The report presented below gives a detailed understanding on the concept of applied management with context to one of the leading apparel company. ZARA is Spanish oriented company that has adapted with the strategies focusing mainly upon expanding the business activities on international basis to different geographical areas of the globe. The enterprise has attained a prominent position in the textile industry by following the strategy of designing unique clothing and accessories products to deliver maximum possible level of satisfaction with response to latest fashion trends prevailing in the market. The organization has thereby acquired a unique position in different countries including China, Mexico, Greece, etc. It has a wide range of products for men, women and kids, that has enabled the organization to build a positive brand image among its customers which indirectly attracts the potential customers too. Ensuring repeated visits of customers for enjoying latest designed clothing is the key technique applied by the company to secure long term relationship with them. International trading concept has provided the company with list of opportunities to exploit the benefits of globalization by applying smart tactics to withstand severe competition from other apparel companies such as Marks and Spencer, GAP, UNIQLO, etc. (Navi, 2012).
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1. Adding value to resources
The concept of applied management adapted by the enterprise focuses mainly upon managing and adding value to list of resources available with the firm. Resource management is an important part of applied management that ensures maximum utilization of inputs available and maximum production of units of outputs. Resources includes different elements that contribute in completing the list of tasks to achieve common goals set by the organization. These are required by the organization to convert the available units of inputs into outputs for accomplishment of goals and objectives targeted to be achieved. Resource management is concerned with utilizing financial resources, human resources, inventories, etc. effectively and efficiently. ZARA has adapted with the management procedure of minimizing storage cost by delivering the units of outputs immediately after production is completed. The concept of Just-In-Time has enabled the company to maximize its profit margin to a greater extent as compared to various competitors existing in the industry. Designing efficient plans that provides required guidelines to the company for managing human resources in such a way that all of them are enabled to deliver expertise and skills possessed by them (Frederick, 2008).
Employees are required to complete the task of production and manufacturing on time to ensure none of the resources are wastage that could impact the pricing policy by increasing the cost incurred. The concept of project management, divides the complex task of production into list of tasks that are completed by delegating authority and responsibility to each individual, thereby managing the human resources efficiently along with allocating the financial resources ensuring maximum utilization is done of funds available. Moreover, after the company has completed with the task of acquiring required material for production , it undertakes procedure of sorting and inspection wherein defective units are returned back to the suppliers along with ensuring quality inputs are allocated to the production department. Discipline is maintained in carrying out the process of allocation as well as utilization of resources with the objective of enhancing the characteristic feature of final product. Special training programs are undertaken by the firm to enable each of the employee to modify available resources by applying effective managerial as well as scientific techniques. Thus, each procedure undertaken to enhance the quality of input as well as adding value to other resources directly impacts the units to be produced (Mehra, 2006).
2. Main management challenges faced
ZARA is operating on international basis with a vision to acquire a long term future sustenance in future too. It has been focusing greatly regarding designing unique fashionable clothing to provide immense happiness to its clients. However, various issues prevailing in international market has impacted the performance level of the organization forcing the company to consider these as threats and design structures that resolves the same. Successful marketing importantly requires managing the organizational environment for aligning with external environment. Undertaking a research work with respect to the same has analysed below mentioned management issues:
Master Data Management: With consideration to the policies framed under international trading concept, it is required by each of the internationally operating company to provide necessary information and data regarding financial condition as well as various policies followed by the organization to various stakeholder. Stakeholders can be any out of government agencies, investors, customers, employees, creditors, etc (Miao, 2011). With respect to the company considered, it has been observed that some important details and data are required to be displayed on its websites as per government policies for undertaking analysis of the textile industry within each economy to measure the level of income generated from the same for generating targeted GDP and GNP. Moreover, the company has to decide on matters such as how much access is to be provided by different personnels for gathering information of company's state of affairs. These information are easily accessible through centralized systems and techniques which has imposed upon the need to frame policies and rules that ensures none of the confidential details are accessed by any outsiders or competitors. The company therefore needs to manage human resources efficiently that possesses expertise in information technology department (Lockett, Moon and Visser, 2006).
Supply Chain Management: The organization has been facing the issue with respect to supply chain management, as it has been dealing with multiple store outlets located in different geographical areas. Distribution of products to align with market demand is included within this concept. The organization has been supplying products at a large scale which has been facing language issues mainly with respect to countries such as china, Mexico, etc. Transportation defects, language difference as well as difference in ideology of dealers across the globe has hampered the process of supply on account of increased communication gap with dealers and agents.
Human Capital Management: One of the major issue related to management has been analysed with respect to managing human resource. There exists a difference in ideology and beliefs of employees belonging to different cultural background. Company needs to frame strategies that are effective in aligning different needs of employees with that of organizational policies. Addressing issues of each individual employee, provides increased level of motivation to perform better (Hafer and Martin, 2006).
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3. PESTLE Analysis
Understanding external business environment is equally important as that of understanding internal organizational environment. The factors existing in external business environment are not within the control of company. Considering the impact of each of the factors prevailing is an important aspect of international business marketing to acquire a leading position in fashion industry with special consideration to the organization mentioned. PESTLE is an abbreviation used for determining Political, Economical, Social, Technological, Environmental as well as Legal factors. Impact of each of these factors regarding overall performance of organization has been mentioned below:
- Political: Regulations and laws imposed by government of respective countries has been determined as one of the most impacting factor regarding overall profit of the organization. Policies within different economic environment are required to be followed by the enterprise to ensure long term sustenance and a positive image within the society. Government intervenes with company's policies to ensure protection of public interest (Daymont and Blau, 2008).
- Economical: Elements prevailing within the economy that determine the rate of inflation, recession, etc. are included here. ZARA has been designing policies and taking important financial decisions to adjust with according to economic condition. Policies of various geographical areas is different denoting the financial stability of the nation. The economic downturn can adversely affects company's profit earning capacity wherein it must be required to apply smart tactics to pull maximum customers within the market.
- Social: Socio-cultural factors are to be considered for undertaking product development to satisfy customer's preference and demand. Each of the customer group determines common preference and taste that determines the fashion trend prevailing within the market. For example, customers belonging to Chinese market prefer bright coloured clothing whereas customers from European market prefer white, blue and other dull colours. Each of the market signify specific set of features with respect to cultural beliefs. In Arabian countries, women are restricted on wearing western clothes. ZARA therefore designs long sleeved clothes for women in Arabian market.
- Technological: Technological up gradations and innovations are to be addressed by the company to sustain within severe competitive environment of international business. Resource sorting, allocation of resource , production and operation management as well as distribution and promotion requires use of techniques designed specially to exploit the benefits of technological environment. Using latest means for converting units of input into output can build core competence of producing higher quality products as compared to the products of rivals in the market (Kautonen, 2008).
- Environmental: Environmental awareness have been increasing among citizens having different cultural origin. Moreover, increasing issues such as destruction of green cover and ozone layer has forced the government to frame policies for environmental protection of their own country. As ZARA is operating within different geographical environment, it is a compulsion to follow respective policies ensuring any of the emission process is not releasing harmful toxics in the environment which could threaten the very existence of mankind.
- Legal: Laws and regulations controlling the business activities within respective economy are considered as legal requirements to be followed by the organization. Laws are with respect to employees protection or customer protection, etc. which ensures company is under no means exploiting any of the stakeholder individually and entire society as a whole. A common legal requirement observed to be followed within most of economy is with consideration to ensure that the company is not promoting any negative ideology that can lead citizens on a wrong path (Bashir and Ramay, 2008).
4. Corporate Agenda
ZARA has realized the importance of serving the society within which it is operating. Like each of citizen of an economy, every company is required to deliver contribution to the society to ensure that it has been promoting the standard of living as well as social beliefs followed by the citizens. Various stakeholders are holding relationship with the company for any of the purpose such as obtaining employment, providing fund or providing sources for income. There is a direct relationship between the company and its stakeholders who form the society existing on cultural beliefs and assumptions. The obligations that the company holds towards society is termed as corporate agenda. The scope of corporate agenda has social obligations to be fulfilled to provide return on services provided by various stakeholders and thereby contribute for developing strong financial stability of an economy. Corporate agenda with consideration to different stakeholders have been mentioned below:
- Inputs and resource suppliers: Suppliers are an important part of any company as they provide required inputs for carrying out production activity. ZARA have been effectively contributing to the society by providing business opportunities to number of suppliers and providing income generating opportunity.
- Workforce activities: Employees are an important part of human resource. Human resource consists of number of employees working for achievement of goals of organization. ZARA has been contributing to number of countries by generating employment generation activities for the employees (Chughtai and Buckley, 2008).
- Operations: Operation management department of the company within different location has been following the policy of utilizing various resources efficiently and effectively to ensure energy is not wastage and maximum units are supplied in the market.
- Product and service impact: List of promotional and distribution activities carried out by the company does not include any activities which would harm the society. Company does not include use of any harmful ingredients within production of units of output.
- Community activities: The company has been sponsoring various social activities such as charity functions that provide financial assistance to those who are in need of same. It has been undertaking various campaigns to promote awareness for environment as well as women empowerment (Lindgreen and Swaen, 2010).
5. Managing Corporate Social Responsibility
This section includes highlighting the strategies followed by the organisation to respond to its obligations towards corporate social responsibility. Delivering services to the society to maintain positive image among its customers and promote the standard of living requires various strategies to be followed for the same. One of the strategy followed by the company is that of delivering products at reasonable price to middle class customers as well as premium price products for customers who can afford purchasing expensive range of products. This strategy of adjustable pricing policy has enabled the company to provide services to all level of customers. Secondly, the strategy of using eco friendly means of production that ensures no harmful elements are released in the environment. Moreover the company has eliminated use of harmful ingredients used in production after the campaign of detoxification was undertaken. Thus the organization has contributed immensely by preserving the environment with application of policies with response to same (Cadbury, 2006).
6. Issues with Corporate Social Responsibility
It has been observed that though the company is following required obligation for corporate social responsibilities, it has been facing various issues to derive more benefits from the same. Issues impacting company's operations have been mentioned below:
Competitive labour market: Employee sector has displayed a common ideology with respect to pay scales and benefits provided. They tend to switch over to employers possessing similarity in philosophies and operating practices as compared to their own individual ideology. This has forced the company to develop organizational environment that aligns with needs of these employees thereby impacting company's contribution made towards society.
Suppliers relation: On account of increasing interest of various stakeholders, company had recently framed policies that ensure long term relationship with suppliers along with providing a sense of security to suppliers so that any activity of company would not harm their reputation. Similarly, code of conduct is determined to be followed by various suppliers to ensure none of the activity of suppliers would harm company's brand image. Some of the suppliers have not accepted the code of conduct (Luo and Bhattacharya, 2006).
The above analysed issues has created a significant and well defined impact on business growth and development. In order to effectively deal with the stated issue companies need to adopt different strategies and aspects. In order to deal with competitive labour issue Zara must focus on internal growth aspects. The organizational culture is one of the most effective and significant tool for the same. Effective strategies must be planned to develop a strong and committed team of employees for the business. Tools such as performance management, effective leadership and effective motivational aspects can be adopted in the stated regards.
Supplier’s relations on the other hand is another significant tool which helps in ensuring the cost and growth of the business. Adopting effective and well defined aspects of supplier’s relations can help the business in attaining the same within the market. strategic tools such has corporate networks and social responsibility towards suppliers can help in attaining significant growth towards the stated issue. Zara must develop strategic partnership with its suppliers to manage the cost of the business in the present competitive era.
It can be concluded here with reference to the study work mentioned above that ZARA is one of the rapid expanding company. Its products have been admired by customers from various corners of the globe as these have been holding uniqueness with response to current fashion trend prevailing. The organization has been putting a lot of efforts for designing trendy and fashionable clothing and accessories. Moreover, the organisation has a core competence of putting range of clothing on the shelf on regular basis of twice in a week. It just takes a week for the company to design and manufacture new range of products thereby giving an image to that of a boutique to its outlets located worldwide. It has also been successful in fulfilling Corporate social responsibility for delivering a good example to that of a role model to the industry. The concept of corporate social responsibility has ensured that the companies do not perform in isolation or as a separate part of the society.
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Books and Journals
- Bashir, S. and Ramay, M.I., 2008. Determinants of organizational commitment: a study of information technology professionals in Pakistan. Journal of Behavioral and Applied Management.
- Cadbury, A., 2006. Corporate social responsibility. Twenty-First Century Society.
- Chughtai, A.A. and Buckley, F., 2008. Work engagement and its relationship with state and trait trust: A conceptual analysis. Journal of Behavioral and Applied Management.
- Dahlsrud, A., 2008. How corporate social responsibility is defined: an analysis of 37 definitions. Corporate social responsibility and environmental management.
- Daymont, T. and Blau, G., 2008. Student performance in online and traditional sections of an undergraduate management course. Journal of Behavioral and Applied Management.
- English, L.P., 2009. Information quality applied: Best practices for improving business information, processes and systems. Wiley Publishing.
- Frederick, W.C., 2008. Corporate social responsibility. In The Oxford handbook of corporate social responsibility.
- Hafer, J.C. and Martin, T.N., 2006. Job involvement or affective commitment: A sensitivity analysis study of apathetic employee mobility. Journal of Behavioral and Applied Management.
- Kautonen, T., 2008. Understanding the older entrepreneur: Comparing third age and prime age entrepreneurs in Finland. International Journal of Business Science and Applied Management.
- Lindgreen, A. and Swaen, V., 2010. Corporate social responsibility. International Journal of Management Reviews.
- Coporate social responsibility (CSR). 2013. [Online]. Available through<https://www.iisd.org/business/issues/sr.aspx>.
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