GMS 200 – Winter 2020 (Dr.

Vik Singh)

MINI ASSIGNMENT #2

Note:

1. The assignment is to be done individually using this file and submitted on D2L in the folder “Mini
Assignment 2”. Keep the format in word and do not convert to PDF. Please save the file as “Last
Name_First Name.” No paper copy is required to be handed in.
2. The due date for the Assignment is in the course outline. Late submission as per the course outline will
apply.
3. The assignment is based on Case 2 – Zara International and Case 10 – Hudson Bay.
4. Total marks – 25 (5% of final grade).

Case 2: Zara International (Questions 1-3)

1. In what ways are the elements of the classical management approaches evident at Zara International? (5
marks)

There are three different classical management approaches; scientific, administrative and bureaucratic.
Zara exhibits the characteristics of each one of the three management approaches in their business
strategy. Scientific management revolves around the idea of understanding the science of a task or job and
breaking it down into the necessary actions needed to do the job. This allows you to do exactly what is
necessary to improve performance. Hiring people with the skills that are beneficial to the job and the work
it entails is an approach that follows scientific management. Administrative management approach is about
creating a strategic plan as to how the business should be run and going about it. Their overall plan for
their business is to sell really fashionable items for accessible prices. They keep up the new trends which
are constantly changing. This allows people who are more attracted to the high-end fashion pieces shop at
Zara. They are consistently trying to understand the styles that are most and least popular so that with the
next rotation of items in store, there are more appealing to their customers. They know what doesn’t sell
so when it doesn’t, the designers try to create new styles that can potentially be more popular in store. The
bureaucratic management approach is about understanding the hierarchy in the work environment. It
focuses on having good leadership and an authoritative aspect to the work force to ensure that there are
rules when working. When workers observe that a product is not selling well, it is necessary for them to
understand who exactly to report it to. As there is a clear division in labour, there are specific
responsibilities for each job. By communicating concerns, suggestions or ideas to the wrong person, good
opportunities to progress can be lost. Understanding who is in charge and who to report what to is the
approach of bureaucratic management. Zara has incorporated this idea into their business strategy very
successfully. They are careful with their steps towards new designs, how to create them and how to sell
them in the best way. They also succeed in getting products into stores and rotating their items in a way to
optimize sales which showcase their organization in the workforce.
2. How does Zara’s approach differ from its competitor H&M? (5 marks)

One of Zara’s competitors is H&M. However, there are many differences in how both stores run their
business. One of the differences is the type of clothes they sell and how they sell it. Zara is known for
selling highly fashionable items at a price that is suitable for many which allows everyone to have a high-
end fashion look without overspending. Their ultimate focus is the trendy new items. However, H&M also
sells clothes that are more comfortable and everyday staple items as well. These comfort pieces are
inexpensive as they are simple and basic styles. “Around one-quarter of its stock is made up of fast-fashion
items that are designed in-house and farmed out to independent factories” (textbook). However, Zara
approaches this type of item differently. These are items that are moved around fast and often replaced by
the new designs created by the designers to match with what is highly demanded in the store. Another way
the Zara’s approach differs from H&M is through how they go about their selling strategy. Zara’s parent
company, Inditex, finds it important to cut down expenses wherever it is possible. When it comes to
advertisements, Zara only spends about 0.3%. H&M spends roughly 3-4% on their sales on ads which may
seem like nothing, but when compared to Zara it seems needless.
3. How can systems concepts and contingency thinking explain some the distinctive practices underlying
Zara’s success? (5 marks)

Organizations as systems can be showcased in subsystems. Subsystems are smaller systems that consist in
the bigger system. Within the overall system within Zara, there are multiple subsystems allowing things to
run smoother. Having these smaller components allow more control in their business as different sections
that show importance to the bigger system are run with like-minds and skills. One of the things that Zara
was appreciated for was how fast products will be in store. This is made possible due to having different
skilled workers work in this groups or systems to move toward a common goal within those systems. Each
role that an employee has is directed towards a different and necessary aspect of making Zara a successful
business. They use these subsystems in shipments as they don’t have it all flooding in at once. They order
accordingly which helps control the number of products that are in store and to avoid having multiple of
less popular items. Contingency thinking promotes an idea that there is not one way to manage. There are
multiple approaches that can be considered when problem solving or simply making new innovative
decisions. Any decision is taken with consideration of what is suitable for the situation. This is a factor
towards Zara’s success because everyone’s ideas are considered, and it is not just about authoritative
figures making decisions. There is no one perfect way to manage, so all ideas are important as it will help
spark new ones that move towards success. This free form of managing allows employees to recognize that
all problems should be faced with much thought and that there are multiple ways to go about it, but all
approaches should be analyzed with caution to receive the best possible outcome.
Case 10: Hudson Bay (Question 4)

4. What does an analysis using Porter's five forces model reveal about the industry that HBC competes
within? (10 marks)

The Porter’s five forces model have threat of new entrants, threat of substitutes, bargaining power of
suppliers, bargaining power of buyers and industry rivalry. Threat of potential new entrants requires us to
consider how profitable the industry is, what barriers there are to enter like patents, cost advantages and
disadvantages, and much more. HBC should recognize the new stores that are entering the large retail industry
and how they can become a threat to their success. To go about this, they have to understand how to keep
their image and brand fresh. They have to ensure innovative ideas to keep the customers loyal to the store.
Being a retail industry, it is important to keep bringing items that are up to date with the new trends. Trends in
fashion are always changing so it is important to be up to date and quick when bringing it into store to reach a
good amount of sales. New stores try to bring in new methods and attract many, so it is important to recognize
the new wave of products that are popular. Price is also a large factor in the customers you attract. Reducing
costs in production can allow for reducing costs on the product and attract more people. Threat of substitutes
is about recognizing is an aspect that makes you find out who your competition is; what are potential close
substitutes? One of the companies that can be recognized as a substitute is Nordstrom. To remain successful
when being in a competitive industry is to recognize what customers value the most. It is not just about the
product sold but the service and even the overall aesthetic of the store. The good service provides the
customers a fulfilled experience when shopping allowing them to want to come back. Having an aesthetically
pleasing store is also important as when compared to others in the same mall for example, buyers would be
more drawn to the store that looks better from the outside. Another force is bargaining power of suppliers
which makes you recognize who can provide the supplies needed with the business reaching the best outcome.
Suppliers who recognize that their service is significantly better than many will raise prices. Having good
relationships with suppliers creates a form of loyalty and creates room for negotiations and discounts. It is also
important to be creating these relationships with many suppliers in case of a situation in which suppliers must
be switched. It should happen with ease and this difference should not be noticeable unless it is for the better.
Bargaining power of buyers recognizes our customers and their behaviour towards the store. Buyers want good
quality products for low prices. Creating an impression upon the buyers that creates a form of loyalty and
appreciation for the store will create more long-term buyers who are pleased with the products bought.
Creating new products consistently can reduce the power on the buyers who would want to negotiate prices as
they will be more appealed to the new products. Intensity of industry competition is a factor that considers the
how many competitors you have, impact of these competitors, economies of scale and so much more.
Recognizing that this retail industry is large and highly competitive is important for HBC. Their competitors such
as Nordstrom are also very successful. To remain successful, HBC should recognize a unique approach to
running the store to ensure a differentiation from the rest of those in the industry. It is important to compete
with not just the quality of the products but recognizing the trends in the market overall.
References:
Singh,V. (2020). Porters 5 Forces [PDF]. Retrieved from
https://courses.ryerson.ca/d2l/le/content/342129/viewContent/2803151/View

Shermerhorn, J.R. (2018). Management. ETOBICOKE ONTARIO: John Wiley & Sons Canada.