Work And The Employment Relationship in Zara Business Plan
- Zara already operates internationally.
- Zara wants to further expand business operations by setting up subsidiaries in other countries.
For expanding business internationally, Zara faces several practical and legal challenges as well as employment relations issues that need to be mitigated through appropriate strategies.
Overview of Zara
- Zara makes a specialization in fast fashion (Zara.com, 2021).
- In the Inditex group, it is considered as the largest company
- Its objective is to provide products at a reasonable price.
Since 1975, Zara has been serving and in the Inditex group, it has now become one of the leading companies in the world. Inditex group operates globally and Zara is a part of the Inditex brand. Zara’s business model is slightly different from others in the fast fashion industry. Internationalization of this company has some driving factors such as economy of scale, development of technology, different barriers of exports and so on.
- Zara has expanded in countries such as USA, France, Mexico, and Italy and so on.
- The company focuses on improving customer experience (Inditex.com, 2021).
- It prioritizes sustainability practices.
While expanding its business to different countries, the company faces several challenges from its competitors thereby making it necessary for the company to formulate effective strategies to stay away from competition and make more business profits. Providing effective services to customers is the main focus of Zara. They grow favorable relationships with potential customers by solving their queries as soon as they are received. Join-life collections along with eco-stores are two examples of sustainable practices of Zara.
Practical and legal challenges of the organisation
- Zara has faced recent challenges in the e-commerce business.
- It faces challenges due to the rise of ultra-fast fashion.
- Practical control strategies should be implemented by Zara to overcome the challenges (Stemn et al. 2018).
Due to the sudden outbreak of COVID-19 pandemic, an increasing number of customers have become dependent on online shopping due to pandemic restrictions. The net sales gained by Zara from the e-commerce business are too little. With a rise in ultra-fashion and due to increased pressure of competitors, Zara is facing severe challenges. Hence, proper overcoming strategies should be implemented.
- Due to diverse working cultures, Zara also faces employment relations issues.
- Tax varies between different countries which is a challenging factor.
- Zara needs to make adoption of differential legal attitudes for further expanding business internationally (Benvenisti, 2018).
Zara has already many subsidiaries in other countries and wants to expand further. While doing so, there exist some challenges between employers and employees. Payment, attendance issues and so on are the main reason for disputes among employees. Tax issues can be controlled through tax structuring advice. For entering a new market, Zara needs to comply with all legal factors for successful business outcomes.
- Zara faces legal challenges while doing international business transactions.
- Choice of law is one such issue.
Expanding business globally can provide companies with a lot of opportunities but challenges as well. Conflicts occur in the laws or principles of different foreign countries. If the legal challenges are not tackled effectively then Zara can go through a severe economic crisis. This can result in the failure of a business.
Application of theories and concept
This is one of the popular models, which describes the internationalization process of the organisation. According to Dow et al. (2018), the model suggests that the company firstly choose to enter the nearby low market, therefore increasing the competitive advantage as per the requirements of the markets. Therefore, the company also gets to know about the political, legal, social-economical factors of the country. According to Rani (2021), this condition will help the company to enhance more in the strategy
The model has four stages
Stage 1: stop the regular activities
Stage 2: export the international products through independents logistics department
Stage 3: establishi9ng the foreign subsidiaries in order to enhance the business level in the international level
Stage 4: manufacturing the foreign production
- At the first stage, the company needs to start their business with the local lower market to observe the requirements of the consumer. This situation will help the company to know about the culture, region, and other important factors of the particular subsidiaries
- Secondly, many companies are entering the new markets through exports at the particular subsidiaries
- The matrix model of the business completely depends on the correlation of the interdependence of market knowledge and market commitment
Therefore, using this model will be beneficial if the company Zara enhance its business entity globally
The network approach theory is a model to develop effective relationships around the same workplace in order to achieve the company goal or success. According to Liñán et al. (2020), this model is worked like a tool that is helping to gather more people at the workplace. The tool also helps to engage the relationship between the leader ad the other employees. The model is helping to decentralize the people to accommodate each other while working in the workplace. This model helps to enhance the quality relationship, which reflects the understanding of each other, needs, requirements. Therefore, the employees also share the goals, innovative ideas, interests and accountability, which further helps the company to grow in the global market.
The advantage of this model is that,
- Enhance the relationship between the employees
- Collective voices and messages
- Competitive advantages and fast information exchange
- Improving the level of accessing skill for the consumer
- Adaptive nee ideas
- Increasing the level of micro collaboration and experimenting with new ideas
Therefore, implementing this model concept will help the company, Zara, to enhance the level of globalization as well as also helps to increase the level of the employee’s relationship
Recommendations on employment relations issues
- Effective communication is required to improve issues of relations among employers and employees.
- Zara needs to focus on organisational missions and values.
- It is required to make employees feel valued (Meiyani and Putra, 2019).
Dialogues and communication are required as the most important tools for improving relationships in the organisation which Zara can adopt for achieving positive business outcomes. Certain emotions can affect the relationships between employers and employees which can demotivate employees and can lower down productivity. Employment relationship issues can damage brand reputation and many candidates may apply for jobs in the company due to these factors. Employees are the main assets who are responsible for increasing workplace productivity thereby leading the company towards success. So if there are not enough employees in Zara, then it is not possible for the company to make significant success in other countries. Hence, Zara needs to consider organisational missions and values and incorporate employee relationships into them. Employees need to be valued to enhance retention rates.
- Employment relations issues take place due to inadequate payment and wages issues.
- Rewards and inspiration should be provided to employees to mitigate such issues (Zaraket and Saber, 2017).
- A career development plan can be effective in improving relationships.
Employment relations issues can take place due to a lot of factors including inadequate payment. Rewards should be provided to them which may not be monetary. It can be non-financial rewards as well. Both kinds of reward arrangements can be beneficial in this aspect. Recognition is essential which money may not do. A career development plan can strengthen employees’ capabilities and they can perform more work with greater efforts efficiently. This can make other candidates aware of this fact provided by Zara thereby attracting more talents in the process.
- Work-life balance is important to improve employee relationships (Olungo and Ukpere, 2018).
- Relevant software should be used to achieve error-free performance thereby improving relationships.
Employees should not be overburdened with work and there should be a balance between work and personal life which can help employees to stay positive in the workplace. This would help to reduce workplace conflicts and favorable relationships can be developed among employers and employees which is important to enhance brand reputation. It would make other candidates aware that effective operations are conducted and work-life balance is maintained in the workplace thereby attracting more tainted and skilled employees.
- Improvement of all the issues faced by Zara can help in improving financial performance.
- It can enhance brand reputation.
Proper strategies are required to help Zara overcome the challenges, it is facing in the present context. This would benefit the organisation by making them stay away from competition and would also provide the company with the opportunity to give tough competition to other fast-fashion companies such as H&M, Burberry and so on. If the company’s operations run smoothly then it can help to improve brand reputation thereby attracting more employees and customers.
- Mitigating challenges can give rise to positive business outcomes.
- Expanding business further can help Zara to maximise brand reach.
Positive business outcomes are inevitable for this company if challenges are successfully overcome. Brand reach to different customers across the world can increase. Both sales and business profitability are more likely to increase in the same manner.
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