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The Study of text with a focus on individual and group exploration of organization can be said as organization behavior. Organization behavior is functional discipline, which helps to explain behavior in organizations in term of valid philosophies. Management can be defined as the process of planning, organizing, leading and controlling financial resources, human and material of an organization. Organizational behavior is concerned with organizational phenomena while management is concerned with professional disciplines.
An open system is a system where the organization needs have contact with the environment, interactions, its flow and information. Scott (2003) defines it as "congeries of interdependent flows and activities linking shifting coalitions of participants embedded in wider material-resource and institutional environments". Followers of this method consider external relationships more important than the internal ones.The above definition entices a relation of dependence between organization and the factors that are surrounding it. The main features of the open system model for organizations are the inputs, the transformation process, the outputs, organizational aims and the measures of achievements. As the open system model features all the required process for an organization to work. It can be used as a generic model. This model helps the organization to work smoothly and also helps to achieve their aims. The chosen organization 'Zara' is a retail company.
Founded as a maker of ladies lingerie in 1963. Zara opened its first store in La Coruna, Spain as a retail clothing company in 1975. The company had 98 retail shops by 1989 and its production facilities were distributed around Spain. In the same it started its international expansion by opening its first store in Portugal. It was just a beginning of what has become a huge expansion plan across the world. Now it's the largest and most profitable unit of Inditex group. Inditex group is the parent company of Zara. The Spanish giant now has 1300 stores across the world.
As retail consultant Jonathaon May comments, "This rapid expansion has meant that Zara now has three characteristics that distinguish from its competitors. First, it is the fastest growing retail business not only in Europe but also across the world. Second, it has been able to successfully export its formula at a time when many other clothing companies in the middle and lower middle markets have found it difficult. Next, for example, is a fantastic company, but has always struggled to export its particular format. And third, it has created a simple singular message for all its customers. The shopping experience is upscale, while the product offering is good quality, but not best quality, at a good price. It might well have sacrificed a little on technical quality but it has more than made up for it through product design in terms of fabrics, colours, pattern and styles. If you go into a store this immediately hits you and then when you look at the garment you will see that the price tags are big and colourful, emblazoned with the flags of a dozen countries, each accompanied by a local currency price that is the same for that item around the world, from Madrid to Riyadh to Tokyo".
The basic idea of Open system Model for the organization Zara will be clear by the following chart below:-
Environmental Influences affecting Zara
Transformations of Zara
Planning a system
Giving customer with high quality service
Project management of customer order
Internal and external communication
Inputs of Zara
Measures of Zara's achievement
Improvement in performance
Aims of Zara
Outputs of Zara
Reputation for excellence
Organisations are affected by various external factors. These external factors affect the organisational growth. It also affects the operations of an organisation. Economic environment, Social environment, Technological environment, Environmental environment and Legal environment are the main external factors that currently impacting the organisations. It is very important for organisations to understand their external environment as it helps to improve their organisational performance, helps the organisation to respond to opportunities, risks, challenges and limitations, and also helps maintain a position in the market.
In analysing the macro-environment, it is very important for the organisation to identify the factors affecting the organisation. PESTEL analysis is a standard and simple technique used to analyse the external environment of the organisation. A clear view for PESTEL analysis is given below;
Political Environment - The Spanish government and retail brands agreed together on pushing an image of healthier bodies by putting the clothes upto size 38 on the windows of the shops. [Spain to standardize, 2007]
Economic Environment- Spain had the highest European unemployment rate of more than 20% in 1990's. The growth of the organisation increased the economy and reduced the rate of unemployment. [Wilkinson,2007]
Social Environment - Now-a-days growing acceptance of metro sexuality is an advantage for Zara. As now men are also more fashion oriented. Also people want to look younger and ageless as they are getting older and older. This is a major impact on Zara for its designs.
Technological Environment- New technologies is very important for a fashion retailer to ensure quality. The time taken between developing a garment until it lands in the store shelves also depend upon the technology they use. Zara is the industry for instant fashion.
Environmental Environment- Inditex, the parent company of Zara has stopped sales of fur garments. The Spanish giant supported the protection of animals and the environment. [ Zara bans fur,2004]
Legal Environment - The retail companies has to consider the jurisdiction system of each and every country because national laws have a strong impact on the retail industry when expanding internationally. As Bulgaria and Romania became the part of European Union since January 1st 2007, they have potential locations for production facility, where cost can be held low.
"Organisational structure is the pattern of relationships among positions in the organisation and among members of the organisation. Organisational structure makes possible the application of the processes of management and creates a framework of order and command through which the activities of the organization can be planned, organized, directed and controlled. The organizational structure defines tasks and responsibilities, work roles and relationships and channels of communication" [Mullins 2005]
The objective behind creating an organizational structure is to link all the individuals in established network of relationships so that authority, responsibility and communications can be controlled. The organizational is very essential to assign various levels of authority and responsibility to groups or individuals to attain the desired outcomes of the organization. The organizational structure also creates a hierarchy or pyramid of commands in which authority flows downward and responsibility flows upwards. [ O & B coursebook ,2004]