CONTENTS

Company profile: ...................................................................................................... 3

Zalando Internal Environment Analysis ....................................................................... 4

Zalando Revenue streams: ......................................................................................... 4

Geographical locations: .............................................................................................. 4

Zalando Starting point vision and platform strategy .................................................. 5

Zalando Organizational Culture: ................................................................................. 5

Zalando Human Resource Management .................................................................... 6

Zalando Organizational Structure............................................................................... 7

Zalando External Environment Analysis....................................................................... 8

Zalando Microenvironment ........................................................................................ 8

Zalando Macroenvironment ..................................................................................... 11

Zalando Overall Company’s Swot Analysis ................................................................ 11

HRM & Organizational Redesign Goals and recommendations .................................. 12

HRM & Organizational Redesign Goals ...................................................................... 12

HRM & Organizational Redesign recommendations ................................................. 12

Human Resource Management Recommendations: ............................................... 12

Organizational Redesign recommendations: ........................................................... 13

Risks associated to HRM & redesign recommendations ............................................ 15

References .............................................................................................................. 18
COMPANY
PROFILE:
Zalando company is a well-known
e-commerce platform that
originated in Berlin-Germany, and
it is specialized in fashion and
lifestyle. The core functions of the
company consist of connecting all
the major players in the fashion
industry – from end customers,
through retailers, brands, stylists
and factories, to advertisers.

The founders of the company

aimed initially to create a store
that would offer a simple,
convenient, high-quality, and
customer-oriented platform that focuses on the footwear field.

Today, Zalando company is no more focused on the shoe industry but expanded its scope
to cover all segments of the apparel industry.

The value proposition of the business includes 5 main elements: accessibility, price,
customization, innovation, and brand/status.

The German company offers its online shoppers from 25 countries access to a large
number of assortments from more than 6500 global, local, and private label offerings.

The Business Model of the company allows it to offer low prices as most items were
collected and posted after partners’ final sale, which justifies the profitability for all
involved parties. The partners are able to avoid inventory, storage, and destruction costs
and maintain a sustainable image. As a result, Zalando is capable easily to pass the favor
to buyers by offering low prices and discounts.

Zalando has established a well-recognized strong brand. 48 million active shoppers visit
the website from 25 countries making around 135 million website visit per mouth. The
company website shows that they refer to themselves as the leading European online
platform for fashion and lifestyle (corporate.zalando.com, 2022).
Zalando Internal Environment Analysis
ZALANDO REVENUE STREAMS:
Zalando Fulfillment Solutions (ZFS): Zalando generates most of its revenue through their
(ZFS) Solution which enables mainly its brand partners to “monetize end-of-season,
excess, or slow-selling articles by selling to Zalando Off-price directly”
(corporate.zalando.com, 2022). Subsequently, the company sell these items to customers
for a profit. The company maximizes its profit by offering free delivery and return services.

Partner Program and Connected Retail: The apparel company invoice its partner for
selling their products on its platforms, allowing them to reach their vast customer base.
The Partners also benefit from the set of solutions offered by the company experts’ team
to increase sale and revenue.

Advertisement revenues (ZMS) : As a website and app platforms, Zalando offers other
companies & partners the possibility of advertising on its platforms by placing ads and
marketing content for a commission.

GEOGRAPHICAL LOCATIONS:
Zalando company started from a shared apartment on Berlin’s Torstraße that had been
turned into an office and warehouse. Nowadays Zalando company is present
geographically in 25 countries (corporate. zalando,2022).

1. Germany 13. Denmark

2. UK 14. Czech
3. France Republic
4. Switzerland 15. Romania
5. Spain 16. Lithuania
6. Italy 17. Norway
7. Austria 18. Finland
8. Poland 19. Slovenia
9. Luxembourg 20. Ireland
10. Belgium 21. the Slovakia
11. The 22. Croatia
Netherlands 23. Latvia
12. Sweden 24. Estonia
25. Hungary
ZALANDO STARTING POINT VISION AND PLATFORM STRATEGY
The German retail company’s vision is to be the starting point for fashion, which means being a destination
for anyone who thinks about fashion and lifestyle items.

In order for the apparel company to realize its vision, it focuses on three core strategic dimensions.

First of all, the company is directing all the efforts towards customers, aiming in improving and innovating
its customers’ experience.

Secondly, Zalando company focuses on creating a strong platform business model, connecting all parties
such as retailers, brands, stylists and factories and advertisers to their target customers.

Last but not least, the retail company is committed to building a “fashion platform with a net-positive
impact for people and the planet” (Annual-Report_Zalando, 2022)

ZALANDO ORGANIZATIONAL CULTURE:

In spite of the fact that organizational culture is the core pillar that enables organizations to grow to their
fullest potential and maximize their capacities, as it provides consistency and directions to improve
workflow and direct decision-making process, no consensus had been reached by researchers on what an
organizational culture is? Nevertheless, As pointed out by Dr. Geert Hofsted professor of Psychology and
anthropology: Organizational culture is “the collective programming of the mind that distinguishes the
members of one organization from another” (Hofstede,1980). In the broad sense culture is how
organizations ‘do things.” (Francisco, S. ,2007).

Established on these definitions and performing a deep dive into how Zalando company built its culture,
we can conclude that the company is adopting and agile methodology to be capable of responding quickly
to changing business contexts especially with their exponential growth rate. Moreover, the Berliner
originated company has established an open-minded culture where employees can feel that they work in
community. The Senior Vice President in charge of People and Organization at Zalando says” Our corporate
culture is shaped by the values that have distinguished us and made us successful from the very beginning:
profound customer orientation, entrepreneurial thinking, speed and team spirit. With that, our employees
from over 130 countries have a unique feeling for who we are and how we manage to rethink our business
every day.” (Zalando,2022)
ZALANDO HUMAN RESOURCE MANAGEMENT
Every organization is made up of people as
they are its most important asset. Recognizing
how different we are in terms of cultures,
values, and beliefs justifies why there are too
many different definitions. for this discipline
(Gluck, 1979) (Graham and Bennett, 1992)
(Stewart and Brown,2014) …etc. However, for
the purpose of this report we will follow the
lead of our professor for HR Management and
Organization Design, Dr. Stratis Andreas Efthymiou and define it as “Human resources management aims
to increase organizational performance in terms of increased productivity, higher profitability, and lower
employee turnover rates. Thus, it’s the view that HR is not just about hiring people, dealing with workplace
issues, and organizing formal training. Rather, HR can contribute to the management and strategy
development of the organization.” (Andreas Efthymiou, S,2022).

Based on HRM different examined definitions, I must admit that it is not easy to judge an organization’s
HRM success without sufficient details. Nevertheless, From Zalando website we can confirm that they are
aware of the importance of this subject, the reason they explicitly emphasis on the importance of
performance culture to increase productivity and profitability and lower employee turnover. The European
company additionally prioritize feedback: “with 360° feedback, we avoid a biased, top-down approach in
favor of a more holistic, fair, and transparent system” (Zalando,2022).

Training and building capabilities are also one of the main areas of company’s focus, as well as health

and wellbeing.

However, Benjamin Franklin beautifully said: “Well done is better than well said.” If we dig deep into the
berlin-based company and investigate further we
find out that although the company is presenting
itself as the dream environment to work for, with a
simple search on any engine we discover that
Zalando company was associated to too many
scandals such as the bad work conditions
uncovered by a TV report (fashionnetwork, 2014).
Furthermore, the NGO raised concerns about
women’s rights and supply chain (business-human
rights, 2018).

Therefore, we can conclude that it may seem that

Zalando company is applying HRM best practices.
Yet, in reality the company is struggling to certain
extent to establish a real strong HRM model.
ZALANDO ORGANIZATIONAL STRUCTURE
Generally, organizational structure is defined as the enduring characteristics of an organization reflected
by the distribution of units and positions and their systematic relationships to each other (Porter, L.W. and
Lawler, E.E. (1965). Hall, R.H. (1977) suggested that it is the setting in which power is exercised, decisions
are made, and the organization’s activities are carried out.

Referring to this definition and based on Zalando website the company is applying a model called
“Organized Autonomy”. This model is based initially on agility, autonomy, motivation, and accountability.
Following this architecture, the number of team members must be limited. Using this architecture, Zalando
management group align the team using “OKRs” objectives and key results and prioritization techniques
to reduce the need for frequent alignment which “gives most teams the tools and context to make good
decisions on behalf of the company, autonomously” (InfoQ,2018).

This model is inspired by Conway’s law article written by Melvin Conway in 1968 and adopted by Fred
Brooks in the iconic book “The Mythical Man Month in 1995”.

Conway’s law suggested that “Organizations, who design systems, are constrained to produce designs
which are copies of the communication structures of these organizations” (Brooks, F. ,1995)

As any model or regime, this organizational structure model has certain drawbacks affecting the company
tremendously, although it seems very sophisticated, advanced and in harmony with the VUCA world.

Because the teams are so small, decision making will require multiple decisions to be made by multiple
groups, resulting in slow communication.

The company will reflect the chaos of structure and disharmony. For example, the reported scandals show
that the administration's promises and advertisements did not match reality.

Forbes magazine in 2017 discussed How Platforms Are Neutralizing Conway’s Law and highlighted the fact
that this system may imply a loyalty problem, as in small groups employee loyalty would be to the group
and not to the company.
Zalando External Environment Analysis
ZALANDO MICROENVIRONMENT

Target customers:
The company targets a variety of customers: female, male & kids, mainly due to its business model focused
on retail outlet. Mostly Zalando targets price-focused-customers by providing them with a cheap price
comparing to the original price of the item. As originally the company focuses on fashion items such
clothing, footwear, sportswear, underwear and accessories and certain equipment’s, the company
develops different customer’s personae based on a broad spectrum of tastes, genders, and ages. However,
the primary effort is geared toward women as based on stats from retail-week website extracted on 2022
women account for 75% of the customer’s base. Finally, it should be noted that the company’s average
customer’s age varies between 25 and 45 years old (retail-week,2022).

Partners
As previously mentioned, the business model of Zalando is based on partnerships with other global and
national brands and retailers. Thus, given the importance of business ally it is no surprise to announce that
their number exceed 5,800 (Annual-Report_Zalando, 2022).

Zalando
Sample of
partners
 Source: (Corporate. zalando,2022)

Market Position & Competitors:

First, let us start with a key definition before deep diving into Zalando’s market position and competitive
analysis: “competition and competitiveness are the terms frequently used both in business and public
discussion about the economic units, their environment and about their ability to perform according to the
strategic or policy goals derived from business, economic, or social objective (Enn Listra,2015)

It should be noted that this analysis focuses on E-commerce platforms that connect different brands to
their end customers across countries. Websites that sell their own branded items such as SHEIN are not
considered. Moreover, platforms that specialize in one apparel field such as Footlocker are also excluded
from the equation.

Based on the analysis of the master data, we can conclude that the German e-commerce platform has a
strong market position and strong online presence competing on a global scale with strong, well-
established, and well-known companies.

Zalando's growth rate over time shows great potential for sustained growth in corporate profits and
customer satisfaction which can be verified by the number of fulfillment centers opened from year to
year.
ZALANDO MACROENVIRONMENT

Zalando Overall Company’s Swot Analysis

HRM & ORGANIZATIONAL REDESIGN GOALS AND
RECOMMENDATIONS

HRM & Organizational Redesign

Goals
The strategic objective of this paper is to propose a
more appropriate, strategic, and coherent approach
to human resource management and stronger
organizational design in line with Zalando's
requirements in today's disruptive and competitive
environment and to ensure value delivery through
customer prioritization as well as establishing a
positive culture and environment.

Moreover, this report will help the company

understand its priorities, increase its revenues,
reduce its costs, retain its employees, save time and
advise it on how to maintain a competitive edge and
be able to compete with the global well-established
players in the e-commerce market? Moreover, this
report will suggest how the company can adapt to its
environment in the near, short, and long term.

On the other hand, this report will be of great importance in order to improve the work environment for
employees, and help the company create a positive culture that promotes innovation, values talents,
develops employee skills, reduces fatigue and makes them happy and proud of what they accomplish
within their organization.

Last but not least, this paper may not have a direct impact on customers, but it will make them happier
about the quality, speed, and cost of the product. Moreover, customer focus cannot be achieved and
maintained in the long term unless the company follows best practices and is aware of its environment
and challenges.

HRM & Organizational Redesign recommendations

HUMAN RESOURCE MANAGEMENT RECOMMENDATIONS:
Based on Zalando's inferred evaluation, my recommendations will focus on two key core factors:

Honesty
As mentioned above, it is quite clear from the company's website that they understand the importance of
human resource management, and the reason is that they present a good message on their website.
However, investigations revealed that the company is facing serious human resources issues. Therefore,
management must first and foremost be honest about their current situation and seriously decide to
change how to do things which brings us to the second point.

Change Management
Change management is a systematic and structured process of developing and implementing strategies
and interventions for organizations transitioning from current state to a desired state. Change
management typically deals with incremental change, or first order change, and transformational change,
or second order change (Wang, G.G. and Sun, J.Y. ,2012)

The purpose of the change management should focus on establishing a positive, transparent
organizational environment in the long term through different strategic activities.

The process of change management consists of the 3 phases:

1. Preparing for the change.

Analysis, planning, and strategy development based on Zalando objectives and vision.
Revision of policies and code of conduct.
Quality Management Analysis
2. Managing Change.
Communicating the right message at the right time in the right way
Adopting the plan to the different level of the organization
Securing the buy-in of stakeholders especially managers
Building capabilities Programs
Managing resistance
3. Integrating of the change within the organizational culture
Revision and evaluation the success and failure
Establishment and normalization of the process
Involving employees
Feedback from employees

ORGANIZATIONAL REDESIGN RECOMMENDATIONS:

As previously explained, Zalando follows a Conway-inspired model of organized autonomy which I believe
is not appropriate for the company given its business model and strategy, size, multiple locations, rapid
growth, and association with numerous scandals. Therefore, I would recommend a hybrid structure:

What is a hybrid Structure?

A hybrid structure is a design that allows employees to report to different layers of authority and to
different managers within the same level. Organizations can apply this model by organizing the activities
based on key functions (Functional) and key products (Divisional)

How hybrid structure works?

The hybrid organization depends on four (4) major organizational elements (strategy-transformation,
2022):
 • Core structure or backbone: Responsible of the overall vision, strategy & governance, and synergy
• Functional/Divisional units: Responsible of operational excellence, critical responsibilities,
capabilities and competencies.
• Agile units: Responsible of execution and delivery especially in a VUCA world, and they can work
on different projects and report to different managers.
• Shared services: Responsible of the harmonization and the facilitation to boost collaboration and
to align between the functional/Divisional units and the agile units.

Why Hybrid Organizational Structure?

• Efficiency: The Hybrid model can ensure the optimization of resource management, as the right
job will be assigned to the right employee at the right time. Additionally, it will help both the
company and the employee thrive in the current VUCA world by maximizing productivity and
building capabilities. Also, it will help increase the employees return in investment and decrease
employees’ retention.
• Company Culture: This method will allow the company to boost transparency and honesty and
encourage employees to believe in an atmosphere of innovation. Also, it will decrease boundaries
and bureaucracy and it will decentralize the power in the lower chain of command to boost
opportunities and establish a positive culture.
• Collaboration: The hybrid structure will allow employees from different departments to exchange
knowledge by working on the same project and decrease competitiveness. Furthermore, it will
help employees develop other skills not directly related to their area of expertise.
• Flexibility and Agility: Combining different models can enable Zalando company to achieve long-
term strategic vision as it will allow it to reach the level of maturity required to respond to changing
market needs quickly and appropriately.
RISKS ASSOCIATED TO HRM & REDESIGN
RECOMMENDATIONS
Recommended HR techniques are based on best practices. Therefore, I do not think that implementing
these suggestions carries any risk. However, it should be noted that implementing these techniques
without a real desire for change and consistency will cause more harm.

Thus, I would recommend following Kotter’s (1996) 8-step change model

• Step 1: Create urgency

• Step 2: Form a powerful coalition
• Step 3: Create a vision for change
• Step 4: Communicate the vision
• Step 5: Remove obstacles
• Step 6: Create short-term wins
• Step 7: Build on the change
• Step 8: Anchor the changes in corporate culture
On the other side, I would like to highlight that the
hybrid model implies several serious risks in case it
is not implemented thoughtfully and carefully.

although the hybrid model can ensure

flexibility and efficiency, it can create
conflicts between the vertical functions and
the horizontal products, as several projects
can take place at the same moment leading
employees and managers to struggle
handling the coordination between the
different players and stakeholders.
Consequently, the hybrid organizational
structure Can cause a waste of time and
energy and even an increase in the
operational cost necessitating the company
to increase the number of employees to
cope with high demand of a growing
company that can in return aggravate the problematic situation.

However, good management practices and strong planning, adoption of collaborative style and
conflict handling style can allow the organization not only to avoid these problems, but to thrive
in a VUCA world.
In this instance, I advise to implement the following framework:
REFERENCES

Zalando.com. (2019). Homepage | Zalando Corporate Website. [online] Available at:

https://corporate.zalando.com/en.

corporate.zalando.com. (2021). Annual Report 2021. [online] Available at:

https://corporate.zalando.com/sites/default/files/media-download/Annual-
Report_ZalandoSE_21_EN_220228_s.pdf [Accessed 16 Dec. 2022].

Francisco, S. (2007). The Way We Do Things Around Here. American Behavioral Scientist, 50(7), pp.970–988.
doi:10.1177/0002764206298322.

corporate.zalando.com. (n.d.). Zalando: Our Values at Zalando | Zalando Corporate. [online] Available at:
https://corporate.zalando.com/en/newsroom/en/stories/our-values-zalando.

Ivancevich, J.M. and Glueck, W.F. (1983). Foundations of Personnel. Plano, Tex. : Business Publications.

raham, H.T and Bennett, R. (1992) Human Resources Management, 7th ed, London: Pitman Publishing.

Stewart, G.L. and Brown, K.G. (2014), Human Resource Management: Linking Strategy to Practice, 3rd ed,
Hoboken, NJ: John Wiley & Sons, In

Andreas Efthymiou, S. (2022a). M525 HR Management and Organisation Design. [GISMA business School-
M.Sc.Leadership for Digital Transformation 2022].

Bonrepublic. (n.d.). Performance management easy and flexible. [online] Available at:
https://www.bonrepublic.com/performance-review/?utm_source=google-
ads&utm_campaign=de_at_feedback&utm_agid=feedback&utm_term=360%20degree%20feedback%20system
&gclid=CjwKCAiAy_CcBhBeEiwAcoMRHL041rUwFMPKyN3FC673eemJITqLm0ImMjdOx27cpteh0Q65ukhnDxoCR
_gQAvD_BwE [Accessed 16 Dec. 2022].

Moynihan, P.K., Qayyah (n.d.). Zalando begins internal investigation after employees accuse Europe’s biggest
online fashion retailer of racism. [online] Business Insider. Available at:
https://www.businessinsider.com/zalando-starts-internal-investigation-after-racism-allegations-2020-6.

Business & Human Rights Resource Centre. (n.d.). Women’s rights NGO raises concerns about supply chain
transparency of German fashion retailer Zalando; co. responds. [online] Available at: https://www.business-
humanrights.org/en/latest-news/womens-rights-ngo-raises-concerns-about-supply-chain-transparency-of-
german-fashion-retailer-zalando-co-responds/ [Accessed 16 Dec. 2022].
Porter, L.W. and Lawler, E.E. (1965) Properties of Organization Structure in Relation to Job Attitudes and Job
Behavior. Psychological Bulletin, 64, 23-51.

InfoQ. (n.d.). Scaling Autonomy at Zalando. [online] Available at: https://www.infoq.com/articles/scaled-

autonomy-zalando/.
Brooks, F.P. and Brooks, F.P. (1975). The Mythical Man-month. Reading, Mass.; Don Mills, Ont.: Addison-Wesley
Publishing Company.

Woods, D. (2017b). How Platforms Are Neutralizing Conway’s Law. [online] Forbes. Available at:
https://www.forbes.com/sites/danwoods/2017/08/15/how-platforms-are-neutralizing-conways-
law/?sh=7e3ddff832a0 [Accessed 15 Dec. 2022].

Retail Week. (n.d.). Dashboard | Zalando. [online] Available at: https://www.retail-

week.com/prospect/zalando/dashboard/7039749/182.supplierdashboard [Accessed 16 Dec. 2022].

Listra, E. (2015). The Concept of Competition and the Objectives of Competitors. Procedia - Social and
Behavioral Sciences, 213(1), pp.25–30. doi: 10.1016/j.sbspro.2015.11.398.

Wang, G.G. and Sun, J.Y. (2012). Change Management. The Encyclopedia of Human Resource Management,
[online] pp.103–106. doi:10.1002/9781118364741.ch17

Hbr, F. and Kotter, J. (1996). Leading Change Why Transformation Efforts Fail Leaders who successfully
transform businesses do eight things right (and they do them in the right order). [online] Available at: https://irp-
cdn.multiscreensite.com/6e5efd05/files/uploaded/Leading%20Change.pdf.

THOMAS, K. (1976) Conflict and conflict management. In DUNETTE, M. D. (ed.) Handbook of industrial and
organisational psychology. New York: Rand McNally

TUCKMAN, B. (1965) Developmental sequence in small groups. Psychological Bulletin. Vol 63. pp384–99.

Hofstede, G. (1980). Culture’s consequences: International differences in work-related values. Beverly Hills: Sage
Publications.
Thank you