people and their performance (Flat World Knowledge 2014). Teamwork performance For a team to perform well, it requires a good team manager. At both H&M and Zara, the employees ensure that all the team members understand the aim and goals of the organization. The managers then advocate for teamwork. Teamwork can only be achieved if there is a good link between managers and the subordinate staff. Both companies value the efforts and contributions of all team members. Supervisors must ensure that all employees understand the goals of the organization. This can allow the employees to integrate their personal goals with the organizational goals. Employees are taught the importance of working together as a team. Once each employee plays their role well, it accomplishes the general aims of the organization (ZipfWorks 2014). Conclusion In conclusion, the business approaches of performance management and high performance work are closely related but they have some slight distinguishing factors. These factors have been described by comparing the business approaches of two outfit and fashion companies, H&M and Zara. H&M seems to use the performance approach strategy while Zara uses high performance work approach (ZipfWorks 2014). For this reason, Zara Company has an approach that promotes high work performance of employees. On the other hand, H&M uses performance management approach. It does not own any production industries that design their own products. Zara, however, owns manufacturing and production industries hence it designs its own products according to customers’ specifications. Both strategies aim at motivating employees so as to improve the company’s productivity and development. Reference List Adam, P. (2014). The Strategic Management Analysis of ZARA (Relative to the Case in Developing Countries). Retrieved on 22nd March 2014 from http://www.academia.edu/5492552/The_Strategic_Management_Analysis_of_ZARA_Relative_to_the_Case_in_Developing_Countries_ Agunis, H. (2013). Performance and Management. London: Pearson and Armstrong. Astrid. (2010). Zara and H&M: Fast Fashion on Demand. Retrieved on 22nd March 2014 from http://blog.modelmanagement.com/2010/06/01/zara-and-hm-fast-fashion-on-demand/ Bagaria, A. (2014). Uniqlo vs Zara vs H&M vs the world of fashion retailing. Retrieved on 22nd March 2014 from http://retail.economictimes.indiatimes.com/blog/Uniqlo-vs-Zara-vs-H-M-vs-the-world-of-fashion-retailing/91 Baron, M. a. (2013). Managing Performance. London: Chartered Institute Of Personnel and Development. FashionUnited, (2013). Clash of the Fashion Titans: H&M vs Forever 21. Retrieved on 22nd March 2014 from http://www.fashionunited.co.uk/fashion-news/fashion/clash-of-the-fashion-titans-hm-vs-forever21-2013121719445 Flat World Knowledge, Inc. (2014). Zara Case Study: Fast Fashion from Savvy Systems: The Wall Street Journal, May 18, 2001. Retrieved on 22nd March 2014 from http://www.flatworldknowledge.com/node/19554 Hadfield, W. (2014). H&M targets staff productivity gain with Europe-wide scheduling tool. Retrieved on 22nd March 2014 from http://www.computerweekly.com/feature/HM-targets-staff-productivity-gain-with-Europe-wide-scheduling-tool Hennes & Mauritz AB. (2011). Part 1: H&M in words and pictures. The H&M Way. (2009). The H&M Way– living by our values and guidelines every day. Retrieved on 21st March 2014 from http://about.hm.com/content/dam/hm/about/documents/en/hm-way/HM%20Way_en.pdf Van der Veen, L. (2013). Performance Management Zara. Retrieved on 22nd March 2014 from http://prezi.com/kdwujz6xqwjz/performance-management-zara/ ZipfWorks, (2014). H&M vs. Zara: Side-by-side Comparison. Retrieved on 21st March 2014 from http://hm.knoji.com/compare-vs/zara/ Read More