The the group’s brand is organized as a separate


The first example supports the A.Chandler’s
theses about the importance of a company’s structure based on the company’s
strategy and dividing top management from daily operating managers:


Inditex group, founded in 1963 as a family
business, today is one of the largest fashion retailer, the owner of 8 brands
(Zara, Pull, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home,
Uterqüe)1 offers its products in 7504 stores on 94 markets of five
continents.  The company’s business
strategy is to provide customers fashion goods as fast as possible leads to
creating the structure that supports the group’s strategy:

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Each of the group’s brand is organized as a
separate business unit inside the group. Each unit has a support area
(manufacturing plants, logistics, raw materials, marketing and sales, real
estate, international expansion), operates independently and responsible for
its decision making, manufacturing, fashion design, distribution and financial


The top management of the group is a
centralized “strategic controller”, involved in setting corporate strategy and
approving business strategy of each of individual chains, and monitors their
capabilities, but not involved in the operational process.


Next example shows a positive outcome of
using the vertically integrated structure:

“Zara”, the most successful global fast
fashion leading brand of Inditex group, who broke a tradition production cycle
of the fashion industry, is a vertically integrated retailer and its business
system looks like following:  the company
buys fabric in limited to 4 colours and all other necessary manufactory
products on the base of demand. Zara has an advanced communication system that
connects production, supply and sales locations, and headquarters.  Almost 50% of the products are manufactured
at home in Spain, 25% in Europe,  the
rest in locations in Africa and Asia. 

Production took place in small batches,
with vertical integration into the manufacture of the most time-sensitive
items. Both internal and external production flowed into Zara’s central
distribution center.2 Production delivered from the distribution
center to primarily-located mostly owned stores twice a week. Vertical
integration reduces “bullwhip effect”3 increasing swings in
inventory in response to shifts in customer demand as one moves further up the
supplier. Contact the customer feedback helps to react fast to each demanded


The last example is a try to link
Chandler’s theories to actions of a multinational technology conglomerate
“Cisco” which was founded in 1984 as a private company in the California, USA
and became public in 1990. Nowadays the company is the market leader, has the
biggest network in the world that designs and sells a broad range of Internet
technologies, cloud services, and security systems (the company generates 59%
of revenue on Americas’, 25% on EMEA and 16% on APJC markets).4


According to Chandler’s definition:
“Strategy the determination of the long-term goals and objectives of an
enterprise and the adoption of courses of action and the allocation of
resources necessary for carrying out these goals”.5


Today’s quickly changeable business
environment demands from big companies to be flexible and capable to set
thoughtful action plans and apply strategies that can be easily changed and
adapt according to market’s conditions.


Chandler suggests that for success a
company needs to achieve scale and scope by expanding, leveraging, allocating
resources and bold investments.


“Cisco” managed to standardize basic tasks
across the whole company’s network, that helps to save operational costs for
the company and its clients. The company is focused on acquisitions with the
aim to expand market or add new market entries. Acquired companies bring
various types of technologies and knowledge to “Cisco” (from the 1993 year
“Cisco” has acquired over 190 companies), the company invests carefully and
always stays away from risky deals and buys only solutions, that can be
developed and implemented quickly. Results of acquisition help to reach scope,
but apart from a broader range of products and services for the clients, the
company gains the growing number of competitors.


Thus elements of Chandler’s theories can be
found in today’s

business world highly influenced by time
and high market competitiveness.


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