Organisational Behaviour

and Management

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Table of Contents
Introduction................................................................................................................................3

Company Background............................................................................................................3

Scenario- Franchise opportunity to entrepreneurs.....................................................................3

Franchise................................................................................................................................3

Impact of franchising opportunity to entrepreneurs...................................................................4

Impact on Human Resources.................................................................................................4

Impact on Marketing..............................................................................................................5

Impact on Operations management........................................................................................6

Impact on Information System...............................................................................................7

Impact on Finance..................................................................................................................8

Conclusion................................................................................................................................10

References................................................................................................................................11

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Introduction
Organisational behaviour relates to the attitude of the personnel and groups interrelate with
organisation and the impact it has on the performance, goals etc. (Griffin, Phillips and Gully,
2020). The essay is about the strategic decision and management of Zara. The essay will
discuss the overview of the company. The essay will detail about the impact of decision of
company to offer franchise opportunities to entrepreneurs seeking to buy franchise. The essay
will discuss about strategic decision’s impact on the Marketing, Information system. It will
also brief about its influence over human resource management. Further the essay will detail
about its effect on operation management and Finances of company.

Company Background

Zara is internationally famous fashion brand which is associated with Inditex Group. It
originated from Spain in 1975 and it’s headquarter is situated in Galicia. Its outlets are spread
in over 73 countries with 2600 stores. Inditex operates its all stores except in places where the
ownership is restricted. It is known for rapid product development which assists in launching
over 10000 designs each year. Its most of factories are located in European countries due to
which the major portion of productions is done in European countries while some part being
in Asian because of long shelf life (Gulcebi and et.al, 2021). It business model is fast fashion
which aims at selling quality clothing at convenient prices. It also follows innovate approach
in which it do not spend on marketing instead opens a new outlet. The reason of success of
the brand is due to its strategy of offering high end fashionable products at low price and
instant adopting of new trend which led to market capitalisation. It operates on vertical
integrations model which involves the department like designing, sourcing, manufacturing
and distribution, retailing. The company is also responsible for carrying out all the functions
without any intermediary which impacts its growth positively.

Scenario- Franchise opportunity to entrepreneurs

Franchise

Franchise is a strategy of business expansion in which the license is permitted to franchisee to

franchisor’s business procedure, knowledge, resources, trademark etc. This grants the
franchisee to transact in the product registered under franchisor (Gillis and et.al, 2020). For

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this purpose, the franchisor has to pay certain license fee for acquiring the right to franchise.
Zara as way to expand its business further chose to offer franchise to the entrepreneur who
are interested to associate with the brand.

Impact of franchising opportunity to entrepreneurs

Impact on Human Resources

The decision to offer franchise to entrepreneurs results in expansion of company in more

geographical locations. This creates job opportunities as franchise will need appropriate
people for its operations (Shitemba and et.al, 2022). This increases the demand of human
resource which leads to increase in recruitment, training and development. For effective
handling of the people from different locations with varying skills, backgrounds, beliefs,
culture etc. the organisation requires to strengthen HR department for efficient handling. It
also has to ensure that franchise outlet reflects the brand values.
The franchise strategy also help the company to have insight of the expertise and knowledge
of the entrepreneurs at local level which facilitate in gaining knowledge in relation to regional
market along with adapting cultural differences effectively. This requires investment to be
made in offering cross cultural training for the development of the employees working in
franchise outlets. This results in creating workplace with the diverse talents belonging to
varying backgrounds.
It also influence the way of management of human resources. The expansion requires
effective communications system for ensuring smooth coordination amongst the franchisees
and company (Nsaibia and Edelswärd Sneitz, 2023). This requires streamlining of
communication with the implementations of technology and ensuring secure data flow. This
also needs the employees to be trained to be familiar with the new systems and be adaptable.
It also modifies the organisational structure; it requires the delegation of responsibilities to
franchisee. This requires the company to focus on employee engagement and empowerment
as they are essential in maintenance of brand image. This requires offering the employee with
resources, assistance and training for effective management of franchise stores.
It also influences the motivation strategies and employee retention tactics. The expansion
offers more career advancement opportunities to employees (Abd Aziz and et.al, 2021). This
positively influences the existing employees as well appeal to top talents wanting to enrol in
organisation. It also leads to focussing towards developing positive work environment and
offering learning opportunities for employee to enhance retention and commitment to brand.

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Impact on Marketing

The franchise offering to entrepreneurs leads to marketing of brand to wider reach. The
partnership with the entrepreneurs allows the brand to enter into unreached market and new
customer base. This assists the brand to understand the fashion preferences in accordance to
culture of different regions and expands its product line with the clothing and accessories that
aligns with the people’s choices accordingly (Lee, Kim and Rhee, 2021). This results in
creating more customised and inclusive marketing campaigns to target effectively the
customer base which leads to increment in sales and awareness of the brand.
In order to makes aware that the franchisee have the knowledge of the marketing tactics and
campaigns etc. to align with the one which is utilised by company, training is required to be
imparted to franchisee. This led the marketing department to create training programs to
facilitate with the knowledge of strategies, tools and resources used by the company to
construct marketing campaigns which effectively reach the targeted audience.
The franchise also allows the Zara to have stores in such locations which are not explored yet
and was difficult as well (Hussain and et.al, 2020). It allows setting up business in countries
which requires strict regulations to follow along with huge resources and time consumption
involved. The franchise result in creating presence in untapped market and fulfilling the
demands of customers which amplify its reach and leads to strong engagement with
customers.
It influences the marketing due to diversifying the product offering. Due to franchisee
established in different locations with varying skilled people it is able to provide huge range
of products in stores assisting the brand to feed the diverse product preferences of customers
(Thaichon and et.al, 2020). This assists the company to have the competitive advantage due
to adapting to trends prevailing among the customer by offering the products in accord to
demands.
Franchisees are accountable to perform the daily operations like inventory management,
customer service, staffing etc. This helps the company in focussing on the core competencies
like designing, manufacturing while franchisee has to overlook only retail operations. This
results in lifting the burden off the brand and ensuring proper maintenance of brand and
customers achieve the best shopping experience. This leads to development of loyal customer
base along with the positive image of brand.

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Impact on Operations management

The decision to offer franchise to entrepreneurs leads to decentralisation in the decision

making. Although the company follows the centralised approach in overlooking operations
but the franchising model adoption requires navigating towards the decentralised approach as
the franchising model requires the decision to be made at store level (Kremez and et.al,
2021). This leads to providing the franchise partners control on the operations such as
inventory management, product pricing, marketing strategies etc. From this, the company
will experience faster decisions. This results in avoiding unnecessary delays in obtaining
approval relating to any operations leading to more effective operations.
It also helps in eliminating the risk linked with expansions. In order to keep the operations
flow without any disruptions it has to adapt the operation to suit preferences on customer
behaviour located in regions. In locations where the demand of traditional clothing is high
requires to change the focus of the designing and manufacturing operations towards more
traditional based. In similar manner, it has to introduce the suitable clothing line catering to
regional market. The localisation strategy adoption because of the franchising decision will
result in the increased sales and higher customer satisfaction.
It also leads to reductions of operational cost as the company do not have to spend on
establishing stores, warehouses in the locations of franchisee which is very expensive and
risky as well. The risk of setting space for the various operations is on entrepreneurs. This
allows the organisation to shift its focus to other parts of operations like designing,
manufacturing, distribution etc. which results in more effectiveness and finance saving on
operations.
The products manufactured by Zara are known for its qualitative standards. The franchising
needs the management team to facilitate the guidance, assistance and resources required to
maintain the consistency for which its offering is known for. This may lead to development
of the department which overlooks the standard and quality of products being transacted by
franchisees.
The establishment of stores in more location leads to the rapid growth in the demands of
products. In order to effectively fulfil the demand and maintain customer satisfaction requires
the operations management to ensure that supply chain is efficient. To achieve this, the
supply chain needs to be revaluated in order to make sure that it is agile to meet the dynamic
demands and trend. The operations like logistic and distribution also require refining to
ensure that the stores do not face delays in receiving the products to stores. This leads to

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increasing the focus on adopting the enhanced transportation systems which is cost effective
as well timely reaching. This also helps in fulfilling its commitment to rapid customer
delivery with its fast fashion model.
It has multiple operations like inventory management, design process, marketing operations
etc. which compels the business to set up training programme for facilitating the knowledge
of operation to people overseeing the process at the franchisee stores. The arrangement of
regular sessions results in achieving the excellence in various operations.

Impact on Information System

The franchise strategy influences the information system within the organisation to adopt
effective supply chain management system. With the franchise, the stores number sees the
increase along with the inventory levels. For effective tracking and management of inventory
levels in various franchisee stores in real time needs sophisticated system. The company
operates on pull system which allows in responding rapidly to requirement of customer
demands by facilitating the store with the required products within few days. This requires
the system to be integrated into the franchise for ensuring flawless supply chain procedure.
The franchise model also requires the set of effective communication system within the
company. Due to the independent operations of franchisee, it is very essential to set up
communication channel which is smooth and interrupted between the franchise partner and
company. This involves the frequent updates in relation to product launch, supply chain,
marketing campaigns etc. This requires the organisation to invest in communication model
which allows real time information and data sharing and communications without any delays
between them. This guarantees that the franchisees are aware of the strategies of the company
and rapidly adapt to the alterations in the market.
The impact of franchise leads to the requirement of data standardisation and integration in the
information system of organisation. The increased stores operating under the license of Zara
requires unified system for capturing and analysis of data from stores. This assists the
company in making accurate and informed decision on the basis of collected data in relation
to customer behaviour, fashion trend etc. It leads to investment in the data management
which is centralised which integrates data from across all stores offering holistic view of
performance of business.
It also requires regularisation of procedure in stores. This makes sure the consistency in brand
image and customer experience consistency. For this, the organisation has to implement SOP

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for the franchisees, stating guidelines and expectation from operations of stores. It ensure that
franchisee have the access to standard procedures and necessary documents. This makes sure
that the operation is in sync with standards of company and sustains its brand and reputation.
With franchising the organisation will be introduced to responsibilities concerning the
protection of the data of customers as well as its operations. In order to tackle this, the
company requires to implement latest security measures to control the access of sensitive
information to franchisee as the leak of data can lead to huge loss of monetary value as well
as reputation to company.

Impact on Finance

The organisation has positive influence with the franchise on the financial performance. It
experiences the boost in revenue due to increased sale which is the result of expansion and
appealing increased number of customers from various locations. It also results in higher
profitability for company. It also saves the huge investment required to set up stores in
multiple locations and its operations as the franchisee is accountable to incur expense from
setting up to keep the operations going (Husain, 2021). It will also create stable income
stream for company as from the franchisees the organisation receives fees for obtaining
permit to deal in products and royalties as well.
The franchise also assists the firm in mitigating from the financial risk, uncertainties and
burden. The franchisee is solely in charge of overseeing the daily operation; this makes the
company less vulnerable to operational cost and risks. This helps the firm to concentrate on
the core competencies and reserve the resources for the development of new products and
managing the brand (Lee, Kim and Rhee, 2021). Franchising helps in rapid and flexible
expansion without incurring the cost of market research, resources etc. which is financially
beneficial and less risky.
It also leads to redesign the financial management approach within the company. As with the
expanded franchise network requires the efficient financial system for tracking and
monitoring the financial performance of franchise. This includes establishing standards for
financial reporting, conducting financial audits and facilitating training and assistance to
franchisees for financial management. It also needs to formulate new policies associated with
the finance and system of monitoring to make sure that franchisees adhere to financial
policies.

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With franchising the company confronts with the financial risk like underperformance of
franchise, trends, and economic situations of the various locations and challenges of legal
regulations. This requires the financial department to carry on risk assessment and develop
risk mitigation strategies for the purpose of navigating through uncertain situations and
secure the financial well-being of organisation. Franchising requires the development of
appropriate budget and financial forecasting procedure which leads the financial teams to
collaborate with strategic planning team for making budget which is within the limitations
and orient with goals of franchisee.

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Conclusion
The essay was on the strategic decision and management of Zara. The essay detailed about
the background of the company. The essay was on the impact of decision of company to offer
franchise opportunities to entrepreneurs seeking to buy franchise. The essay detailed about
the impact the decision made on the human resources like recruiting the talents, training etc.
The essay briefed about influence on marketing and operation management like adopting the
customised marketing campaigns, creating new departments like quality control. Further the
essay detailed about the influence on the finance and information system within organisation.

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References
Books and Journals
Abd Aziz, N.A., Ramdan, M.R., Nik Hussin, N.S., Abdul Aziz, Z., Osman, J. and Hasbollah,
H.R., 2021. The Determinants of Global Expansion: A Study on Food and Beverage
Franchisors in Malaysia. Sustainability, 13(18), p.10328.
Gillis, W.E., Combs, J.G. and Yin, X., 2020. Franchise management capabilities and
franchisor performance under alternative franchise ownership strategies. Journal of business
venturing, 35(1), p.105899.
Griffin, R.W., Phillips, J.M. and Gully, S.M., 2020. Organizational behavior: Managing
people and organizations. CENGAGE learning.
Gulcebi, M.I., Bartolini, E., Lee, O., Lisgaras, C.P. and Onat, F., Mifsud,.,… Zara,
F.2021. Climate change and epileps: insights from clinical and basic science studies. doi, 10.
Husain, S., 2021, December. Financial Appraisal of the Fast Moving Consumer Goods
(FMCG) Industry of India. In Proceedings of the International Conference on Advances in
Management Practices (ICAMP 2021).
Hussain, D., Grünhagen, M., Panda, S. and Hossain, M.I., 2020. Franchising in South Asia:
Past, present, and future developments. Journal of Marketing Channels, 26(4), pp.227-249.
Kremez, Z., Frazer, L., Weaven, S. and Quach, S., 2021. Ecommerce structures for retail and
service franchises: Ecommerce implementation in mature franchise systems. Asia Pacific
Journal of Marketing and Logistics, 33(6), pp.1292-1308.
Lee, E., Kim, J.H. and Rhee, C.S., 2021. Effects of marketing decisions on brand equity and
franchise performance. Sustainability, 13(6), p.3391.
Lee, E., Kim, J.H. and Rhee, C.S., 2021. Effects of marketing decisions on brand equity and
franchise performance. Sustainability, 13(6), p.3391.
Nsaibia, R. and Edelswärd Sneitz, M., 2023. Motivation and autonomy in a digital
organisational communication of a swedish franchise system.
Shitemba, K., Darlington, P.O., Kasse, S.N. and Ukpere, W., 2022. Franchising as a strategy
for job creation in the clothing sector: A case study of Walvis Bay. Journal of Economic
Development, Environment and People, 11(4), p.31.
Thaichon, P., Weaven, S., Quach, S., Bodey, K., Merrilees, B. and Frazer, L., 2020. Female
franchisees; a lost opportunity for franchising sector growth?. Journal of Strategic
Marketing, 28(2), pp.107-122.

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