Dubai Holding Group is based in the fashion retail industry, with a Functional organizational

structure. The company is owned by three Emirati Partners, managing 6 franchisee brands
(Zara, Zara Home, Stradivarius, Lefties, Sfera and Women Secret), headed by the General
Manager, with the respective Department Heads reporting to him. (Christine Organ, 2023)

The WHY?
As the company’s franchisee brands are in various geographical locations, it becomes
important to have centralised, however specialized functional departments, which can carry
out required tasks with limited approvals required from top management, up to certain levels
of decision making based on functional specialities.
This type of structure has been designed for the company, due to its scalability, consistency,
clear division of specialised work with accountability. The HR, IT, Finance, Project &
Maintenance, Marketing Teams based in Dubai Head Office are the one- stop shop for all
brand’s retail stores in U.A.E. and in G.C.C. countries in the field of their specialisations.
As described by Patrick Gleeson in his article connecting Purpose to Structure, (Patrick
Gleeson, Ph. D., 2022), the company’s Purpose is linked to 4 pillars-the Functional structure
enables the purpose of Service Excellence and Growth, through its specializations and
enables Innovation and Partnership, through collaboration with various functions.
Advantages and Disadvantages of Functional Organizational Structure (Indeed,2023)

Advantages Disadvantages
Clarity regarding the chain of command The individual departments have become
with a Centralised Dubai Head Office helps siloed in their way of working, leading to
in better reporting and decision making. dependence on hierarchy and approvals.
Clear division of specialised skill sets in Little scope for skill development in other
respective departments fields or lateral movement in jobs
Clear accountability for job roles & Decision making takes longer with
responsibilities in respective departments approvals required from the Partners,
General Manager, and each departmental
head.
Transparent reporting lines with clear Conflict of interest as members of each
understanding of hierarchy department do not see the big picture of how
other departments work or contribute to
overall efficiency and goal achievement.
Systematic implementation of projects due 360-degree feedback or upward feedback
to sustained scalability in this structure by from the frontline retail store staff is
each department has supported the sometimes impaired due to several levels of
development of the business from the hierarchy, hindering the time frames within
U.A.E. market to other G.C.C. countries. which top management can take corrective
 action.
Skill based training provided for each role Cross training into other functions is not
encouraged as internal transfers are not
preferred.

London International Studies and Research Center (LISRC) is a Dubai based company in the
EdTech industry, with a flat organizational structure. Headed by the CEO, who directly
manages all the different teams, with no middle managers in between. The company offers
CPD UK Certified courses in Digital Marketing, Human Resources, Data Science and
Cybersecurity to working professionals. (William Craig, 2018).

The WHY?
The flat structure works well as the company is a small start-up, with only 20 employees,
with all employees having the CEO as their direct reporting manager. Being in the highly
competitive Ed-Tech Industry, the flat company structure enables the CEO to keep a tight
control on the operations and people part of the business, make faster decisions to adapt to
the changing market conditions, based on quick feedback from the frontline sales staff.
The Vision of the company is – To be a Global Leader and become one of the Pioneers in the
Ed-Tech industry. This goal is being achieved through a Flat organizational structure, wherein
greater agility and team collaboration helps the company to be competitive. (Jacob Morgan,
2015)
 Advantages & Disadvantages of Flat Organizational Structure:

Advantages Disadvantages
Decision making is faster with nil hierarchy The span of control of the CEO is high -20
and bureaucracy employees, leading to his burnout due to
increased workload
Innovation and collaboration between Delay in work progress, when employee is
employees are higher, with one leader not self -motivated or not monitored closely
guiding the vision of the company by CEO
Employees have autonomy and are well- This structure is difficult to scale up when
motivated opening a new branch in other geographies.
The company can adapt quickly to change There is no internal promotion path for
in market conditions or customer needs, due employees, which has led to high employee
to one decision maker – the company CEO turnover due to lack of career progression
opportunities
Bottom – up communication is faster and
important, due to CEO’s focus on getting
direct feedback with open door policy
 1. Analyse connections between your organisation’s strategy (or an organisation with
which you are familiar) and its products or services, and customers. (AC 1.2)

Analyse how strategy needs to be integrated with products/ services and customers.
You can analyse the vertical and horizontal integration with strategy to achieve organisational
goals. Think about the outcomes of strategic planning tools such as SWOT and PESTLEE.
You can discuss how strategy is formulated and how it links with products/ services and
customers.

Analyse: to break something into its component parts and show how they relate to one
another. In this case, think about the link between organisational strategy and its products,
services, and customers with strategy. How organisational strategies are shaped by the
business and external contexts; organisational insights and organisational performance;
models of strategy formulation and implementation; concept of vertical and horizontal
integration of strategy and how it connects with products, services, customers.

Position statement:

Inditex Group (Industria de Diseño Textil S.A.) was established in 1985 in Spain by its
founder Mr Amancio Ortega, with its first brand as Zara opened in 1975. One of the pioneers
in fast fashion, the company grew quickly with other brands like Zara Home, Lefties, Oysho,
and acquisition of Massimo Dutti, Pull Bear, Bershka and Stradivarius. The business strategy
of Inditex Group focuses on the concept of Fast Fashion, with strengths of vertical integration
and supply chain management, digital transformation, all with sustainability. A sustainable
strategy aligned with its products, services, customers, and people has helped the
organization to retain its foothold in the ever-changing fast fashion industry.
(Inditex.com, 2024)

The How?

Inditex Group follows the 4E Model of strategy- Explore, Enable, Evangelise and
Exploit, producing designs in small batches and then producing depending upon the
market response. The Unique Selling Proposition of the company and its brands,
lies in its ability to ship a garment from the stage of inception to the shop floor
within 15 days. (Economist, 2015)
Stage 1: Strategic Analysis & Objectives

The Strategy of Inditex Group is based on four pillars: Unique fashion proposal,
increasingly engaging shopping experience, extraordinary team, sustainability, and
responsibility.

Based on the SWOT and PESTLEE Analysis as below, Inditex Group has utilised
Vertical and Horizontal integration to be ahead of its competitors.

Vertical integration: Having a 100% control on the resources and costs by owning
the process from purchasing (buys fabrics from own company: Comditel), designing
to manufacturing (more than half of its factories are self-owned) to the retail stores.
This has been possible through the effective collaboration of the designers with the
manufacturers in the Cube in Inditex Headquarters and the Logistics Hub in
Zaragoza, through the Just in Model.

Horizontal Integration: Through the acquisition of brands like Stradivarius and

Massimo Dutti, Inditex Group can offer wider range of product portfolio and reduce
market competition.

Business Model for Inditex Group

 SWOT Analysis:

STRENGTHS WEAKNESSES

Fast Fashion business model, can Product pricing points are higher compared to
process delivery of items within 2 emerging competitors like Shein, especially in
weeks of inception the face of inflation

Production is based on direct customer Ethical concerns regarding exploitation of

feedback with limited inventory, labour could lead to dent in brand reputation
creating scarcity and exclusivity for
customers.

Vertical integration of the process from Lack of loyalty program to retain delighted
design to retail stores, hence better customers, unlike competitors like Shein
control over costs and resources

Has varied brands catering to different Lawsuits against Zara for copying of designs
age groups and market segments,
creating value for fashionistas, from
retail stores to digital Apps to social
media channels.

Use of technology to understand

customer preferences (Personal Digital
Assistants), aiding in faster turnaround
time and RFID for inventory
management.

Sustainable brands with the launch of

pre-owned resale platform,
Sustainability Innovation platform
coordinating with start-ups with
emphasis on circular economy

Instore customer experience is higher

with centrally located retail stores

OPPORTUNITIES THREATS

Can scale up easily in new emerging Emergence of low-cost E-Commerce fashion

markets, with new product lines platforms (Shein, Temu), specifically targeting
GenZ market segment

Needs to focus on increasing online Pressure from investors to provide details of

presence with E-commerce shopping supply chain to eliminate labour exploitation
and Augmented Reality (AR)

Sustainable products can help in Emergence of AI based Style Advisor Apps like
attracting new market segments, eco- Get Outfit, which can steal the market share
friendly customers

Digital marketing budget needs to be Keeping pace with the fast-ever-changing

enhanced for venturing into emerging requirements of customers in different
markets geographies could be a challenge
PESTLEE ANALYSIS

Political Zara Ukraine conflict, Middle East geopolitics

affecting business in varied parts

Economic Increasing inflation levels

Drop in consumer disposable income level

Social Customer preference in usage of sustainable

brands

Gen Z s preferring social media influencers &

Apps

Technological Virtual fitting rooms

Multiple payment options on App/ website:

Tabby, COD

Environmental Sustainable products & packaging

Recycling used products

Legal Labor laws – declare supply chain details.

Ethical Design infringement lawsuits

Stage:2: Strategy Formulation

Transversal and Collaborative Innovation which is the basis for the four pillars
of the company’s strategy and touched every point of its business life cycle. It is
limited not only to the company and its people but to other organizations, or person
to build a sustainable future. A few examples are Zara’s Pre-owned platform, virtual
shoe fitting in Pull& Bear and Zara Home’s detergent, The Laundry which is eco-
friendly. (Inditex strategy, 2022)

Stage 3: Strategy Evaluation

Materiality Analysis is one of the most critical ways by which Inditex evaluates
what is important for all stake holders (internal and external) with Financial
materiality (for Inditex) and Impact materiality (on other stakeholders). (Inditex
strategy, 2022)

Double Materiality Matrix (2022)

Stage 4: Strategy Implementation

Force Field Analysis: Zara- Pre-owned Platform for a Circular Economy -

Repair, Resale or Donate Zara products. (Zara website, 2024)
Stage 5: Controls

Milestones achieved :2023.

In 2023, Inditex’s sales grew +10.4% to reach €35.9 billion, opened stores in 41 new
markets, has 251 million followers on social media, with Gross profit increased 11.9% to
€20.8 billion. (Inditex Annual Report, 2023).
Hence, the strategy of Inditex group is focused on the four pillars as below: (Inditex
Annual Report, 2023)

Pillar:1: Unique fashion proposal- ensuring that Inditex continues to provide quality
and trendy fashion products to customers throughout the globe. Example: Poplin
collection by Stradivarius.

Pillar:2: Increasingly engaging shopping experience- ensuring that Inditex

customers enjoy seamless physical and digital store experiences. Example: RFID
security technology for Zara apparels.

Pillar:3: Extraordinary team-Internal employee promotion (72% of total vacancies),

Orientation program (Zara Coach & Hola training program established in 50
markets) to establish the company as a benchmark employer.

Pillar:4: Sustainability, and responsibility: Promotion of circular economy through

Zara’s pre-owned platform, Sustainability Innovation Hub, and usage of sustainable
materials in textiles (E.g. Loopamid)
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