The Structural Frame:
A frame is a systematic collection of concepts that enables a greater understanding of
what goes on in a business’ day-to-day operations. A structural frame is similar as it
organizes where elements need to exist in order for a corporation to be efficient and
effective in its operations (Bolman and Deal, 2008). Within this structural frame lie the
organizations goals as well as the specialized responsibilities of employees and their
relationships. This is vital in order to allow adequate coordination for a well-organized
platform of success (Bolman and Deal, 2008). Using this structural frame, Armani’s
organizational design will be analyzed in order to determine whether or not they can adapt
or react to change and how effective the company will be in such situations. In order to
understand exactly what happened in the “situation”. To best understand the overall
organization and the environment in which Armani Exchange competes, the whole Armani
franchise must be analyzed
The Organization Structure of Armani: The Pyramid
There are two models as to how an organization desires to structure itself. An
organization can choose a business model in order to make money in the short run and in
the long run as well: Either a Pyramid or a Galaxy scheme (Kapferer and Bastien, 140).
‘Armani’ is a company that positions itself on the ‘pyramid’ business model, occupying
multiple levels declaring their structure (See Figure1). Armani’s strategy is creating subbrands by diversifying their product categories with the signature Giorgio Armani brand at
the top of the pyramid in order to set the standard (Kapferer and Bastien, 141). Beneath the
signature Armani is an entity that provides slightly closer to the reach of the customers,
“Armani Collezioni”. Following this are Emporio Armani, Armani Jeans, Armani Exchange,
Armani junior, Armani casa, Armani Prive’, Armani Dolci and the recently opened Armani
brand hotels in the major cities of the world (Armani Press, 2005).
Armani’s Company Pyramid:
Giorgio Armani:
Armani’s company has Giorgio Armani at the top of the pyramid (See Figure 2),
since it is the first line established by Armani himself in the 1970’s. (Funding universe,
2002) Thus, Armani will always take pride in his first creation (CNN, 2006). It carries the
designer’s name as well as overseeing the rest of the line of the brand, therefor whenever
Armani decides to open in a new market it is evident that a Giorgio Armani boutique will
open first to set the standard for the rest of the brand. This parent company is privately
owned and run by Giorgio Armani himself, the founder and designer of the brand (Roll,
2012).
The Giorgio Armani is indeed a corporate brand with a sole shareholder and it is the
line featuring the main collection of couture suits and gowns targeting the elite of the
society of ages 35-50 (Roll, 2012). The Style and the design of Giorgio Armani’s line is
simply a combination between couture and classic bringing the best of men's’ suits and
gowns to life. However, the price is very high on this end of the grid (Figure 3).
Armani Collizioni:
Armani Collizioni (previously Giorgio Armani Le- Collizioni) is the entity that caters
to the segment of customers that love Armani’s designs and would like to wear Armani but
cannot afford to do so. The style and designs are simpler than the couture line there for
cheaper by around 20% than what the Haute couture sell for. There are eleven stand-alone
boutiques of the Colliziono, generally it is sold in high-end department stores or recently
combined with an Emporio Armani store.(Roll, 2012)
Emporio Armani:
Emporio Armani is a diffusion line that sells high-end clothing targeting young
professionals between the age of 25 and 35. The pricing leans more towards the higher end
and the style is very consistent with the tastes of those interested. This line is sold strictly
in its own freestanding boutiques, there are 122 Emporio Armani boutiques or in mini
boutiques in exclusive high-end department stores. EA7 is a sub-label branched out of the
Emporio Armani line. It is a high-end sports line that is sold in the store (Roll, 2012).
Armani Junior:
It is the line that is created especially for kids. There are fifteen boutiques around
the world but products also found in selected high-end department stores (Roll, 2012).
Armani Jeans:
There are 15 Standalone Armani Jeans stores. These stores sell Jeans and a few of
Emporio Armani’s collection but generally Armani’s Jeans are sold in department stores.
The design of the line is completely different than this of Giorgio Armani, The colors
diversity and the complexity of the design caters to a very different segment. It is a trendy
line so it caters to customers that are 18- 30 years old (Roll, 2012).
Armani Exchange:
Armani Exchange is the most accessible line of the Armani brand delivering to a
wide range of the market unlike the couture lines. The prices are more realistic for the
mass public in return for the feel of the luxurious brand name designs of Giorgio Armani.
With over 235 stores around the world, Armani Exchange has the highest number of stores
since it caters to the biggest segment of prospective customers (Roll, 2012).
Armani Casa:
Armani Casa is an exclusive Armani Italian designer furniture line. This store caters
to high-end home décor and furniture featuring, lamps, linens, and dining essentials. There
are only 40 exclusive boutiques worldwide. (Funding universe, 2002)
Armani Hotels:
Armani Hotels are a series of hotels opening in the major cities of the world like
Dubai, Milan and London. Giorgio Armani oversees all the designs of the hotels from the
biggest details to the finest. The series of Hotels and residences are furnished completely
by Giorgio Armani from his line Armani Casa, making it that much more exclusive (Armani
Hotels and Resorts, 2012).
Mintzberg’s Divisional Forms:
Armani the organization follows Mintzberg’s Divisionalized form (See Figure 4).
Each brand line is a division serving a distinct market and running its own functional units
under the umbrella of one huge parent company the “Giorgio Armani”. Giorgio Armani said:
“I have always paid great attention to having brands that don’t overlap. I choose a brand for
a particular market and balance my collections in terms of look, price, distribution and
location.” The divisions of the Armani brand lines are based on the pricing, management,
distribution and marketing (Piergiorgio, 2010). Each line of the Armani brand has its own
committed style, product and brand manager, sales and communications, and its own
Public Relations staff. Nevertheless, all the brand lines are closely supervised by the brand
creator himself Giorgio Armani (Piergiorgio, 2010). Having a Divisionalized structure is
very beneficial for a large organization such as Armani. This structure offers benefits such
as economies of scale, resource allocation, and responsiveness while still controlling
economic risks (Bolman and Deal, 84). Some argue that having an individual overlook
every divisional manager is tedious and may lead to the head of the organization losing
touch with operations, however Armani prides himself in the interfering in every sector
organization and adjusting it how he sees fit (Roll, 2012). The Armani brand is built on the
foundation of its’ founder Giorgio Armani. His interconnectedness within the organization
is the main competitive advantage for the company (Roll, 2012). Giorgio is the sole
shareholder and the CEO of the complete brand where he supervises the designs of every
aspect of the brand. There are no other designers or leaders that are trained to carry on
operations without Giorgio Armani. (Davidson, 2009)
Analysis of the Structural frame
Armani greatly emphasizes their logo and their brand and this is evident through
their corporate structure. From upper management to the fore front employees, the brand
name is stressed. While this message is communicated, it is not effectively acted upon due
to major flaws in the organizational structure. Armani employs two types of working units;
those established around customers and those around a certain place or geography
(Bolman and Deal, 2008). This is evident through the various brands Armani has to cater to
different types of customers (i.e. Armani Exchange for ordinary consumers, Emporio
Armani for more high end consumers, etc.) and the distribution of them across the retail
landscape.
The Armani Exchange store, the brand under analysis, uses both lateral and vertical
coordination to structure their operations. Vertical coordination uses methods such as
authority, rules, and planning systems to communicate the Armani message to employees
(Bolman and Deal, 2008). As discovered through an interview with a former Armani
Exchange employee, managers are given a high degree of authority. They are assigned with
ensuring store operations are aligned with company goals and frequently stress the Armani
logo and brand on the employees. The managers also stress performance controls by
emphasizing sales goals and rewarding the employees with the highest sales. They,
however, do not explain how these goals are to be met. Armani Exchange also utilizes some
lateral coordination such as meetings. These weekly meetings, however, only occur
between the managers and exclude employees. The person interviewed was a Sales
assistant and a cashier whom said that there were never meetings scheduled for them with
the managers. However, there were five managers for one branch and they meet regularly
every week where the rest of the staff were not allowed to participate and were not
notified as to what went on during the meeting.
After analyzing the structure of the Armani Exchange store, it is evident that much
structural inefficiency exists in the organization of the store. The main flaw is the lack of
communication to the employees. While managers have frequent meetings to discuss sales
goals and overall company objectives, these are not communicated to the front line sales
associates. News such as what sales goals are, which employee met them, and other crucial
information are all posted on a board through which the employees get their updates for
the week. During the interview with the Armani Exchange employee, it was also discovered
that managers gave high importance to sales goals and greatly rewarded the employees
with the highest sales. While they communicated these goals, they did not instruct the
employees on how to achieve them, leaving them to understand that on their own.
The high emphasis on sales goals left employees narrowed in on achieving good
sales, which were thereby done through profiling their customers, whether intentionally or
unintentionally. In a store where managers rewarded and respected high sales employees,
the rest of the sales associate team could not afford to give time to customers they felt
would not make purchases. If they did, they would fall behind in sales and lose opportunity
to display good work performance to their managers. This, however, created a
disconnection between the consumers and the Armani Exchange brand or company goals.
Armani Exchange, in comparison to other Armani brands, is the affordable brand targeted
towards more everyday consumers. Nevertheless, even in this situation, the behavior of the
sales associates portrays the brand as one that only has time for high worth consumers,
causing a rift between what Armani is actually trying to achieve with their Armani
Exchange stores.
Figure 1:
Figure 2:
Figure 3:
Figure -3-
Figure 4:
Pricing: Armani applies a pricing strategy where the couture line are highly priced and
then sloping down to much lower prices for Armani Jeans and Armani Exchange. The
different sectors of the brand are prices separately according to the category. (Davidson,
2009)
Management:
Distribution: Armani Carefully chooses what is sold in boutiques and what is distributed
through high-end department stores. A customer can never find couture gowns in a
department store they are strictly sold in Armani’s high-end boutiques. In Addition, the
merchandise sold on the website and in the U.S are selected items and not the whole
complete collection as in Italy, Milan. (Piergiorgio, 2010)
Marketing: Armani’s marketing strategies differ according to the different categories. The
couture lines do not necessarily need much advertising since celebrities take pride in
wearing Armani’s Couture on the red carpet and on important ceremonies. For the lower
bridge Armani lines the chosen faces and bodies of Armani are Worldwide famous
celebrities, currently Christiano Ronaldo and Megan Fox. The Marketing process emerges
from a very centralized strategies that allow consistency between the brand’s image and
the brand’s Identity. (Piergiorgio, 2010)
Brand Identity:
Giorgio Armani is splendidly content to deliver the highest quality merchandise where the
Armani brand combines Elegance and sophistication, comfort and glamour in a simply
marvellous Italian Taste creating a complete lifestyle and an Aura for a way of living.
(Piergiorgio, 2010)
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