An analysis of the culture of an organization: Zara

An analysis of the culture of an organization: Zara


Since its inception in 1975, Zara has continued enjoying a strategic market position against its competitors through a distinctive business model. The company’s business model has incorporated design, production, sales and distribution through its extensive retail network. A highly differentiated business strategy within the supply chain also allows the company to position itself competitively and safeguard its sustainability. Brewer and Venaik noted in their work “Individualism-Collectivism in Hofstede and globe”, that Zara’s real strength may be found in its well developed organizational culture. This document offers a comprehensive analysis of Zara’s organizational culture. The document will analyse both the external and internal environmental factors influencing the apparel industry at large due to their significant impact on Zara’s culture.


The focus throughout this report is to further the understanding of Zara’s organizational culture by investigating the company’s current Human Resource management sub unit through a qualitative study. The report has applied theoretical frameworks in the study for organizational culture in conducting the above analysis. This analysis will also present possible factors that can promote or hinder Zara’s performance management and overall company success in Sweden. Several researches within the apparel industry have been carried out on employee’s morale, HR management and the effects they have on productivity. However, these researches have failed to draw a comprehensive conclusion about the International types of HRM and how they affect productivity and sustainability in a company (Silverthorne 56)

Culture has had a significant impact on Zara and has created a disparity bewteen the company and its swedish employees (Zabid, Sambasivan and Azmawan 25). This document aims at analyzing Zara’s culture using Hofstede’s theory to explain this dispality. Zara’s current culture in Sweden has failed to promote the organizational objectives. Cultural difrences often have a significant impact on businesses such as Zara that operate in cross cultural contexts. These differences are brought about by challenges in emplyee particpation, communication and other relational fields as seen in IMB case study (Nagy 10). However, the analysis in this document shows that the situation at Zara Sweden could be better if the company’s human resource managemnet practices were alighned in accordance to the swedish national values as identified by Hofstede theory.


Zara is one of the leading fashion companies in the world with a considerable market share in Europe (Amancio 23). Inditex, which is Zara’s parent company, is among the top distribution corporation in the international market. Unlike other fashion companies who commit 3-4 percent of their sales to advertising, Zara only commits 0.3 percent of their sales (Amancio 32). This is made possible by a highly reliable supply chain that has created the necessity for other fashion companies to compete with this business model, which has earned the company over $ 3 billion.

Factors such as age directly affect demand for different apparel categories. An increase in birth-rate may stimulate the rise in demand for baby and maternity clothes. Economic conditions also have a significant impact on Zara. These conditions often lead to a significant increase or decrease in consumer disposable incomes that may be followed by an increase or decrease in apparel sales. Political aspects in the apparel industry such as workers’ rights and child labour laws have to be carefully considered by any apparel company seeking a sustainable work environment (Alizadeh & Panahi 13).

Technology has been an emerging external factor that has transformed the apparel industry. Over the past ten years there has been a sharp increase in the number of apparel companies implementing digital technologies such as Location Based Mobile Technology. This type of technology allows apparel companies to monitor and communicate with consumers hence meeting the needs brought about by the rapid changes within the apparel industry (Andrews, Cameron and Harris 28)

A closer look into Zara’s internal environment will assist in establishing the company’s culture. The company has several successful trademarks worldwide and recently won a case against Louboutin in a French court in regard to the red soles trademark (Alizadeh & Panahi 13). Logos and exclusive brands are among some of the intangible resources that enables Zara maintain its position in the apparel industry. Intangible resources may include efficient information technology systems that contribute to Zara’s brand identity. These systems also help in establishing a strong relationship among designers, suppliers and manufacturing facilities. The company’s unique in store inventory model also gives Zara a competitive advantage on its brand image and offers exclusivity to its target customer’s (Brewer and Venaik 1).

Theoretical framework

Justification for the chosen theoretical framework

In this report, two major theories have been presented, Hofstede’s cultural dimensions and Edgar Schein’s organizational culture theory. Hofstede’s cultural dimension theory describes different aspects of culture that influences business behaviour while Schein’s theory expounds on culture from an observer’s standpoint. In this document, Schein’s theory has been rejected and Hofstede’s theory has been chosen to provide the theoretical framework in analyzing Zara’s organizational culture. This is because Hofstede established that there were general differences between the Spanish and Swedish culture. Another reason for selecting Hofstede’s theory in analyzing Zara is; unlike Schein’s theory, Hofstede puts great emphasis on the importance of international awareness and multiculturalism for all organizations. Therefore, this theory is more significant than Schein in analysing Zara’s international market in Sweden (Lopez, and Fan 29).

There are several approaches that can be made when defining Zara’s culture, however, the central concepts discussed in this study are outlined by Hofstede’s cultural dimensions theory, which hypothesizes six dimensions of culture, these dimensions; include power distance, avoiding uncertainty, individualism versus collectivism, masculinity versus femininity, restraint and long term orientation (Hvass 4). Hofstede’s cultural dimensions theory has been used on a study that was conducted on IMB employees in 50 countries. It identified several aspects of organizational culture such as cultural differences and multiculturalism that influenced the overall business performance. Hofstede’s cultural analysis on IBM is similar to Zara’s organizational culture analysis in that both aim at establishing the underlying aspects that influence optimal performance within the organization (Kraljevic, Primorac and Bunjevac 13).

Schein’s theory has been rejected in this analysis, but some of the theories’ presumptions are important in regard to organizational culture. Schein theory explains that culture outlasts organizational services and products and all other physical attributes within the organization.  The theory will also explain the need for effective and sustainable reforms to overcome the identified constraints. Recent studies have shown that countries world wide are undertaking enterprise reforms including Sweden (Levine 93). Using organizational culture as a point of departure, the Hofstede theory will attempt to contribute to the current discourse on the enterprise reforms Zara has implemented in Sweden and how these reforms have affected the company’s overall performance. Hofstede’s theory has taken two major factors into consideration in determining the school of thought in Zara’s organizational culture.

Hofstede’s cultural dimensions theory

This theory relates culture to regional and ethnic segments. The theory suggests cultural value may be achieved when an organization changes its behaviours by altering the preceding mental attitudes within the company. The theory explains that different ethnic segments such as the Jews and Gypsies have maintained their identity, but they show a consistency in the adaptation of some of the dominant cultural settings. This theory is essential in analysing Zara’s organizational culture in the international market whereby the company is faced with different ethnic groups. According to Hofstede’s theory, both national and regional groups have a significant impact on organizational behaviour (Harvey 97).

The research findings on Hofstede theory identified several cultural features with IBM culture, which also helps in explaining some of the behavioural paradigms in Zara’s culture in the international market. As discussed earlier, the theory has identified four key cultural dimensions. The first dimension is power distance; Hofstede established that there exist differences within nations especially on how they treat inequality (Hall 98). The power distance analysis on IBM across different countries revealed that countries with low power distance had the tendency to consult while subordinates from countries with high power distance highly depended on superiors (Endler & Corace 21).

Subordinates in cultures that have high power distance rarely disagree with their superiors directly, they also lack teamwork and employees lack morale, hence may not perform at their optimum levels (Ehiobuche 47). The power distance dimension described at IMB aimed at creating an understanding on the need for valuing cultures that implemented systems of lower power members (Denison 96). It is important to identify the power distance between the subordinate employees and the management at Zara. The company has a streamlined organizational culture that is performance oriented.  Zara’s low power culture eliminates unnecessary managerial ranks hence improving the flow of information across all levels.  Companies that implement a low power organizational cultures have lesser redundant administrative procedures within the organization that facilitate a decentralized decision making structure (Denise, Carlson, Stepina, and Nicholson 197).

Previous case studies have established that cultures with high uncertainty avoidance index were highly structured and people behaved as they were expected and also constantly predicted the future (Deem 29). The Individualism versus collectivism dimension identifies the degree at which people feel they belong to a specific niche. This dimension identifies the underlying relationships between people and groups. Individualism is recognized with societies whereby people’s relations are weak and individuals only watch out for themselves and their families. However, collectivism is recognized with societies that members form powerful and integrated groups (Canina, Palacios & Devece 212). The masculinity versus femininity dimension aims at evaluating the delegation of responsibilities between males and females within a society.

Unlike Hofstede approach to organizational culture, Schein’s theory illuminates organizational culture from an observer’s standpoint (Brewer and Venaik 21). The first level in the theory includes attributes that can be seen, felt and heard by the observer and is referred to as artefacts. This includes facilities, awards, operational creeds and the way employees dress. The next level focuses on the values shared by the organizational members (Brewer and Venaik 21). Schein’s theory analysis on Burberry identified local and personal values that had been widely expressed within the organization.

Some of these personal values include basic beliefs and assumptions about the supportiveness and trustworthiness of the organization (Nagy 210). This theory is therefore very significant in identifying the attitudes of Zara’s organizational members. The central concept in Edgar Schein theory entails organizing the culture into three major types, which are artefacts, values and assumptions. The artefacts include cultural displays that can be quantified and are tangible (Lehner & Maier 200). The theory has been used in analysing Burberry’s culture in the emerging Asian markets. The theory established that Burberry’s culture in Asia was more developed because of internal and external integrations. The analysis on Burberry’s culture using Schein’s theory can be compared to Zara’s culture analysis. This is because both are apparel companies seeking to strategically establish themselves in the international market where external and internal environments reflect their evolutionary approaches to organizational culture (Isopeskul, Shakina and Georgieva 216).

Zara organizational culture analysis

This section of the report aims at applying Hofstede’s theoretical framework and concepts to conduct an analysis of Zara’s organizational culture. The analysis will examine Zara’s national values as identified by Hofstede and will focus on the Human Resource Management department as a sub unit. There are several ways in which Hofstede’s and Schein concepts find application in Zara’s organizational culture case analysis; with innovation and originality as an example of values that may be seen in Zara’s artefacts (Nagy 10). It is important to analyse the fast paced apparel industry to gain this particular insight. The insight gained offers a platform whereby theoretical frameworks in organizational culture can be applied in a current setting that can be used as a measure of organizational effectiveness (Malopinsky 207). Using theoretical frameworks in organizational theory will also help in establishing how Zara is adapting itself internationally and how effective its operations in Sweden are at carrying out these adaptations.

Zara’s huge financial losses in Sweden have led to the closure of three of its major stores in the country (Mcsweeney 22). This may be attributed to cultural differences that have led to ineffective management practises. According to Swedish media reports, the HRM practices in Zara Sweden had been compared to the poor working conditions experienced in Mexico while internal promotion were said to be confusing (Nylander 12). Other concerns included overtime payments and bad firing and hiring practices experienced in Zara Sweden. Media articles that have been portraying a destructive culture, unsound financial situation and employee harassment have been destroying Zara’s reputation in Sweden.

The following is an explanation of these issues based on Hofstede national value. Masculinity index; there exists a disparity between Zara’s cooperative nature in Sweden and in Spain cultures. According to Hofstede, the Spanish culture is more competitive and people value achievement. Swedish culture however is less concerned with competition and the people instead, value cooperation. The difference between Zara’s store managers in Sweden and Store managers in Spain is that the former are more supportive of their staff and decisions are made through teamwork. Zara’s store managers however are more likely to consult their staff only with the aim of making informed decisions (Silverthorne 4).

Hofstede theory confirms the current media reports that to point towards poor communication between regular staff and managers at Zara stores in Sweden (Steensma & Corley 91). Several reports have shown that employees at Zara Sweden felt constant pressure to work overtime, hence suggesting a competitive environment whereby achievement was highly valued. Cultural disparity is therefore present because there lacks cooperation between Zara’s managers and staff (Uzkurt, Kumar, Kimzan and Eminoglu 213).

Another of Hofstede’s concepts that finds application in Zara Sweden case is the Uncertainty Avoidance Index. Hofstede seems to suggest that Zara’s employees in Sweden prefer lesser rules as compared to employees in Zara Spain. Spanish people prefer rigid rules because they believe that change leads to stress. Empirical data reveals that tasks at Zara are performed according to rules and regulations (Tokatli 208). However, workers in Sweden believe that there shouldn’t be more rules than necessary and they would perform better if they were able to influence and change the tasks to the better.

In the Power Distance Index, Hofstede suggested that the Swedsh hierachial structure strived for equality and power was distributed among people equally. This explains the dissatisfaction of employees at Zara Sweden who according to Touburg have been quoted saying they feek like they work in a different company with the mangers. Hofstede theory points out that in Sweden power is highly decentralized and mangers rely on theier employees experience who presume they will be consulted. Communication between managers and employees is direct and highly parcipitative in nature. A disparity can theorefre be deduced in the power distance index and media articles that portray Zara as a highly controled and centralized company.

The Individualism Index in Hofstede’s theory identifies Sweden as a more individualistic country compared to Spain (Valentino 84). In Zara Spain, teamwork amongst employees is natural and managers do not requre any motivation from managers to perform their duties optimumly. Tuttle’s (23), report on Zara Sweden pointed out that Store managers at Zara Sweden were oposed to teamwork and employees were not encouraged to talk to each other during work hours.

Unlike Hofsteted concepts, Schein theory only observes Zara Sweden culture from a spectators point of view. Schein career anchor concept, however, relate to Hofstede theory in Zara’s organizational culture case study. In Zara Sweden, a career anchor according to Schein consist of the employees’ perception of their talents and abilities to perform duties and tasks. Schein concept has five main constructs which inclue autonomy, independence, security, entreprenuerial competence, functional competence and mangerial competence. Employees in Zara Sweden have have not identified themsleves with the values of the company, which has resolted in a cultural disparity (Vitell, Nwachukwu, and Barnes 93).

Another key element as identified by Hofstede theory in Zara’s internal culture is its production process, which takes four weeks. A traditional production cycle takes approximately 6 months to complete, from design to store inventory. An effective HRM subunit coupled with a vertically integrated model that incorporates its own manufacturers, designers and logistics ensures the process only takes 4 weeks bringing a flexible structure whereby the company can adopt up-to-the-minute fashions. Zara’s distinct in-store inventory model is valuable and would be very expensive to imitate hence maintaining a competitive position in the market (Nylander 22).


It has been established that Zara’s real strengths lies in its culture, and the company is enjoying tremendous growth with new stores opening worldwide. However, Zara Sweden’s annual report in 2015 income statements depicted a loss. Zara has been making huge financial losses in Sweden and had decided to close stores in Taby, Sundsvall and Orebro (Nagy 21). Mcsweeney (22) work on “Hofstede’s model of national cultural differences and their consequences” shows why Zara Sweden has continued performing poorly and what the company should be doing in terms of its Human Resource management. Numerous authors have written about different aspects of the HR management department such as Marcus (201) and Mazaira, Gonzalez, & Avendano (20). These authors have been able to establish through case studies that there is a direct correlation between employee satisfaction and overall company success.

The recommendation offered in this report is that Zara’s managers and staff in Sweden should aim at understanding some of the cultural issues in respect to Hofstede’s six cultural dimensions. Understanding the prevailing cultural disparities at Zara will enable both managers and staff members analyse issues through a different perspective, hence coming up with strategies and actives that address these issues.

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