Zara: Types of Organizations and Business Functions Report

This report provides a comprehensive analysis of Zara, a prominent company in the retail industry. It begins by defining the business environment and outlining the types and objectives of organizations, distinguishing between public, private, and voluntary sectors, and highlighting Zara's status as a public limited company. The report delves into Zara's organizational structure, identifying it as a divisional structure, and examines the interrelationship between various functions such as marketing, production, finance, and human resources. It explores the advantages and disadvantages of this interrelationship, as well as potential complexities that can arise. Furthermore, the report assesses Zara's size, objectives, and market share, comparing it with competitors like Arcadia Group. The analysis includes key functions, such as marketing, production, finance, and human resources, and their interdependencies within the organization. The report concludes by summarizing the key findings, emphasizing the importance of organizational structure and functional integration in achieving business objectives. The report is supported by references to academic journals, books, and online resources, and provides a detailed overview of Zara's business operations and its environment.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................3
L O 1................................................................................................................................................3
P1) Types and objectives of organizations. ................................................................................3
P2) Size and importance of different types of organizations. ....................................................4
M1) Analysis of structure and business objectives. ...................................................................4
L O 2................................................................................................................................................5
P3) Relationship between various functions of the organization................................................5
M2) Advantage and disadvantage of interrelationship between various functions....................6
D1) Complexities in organizational structure and in relationship between various functions....7
L O 3 &L O 4 (Covered in PPT)......................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
INTRODUCTION
Business refers to the process of producing and distributing goods or services to earn
maximum profits. Business Environment refers to the sum total of all the factors and forces that
can impact the operations of the business directly or indirectly. Micro factors exists in the
internal environment of the company that directly affects the business of the organization. Macro

factors exists in the external environment outside the firm that indirectly affects the operations of
the company (Deasy, and et.al., 2016). The Report will be based on Zara. The company belongs
to Retail industry. It was founded in year 1975 in Spain. Zara deals in Apparels for men, women,
Kids etc. and it owns various brands such as Oysho, Bershka etc. The Report will outline various
types and purpose of the organizations, size and importance of different types of the firms. The
Report will also explain the interrelationship between different functions of the organization and
its advantages and disadvantages.
MAIN BODY
L O 1
P1) Types and objectives of organizations.
Public-
The public sector of the country is owned and managed by the government of the
country. These organizations are operated under the control of Government. One of the common
example of public organization is Zara.
Objective- The aim of public organizations is not to earn profit. The main objective of public
organizations is to provide services to the people that are living in the society.
Legal structure- Zara is a public limited company and its share capital is divided in large
number of shares which is owned by the public.
Private- Private organizations operates their business in private sector of the country. These
firms are not owned and controlled by the Government of the country. These organizations are
owned and managed by individuals. One of the best example of private organization is Arcadia
Group in UK.
Objective- One of the main aim of public organizations is to earn maximum profits for future
growth of the business. Companies achieve this objectives by reducing the cost of production,
developing innovative products etc.
Legal structure- Arcadia Group is a type of private organization. Majority of the shares are
owned by Taveta Investments, Sir Philip Green etc.
Voluntary- Voluntary organizations are formed by group of people having a common objective.
These individuals enter into a contract to form a voluntary group. One of the common example
of such type of organization is Wellcome Trust.

Objective- Group of individuals can form a voluntary organization for various reasons such as
for promoting the development of economy or social welfare of the people that are living in the
society.
Legal structure- All the activities of Wellcome Trust is regulated by Charity Commission.
Wellcome Trust Limited is the only trustee of the organization. The organization is a type of
company limited by guarantee.
P2) Size and importance of different types of organizations.
Size-
Zara is one of the largest Retailing company that deals in Apparels. It produces and sell
various clothing items across the whole world. Company has more than 10,000 stores in
countries like France, Spain etc.
Arcadia Group is large scale organization as it operates more than 2500 stores in UK. company
has its operations in approximately 48 different locations.
Objectives- The objective of Zara is to provide high quality products to the buyers.
The objective of Arcadia Group is to develop and offer right type of products to the targeted
segment of buyers in local and international market.
Growth- The level of sales of Zara in UK has increased by 17% in year 2018. The level of sales
of various brands of Arcadia Group such as Topman has decline 5.6% in year 2018.
Market share- According to Global Data in year 2016 the market share of Zara is 1.5% in UK.
In year 2018, market share of Arcadia Group has decline and currently market share of company
in UK is 3.8% in Retail sector (Erasmus, B., Strydom, J.W. and Rudansky-Kloppers, S. eds.,
2016).
M1) Analysis of structure and business objectives.
Organization structure-
Zara follows Divisional Organizational Structure for performing various functions of the
organization. The type of organizational structure followed in Arcadia Group is Hierarchical
organization structural. Organizational structure of Zara and Arcadia Group helps to develop
products or services for targeted buyers in effective manner. Organization structure of the
company also helps to achieve organizational objectives such as developing high quality
products such as clothing items for satisfying the needs of customers etc.

L O 2
P3) Relationship between various functions of the organization.
Organizational functions refers to various types of functions that are performed by the
people working in the organization for developing and offering quality products or services to
the buyers. Different types of functions that are performed by Zara and interrelationship between
them are-
Marketing-
Marketing of goods is the responsibility of Marketing department of Zara. It plays an important
role in developing marketing campaigns to attract large number of customers. Finance
department, production department of Zara helps marketing department by providing necessary
information that is required for marketing of Apparels.
Production- Production of goods is the main function of production department in Zara.
Marketing , Research department of the firm provides information regarding change in demands
of customers that helps production department to develop innovative products (Charter, 2017).
Finance department of Zara helps in providing information regarding budget of company for
developing products.
Finance- Acquiring funds from different sources is one of the major function of finance
department of Zara. Finance department provides valuable information regarding availability of
funds in the firm to other departments.
Human Resource- Managing the human resource of the company is an important function of
Human Resource Department in Zara. It helps in filling vacant job positions in different
departments of the company.
Organization Structure- It defines the way in which different activities will be performed in the
organization. There are different types of organizational structures that can be followed by a
company (Chang, 2016). Zara follows Divisional Organization Structure-
Divisional Organization Structure-

Under this type of organization all the activities of the firm are divided into different
divisions on either on the basis of geographic locations, products or service or on the basis of
market. Zara follows Divisional Structure under which each division has different functions to
perform.
All the functions in Zara are link with Divisional Organizational Structure of the firm. In case of
different line of products, each product line will have a separate division under which each
division is responsible to perform various functions like Marketing, production, Human
Resource etc.
M2) Advantage and disadvantage of interrelationship between various functions.
Advantages –
All the functions of different departments in Zara are interrelated with each other. Main
advantage of interrelationship between various functions helps to achieve the aims and objectives
of the company (Camillus, 2016). For example- information provided by marketing department
helps production department in production of goods.
Illustration 1 : Divisional Organizational Structure
Source : (Divisional Organizational Structure, 2017)

Disadvantages - One of the disadvantage of interrelationship between various departments is
that, it may lack in proper coordination and cooperation between the departments.
Miscommunication may also happen between the employees that are working in different
departments of the company (Butler, R. and Wilson, 2015).
D1) Complexities in organizational structure and in relationship between various functions.
Under Divisional Organizational Structure various complexities can occur in the
organization. Such type of organizational structure may promote polities in the firm rather than
good thinking regarding strategies of the firm. Complexities can also be arises due to
interrelationship between functions of the company. For example- Miscommunication may
happen between different departments that can leads to wrong decision-making (Bah, E.H. and
Fang, 2015).
L O 3 &L O 4 (Covered in PPT)

CONCLUSION
The above Report has outlined that public organization plays a major role in offering
services to the people, private organizations works to maximize the profits and voluntary
organization works for welfare of community. The Report has also described that sales and
growth of Zara has improved from last year. Further, the Report has explained that the firm
follows Divisional organizational structure to perform its functions. Moreover, the Report has
described that interrelationship between various functions helps to achieve objectives of firm.

REFERENCES
Books and Journals-
Bah, E.H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics. 114, pp.159-171.
Butler, R. and Wilson, D.C., 2015. Managing voluntary and non-profit organizations: Strategy
and structure. Routledge.
Camillus, J.C., 2016. The wicked challenge of the business environment. International Journal
of Business Environment. 8(1). pp.19-31.
Chang, J.F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
Deasy, S., and et.al., 2016. Controlling use of a business environment on a mobile device. U.S.
Patent 9,247,042.
Erasmus, B., Strydom, J.W. and Rudansky-Kloppers, S. eds., 2016. Introduction to business
management. Oxford University Press Southern Africa.
Fineman, S., 2017. The business of greening. Routledge.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford
University Press.
Fineman, S., 2017. The business of greening. Routledge.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford
University Press.
Online-
Divisional Organizational Structure. 2017. [Online] Available Through :
<https://advergize.com/business/divisional-structure/>