Given the competitive and dynamic nature of the business environment, benchmarking methods for organizations are becoming inadequate. As firms try to be strategic in their plans, it is important to monitor their capabilities and performances in order to map the best direction through which organizational objectives would be achieved ( Hill, Jones & Schilling, 2014) . In this regard, Zara’s clothing company has tremendously grown over the years with its popularity allowing the firm to attract more clients and compete against their rivals. The online fashion store successes have attracted competitive rivals such as H&M to try to eliminate the company’s competitive edge ( Turker & Altuntas, 2014). In light of this, it is necessary for the business to measure its performance and identify ways in which the firm’s potential would be improved. Therefore, a balanced scorecard enables financial performance to reflect other key areas such as customer satisfaction, innovation, and internal processes to safeguard future performance.
Zara’s Balanced Scorecard
| Area of Objectives | Target Measure | Time | Primary Responsibility |
| Customers | |||
| Satisfaction in shopping experience | 20% EBIT increase | 2018 | Improve customer service by training employees Expand stores for customers to shop in |
| Increased varied products to shop on | 65,000 new designs | 2018 | Use customer feedback to create more favorable designs |
| Employees | |||
| Welfare | Decrease employee turnover by 35% | 2018 | Motivate and meet individual needs of employees Develop their professional capacities |
| Processes | |||
| Lowering the Cost of production | Marginal cost decreased by 10% | 2018 | Increase Asian production of clothes |
| Community Social Responsibility | |||
| Increased employment | Reduce the rate of unemployment in Asian countries by 2% | Every year | Outsourcing |
| Ethics | |||
| Employee green strategies | Green energy used in production increased to 70% | 2019 | Apply proper waste management techniques Use cleaner alternative sources of energy |
| Financial | |||
| Financial sustainability | Increased net income by 5% | 2018 | Optimize operations Increase sales through raising product portfolio Practice Total Quality Management |
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Zara’s Contingency Plan
Internal Environment
According to Coste-Manière, Charpentier, Boyer, Croizet, Van Holt & Chhabra (2018), the firm records high employee turnover due to the stressful and subjective work environment. Therefore, promoting younger employees and giving them good working environments as part of their motivational strategies would be effective for business growth. At the same time, the firm would work on increasing the number of employees as part of the overall strategy of reducing the rates of unemployment. Also, increasing employment aligns with the firm’s objectives of increasing designs and opening more stores while reducing the current workload of employees. Also, the predicted increase in the general Asian population not only increases the supply for labor but also creates new markets for Zara’s products. Despite Inditex’s possibility of incurring more costs of hiring, promoting, and training, addressing the needs of employees will increase the overall performance of the company.
External Environment
On the other hand, the growing need for business to adapt to environmental sustainable processes are putting pressures to firms. The likelihood of having compulsory sustainable processes will increase in the coming years ( Ioannou & Serafeim, 2017). In this regard, the firm will seek to adopt greener energy sources to reduce the carbon footprint while embracing proper waste management practices in conserving the environment. The need to improve environmental conservation for the sustainable future will be adhered to in order to be certified. Additionally, the constant changes in consumer behavior force businesses to be agile in meeting the demands ( Bachmann-Medick, 2017). In this case, Zara’s Clothing will be culturally sensitive where clothing designs ill incorporate cultural aspects. This is to capture the attention of consumers in different target regions and increasing the firm’s sales.
References
Bachmann-Medick, D. (2017). Cultural Turns: A Matter of Management?. In ReThinking Management (pp. 31-55). Springer VS, Wiesbaden.
Coste-Manière, I., Charpentier, P., Boyer, G., Croizet, K., Van Holt, J., & Chhabra, S. (2018). Innovation and Sustainability in the Luxury Fashion and Fabrics Industry. In Models for Sustainable Framework in Luxury Fashion (pp. 11-34). Springer, Singapore.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach . Cengage Learning.
Ioannou, I., & Serafeim, G. (2017). The consequences of mandatory corporate sustainability reporting.
Turker, D., & Altuntas, C. (2014). Sustainable supply chain management in the fast fashion industry: An analysis of corporate reports. European Management Journal , 32 (5), 837-849.
