Question

Assess whether or not Zara management should move from a decentralised business structure, where branch managers in the shops have a lot of control in the decision-making processes, to a more centralised structure where the company Headquarters in Madrid make all the key decisions for all of itś branches across Spain and beyond.

Answer 1

Zara management should not move from the decentralized business structure to a centralized one.

The reason is that each branch has a different location and therefore has a different customer base in addition to different cultures that prevail in that geographical region.

It is only possible to take action on time if faced with a problem according to what will suite that branch and is customer friendly. If the head office in Madrid makes decisions, they might not be familiar with all the traditions and might make unfriendly decisions.