Zara Organizational Structure

Structure relates to a skeletal framework of activities and processes in an organisation

and specifies the roles of these in achieving goals and objectives of the organisation.
According to (Mullins, 2009), a good structure is highly important due to the fact that
decisions on structure are primary strategic decisions which can make or break an
organisation. One important aspect of a good structure is the human element.
Organisation structure should be designed so as to encourage employees and increase
the morale and job satisfaction of organisation members which will result to overall
organisation efficiency.

(Mullins, 2006) describes nine basic considerations in the design of organisation

structure. The fundamental step is to define organisational objectives to enable further
analysis and comparisons of other forms of structure.

Clarification of objectives
A clear definition of objectives is vital to provide a framework for the design of structure
of an organisation. Organisation objectives provide fundamental schemes for division of
labour and creation of group units and sub units. Clearly stated aims and objectives will
assist in decisions on the strategy and structural dimension to employ to achieve
organisational objectives.

Task and element functions

Certain functions must be performed in order to produce a good or service, from the
development of the good or service to finance of resources used in the complete
processing. These functions are referred to as the task functions. The results of the task
functions must be coordinated to ensure the efficient achievement of total objectives of
the organisation. Element functions refer to vital parts of the management process and
are supportive of the task functions such as human resources and public relations.

Division of work
An organisation needs to accomplish an overall task of allocating many different
activities to groups of people or individuals to achieve its objectives. The division of work
and grouping together of individuals should be organised according to a basic criterion
to establish a coherent link between the activities involved. The division of work and
linkage of activities occur in various ways such as specialisation, use of similar
resources or common expertise of organisation members as the most commonly used
basis for grouping activities. Others include division by product or service, division by
location, division by nature of the work performed, division according to common time
scales such as shift working, division according to staff employed such as allocation of
work based on experience and so on.

Centralisation and decentralisation

The extent of centralisation or decentralisation refers to the point of critical decision
making in an organisation which reflects patterns of authority in a structure. In
centralised structures decision making authority is within the power of top management
while decentralised structures, decision making authority is delegated (Rollinson, 2005).
The arguments in favour of centralisation in an organisation entail the easier
implementation of a common policy, easier coordination and management control,
preventing sub-units from becoming too independent, over-head cost reduction and
faster decision making because of the smaller number of people involved. In contrary,
arguments for decentralisation include decisions being made at a point closer to
operational levels, increased responsiveness to local circumstances, improved level of
personal customer service, more flexible structure, control is distributed more evenly
which provides opportunity for development for those lower down, and encouraging
effect on motivation and morale of staff. Basically, decentralisation tends to be easier to
implement in the private sector organisations than public sector ones where procedures
and protocols are the order of the day. Decentralisation being a more flexible approach
provides support for employee participation and empowerment at all levels which
increases innovation and improves technology while centralisation ensures
professionalism in all activities by maintaining effective coordination and overall control
of the organisations activities as a whole. A mix of both such as being global and local,
practically being decentralised with a central control and authority should produce an
organisational advantage.

A vivid illustration of decentralisation is the Zara fashion enterprise (cited in Mullins,

2009, p.596), where the company derived its success from integration of design,
production, logistics and sales within companies globally rather than separating and
outsourcing this different business elements unlike its contemporaries in the fashion
industry, while still keeping control of all major operations in Spain. The company
rejected rigid organisational structures in favour of a more flexible approach which
comes from a highly integrated, fast and efficient form of communication between its
global network of outlets and central hub of operations in Spain. The industry average
time for introducing a design into the shops is six to nine months; Zara achieves this task
in three to four weeks. What is peculiar here is that Zara only makes what is selling at
the moment, store assistants and managers constantly get information about what is
selling and how quickly it leaves the racks implying that local managers have a strong
influence on their store’s success and thus the company overall.

On the other hand, an illustration of centralisation is that of Nissan Motor Company

(cited in Certo and Certo, 2006, p.123), a successful global automobile manufacturing
company where the new CEO ordered calls for the elimination of 30 per cent of
production capacity in Japan due to recent financial difficulties. The CEO’s plan is to
help reduce expenses as well as close offices in New York and Washington with a view
to centralise company operations in Japan to enhance success.

Principles of organisation
The ten principles of organisation include principles of the objective, specialisation, co-
ordination, authority, responsibility, definition, correspondence, span of control, balance
and principle of continuity.

Span of control
This refers to number of subordinates who report directly to a particular manager or
supervisor. Span of control is larger at lower levels of the organisation where
responsibility is concerned more with the performance of specific tasks. If span of control
is too wide, supervising too many subordinates effectively becomes difficult and stressful
for managers as well as planning and development, training and control. Narrow span of
control may lead to low morale and initiative of subordinates due to close supervision
level, and also increase administrative costs.

Chain of command
This refers to the number of different levels in the structure of the organisation, the chain
of hierarchical command. Every employee must know there position within the
organisation structure. The combination of chain of command and span of control
determines the overall pyramid shape of the organisation and whether the hierarchical
structure is flat or tall. Flat hierarchical structure depict a broader span of control and few
levels of authority while tall structure depicts narrower spans of control and more levels
of authority. There is no ideal hierarchical structure but it is best to have a balance of
both.

An illustration is Mc Donald’s fast-food restaurants (cited in Certo and Certo, 2006,

p.236). Mc Donald’s decided to reorganise its global senior management team as a
reaction to its recent poor financial performance. This involved creating two geographic
areas of responsibility. The new positions focuses on managing operations in the
America’s while the other in Europe, Asia and the Pacific. The new structure evolved
with a view to create clearer lines of responsibility and more focus on the company’s
financial performance within the territories. The new organisation hierarchy was also
aimed at helping the company make business decisions more quickly.

Formal organisational relationships

This refers to individual authority relationships arising from defined patterns of
responsibility in an organisation. This are identified as; line relationships where there is a
direct relationship between subordinate and supervisor; functional relationships between
people in advisory positions, and line managers and their supervisors; staff relationships
are usually personal assistants who exercise only representative authority.

Line and staff organisation

This provides a means of making full use of specialists while maintaining the concept of
line authority.

Project team and matrix organisation

A project team refers to a separate unit set up temporarily for a particular project which
is disbanded when the duration elapses while matrix organisation involves functional
departments specialising in numerous activities.

In conclusion, the overall effectiveness of the organisation will be influenced both by a

healthy structural design, and by the behaviour of people who work within the structure.
There are numerous variables and factors which influence the soundest structure.
Nothing like a perfect organisation exists but it is crucial to establish a framework of
order and system through which organisation activities can be planned, organised,
directed and controlled. Since structure divides up the organisation into different parts
and specifies what roles these will play in achieving specific aims and objectives, it also
provides for control and coordination of the parts to achieve this goals. Basically, the
essence of structure is the division of work among organisation members, the
coordination of activities and various jobs which are inter-related.

References
 Certo S.C and Certo S.T. (2006) Modern Management. 10th edn. Prentice Hall
Mullins, L.J. (2009) Management and Organisational Behaviour. 8th edn.
Financial Time Press Rollinson, D. (2005) Organisational Behaviour and
Analysis: An Integrated Approach. 3rd edn. Financial Times/ Prentice Hall