Category: Analysis 12th November 2018
The purpose of this report is to develop an ability to think analytically and critically about Business Performance Improvement (BPI) issues in modern day organizations in their attempts to become agile. To elaborate BPI, the author selected one of the global companies Zara, and critically discussed different stimulations of high performance culture and how those stimulations might affect Zara’s performance.
Zara is one of the most profitable brands owned by Spanish clothing retail group Index. The global company was founded in 1975 and today it has over 2,000 stores located in the most important shopping districts across 88 countries. Zara is distinguished as a consumer-based fashion retailing, and focuses on delivering the latest fashion trends with a rapid response to market demands. By tracking continuously the preferences of customers, the company has built their core business model. For new product it takes only 2 weeks to design and deliver to the stores, and each year the company produces 10,000 new clothes. Furthermore, the unique thing about the company is that they do not use any promotions and advertisements. Instead of paying for the advertisements, Zara continuously invest in training the employees, creates new design of clothes, and opens different shops globally. In addition, the company has four product lines. They include the women, men, kid, and home.
Hammer was one of the first who outlined Business Process Re-engineering in 1990 and defined as a new approach to the management of processes, producing radical improvements in performance of organizations. It is used to overhaul all the departmental boundaries of business operations in order to maximize the relationship between suppliers and customers (Hammer, 1990).
High performance culture is an organizational culture that changes over time to endeavour the business performance within organizational environment. It consists of following four key elements:
· Employee autonomy and involvement in decision making;
· Support for employee for performance;
· Sharing knowledge and information;
· Details will vary from organization to organization (B.Marong handout, 2014).
High performance culture is needed to analyze working environment, to build good relationship between the employees, to support them if it is needed, to regulate the standards of working performance, etc. Employees play the most important role in the organizations as they are the core of the organizations. Having satisfied employees build a strong distinctive organizational culture for businesses. Thereafter, it develops the organizations unique atmosphere, designates boundaries, which create competitive advantage for competitors difficult to cope with (Furnham and Gunter, 1993). Moreover, to achieve this implementation, companies specifically managers, need to determine what are the stimulations for its employees to be able to improve high performance culture.
Before analyzing the stimulations, Zara’s managers have to continuously identify how well perform their employees, what is the overall review of the store, whether they need training, or to develop any strategy.
Training at Zara never ends. It’s a continuous process that ensures that the employees are able to compete with others in other retail stalls. An appraisal method involves an interview with the store manager and the department manager (Furnham and Gunter, 2005). Thus, the manager is able to identify at which stage the employee is and the skills they still need to acquire.
The organization’s mission is to provide its customers with an exclusive choice of fashion. This is through the providence of a faster turnover of new stock in comparison to other fashion retailers. In addition, the organization aims at providing contributions to sustainable developments of the society at large and the environment.
Its goals and objectives include:
· Saving energy and the eco-friendly store. This is aimed at reducing the consumption of energy by 20%. This measure is applied to all business processes including the design of the shops;
· Production of less waste;
· Increased awareness among the various team members. This is through training and development methods.
· Communication and Feedback
The company’s network of retail shops and clothing factories often communicate through a sophisticated feedback mechanism that gathers the intelligence of the market and puts it into work. The sales personnel often carry digital assistants that aid them in relaying information on the various trends in the fashion industry and the demands of the customers (Jenster and Hussey, 2001). They then send this information to the company’s designers in Spain. Real-time sales data enables the factory to increase in its product of goods that are in demand in addition to bringing out similar designs.
The organization is divided into men, women and children sections. These sections have different designers and products. However, the distribution, logistics and the other departments are similar. In the organization, there is an easy flow of communication; moreover, special focus is paid on local demands and trends. In order to avoid falling into bankruptcy, the group constantly re-inventing itself this is as a result of the groups’ focus, which is the product and the customers.
The store acts as the heart of the entre Zara process. It often receives information from its clients and discusses this information with the headquarters. The information is then passed on to commercial teams in order for them to determine what might be or not be liked.
The employees at Zara often work together as a team in order to get the job done successfully. In an event of considering a new product, it gets designed made and criticized in a few hours’ time. All employees work together to ensure the product is successfully finished (Obolensky, 2010). Through these standards, the company has been able to grow and create a strong organizational culture. The members of a team are often switched around in order to lead to the creation of fresh ideas, competition among different teams and continuous feedback mechanism. This structure has enabled the place of work both respectful and unpretentious.
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Total remuneration consists of financial rewards and employee benefits. These aspects together form a reward system. The employees are paid on the basis of commission. The commission is a percentage of the store’s daily intake of the employee (Fleig, 2008). Thus, they are able to motivate employees as more they sell, the more they are paid.
This is fundamental to organizational functioning, and it seeks to improve team-performance by helping members to understand own team roles more clearly and to improve their interaction and collaboration (Kracklauer, 2004). Zara in order to stimulate a teambuilding more effectively, first needs to identify personal team role preference, actions can be taken to any imbalance.
The organization measures its performance and this has paid. It has four measures that it uses to measure its performance. This includes operational level measures, the flexibility of the delivery systems to meet the needs of the customers, order lead time and the effectiveness of scheduling techniques (Davila and Epstein).
The product development personnel at the company play a vital role of linking the stores and the designers. Various items were designed on average a day, however, only a slight percentage of them made it to the production firms. Large scale production is only carried out when there is a positive reaction from the customers. The manufacturing division of the company is on a production network. Manufacturing operations have made the production networks possible. The system requires a close integration to achieve a short throughput time. The system complies with the needs of the customers, which are often got from various research methodologies (Melahi, Frynas and Finaland, 2010). This ensures that what is produced is necessarily required by the market. The culture promotes innovation, thus, leading to the development of new products that fill the market space. Adequate feedback mechanisms ensure that the process of production is kept relevant.
To increase Zara’s product awareness and market share, it is necessary that it expands its scales at a global level. However, it needs to analyse critically the local regulations of other countries as this is not often an easy task due to different regulations and ambiguous rules. An example was the attack that Zara got from China’s consumer watchdog due to an acquisition that it had poor quality of cloth material (Kapferer, 2008).
However, the 200 professional designers that the company has constantly update new fashion trends for the organization. This is an advantage of the organization as it enables it pursue the fast fashion market. In social cultural terms, there is a tendency of consumers spending more on electronics, healthcare and leisure than on clothing. This drives apparel organizations to ecologically develop their businesses in order to meet consumer demands. This is a strategy that Zara has adopted.