This report will give an overview of Vodafone and Zara, as public and private companies. It will look into the structure, visions and business objectives of each company as a measure of their success.
Zara is one of the largest international fashion companies, with a revenue of $15.9 Billion (Inditex.com, 2016). It was founded in 1975 in Galicia, Spain by Amancio Ortega and Rosalía Mera. It is part to Inditex, one of the world's largest clothing retailer. Other successful high street brands who are also owned by Inditex include, Massimo Dutti, Mango, Bershka and Pull & Bear. Zara supplies luxury Women's wear, Children's wear, Men's wear as well as Home ware (Zara Home) to the high streets.
Zara has 2,160 stores worldwide as well as an e-commerce website. It employs over 150,000 people and produces over 450 million items per year. Their products are supplied based on consumer trends and they are able to deliver luxury looking goods at a fraction of a price.
Their mission is to deliver luxury products at a reasonable price, to the average consumer. Zara's mission statement says: ‘The customer is at the heart of our unique business model, which includes design, production, distribution and sales through our extensive retail network' (Inditex.com, 2016). Its highly responsive supply chain ships new products to stores twice a week. After products are designed, they typically take 2 weeks to reach the stores. All of the clothing is processed through the distribution center in Spain. Zara has a policy of zero advertising as they prefer to invest their revenues on opening new branches.
Zara's follows their stakeholder's trends closely in order to be up to date with the fast pace of the fashion market.
Vodafone is one of the world's leading mobile communications providers, operating in 26 countries and in partnership with networks in over 55 more. Across the world, they have almost 444 million customers and around 19.5 million and employ over 13,000 people across the UK. Vodafone offers Mobile communications and broadband.
Vodafone's mission ‘sets out the ambition to deliver connectivity and innovative services to improve people's livelihoods and quality of life. Central to achieving this vision is the longstanding commitment to manage our operations responsibly and ethically.
Stakeholders include customers, employees, investors, suppliers, regulators, local government, community representatives, journalists and pressure groups. Vodafone believes in listening to stakeholders outside the business and adjusting to meet their expectations where possible. This helps identifying emerging issues, potential risks and new opportunities.
Size and Scope
Zara is a limited for profit organisation. It is privately owned and is part of Inditex, the largest fashion group in the world. Zara has 2,160 stores worldwide as well as an e-commerce website. It employs over 150,000 people. (Inditex.com, 2016)
Zara responds rapidly to changes in consumer taste. The chain produces 300,000 stock-keeping units, or SKUs, a year in an effort to get the latest styles in stores as quickly as possible. Managers submit sales information to company headquarters weekly, both financial information and customers' reactions to products. The company then reacts to that report by continuously designing and manufacturing new merchandise. An idea or a trend inspired by the managers' report can show up in stores within 2 weeks, compared to the 6-month industry average. Zara has makes some trade-offs, such as investing in distribution at the expense of other functions (e.g. marketing), to implement the strategy.
Vodafone is a British public Limited for profit organisation. Operating in 26 countries and in partnership with networks in over 55 more. Across the world, they have almost 444 million customers and around 19.5 million and employ over 13,000 people across the UK. Vodafone offers Mobile communications as well as broadband.
Vodafone UK provides a range of communication services, including voice calls, text messages, video messaging, internet access, Vodafone live! and other data services, through prepaid and contract pricing arrangements.
To achieve organisational objectives companies must form interrelationships between departments. In particular human resources, Marketing and R&D.
Human resource management has the ability to promote a better workplace environment and employee relations through its policies. One of the ways is through team building – HR has the ability to influence team building and overall company morale. By having strategic policies this will help with team morale and in turn ensure that the overall aim of each employee is mutual. Resulting in a more productive team.
It is also a way to monitor progress - Much of the strategic plan is likely to rely on the cooperation and support of employees and individual departments or functions within the organization.
Marketing plays a crucial part in the development of strategic planning in organisations. It is the method used to portray the value of services and products to clients. Sales, advertising, pricing all come under the role of a marketer. It also assists with the development of new ideas, increased sales, brand recognition and cost savings.
Vodafone's marketing strategy is very successful. Zara has chosen to rely mainly on word of mouth as well as the in store experience of its clients. Zara also achieves most of its research from the in-store experience where managers monitor trends and consequently send them to the R&D department.
R&D can help a company follow or stay ahead of market trends and keep the company relevant. If a trend is already happening or is bound to happen, a company's R&D department can help it take advantage of that new trend. This is crucial for Zara's fast paced delivery of design to its customers.
R&D also connects various parts of a company's strategy, such as marketing and cost reduction. Specifically, companies should invest in R&D due to increased market participation, cost management benefits, advancements in marketing abilities and trend matching.
It is the R&D function, that provides a platform for creativity and innovation to flourish in an organisation. Perseverant efforts are needed when one is in pursuit of research. Every failure in a R&D effort increases the pressure to perform.
All in all, the interrelationships of these functional areas must be taken into consideration in decision making. As a coercive plan including each functional area will result in successful decisions.
Organization structure is essentially the skeleton of a company. It is the makeup of the purpose of an organisation, it helps set the defined roles, functions, scopes of authority and systems to help employees with working towards the organisation's aims. Vodafone and Zara both have different structures which correlate with their organisational functions and mission.
Zara has a flat organisational structure which is linked to its fast and successful response to market trends as well as high performance. In flat organizational structures companies are able to reduce the number of managerial hierarchy levels and decentralize decision making.
Zara is also vertically integrated as it has control over all of the production and distribution steps involved in to creating their products. Zara limits outsourcing their labour to cheaper countries unlike other brands, this enables Zara to maintain consistency in the quality of finished products. Vertically integrated organisations can reduce costs and improve productivity by reducing turnaround time. This is seen in Zara's highly effective product turn over of a new item being designed and hitting the shelves within a 2-week time frame. However, ‘sometimes it is more effective for a company to rely on the established expertise and economies of scale of other vendors rather than trying to become vertically integrated.' (Investopedia)
Vodafone is organized both by function (group finance, group human resources) and by geographical areas (Europe and Asia). There are also individual national divisions, which have their own particular organization structures. There are national divisions, which have their own particular organization structures.
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