Zara International is a clothing and accessory retailer with operations in 88 markets around the world. Spanish Inditex Group owns the company that deals with men clothes, women clothes and has a Zara Kids for children clothing. Zara is one of the most successful fashion retailers in the world. The success of the company has been attributed to strategic management capabilities that involve the inventory management and as well the human resource management. The company human resource strategy was to include a Spanish manager in every store. This allows the company to maintain a management culture that is efficient and reduce the influence of globalization. In addition, the company encourages teamwork as opposed to individual achievement thus focusing the team effort towards the organizational goals rather than personal glory. In production, the company has employed an innovative inventory management system (JIT) that allows it monitor the selling patterns so as to avoid excessive production and update the inventories regularly as per the trends. The company has adopted transformational leadership style with a simple hierarchy. The store managers and the designers report directly to the leader. This allows the employees to be innovative and assume a sense of ownership of their branches. In regards to the management decision of using satellite production plants, this is not ideal as it would lose its core production competence that allows it to design new products promptly and roll them for production and delivery within 15 days. UNIQLO and Zara International use the same inventory management system. The only difference is that Zara produces on demand while UNIQLO productions are done throughout the year.
Zara is a Spanish clothing and accessories retailer that is based in Galicia, Spain. The company was established in 1975 by Amacio Ortega and Rosalia Mera. The company is the flagship brand for the Inditex group. The company then expanded to Europe, America, South America, Asia, Africa and Australia. In the year 2010, the company launched their online operation which has since spread to most of the company stores. The company major products include men clothes, women clothes and have a kids section. The company operates on the trend and promptly responds to the customers' feedbacks promptly. The company boasts of having the quickest response time with new products taking a week to design and within 15 days they have been shipped to the stores (Zara, 2017). This is unlike the industry average that takes an average of 6 months to launch a new product. The company has a central distribution center in Spain from which finished products are shipped to the stores worldwide. The company has an annual tally of over 450 million items. It is estimated that the company produces 12000 new designs on annual basis. This is achieved through the use of a group of designers as opposed to having them working as individuals. This paper will discuss the management styles that have been adopted by the organization and assess their effectiveness (Thompson, 2012).
Human Resource Approaches
The company organizational strategy is guided by the fact that it is a global corporation and thus must always strive to ensure that it conforms to the global requirements. For it to stay competitive, the company strives to lower the operational costs and offer unique services. This has led to the company acquiring its cost leadership status and has mastery in differentiation. The company can provide clothes that meet the individual needs and within their budgets. This allows the company to increase its sales, market share and as well the profit margin. The primary differentiation drivers include the quality of the services offered and a highly efficient supply chain that allows the organization to move her products efficiently.
The company has a unique human capital strategy to allow the company acquires the synergies that will allow competing in the global market. The company has opted for a polycentric approach that allows the company to maintain Spanish culture across all the stores. This also allows the company to bridge the gap between headquarter and the stores. The presence of Spanish managers allows the company to introduce a Spanish management strategy and allow the stores to operate smoothly without influence from the host countries' culture. The company has a fairly simple structure that involves the president, designers, and the store managers. The designers reports to the president and as well the store managers. Thus, the president is the ultimate organizational leader who oversees the operational practices of the designers and as well the sale through the sales manager.
This human resource strategy allows the organization managers to be able to actively monitor the movements in the inventory in the stores and be able to respond swiftly. This management strategy whereby the managers reports directly to the president. This allows them to be hard working and ensure that their branches improve to match the performance of the others. The low hierarchical levels allow the managers to be in the decision making. It also reduces the redundancy in the management and works in line with the company objectives of lowering the operational costs. The process also shortens the products life cycle by increasing the rate of turnover.
The human resource department is committed to creating a conducive working environment that offers equal opportunities based on the outcomes. The management encourages teamwork in tackling the daily tasks. An example is the design team. The company has a team of over 200 designers who are expected to work in unison to address any customer complaints and be able to pursue new opportunities actively. This great teamwork allows the company to be able to launch new products swiftly and thus being able to respond to the shifting demand as accurate as possible. Also, the human resource office favors women as opposed to men. This is exemplified by the number of workers being employed with 82.8% being women. A combination of all these human resource strategies is the differentiation techniques.
Major Competence in Production
The close inspection of the inventories by the management allows them to determine the fastest moving products and that they can control the production to avoid massive discounts. The team is able to rapidly change the way goods and services reach the stores and thus able to differentiate their products. The company can optimize on the profits owing to the fact that 60% of the total production is done in house. The company has a centralized and specialized location where all the goods are produced. The in-house production is efficient as the company can use the services of the designers and remove wastage and over production. The company uses an inventory management system known as just in time (JIT) system. It allows the company to produce only the clothes that are in demand and fast moving.
The management style adopted is transformational leadership style. The management is in control of some aspects of the business. However, the leaders are given the autonomy to some decisions. This form of leadership encourages innovation and creates a sense of competition, and the employees will strive to meet their targets to match with the rest of the employees. This leadership style has seen the business thrive since she took off the power. She has been able to control the business using her unique style and leadership position. In line with that spirit, the business should continue to use that leadership style, and Tania should approach the leadership from the same perspective to ensure that the business continues to thrive under his reign. However, immediately after taking over, the new manager will require the guidance of people who have been there for longer.
Zara intention of making small batches in the facilities close to the market is not an ideal solution. This is because the new satellite office will not be able to produce all the products. The increased workforce will go against the company mission of lowering the cost of production. Also, the company is founded on the basis of fashion and trends, thus the loyal customers' stream in to get a new product that is different from what is being offered in the market. Uniqlo market is not very elastic to the charges in the fashion, and thus the manufacturer can manufacture uniform products and save on the production cost.
The two stores have a unique inventory management system that allows them to acquire just the right quantity of the products. UNIQLO analyzes the sales and forecast the expected sales and give the information to the producers who strive to ensure that they meet the demands. Zara on the other hand manufacture on a need basis. Thus, they are able to respond to the growing demand through production of the new products instantaneously. Whenever there is a slight overproduction, the companies employ merchandisers and offer the clothes at a discount (Wilding, 2016).
Thompson, D. (2012, November 13). Zara's Big Idea: What the World's Top Fashion Retailer Tells Us About Innovation - The Atlantic. Retrieved from http://www.theatlantic.com/business/archive/2012/11/zaras-big-idea-what-the-worlds-top-fashion-retailer-tells-us-about-innovation/265126/
Wilding, R. (2016, September 2). The Secret Behind Zara and Uniqlo’s Supply Chain Models. Retrieved from https://theleadershipnetwork.com/article/supply-chain-management/zara-uniqlo-supply-chain
Zara. (2017). WorldWide - Zara Home. Retrieved from http://www.zarahome.com/