Art of Enterprise UCIL24002 Assignment Sample
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Introduction
There are different ways are used to conduct the business and the two best examples are the Entrepreneurship and corporate management which is come under the Entrepreneurial Management Model (Drucker, 2014). This model stated that entrepreneurial and managerial working give rise to the innovations.
Furthermore, to understand about these approaches more deeply, there is need to analyse its presences in the companies. For this, this paper covers different sections. Each section provides detail information about entrepreneur and managerial working and its benefit in context to increase efficiency and productivity of organisation.
However, the study firstly underlines the Entrepreneurial working & Managerial working by following the brief overview of the selected company i.e. Zara which is an Spanish fast fashion clothing retailers and it works under the main brand of the Inditex group. Afterwards, this company will be analysed as per the entrepreneurial and managerial model. At last, the significances of such models will be discussed in order to identify the value addition.
Therefore, the main purpose of this study is to evaluate the creation of the new value as a result of effective entrepreneurial management model. Likewise, it is identified that how much entrepreneurial and managerial working are used by the business and in which way these aspects generate value for the business.
In regards to this model, different areas are studied such innovation, creativity strategic planning and teamwork etc (Zolin et al., 2011). Based on this, Zara company capability has been analysed that how much company has successfully adopted these aspects in its business operations.
Entrepreneurial working & Managerial working
Different researchers Rae et al. (2012), define varied definitions of the term Entrepreneurial Management model. But in this paper, the study will be used of Dr. David Rae and understand the meaning of entrepreneurial management model. He explained this theory by mention two approaches i.e. entrepreneurship and management and identified how both the terminology work together for creating value.
Likewise, new business demands for the innovation and search for an opportunity then it go on making ideas profitable through use of strategies and plans. Thus, it can be stated that for any business, there is primary importance is to generate innovative idea as without uniqueness, changes as per the customer taste, business environment etc, business can’t survive for a longer duration (Arthur et al., 2012). But at the same time, he is not denying that management has nothing to do with business as it also has significances due to without proper planning, leading and operational process, the business idea and innovation can’t be implemented.
So, both the aspects are the requirement for achieving the innovations. The best example of companies that successfully establish these approaches in its business operations are the Apple, Google and HP etc (Rae and Wang, 2015). Based on this study, it is stated that entrepreneurial and managerial working tends to be not divided.
According to Kalyar (2011), entrepreneurial working and management working are totally different and it functions one after one. Likewise, entrepreneurial is working purely on the creativity and concentrates on the opportunities by conduct market research. This way the best ideas are generate. At the same time, innovation is also executed quickly in the form of adopt new business model, investment in product portfolio.
Due to this, business is able to achieve the flexibility as per the changes in business environment. This practice helps the business to cater each and every needs of changing customer taste and preferences. Moreover, it results in running of business over longer duration by aligning with the changing business scenario. In support to this study, Bradley et al. (2011) illustrated that entrepreneurial working also give rise to the expansion of business into the international market. This is because company focus on changing business environment pushes it to add the innovation.
So, this action allows the company to expand the business in different countries by understanding the target customer needs and accordingly develop the innovation in the product. This practice generates huge profit to the company. Other than that, innovative business idea also tends to attracts huge customer base. The best example of innovation is the online business idea which is now-a-days gain huge recognition as people tend to prefer buy online whether it is clothes, food or electronic. This increasing trend of online business helps to appeal larger target audience (Teece, 2016). Thus, these are the aspects that provide benefits to the organisation.
On the other hand, Goergen and Renneboog (2011), Managerial working is more practical approach which is based on five aspects such as vision, mission, company policy, planning and strategies etc. According to these areas, company design the operations and develop the final result (Naldi et al., 2015). Basically, management theory is more involved in the execution of activities which is decided or planned in entrepreneurial model. It means that bring the business idea into the reality.
In a specific manner, company firstly operate the managerial approach through focus on alignment of mission, vision and strategic goals etc. For instance, company for adopting the managerial approach, there is needed to focus on the mission, goals & objectives so that task has to be performed accordingly (Griffith, 2010). Secondly, team spirit and communication network are the areas that support the managerial approach (Freeman, 2010). However, without having proper involvement of human resources in the business idea, the innovation won’t be implemented.
So, the proper strategy, plan and talent workforce are required to successfully adopt the results. Moreover, installation of system, facilitates of internet provide the proper communication between the stakeholders. It results in performances of work or task on time. Thirdly, management relationship with staff, investors, shareholders, suppliers etc are important to maximise productivity. However, if employee and management relationship is positive then it directly influences the productivity of firm.
Thus, it is important for the business to focus on the employer and employee relationship through conduct the timely training session, organise the rewards system and provide timely feedback to employees so that they can make necessary improvements in their skills (Morgan, 2012). At last, Rae also stated that value management is significant to achieve by implementing the operations in a sustainable manner.
This helps in attaining the value in the form high profits and less cost investment. This study indicates different areas of entrepreneurial and managerial aspects that help in adding value and efficiency on the business.
Explanation on “Zara”
The selected company for the analysis is the Zara which is a considered as a Spanish clothing company which based on Arteixo, Galicia (Spain) etc. However, Zara stores have men and women clothing as well as children’s (Zara, 2018). It owned factories in Spain, Portugal and turkey etc.
However, Zara come under as a few brands which maintain its high quality and affordability from many years. That’s why it is still become the consumers first choice when comes to buy the western and comfortable clothes.
Zara journey is not as easy and it establish in 1963 as dress-making factory then Ortega starts small store which is firstly named as Zorba in La Coruna, Spain and it open with an budget of meagre 30 Euros. After a time, he changes the name and rename as Zara with no particular intension.
Zara in a slowly manner spread its store in Spain then Portugal and by the 1990s it spread its store in entire USA, France and Europe etc. Currently, Zara has approx. 6500 stores in 88 countries around the globe (Bhardwaj et al., 2011). The company has still become the favourite in the list of customers due to its unique business model. Likewise, Zara has vertically integrated supply chain which allows to exporting of garments in 24 hours in 365 days of the year.
The vertical integration system allows the Zara to make control over several areas such as Dyeing, processing and fabric processing etc. at the same time, Zara also remove the needs of multiple warehouse because it produces small of batches of design and then getting response of such batches then further produce another set of small batches. This practice reduces the maximum wastage and it also eliminates the chance of repetition of clothes.
This unique action makes the company leader of the clothing market. Furthermore, it also has a centralised distribution system at Spain and within which it manages the supplying of raw material and delivery of final goods to respective customers. In respect to Zara brand communication strategy, it relies on the store displays as to appeal customer rather than put an advertisement. Similarly, it places the store in that area where target audience can easily visit the store.
It also use simple art in the store and hire the specialised staff which has full knowledge of fabric, prices and quality of clothes in order to resolve the customer complaints and provide effective customer service. Therefore, these strategies assist the Zara to attain the competitive advantage in the global environment.
Evaluate of Zara in regards to Entrepreneurial & Managerial working
This section defines the several aspects of entrepreneurial working and managerial working in context to company Zara which is a leader in fashion retail industry.
Entrepreneurial Working
Firstly, entrepreneurial working demands for the identification and adopting the opportunities for conducting business. Similarly, Zara proves to be successful in regards to incorporate the innovation (Rae, 2013). Likewise, Zara in its past scenario focus more on the traditional way of operating of business but with the time Changes Company creates the Innovation in the form of adopting the agile and flexible business model.
In this, Zara uses the push based model and it means that factories push out the product to a store which is then sold to final consumers. Besides that, creativity is also an essential aspect of entrepreneurial working and this aspect is also successfully accomplished by the Zara. However, it highly believes in creativity and innovations that’s why it never goes to produce the bulk production of same pattern clothes.
Likewise, it firstly produce small batch of clothes design then wait for the response and after only it produce new design of clothes. At the same time, it also uses the creativity in the marketing of the brand. The current scenario where companies are involved in aggressively promoting of the company at several platform So in that era, Zara choose to use to focus more on store architect and design rather than rigorously promote the company in front of customers.
Besides that, it also tend to be quality oriented and due to which customer develop the faith on the brand and ready to buy whatever design company offers. This clearly highlights the company uses the creativity and innovation from its supply chain to distributing and marketing of the product. This makes the Zara leader of the clothing market (Ahmed and Duellman, 2013).
On the other hand, Internationalisation is also considered as an important aspect in Entrepreneurial working. Zara is well known for its selling of products in multiple countries. Likewise, Zara perform its first international expansion in the Oporto and Portugal through perform multiple actions such as market research i.e. Survey & Interview.
Based on this, it identifies the market needs and demands and accordingly it serves them. Moreover, there are various decisions that Zara takes for the selection of right country market to enter. For this, attitudes of management, needs of the foreign market and nature & structure of the company. Based on such activities, Zara select the market to expand its business operations. Other than that, language, business practice, political and legal systems are also studied by Zara.
For instance, If Zara wants to expand the business in that area where it has less capability to enter into that market due to different in language and less knowledge about the local people. So in that case, Zara also pursue towards the outsourcing strategy which helps in tapping the uncovered market. These practices help the Zara to successfully implement its business operation in international platform (Guan and Rehme, 2012).
Additionally, Customer Appeal tends to be an important feature of Entrepreneurial working. However, Zara also create effective customer service plan in which it uses upper-efficient supply chain, centralised distribution system, brand communication strategy and sustainable adaptation practice etc (Priem et al., 2013).
On the other hand, Zara believes in three steps for increasing satisfaction level of consumers. Step one is to provide the customer that what he/she wants to wear. Step two: Produce clothes in different designs but in small batches. This is because people not prefer to buy repeat clothe which they have seen to wear some other people.
Step three: Optimum utilisation of resources by reducing the cost. This step is completely followed by Zara in the form of use strategy of sustainability in which Zara reuses the fabric and gives design to Fabric. Through this manner, company utilise its unsold material and it helps the company to save maximum investment. By focusing on these steps, Zara appeal diverse cultural group towards the brand. This adds the value in the form of having high customer loyalty.
Managerial Working
Strategic Focus are the important feature of Managerial working and Zara also address such aspect in its functions in a way to align the mission, vision, values and policy of company and communicate effectively to both internal as well as external stakeholders.
For this, company installed the systems, Intranet facilities etc, and these areas maintain the communication level between the management and employees (Hitt and Duane Ireland, 2017). This practice also helps in continuously flow of information and within which proper customer service is delivered. For instances, CRM system helps the Zara to identify the changing needs of customer and based on such changes, company design its product line.
Besides that, Zara focus on the cost leadership and differentiation strategy. Based on such strategy, company provide innovative designs of cloth at affordable price. This adds value in the form of achieving high customer loyalty.
Furthermore, Team Work Spirit is also believed as a vital part of the management as team spirit has a power to utilise the work in an effective and productive manner (García-Álvarez, 2015). Similarly, Zara also emphasis on teamwork through timely conduct of meeting and allows the participants to share their viewpoint.
Besides that, Zara develop teamwork spirit through design it’s headquartering in such a way that employees work with coordination and positive environment will be built up. Zara put managers put manager desk at the end and allow all employees to sit together so that they could freely discuss the ideas and bring value to the company in form of innovation (Hye-Sun et al., 2016). Besides that, Zara also conducts training session in every end of the month when new clothe line is presented to audiences.
In that time, Zara trainer make staff aware about the new design information’s related to Fabric, patter prove etc. this practice allows the staff to answer the customer when he/she ask about the new range of product design. The training session allows the team members to develop the spirit of work together and achieve productivity for the company. Thus, Zara heavily rely on this practice to build the team work spirit. It result in increasing satisfaction of employees and bring reduction in employee turnover.
Additionally, Management-Employee relationship provides support to management in terms to timely delivery of result and brings improvement in customer’s services. Zara is considered as leader of UK market and it becomes due to its healthy relationship with internal and external stakeholders. It is not easy to maintain such relationships for Zara.
In regards to this, Zara introduce reward and recognition system. For Example, On 19 march 2015, Zara parent firm i.e. Inditex launches profit share scheme in which more than 70,000 employees are received bonus (Rae and Wang, 2015). It means that Zara will share the bonus from their profit.
Under the profit share scheme, company decided to share approx. 2% profit to the staff members in the form of bonus. This practice encourages the employees to perform more efficient and provide more productivity to company.
Other than that, Zara also involved the feedback system so that employees can get information about their performance. Likewise, company is used the 360 degree feedback system for making employee realised that in what areas he/she needs to bring improvement. This feedback system tend to be appropriate as in this individual receives the performances review from not only to employer but it includes manager, peers, customers and owners of the firm.
So, this method is quite effective for communicating the information related to performances to the staff members. In a similar manner, Zara also emphasis on the communication practice as company believes that the main reason within which employees are not satisfied is the lack of understanding about the roles, existences of biasness and unfair compensation system.
Because of that, Zara focus all these aspects in the form of use internet and e-mails to inform about the individual roles and responsibility. At the same time, company use the excel sheet for maintaining the records of the payroll. This action avoids the misunderstanding and brings improvement in the relationship between management and employee.
Lastly, as per the growing environmental issues, the sustainable practices play an important role in influencing the customer. In a similar manner, Zara also take initiative towards the implementation of green practices in its business operations. Go green is the Zara new sustainable clothing collection which is launched by the Zara on 2016 (Jang et al., 2012).
This collection grabs huge customer base as this clothing line purely indicates the reuse or recycle of fabric (Garrigos-Simon et al., 2012). It means that Zara reuse its fabric and create new design. This action allows Zara to reduce its maximum cost and increase the efficiency of product and service. However, current strategy of Zara involves the using of certified organic cotton in certain collection and leveraging recycled material.
Not only this, under the supply chain, Inditex partners engaged with 1725 suppliers in over 50 countries and each one is held responsible to stringent with environment standards. Thus, based on study, it can be stated that Zara has successfully performed in both the aspect such as entrepreneurial and managerial. The properly implementation of such aspects helps the Zara to achieve the value through become the market leader and having an high market share as compare to its key competitors.
Significances of the aspects for the Zara in regards to adding value
The above mention aspects of entrepreneurial model provide value to the Zara in the form of fashion leader in global market. For instances, Zara entrepreneur working clearly defines its creativity and innovation which it brings with changing needs of customers (Priem et al., 2013). Likewise, Zara innovate all aspects of the business as it does not stick to the product and focus on manufacturing, data tracking, inventory management, store layout and staff operations.
The innovation in all these aspects allows to developing the quality product and it automatically improves customer services. Thus, this action plans makes the customer loyal towards the brand. Eventually, the innovation allows the company to boost the sales and increase share price in market. Similarly Zara has also got high sales after successfully use the innovative business model. Here are the records of the Zara sales in 2011-16.
This figure clearly shows the increment of Zara sales over the years due to its adaptation of vertical integration business model. It quality focus, unique design at affordable price allows the higher visiting of customers over the Spain store.
Moreover, Zara also get the success in the market expansion due to it enter into the foreign market with proper research and enough funds that’s helps them to sustain in longer duration. In the expansion plan, company focuses more on the 4ps in such a way that it identifies the taste of local people in terms to look at the wear pattern, analyse the people purchasing power in order to decide the price.
Company determine the way within it inform the target consumers about their product. Lastly, it opens the store in that area which is easy to visit by consumers. For instances, Zara target audiences is generally young people who likes the western and casual clothes. For that, company used social sites to give information to target audiences.
This action influences the buying decision of product and service in a positive manner. Besides that, Online shopping facilities and centralised distribution system allows the company to appeal larger target audiences (Gallien et al., 2015).
However, Zara not only effectively incorporate entrepreneurial aspect but it also get achievement in management aspects due to it align the vision, mission of the company and communicate such activities to employees. This practice reduces the chances of misunderstanding and conflicts. At the same time, company focuses on the training, reward & recognition system and feedback process to encourage staff members to perform better.
This result in increasing profit and sales of Zara and these profit generation also satisfy the employees as company share 2% of profit with employees (Özlen and Handukic, 2013). Moreover, Zara is also achieving the value in the form of using the sustainable practices. Likewise, Zara currently deals in pure cotton fabric for producing the clothes.
At the same time, Zara also reuse or recycle the old clothes into new designed one. This action helps the company to increase the efficiency and reduce the requirement of more investment. Similarly, Zara also able to save huge cost through not aggressively promoting of product in front of customers and instead of that, it concentrates on the design and Architect of store that’s appeal larger target audiences. In this, company add value by saving the over spending of money over advertisement.
The vertical integration business model also contributes in the addition of worth in the form of timely availability of raw material, having control over the colour dying, production of fabric process etc. This area assists the company to increase the quality of product. It results in generating the revenue and revisit of customers into the store.
Thus, combination of both aspects results in adding more value to the Zara in the form of achieving competitive advantage over the key competitors like H&M, Mark & Spencer and Louis Vuitton etc. Zara give strong competition to these rivalries through successfully implementing the entrepreneurial management model.
Conclusion
From the above discussion, it is concluded that the Zara is successfully following the combination of entrepreneurial and managerial working. However, Zara is quite creative and innovative company that offers unique product and service to the target market. It is justified that through the Zara agile and integration business model.
Through this model, Zara target the customer through incorporate of cost leadership and differentiation strategy. As per this strategy, company offer the innovative products to target audiences at affordable price. This strategy adds value in the form of customer revisit into the store. Besides that, company supply chain method is also proves to be successfully in terms to appeal the customers.
It is because Zara never produce same design of clothes in big batch as it believes to produce two round of small batch of same design. This practice satisfies the customer as they get new designs when they visit to the store and it also reduce the repetition of clothes. Additionally, company also incorporated well the managerial working through develop the healthy relationship between the employer and employee.
At the same time, company also emphasis on the sustainable practices in order to serve the society and retain the customer base. Besides that, company share its 2% profit as a bonus to employees. These practices result in achieving value in the form of higher productivity and efficiency. On the basis of study, it is analysed that Zara has properly incorporated the entrepreneurial model in its business.
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