Zara's Competitive Advantage in the Fashion Industry

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Context of Business
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Table of Contents
Introduction...................................................................................................................... 3
Assignment 2................................................................................................................... 4
Conclusion..................................................................................................................... 10
Reference list................................................................................................................. 11
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Introduction
Globalization and dynamic advancement of technologies have the changed the way of
conducting business operations compared to traditional days. Business operations and
management, business expansion, growth, success, prosperity and depend on vision,
leadership styles and approach, organizational culture and management practices. In
depth discussion of all these vital factors will be provided in this study in respect to the
chosen organization for better consideration of the entire project. Different aspects and
theories related to this context will be represented in this paper. “Zara” is popular
Spanish fast fashion retailer, was founded in 1975 by Rosalia Mera and Amancio
Ortega. The company has a huge workforce unit to manage more than 10,000 stores in
the world and provide high satisfaction to customers (Zara.com, 2019).
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Assignment 2
Brief history and summary of the company
“Zara” was established in 1975 by Rosalia Mera and Amancio Ortega in the
downtown Galicia in Spain’s northern part with the burning desire of offering high quality
fashion products to worldwide customer at the most affordable price rates. Apart from
this, it also owns multiple brands like Pull&Bear, Bershka, Massimo Dutti, Zara
Home, Oysho and others.
Pull & Bear: It was founded in 1991 for young adults and it serves casual laid back
clothing.
Bershka: It was established in 1998 for serving fashion products long with urban styles
and modern fashion for youths. It has over 1098 stores.
Uterque: In 2008, it was founded to offer high quality fashion accessories attractive
rates.
Zara Home: It has more than 520 stores in the global premises. However, it was
established in 2003.
The parent company of “Zara” is Inditex that is global specialty retailer and the
company designs, produces and sales apparel, fashion accessories for men, women
and kids. The parent company is well-established and popular retail MNC in the world
and is the largest fashion group with over 170,000-trained employees those are
responsible for operating over 10,000 global stores in 49online markets and 98 phsical
markets at different locations (Zara.com, 2019). The company started its journey from a
small size fashion retail company with a minimal number of staffs. They continued
offering high quality fashion products to customers that resulted in wide global customer
base and multiple numbers of stores by 2001. Zara opened 507 stores throughout the
world including Spain to reach out more numbers of customers and attracting them
through competitive as well as affordable price rates of the products. Before this, the
company already launched multiple new stores across biggest cities in Spain to capture
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the domestic fashion retail market. As per the records and statements, “Zara” already
has built over 10,000 stores within only 44 years that is a huge success in retail
industry. The company has used affordable and competitive price rates and since
beginning, they have followed economic pricing strategy to dominate over different
markets and attract wide customer base successfully. Additionally, the company
focuses on producing more styles rather than quantities. In the last year, the company
generated, $18.9 billion revenue in business.
Rationale for selection of the organization
In modern retail industry, competition level is enhancing day-by-day and due to this high
market competition, the entire business industry is stumbling due to sustainability
issues. In order to sustain in market, most of the successful MNCs like “Zara” follow
multiple leadership styles, company vision, mission, organizational culture and others.
In order to assess and understand the significance and role of these approaches and
other factors in assisting the company to achieve competitive advantage in market,
“Zara” has been selected as it is popular and well-matched for analysis. This company
has shocked the entire fashion retail business industry by its appropriate vision,
organizational culture, leadership approaches and others so that the company has been
chosen for analysis.
Vision, leadership style, organizational culture and management practices
The specified origination has a strong vision that assists them to meet their expected
results. The vision of “Zara” is giving the consumer an exclusive choice of fashion
through offering quicker turnover of new stock compared to any other companies of
same business filed. Appropriate vision setting is important for greater business
success and excellence. “Zara” has a strong organizational vision that is future
oriented and effective enough for higher growth of the company (Aithal, 2016). The
CEO and other higher business authorities have set their vision that has assisted the
company become what it wants to be. To fulfill their vision, the company provides high
quality fashion products to worldwide customer at the most affordable price rates.
Another important consideration is effective leadership styles of “Zara”. The company
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uses different but effective leadership approaches of offering direction, executing plans
and encouraging employee unit (Nanjundeswaraswamy and Swamy, 2014). From a list
of effective leadership approaches, the company follows transformational leadership
style and democratic leadership style for absolute maintenance of their business
operations, entire workforce unit and other important functions.
Democratic leadership is considered as effective leadership style as it allows leaders
to make decision basing on each team member’s input and their opinions (Hendriks and
Karsten, 2014). For instance, in “Zara”, leader might provide the team some decision-
related options. Additionally, they start open discussion regarding every option. Leader
always take in account different aspects and opinions of employees before making any
organizational decision. Moreover, the leaders of the specified company also follow the
transformational leadership that focuses on transforming and developing conventions
of the organization (Yahaya, R. and Ebrahim, 2016). In “Zara”, employees have their
basic set of weekly goals, where the leader pushes them to improve their performance
and come outside of their comfort zone. Both of these leadership techniques are
effective enough for leading the workforce unit towards successful accomplishment of
business targets. Apart from this, different management practices and the procedures
of managing business practices of “Zara” is extremely significance in business context.
Management control and management accounting are two important elements of
management practices of the specified company. Some of the key management
practices of the specified company are engaging employees, rewarding efforts and
contribution, creating cultural cohesiveness, focusing on team effort, arranging
meetings, improving communication for greater bonding and relationship. All these
managerial practices are extremely important for Zara’s development in business. In
terms of conducting and managing business operations at international location is
always more complex and risky as well. Management of different business activities
becomes critical and tough for business organizations. MNCs like “Zara” use effective
managerial theories and approaches like scientific management theory,
administrative theory and for improving organizational behavior and reactions
(Waring, 2016). “Zara” uses human relations theory and behavioral science theory
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that are considered as highly effective in this context. However, scientific
management theory and administrative management theory are helpful to
managers in terms of managing the exhaustive business activities and functioning in a
precise manner (Hill et al., 2014). The company is highly passionate regarding adopting
a flexible work environment, where staffs can contribute their maximum efforts to the
business goals. Managers of the respective company follow and align all these
managerial approaches and theories to accelerate their business excellence and
competiveness in market place.
Influence of culture and management
It is undeniable that appropriate organizational culture, behaviour of employees and
their management styles are directly responsible for influencing and improving their
business functions as well as strategies. In modern context, most of the successful
MNCs like “Zara” always focus on adopting and maintaining an effective and
appropriate organizational culture in the firm that can provide benefits to every single
stakeholders of the business unit in order to keep them motivated and posing them to
contribute their maximum efforts in accomplishing business targets. Organizational
culture is the sum total of ideologies, traditions, principles and values, which pulsate
throughout a company (Alvesson and Sveningsson, 2015). Effective maintenance of
work culture is the key to Zara’s success. Culture influences to build a strong employee-
employer bonding that reflects on overall business performance of the company.
Culture sounds a bit like family and it goes to the heart of character and personality. It
allows an organization accomplishing any business targets effectively.
Communication standard also improves in well developed culture and employees
shares their views and business ideas with each other that are for their personal and
professional level development (Hogan and Coote, 2014). Apart from this, developed
culture of the organization allows following ethical business practices and enhances the
market position as well. Positive culture always results in positive outcomes. It brings
the entire workforce unit together for focusing upon common targets and objectives. It
promotes organizational pride along with multiple benefits such as higher employee
morale, loyalty and higher productivity. Effective organizational culture of “Zara” allows
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transforming important stakeholders into advocates and meeting their expectations in
a precise manner. On the other hand, managerial practices of the similar organization
have played vital role in influencing the company to reach its set business destinations.
The management authorities of “Zara” follow scientific management theory that is
focused upon minimizing waste amount and cutting down manufacturing time. Mr.
Fredrick Taylor developed this effective management theory and through using this
theory, company emphasizes incentivizing staff performance as well as cutting down
“hit and trial” practices (Tzortzaki and Mihiotis, 2014). “Zara” has great market demand
in current scenario so that to meet those demands of huge numbers of customers,
managers use this effective method that alternatively reduces the manufacturing time as
well.
On the other hand, another important management theory used by “Zara” is
administrative management theory that was developed by founder of management
theory, Mr. Henri Fayol. This effective managerial theory has provided detailed
guidelines to managers so that they have been completing their managerial
responsibilities effectively and accelerating business excellence simultaneously.
Moreover, the managers also use human relations theory for building as well as
maintaining coherent relations between employees, where behavioral science theory
has allowed the managers to recognize and meeting different motivating factors of
employees such as social needs, self-actualization and conflicts. Apart from this, one of
the major effectiveness of these managerial approaches, theories and efforts of
managers is leading and managing the workforce unit of more than 170,000 numbers of
employees to meet organizational objectives.
Recommendations
For better business excellence and overall business performance, “Zara” needs to
develop its existing leadership styles strategies and managerial practices altogether.
 “Zara” has more than 170,000 numbers of employees and effective
management of this huge workforce unit is challenging one. However, the
company already follows some of the effective leadership approaches in this
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process, but supportive nature and attitude of organizational leader is crucial in
this context. “Zara” must focuses on adopting the supportive leadership style
to better motivate and manage their wide workforce unit in a precise manner.
Supportive leadership will motivate employees and motivated employees are
more productive so that they can accelerate the production and sales revenue
simultaneously.
 The managerial department must adopt the Bureaucracy theory for influencing
the unity of employees and better engaging the employees in teamwork.
Effective team working skill of employees will allow the company to complete any
kind of tasks in time and keep organizational market reputation and pride
effectively.
 Apart from this, the company can focus on adopting the contingency theory that
assists managers to be adaptable to unique business circumstances. In this
context, using multiple advanced technologies is also highly important for “Zara”.
Automation, robotics manufacturing, IoT and other useful technology will bring
positive changes in the firm.
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Conclusion
From the above discussion, it is possible to conclude that modern business context
have been changed completely compared to traditional business context, approaches
and procedures. In this study, different leadership and management concepts, theories
and approaches have been described in respect of the specified business organization
for better consideration of effectiveness of these different approaches and theories real
life business circumstances. Moreover, the culture and management styles of business
organization influence their business excellence and success. For better business
performance, recommendations over the topic have been provided in the last section of
this paper.
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Reference list
Aithal, P.S., 2016. Creating innovators through setting up organizational vision, mission
and core values: a strategic model in higher education. International Journal of
Management, IT and Engineering, 6(1), pp.310-324.
Alvesson, M. and Sveningsson, S., 2015. Changing organizational culture: Cultural
change work in progress. Routledge.
Hendriks, F. and Karsten, N., 2014. Theory of democratic leadership. P.'t Hart & R.
Rhodes (Eds.), Oxford handbook of political leadership, pp.41-56.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: Theory &
cases: An integrated approach. Cengage Learning.
Hogan, S.J. and Coote, L.V., 2014. Organizational culture, innovation, and
performance: A test of Schein's model. Journal of Business Research, 67(8), pp.1609-
1621.
Nanjundeswaraswamy, T.S. and Swamy, D.R., 2014. Leadership styles. Advances in
management, 7(2), p.57.
Tzortzaki, A.M. and Mihiotis, A., 2014. A review of knowledge management theory and
future directions. Knowledge and Process Management, 21(1), pp.29-41.
Waring, S.P., 2016. Taylorism transformed: Scientific management theory since 1945.
UNC Press Books.
Yahaya, R. and Ebrahim, F., 2016. Leadership styles and organizational commitment:
literature review. Journal of Management Development, 35(2), pp.190-216.
Zara.com 2019. ZARA International | New Collection Online. [online] Zara.com.
Available at: https://www.zara.com/ww/ [Accessed 10 Jun. 2019].
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