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What strategic management approaches and skills would stimulate the growth of the fast fashion industry in Spain?

Written by Philip S.

 

1. Introduction

Strategic management allows for identifying the position of companies in their external environment and evaluating their internal resources and capabilities in order to find the optimal methods of ensuring their growth and business success (Omolade and Tony, 2014). At the same time, the quality of strategy development and the outcomes of its implementation directly depend on the skills of the managers acting as decision-makers (Sabourin and Ayande, 2014). Spanish fast fashion companies rely on innovation and intangible resources to achieve global growth (Truett and Truett, 2014). This emphasises the need to select the most effective strategic management approaches to identify potential bottlenecks that decrease the quality of decision-making in these organisations and prevent them from responding to relevant market trends. Hence, the aim of this essay is to explore what strategic management approaches and skills would stimulate the growth of the fast fashion industry in Spain.

 

2. Strategic Management Approaches and Skills

Traditional approaches to strategic management are based on external environment evaluations performed with the use of such frameworks as SWOT, Porter’s Five Forces and PESTLE analysis (Moran, 2016). However, the modern perspective on the subject assumes that global markets demonstrate substantial uncertainty and suggests the focus on dynamic capabilities and adaptability of the organisation. Therefore, strategic management can be defined as the formulation of organisational goals on the basis of the analyses of the firm’s external and internal environments followed by strategic decision-making, the coordination of available resources and the implementation of the finalised strategy. According to Favoreu et al. (2016), there are three main approaches to planning and implementing growth strategies (see Appendix). The rational concept assumes that external environments can be accurately evaluated and understood by companies and future trends can be reliably predicted. In this method, planning activities are based on programming the growth of the enterprise on the basis of reflection and analysis, which place the emphasis on the skills of managers as the key decision-makers and planners.

The political approach assumes that the information about the external environment is often limited and incomplete because rational decision-making is non-existent and all processes are governed by individual entities that do not act rationally (Mazouz et al., 2016). Therefore, the competence and skills of individual managers can serve as an internal bottleneck limiting the quality of responses to external challenges. Finally, the collaborative approach suggests that individual organisations and governmental entities can cooperate in order to reduce the amount of uncertainty in the markets and increase the effectiveness of their business activities (Guerrini and Pellegrinotti, 2016). The mutual exchange of information and cooperative project execution are perceived as a part of shared strategic vision aimed at the realisation of benefits for both partnering companies.

All strategic management approaches discussed above rely on organisational resources and dynamic capabilities including the skills of managers and employees (Abosede et al., 2016). This expertise allows decision-makers to accurately evaluate the situation in the external environment and develop the strategic course that facilitates the survival and growth of the company while taking into account potential instability factors. According to the findings of several studies analysed by Abosede et al. (2016), the strategic management skills of managers were positively correlated with organisational performance. However, these studies were not performed in the fast fashion industry or the Spanish context. The findings of Haythem (2015) also confirmed that the accuracy of SWOT analysis and the strategic vision of corporate managers were critical for effective strategy implementation and increasing organisational performance. Therefore, the role of managers in strategic management can be viewed as vital as they select the information for analysis and evaluate it relying on their experience and skills. This fact implies that these managers’ personal qualities can determine the outcomes of company activities.

From the practical standpoint, Sabourin and Ayande (2014) identified four sets of managerial skills relevant to strategic management effectiveness. Firstly, the manager has to be able to conceptualise the existing situation in the market, define organisational objectives and align them with the earlier studied context. Secondly, he or she needs to achieve emotional responses from the performers responsible for the implementation of the planned measures (Sabourin and Ayande, 2014). Thirdly, the manager needs to be capable of performing immediate actions and responding to unexpected outcomes. Fourthly, he or she has to be able to ‘fit’ the suggested strategy into the existing principles and values of the organisation. Finally, Bolland (2017) suggested that strategic management practitioners relied on seven critical skills, namely financial analysis, risk and uncertainty assessment, planning, visioning, managing, construction and maintenance of organisational cohesion and leadership. However, it is not clear if some of these skills are naturally developed in certain individuals or can be taught. This makes the appraisal of managers difficult because such intangible skills as visioning can be evaluated only by the results of strategic management activities. As a result, this difficulty often puts the growth of organisations at risk (Caro and Martinez-de-Albeniz, 2015).

 

3. Spanish Fast Fashion Industry

Spanish fast fashion brands such as Zara generally rely on export-based strategies of growth (Taplin, 2014). The need to meet the demands of consumers from radically different environments separated from the headquarters by geographical and cultural borders substantiates the importance of strategic management. Specifically, marketing specialists and managers making decisions need to possess the ‘vision’ mentioned by Bolland (2017). They should also be ready to accept the uncertainty of business environments requiring strategy adjustments as recommended by Mazouz et al. (2016). The management of foreign warehouses and offices by Zara is a good example of how Spanish companies can address this problem (Aggour et al., 2016). Besides the implemented just-in-time supply systems, an advanced system of instant communication is utilised to collect information and facilitate management and coordination in real time. This way, the company manages to control the implementation of strategic decisions and introduces any necessary adjustments if any discrepancies emerge. That said, the outcomes depend on the skills of corporate managers as decision-makers.

This is especially significant considering the fact that 98% of all apparel companies in Spain employ less than 250 people while as much as 70% of their staff members are engaged in innovative activities (Truett and Truett, 2014). Effectively, these companies depend on intangible resources such as product innovations since they cannot compete on the basis of low price due to the high labour costs in the country. Therefore, the coordination of staff and the capability to quickly register and address new trends in the global market are critical for the effectiveness of strategic planning, which emphasises the role of managers’ dynamic capabilities mentioned by Abosede et al. (2016). These problems are addressed by the managers of Zara and Mango who monitor fashion shows in Milan, New York and Paris to collect new ideas and formulate new strategic plans (Loeb, 2015). Due to the adaptation strategy selected by the companies within the political and collaborative approaches, they utilise ‘just-in-time’ manufacturing and distribution principles to transform the conceived concepts into real products as quickly as possible. Therefore, the earlier analysed strategic management approaches and managerial skills can be viewed as a critical component of Spanish companies’ growth.

The political and collaborative strategic management approaches mentioned by Guerrini and Pellegrinotti (2016) and Mazouz et al. (2016) are especially important for Spanish fast fashion companies, due to the nature of their business strategies (Caro and Martinez-de-Albeniz, 2015). They need to address new fashion trends, develop product designs and present them to end consumers in a quick manner to response to rapidly changing demand patterns. At the same time, their goods remain fashionable for a short period of time. As a result, rational and long-term strategic planning becomes ineffective, which increases the importance of accepting uncertainty and developing cooperation with other brands in the market (Loeb, 2015). This standpoint was criticised by Molla-Descals et al. (2012) who stated that Spanish fashion retailers including Adolfo Dominguez, Zara and Mango combined customer-oriented strategic management with long-term growth strategies supporting their global expansion. This may suggest that the rational approach is also utilised by these organisations to formulate international development plans while the remaining approaches are used for tactical decision-making.

 

4. Conclusion

It can be concluded that Spanish fast fashion companies generally rely on the political and collaborative strategic management approaches to facilitate their international growth and quickly respond to constantly changing fashion trends (Guerrini and Pellegrinotti, 2016; Mazouz et al., 2016). At the same time, this idea emphasises the role of such managerial skills as visioning, risk and uncertainty assessment and planning (Bolland, 2017). Spanish organisations such as Zara tend to implement advanced coordination and communication systems to quickly recognise emerging demand patterns and implement their managers’ strategic decisions (Aggour et al., 2016). Hence, it can be recommended that these companies should focus on talent management and innovation to stimulate growth as 70% of their employees are involved in the development of new products and concepts (Truett and Truett, 2014). In addition, their global development strategies may incorporate the elements of the rational approach to include long-term trends into consideration.

 

References

Abosede, A., Obasan, K. and Alese, O. (2016) “Strategic Management and Small and Medium Enterprises (SMEs) Development: A Review of Literature”, International Review of Management and Business Research, 5 (1), pp. 315-335.

Aggour, A., Moussaid, A. and El Hassan, A. (2016) “Fast Fashion in the Moroccan Apparel Supply Chain: A Case Study”, International Journal of Managing Value and Supply Chains, 7 (4), pp. 17-24.

Bolland, E. (2017) Comprehensive Strategic Management: A Guide for Students, Insight for Managers, London: Emerald Publishing Limited.

Caro, F. and Martinez-de-Albeniz, V. (2015) “Fast fashion: Business model overview and research opportunities”, Retail Supply Chain Management, 1 (1), pp. 237-264.

Favoreu, C., Carassus, D. and Maurel, C. (2016) “Strategic management in the public sector: A rational, political or collaborative approach?”, International Review of Administrative Sciences, 82 (3), pp. 435-453.

Guerrini, F. and Pellegrinotti, C. (2016) “Reference model for collaborative management in the automotive industry”, Production Planning & Control, 27 (3), pp. 183-197.

Haythem, A. (2015) “The Role of Strategic Planning in Performance Management”, Express, an International Journal of Multi-Disciplinary Research, 2 (3), pp. 1-14.

Loeb, W. (2015) “Who Are the Fast Fashion Leaders and Why Does It Matter?”, [online] Available at: https://www.forbes.com/sites/walterloeb/2015/10/23/who-are-the-fast-fashion-leaders-and-why-does-it-matter/#691496551555 [Accessed on 11 October 2017].

Mazouz, B., Rousseau, A. and Hudon, P. (2016) “Strategic management in public administrations: A results-based approach to strategic public management”, International Review of Administrative Sciences, 82 (3), pp. 411-417.

Molla-Descals, A., Lorenzo-Romero, C., Mondejar-Jiménez, J. and Fayos-Gardo, T. (2012) “An overview about fashion retailing sector: UK versus Spain”, The International Business & Economics Research Journal (Online), 11 (13), pp. 1439-1466.

Moran, A. (2016) Managing Agile, Berlin: Springer Science & Business Media.

Omolade, O. and Tony, O. (2014) “Effect of strategic planning on the growth and survival of an emerging firm”, American Journal of Engineering Research, 3 (2), pp. 230-239.

Sabourin, V. and Ayande, A. (2014) “Components of strategic skills of MBA students: Component analysis of the obstacles facing executive MBA students in their jobs”, International Journal of Management in Education, 8 (1), pp. 22-36.

Taplin, I. (2014) “Global commodity chains and fast fashion: How the apparel industry continues to re-invent itself”, Competition & Change, 18 (3), pp. 246-264.

Truett, L. and Truett, D. (2014) “Cost relationships and challenges in the Spanish apparel industry”, Applied Economics, 46 (32), pp. 3893-3906.

 

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