Success of Zappos in National and International Markets

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Company Background

Zappos is an online shoes and apparel company with its head quarters situated at Henderson, Nevada, USA; it is barely twelve years old; Nick Swinmurn founded it in 1999. Swinmurn got the idea to invest in the company after he searched for his favorite brown pair of shoes in vain; he pondered over the idea and he saw an opportunity in the market to invest in the sector.

In the same year that he had missed his favorite pair of shoes, Swinmurn approached Tony Hsieh and Alfred Lin, and they jointly started an online footwear shop that they named as “ShoeSite to Zappos”. One year down the line, the company merged with Venture Frogs, which added an additional capital to the growing capital base of the company and jointly they adopted the name Zappos.

According to the company’s audited financial statement of 2009, the company was worth $1.2 billion in 2009. To venture and adopt better online selling skills, the company sold some of its shares to Amazon.com in 2008; currently the company’s chief execute officer and chief finance officer are Tony Hsieh and Chris Nielsen respectively (Zappos Official Website, 2011). This paper analyzes Zappos management structure.

Organizational structure

The company has a formal structure where there are two main players, the chief executive office and the chief finance officer. They are the people that are mandated with the task of condensation and pioneering different issues in the company. The managers have the role of making various decisions on different issues in the company.

The idea to target the international market has been seen as an unusual approach to the company’s selling and business approach. The highly unusual corporate philosophy formed the foundation for the company’s business model, notably its profit sharing operator agreement. The model is such that, when the company wishes to expand, instead of seeking out franchisees, it carries out a search for highly motivated and responsible operators, who are usually among the existing employees of the company.

The top management has numerous meeting with other line managers in the efforts to disburse information and receive feedbacks from the people on the ground. They do not stay in the office and wait for work to be done but they are actively involved in day-to-day running to the organization (Smith & Mazin, 2004).

Values/ethics

Zappos realizes that its success is dependent on the loyalty that they get from their customers, one of the ways of ensuring that they get customers attention and loyalty to the company eventually develop.

Management emphasizes on the need to have high moral values and always aim at selling commodities whose value is high and unquestionable. The company’s products, which include shoes, handbags, accessories and apparels, are sourced from reputable companies like Nike, Ugg boots, and Steve Madden heels; currently the company has over 5000 brands of products that it has to monitor for quality. Shoes account for 80% of the company’s sales.

When we talk of an ethical business, it means that the business is conducted in a way that it goes in line with the generally accepted morals in the society. Some of the ethical matters that the company looks into include compliance with international laws of trade, being responsible and committed to its business and having an integrity lead team (Zappos Official Website, 2011). Corporate social responsibilities are actions that a company commits its self to do, not for its income generation but projects that benefit the society.

The responsibilities that the company has engaged in include; building of medical centers and hospitals, building schools, scholarships to students and charity work (Andrew & Matten, 2004). Zappos leadership plays an important role in strategy development in the organization; the leaders are ready to answer and manage fears that the employees have, they are from the top most to the supervisors.

To develop freelance culture, Zappos has ten core values, which all employees must adhere to, they are

Deliver WOW Through Service: this is through offering high quality service that can be relied upon.
Embrace and Drive Change: the company understands that change is inevitable in modern changing business environments, thus it prepares its team for change when needed to better its service delivery.
Create Fun and A Little Weirdness: the services offered should be quality and appealing to customers.
Be Adventurous, Creative, and Open-Minded: the company aims at improving its processes through its highly experienced employees, they are motivated to be adventurous and creative to have better ways of doing business.
Pursue Growth and Learning: the company aims at offering its employees a career through the company
Build Open and Honest Relationships With Communication: the company has an effective communication strategy that offers information from customers, employees and management
Build a Positive Team and Family Spirit: the company aims at developing orchestrate teams
Do More With Less
Being Passionate and Determined
Being Humble (Zappos Official Website, 2011)

Decision-making

Decisions are the driving force in the organization; managers at different levels are mandated with the task of making decisions within their jurisdictions. For example, Zappos has a strong marketing team, when they want to change the strategy and the approach to marketing. Then the company’s head of marketing is the reference point. The quality of decision that managers make give their organization direction and focus.

The growth and competitiveness of an organization is influenced by the quality as well as acceptability of decisions made by managers at all levels (Wheelen & Hunger, 1999). There is a well cut hierarchy of power distribution in the company; those decisions that require the approval of higher managers are affected only after they have been vetted. When making decisions, it is the organizational culture of Zappos to consult junior and senior employees so that they can develop effective and acceptable decisions.

The management-decision making approach adopted by the company can be referred to as scientific decision making approach, this is where to make good decision managers must undergo three main stages they are; defining the problem, data collection and choosing the best alternative. Always a good manager considers the urgency of the decision before making one (Bridge & Dodds, 1975).

Human resources management/employees relations

The company respects it employees and have made policies aimed at getting employees loyalty; it has over 1500 employees getting direct returns from the company. The rate of compensation is high and there is respect of their view.

When the company sis recruiting, applicants are subjected to robust interviewing program that is of two stages, professional aptitude and personality tests, this is aimed at getting the right people who are willing to adopt the culture of the company that encourages innovation and invention of better way of doing work.

After an applicant has been successful, the company offers six-month probation where it learns the applicant further. After the success, then an employee is employed under permanent and pensionable bases; the company operates a defined contribution pension scheme.

Some of the benefits that the internal customers enjoy are free medical care and lunches, free vending-machines, fully equipped-free library and a nap room; the policies set by the management aims at having an orchestrate team through performance reward scheme (Zappos Official Website, 2011).

The human resource department is given the mandate of ensuring that adequate employees are available at all times. It has the mandate of planning, deploying, employing, training, retaining, and dismissal of employees. When the department is undertaking this duty, it looks into quantitative and qualitative aspects. Qualitative means the right number of employees and qualitative means employees with right skills (Renckly & Renckly, 2003).

Communication

Zappos has an effective internal and external communication system: the system allows for feedback from different stakeholders like the employees, shareholders and customers. Internal business communication is vital for success in all businesses; it facilitates understanding and innovation in a company.

Success in this context means, being able to accomplish a particular task or to achieve a specific objective. Good business communications in relationships with either fellow staffs or customers is needed in order to prosper. Business success can be measured in terms of the practicability of business relationships that is directly proportional to the quality of communication (Guffer & Almonte, 2009).

Marketing strategy

One of the strongest departments in the company is the marketing department: the company adopts a Communication marketing strategy (MARCOM): a marketing strategy that incorporates different marketing strategies to have one strategy that can effectively fight their competitors (Reid & Plank, 2004). The system operates as follows:

Zappos develops various advertisement programs and use of mass media to market for a company’s product. The method has a strong point in that it gets access to a large population making it relatively cheap method of advertising. The method faces a problem of choosing the right approach that will cover all ages, culture and beliefs that the media is able to access at a go. The Medias used include television, Radios and online internet Medias as if you tube (Anctil, 2008).

Since Zappos products are personal in nature, the company has adopted a personalized marketing approach. Traditionally, sales were aimed at creating awareness of existence of a product in the market. However, functions of sales have increased to develop a company-customer relationship.

Customer loyalty and building a strong brand name are the advanced objectives of sales. Zappos has a number of direct marketing sales: under this approach, the customer and the sales man develop strong relations, which can result to a high customer loyalty.

Zappos has adopted an online marketing strategy and the use of social networks. Such networks include Face-book and twitter. Certain information is given as updates in the social networks and users can get their queries solved over them. This aims at creating a human face with the market where they can interact with the company easily (Peter, 2006).

Supply chain management

To manage the large stock of variety, the company need to have a robust and effective supply chain managements system. To have the effective supply chain management, the company has embarked on supplier relations, where it has maintained good relations with its suppliers in a move to ensure quality supply at an affordable cost.

Zappos has a strong procurement; having a good supply chain management makes the company have adequate stock always. There are adequate supplies at an appropriate price and the time when the company requires the supply. The well-developed supply chain management has given the company a competitive advantage. Zappos supply chain management team has quality, quantitative, price and logistic objectives.

Conflict management and change management

The company is structured in a way that there are micro teams that are mandated with taking certain roles: when conflict occurs in the teams, team leaders are mandated with the role of solving the conflicts. They should hold a neutral ground and listen to two sides of a conflict before making judgement. Incases the conflict are as a result of policy, the management has the role of enforcing the policy and in case the conflict is with the national or international laws, the company legal department intervenes.

The company has undergone changes effectively: its Leaders are mandated with the task of pioneering a business to its desired objectives. In transitional period the leaders is the one who guides subordinates to the desired path. They jointly make rules and policies to be followed in attaining the goals. Zappos freelance culture embraces change.

Observations, comments, and conclusions

The success of Zappos in national and international markets has been facilitated by its visionary managers; they make timely decisions and ensure that business processes are effectively managed. The expansion strategy that the company enacts benefits its operations and aims at improving the sales of the company.

Managers are not the sole source of information but they delegate power and consult junior employees before making a decision; this has created innovation and invention of better processes in the company. The nature of the business calls for a strong supply chain and marketing strategy, which the company has effectively enacted.

The business world is changing; the company should not be contented by its increasing sales and lose its aggressiveness. It can use the experience and intellectualism in its employees to start a manufacturing plant instead of depending on other companies to supply readymade products; such a strategy is likely to increase the company’s sales further. Secondly, the company has strong brand name thus, it can venture into franchising business and use brand extension strategy to increase its sales.

References

Anctil, E. (2008). Marketing and Advertising the Intangible. ASHE Higher Education Report, 34(2), 31-47.

Andrew C., & Matten, D. (2004). Business Ethics. Oxford: Oxford University press : Oxford.

Bridge, J., & Dodds., J.(1975). Managerial decision making. London: Taylor & Francis.

Guffer, M. E., & Almonte, R. (2009). Essentials of Business Communication. New York: Cengage Learning.

Peter D. (2006). Marketing Management and Strategy. London: Post & Telecom Press.

Reid, A.,& Plank, E.(2004). Fundamentals of Business Marketing Research. New York: Best Business Books.

Renckly, B., & Renckly, R. (2003). Human Resources. New York: Barron’s Educational Series.

Smith, S., & Mazin, R. (2004). The HR answer book: an indispensable guide for managers and human resources professionals. New York: Amacom Div American Mgmt Assn.

Wheelen, L., & Hunger, J.(1999). Strategic Management and Business Policy: Entering 21st Century Global Society. Massachusetts: Addison Wesley.

Zappos Official Website. (2011). Zappos.com. Retrieved from https://www.zappos.com/

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