Zara Company Management Best Practices - Case Study Example

Table of Contents

• Introduction.....................................................................................................3
• Company History............................................................................................3-5
• Zara Company’s Vision, Mission, and Values.............................................5-6
• Zara Textile Company’s Vision Statement
• Zara Textile Company’s Mission Statement
• Zara Textile Company’s Core values
• Zara Textile Company’s Management Best Practices .................................7-8
• Planning
• Organizing
• Leading and Controlling
• Lessons and conclusion.....................................................................................9-10
• References..........................................................................................................11

Case Study on Zara Company

• Introduction

Zara Company is one of the largest international fashion companies (Crofton et al., 2007). The company is a flagship chain store that belongs to the Index group which is one of the world’s largest distribution groups of fashion clothes. The company places customer satisfaction at the heart of its unique business model. The business model includes the design, production, distribution, and sales of its products through an extensive retail network. The company’s brands include uterque, pull and bear, Bershka, Massimo dutti, oysho, and Stradivarius. The brands are of high quality but yet still affordable. Probably, it is the amalgamation of the qualities of the company’s brands that makes them attractive to a large pool of customers.

The aim of this study is to examine and analyze the management of Zara Textile Company. The examination and analysis will be based on the following areas, (a) the company’s history, (b) the company’s vision, mission, and values statements, and (c) the company’s best management practices. At the end of the study, we should be able to gain lessons on how to effectively run a retail business

• Company History

Zara Textile Company which has currently grown into one of the world’s biggest retailer started off as a small store in Spain. The company was founded by Amancio Ortega in the year 1963. The corporation started from scratch just like most small businesses begin. The origin of Zara Company was the establishment of a dressmaking factory known as ‘index’ by Amancio Ortega. Ten years later, with a budget of a meager 30 Euros, a small store named Zorba in La Coruna was started off in downtown Cacuna, Galacia, Spain. The company’s name was later changed to Zara. This was following the realization by the owner of a bar, two blocks away, with a similar name. The name Zara was coined by a simple rearrangement of the letters molded for the sign to Zara (Torun, 2007).

The first store consisted of not expensive look-alike and higher-end clothing fashions. More stores were opened by Ortega all over Spain. In order to reduce lead times and react in a quicker way to the new trends, Ortega changed the design, distribution and the manufacturing process of the company in the 1980s and this he called ‘instant fashion.’ The new improvement included the use of groups of designers instead of individuals and the use of better information technology (Torun, 2007).

The company has since undergone a tremendous expansion of its empire to its current international status. By the year 1990, the company had expanded into the United States and many other countries. The growth of the company has been enabled by the owner’s passion and the simple planning and proper use of resources (Crofton et al., 2007). The stores operated by Zara Company are company-owned with the exception of situations where the local legislation bars foreign-owned companies from fully owning a business in the particular company. In such cases, Zara franchises the stores.

Currently, Zara stores specialize in the production and supply of women’s clothing, men’s clothing, and children’s clothing. The supply of Zara’s products is based on consumer trends. Yearly, the company produces more than 450 million items (Torun, 2007). The company has the ability to develop a new product that gets into the stores within a week as compared to the industry average of six months. It also launches an average of 12,000 new designs every year. The company has a zero advertising policy and prefers to invest the advertisement funds in opening new stores instead. As of 2nd November 2015, the Company had 2,100 stores located in across 88 countries.

• Zara Company’s Vision, Mission, and Values

The management committee of Zara Company has the responsibility to establish and protect the overarching purpose, ethical principles which govern the company’s activities and the company’s fundamental values. The above are known as the vision, mission, and the values of the company. Zara’s vision, mission, and values are the foundations upon which the company plans and builds its future. The three are very important when one really wants to get into the core of why the company exists, what the company hopes to accomplish, and what the company actually stands for.

Zara Textile Company’s Vision Statement

Zara Textile Company has a stringent commitment to the maintenance of global quality of standards (Crofton et al., 2007). This has led to the phenomenal growth of the company over the past years. Even with the highly competitive global markets, the company has been able to create a niche of its own. Due to the company’s unique quality standards, technical perfection and innovative impacts, the company has become one of the leading symbols of quality in the textile industry. However, behind this admirable success, the company’s team of workforce possesses a complete vision at the back of their minds. The following is Zara Textile Company’s Vision statement:

"To achieve market leadership through unparalleled quality, unique and diverse product mix, empowered employees, first-class systems, and the highest ethical and professional standards."

The company’s vision is clearly result oriented, clearly articulated, and clearly pictures the future that the company intends to create.

Zara Textile Company’s Mission Statement

Zara Textile Company’s mission statement shows the purpose to which the business came into existence. The mission statement is the company’s driving force as it gives a concise explanation for the company’s existence and the company’s long-term goals. Zara Textile Company’s mission statement clearly describes the functions of the company and the value that the company upholds. The following is Zara Textile Company’s Mission Statement:

"ZARA Textile Company is dedicated to the attainment of reliable perfection in the system of providing products & services to the customers through On Time Delivery & improving Customers Satisfaction through Quality and Value.”

Through the company’s mission statement, Zara’s business model is aimed at the contribution to the sustainable development of society and the environment which the company interacts with. A positive interaction environment is important in creating goodwill among the customers and thereby giving the company an opportunity to serve them better.

Zara Textile Company’s Core values

Zara Textile Company has a set of fundamental beliefs. The company’s core value is expressly published and can best be identified by the way the company’s employees acts and behaves when carrying out the activities of the firm. The company’s core values are true since they influence the way the company strives to live by them. By following the company’s core value, the management comes to the understanding of whether they are right or wrong (Thompson and Martin, 2009). Zara Textile Corporate core values are also expressed in the company’s mission statement and include:

• A commitment to sustainability and to acting in an environmentally friendly way.
• A commitment to innovation and excellence.
• A commitment to doing well for the whole.

What actions and behaviors show that Zara Textile Company’s lives per their core values? The company operates in a framework of the company’s commitment that includes the use of eco-friendly sources of energy, the production of less waste and the recycles of wastes. It further fosters training and awareness creation among employees and customers on acts and behaviors that minimizes environmental degradation.

• Zara Textile Company’s Management Best Practices

Zara Textile Company has a clear framework on how to plan, organize, lead, and control the activities of the company. The above are the four core management functions of a typical company. This key management functions is vital for the success or failure of a company. The management’s primary challenge is to solve problems creatively by drawing from a number of academic disciplines. Hence, the frameworks are as discussed below.

Planning

In planning, the management committee of Zara Textile Company has come up with a set of objectives that determines the course of appropriate actions necessary for the achievement of the set objectives. In planning, the management gives consideration to the environmental conditions the company and forecasts future conditions. This is enabled by the company’s pool of employees with good decision-making skills. Zara Textile Company management committee follows a planning process that consists of several steps.

The first step involves an environmental scanning where the planners inform themselves of the critical contingencies facing the company. These contingencies take the form of economic conditions, customer satisfaction, and competitors. The planners then develop a forecast of the future conditions. Planning is therefore done based on the forecasts. Given the company’s established objectives, what needs to be achieved and when, the management identifies alternative courses of actions that can be used to achieve the objectives (Zentes, Morschett, and Schramm-Klein, 2011). The management then comes up with the best course of action to achieve the objectives by evaluating the various alternatives. Subsequently, the management committee then formulates the effective plans to implement the requisite actions.

• • Organizing

The organization function of the management of Zara Textile Company involves the development of organization structures and the allocation of human resources in such a way that ensures the accomplishment of the objectives of the company. Through its efficient and unique business structure and turn around efficiency, Zara Company has captured the public attention. With over 2,100 stores located across 88 countries and with over 12,000 new designs launched each year, the company needs efficient organization structure to manage the resources of the company.

The company’s overarching strategy is the achievement of growth through diversification. It achieves this through a vertical integration that ensures that the company’s operations are within extremely lean organizational framework which promotes a high level of performance. There is thus a high reduction in the number of managerial hierarchy levels as well as the minimization of decentralization of decision-making. This has enabled the organization to designs, manufactures, distributes, and retails clothes within two weeks of the original design, first appearing on catwalks.

Leading and Controlling

The company has enthusiastic leaders who have been a source of inspiration to the other employees. The leaders have been creative in coming up with social and informal sources of influence that have enabled the subordinates to exert more efforts to attain organizational objectives. In ensuring that the performance of the company does not deviate from the set standards, the company takes three major controlling activity steps. This involves (1) establishing performance standards, (2) comparing actual performance against standards, and (3) taking corrective action when necessary (Thompson and Martin, 2009).

• Lessons and conclusion

This study has enabled me to understand the key challenges that affect retail management. In such a big retail company as Zara Textile Company, the goal of maximizing productivity can be tough. The large operations involved make the sales targets to seem unreachable. However, in Zara Textile Company settings, good retail management thrives and the company is able to achieve its objectives. The company does this through four primary areas of skills: effective time managing, effective recruitment and supervision of staff, the building of skilled and motivated sales and service teams, and effective change management.

With the current highly competitive retail environment, there is a need for a continuous improvement in the company’s culture and sales performance as a major element of the total mix (Chevalier and Gutsatz, 2012). Through the examination and analysis of the management of Zara Textile Company, I have learned about four effective tips that are vital for a retail sales management. These tips include:

• Setting of High Standards

Given the harsh competitive business environment, the survival of any business will be anchored on its excellence. When starting a business, one should provide goods and services that challenge the existing standards. This will give the firm an instant recognition. The management should, therefore, invest in a research on what a good product looks like and develop training programs that will enable a culture of excellent performance to be embedded throughout the company. The result will be a workforce that is confident in delivering customer service (Zentes, Morschett, and Schramm-Klein, 2011).

• Growth of Sales

Since most companies start from scratch, there is a need to be creative on the avenues to sale the company’s products. The growth of the company translates to increased sales and it should be nurtured as one of the missions that the company should achieve (Chevalier and Gutsatz, 2012). This will ensure that the employees understand the connection between the required standards and sales. With the mission, the employees will be aware of the need to talk to customers and enquire about what they are looking for. This is important in developing the most appropriate product for the customers.

• Offer customer service excellence

A company should provide services to the customers in a constant friendly and helpful environment. A good service to the customer is memorable and may entice the customer to come back again for the services (Thompson and Martin, 2009). Nevertheless, the current customers can also recommend the business to family members and friends. This is important in generating a cycle of successes.

• Ensure Performance is Sustained

In developing a successful business, the management should create an opportunity for the work-team members to fine-tune their skills (Zentes, Morschett, and Schramm-Klein, 2011). This can happen in a classroom setting or in the workplace environment. Therefore, this is in line with the wise men’s saying “Practice makes perfect.”