...Inditex Strategy Report Jessica Vincent Phillip Kantor Daniel Geller April 19, 2013 Contents Executive Summary ................................................................................................................................................ 3 Company Background ............................................................................................................................................ 4 Business Model....................................................................................................................................................... 5 Retail Subsidiaries..................................................................................................................................... 6 Company Background ............................................................................................................................................ 8 Financial Analysis ................................................................................................................................................. 11 Profitability & Shareholder Returns ........................................................................................................ 11 Revenues .................................................................................................................................................. 11 Costs .................................................................................................................
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...Zara Marketing Management Company background and relevant financial information The Inditex (Industria de Diseño Textil) is a clothing manufacturer group founded in Spain in 1985 by Amancio Ortega Gaona. This group is owner of Zara and from the 1990s launched other firms such as Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Zara Kids, and Uterqüe (see Table 1 in Appendix Section). With this wide brand selection, Inditex is actually able to satisfy women, men, and children needs in an international context. In fact, Inditex group, through the years, expanded to 6,104 stores in 86 countries spreading over Africa, Asia, Europe and America, and it has become one of the biggest fashion retailers in the world, operating in textile,design, manufacturing and distribution (Inditex, 2013). Even though the group has an international vocation, it has its head-quarter in the north-Western of Spain. Most of the corporate managers are Spanish, and roughly the 50% of the manufacturing is located in Spain or very close to it, as the factories in Portugal, and Morocco (Zara: Fast Fashion, Pankaj Ghemawat, José Luis Nueno). These mentioned evidences are useful to underline that the Spanish head-quarter exerts a strong influence on Inditex's world wide business model, and all the related global marketing strategies. The financial year 2012, Inditex was continued to show a really strong financial position. As the line chart 1 showed, at the year end of 2012, the net sales...
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...ZARA: History and Background Inditex is a global specialty retailer that designs, manufactures, and sells apparel, footwear, and accessories for women, men and children through its chains around the world. Zara is the largest and most internationalized of the six retailers that Inditex owns: (Zara, Massimo Dutti, Pull & Bear, Bershka, Stradivarius, and Oysho). By the end of 2001, Zara operated 507 stores around the world, including Spain. Of Inditex’s total employees, over 80% of them are part of the retail sales force and 8.5% are in manufacturing, design, logistics, and distribution. The remaining 11.5% are part of the corporate headquarters of Inditex, which is located in the region of Spain called Galicia. The role of the corporate center at Inditex’s headquarters is that of a “strategic controller” only, and is involved in setting the corporate strategy, approving the business strategies of the individual chains, and controlling their overall performance rather than as an “operator” functionally involved in running the chains. This gives Zara autonomy to operate independently and be responsible for its own strategy, product design, sourcing & manufacturing, distribution, image, personnel and financial results. With this freedom, Zara was able to make major investments in manufacturing, logistics, and IT, including establishment of a just-in-time manufacturing system and a 130,000 square meter warehouse close to its corporate headquarters. Zara manufactured...
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...ZARA: History and Background Inditex is a global specialty retailer that designs, manufactures, and sells apparel, footwear, and accessories for women, men and children through its chains around the world. Zara is the largest and most internationalized of the six retailers that Inditex owns: (Zara, Massimo Dutti, Pull & Bear, Bershka, Stradivarius, and Oysho). By the end of 2001, Zara operated 507 stores around the world, including Spain. Of Inditex’s total employees, over 80% of them are part of the retail sales force and 8.5% are in manufacturing, design, logistics, and distribution. The remaining 11.5% are part of the corporate headquarters of Inditex, which is located in the region of Spain called Galicia. The role of the corporate center at Inditex’s headquarters is that of a “strategic controller” only, and is involved in setting the corporate strategy, approving the business strategies of the individual chains, and controlling their overall performance rather than as an “operator” functionally involved in running the chains. This gives Zara autonomy to operate independently and be responsible for its own strategy, product design, sourcing & manufacturing, distribution, image, personnel and financial results. With this freedom, Zara was able to make major investments in manufacturing, logistics, and IT, including establishment of a just-in-time manufacturing system and a 130,000 square meter warehouse close to its corporate headquarters. Zara manufactured...
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...ZARA: History and Background Inditex is a global specialty retailer that designs, manufactures, and sells apparel, footwear, and accessories for women, men and children through its chains around the world. Zara is the largest and most internationalized of the six retailers that Inditex owns: (Zara, Massimo Dutti, Pull & Bear, Bershka, Stradivarius, and Oysho). By the end of 2001, Zara operated 507 stores around the world, including Spain. Of Inditex’s total employees, over 80% of them are part of the retail sales force and 8.5% are in manufacturing, design, logistics, and distribution. The remaining 11.5% are part of the corporate headquarters of Inditex, which is located in the region of Spain called Galicia. The role of the corporate center at Inditex’s headquarters is that of a “strategic controller” only, and is involved in setting the corporate strategy, approving the business strategies of the individual chains, and controlling their overall performance rather than as an “operator” functionally involved in running the chains. This gives Zara autonomy to operate independently and be responsible for its own strategy, product design, sourcing & manufacturing, distribution, image, personnel and financial results. With this freedom, Zara was able to make major investments in manufacturing, logistics, and IT, including establishment of a just-in-time manufacturing system and a 130,000 square meter warehouse close to its corporate headquarters. Zara manufactured...
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...ZARA: History and Background Inditex is a global specialty retailer that designs, manufactures, and sells apparel, footwear, and accessories for women, men and children through its chains around the world. Zara is the largest and most internationalized of the six retailers that Inditex owns: (Zara, Massimo Dutti, Pull & Bear, Bershka, Stradivarius, and Oysho). By the end of 2001, Zara operated 507 stores around the world, including Spain. Of Inditex’s total employees, over 80% of them are part of the retail sales force and 8.5% are in manufacturing, design, logistics, and distribution. The remaining 11.5% are part of the corporate headquarters of Inditex, which is located in the region of Spain called Galicia. The role of the corporate center at Inditex’s headquarters is that of a “strategic controller” only, and is involved in setting the corporate strategy, approving the business strategies of the individual chains, and controlling their overall performance rather than as an “operator” functionally involved in running the chains. This gives Zara autonomy to operate independently and be responsible for its own strategy, product design, sourcing & manufacturing, distribution, image, personnel and financial results. With this freedom, Zara was able to make major investments in manufacturing, logistics, and IT, including establishment of a just-in-time manufacturing system and a 130,000 square meter warehouse close to its corporate headquarters. Zara manufactured...
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...9-703-497 REV: DECEMBER 21, 2006 PANKAJ GHEMAWAT JOSÉ LUIS NUENO ZARA: Fast Fashion Fashion is the imitation of a given example and satisfies the demand for social adaptation. . . . The more an article becomes subject to rapid changes of fashion, the greater the demand for cheap products of its kind. — Georg Simmel, “Fashion” (1904) Inditex (Industria de Diseño Textil) of Spain, the owner of Zara and five other apparel retailing chains, continued a trajectory of rapid, profitable growth by posting net income of € 340 million on € revenues of € 3,250 million in its fiscal year 2001 (ending January 31, 2002). Inditex had had a heavily € oversubscribed Initial Public Offering in May 2001. Over the next 12 months, its stock price increased by nearly 50%—despite bearish stock market conditions—to push its market valuation to € 13.4 € billion. The high stock price made Inditex’s founder, Amancio Ortega, who had begun to work in the apparel trade as an errand boy half a century earlier, Spain’s richest man. However, it also implied a significant growth challenge. Based on one set of calculations, for example, 76% of the equity value implicit in Inditex’s stock price was based on expectations of future growth—higher than an estimated 69% for Wal-Mart or, for that matter, other high-performing retailers.1 The next section of this case briefly describes the structure of the global apparel chain, from producers to final customers. The section that follows profiles three of Inditex’s...
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...9-703-497 REV: DECEMBER 21, 2006 PANKAJ GHEMAWAT JOSÉ LUIS NUENO ZARA: Fast Fashion Fashion is the imitation of a given example and satisfies the demand for social adaptation. . . . The more an article becomes subject to rapid changes of fashion, the greater the demand for cheap products of its kind. — Georg Simmel, “Fashion” (1904) Inditex (Industria de Diseño Textil) of Spain, the owner of Zara and five other apparel retailing chains, continued a trajectory of rapid, profitable growth by posting net income of € 340 million on € revenues of € 3,250 million in its fiscal year 2001 (ending January 31, 2002). Inditex had had a heavily € oversubscribed Initial Public Offering in May 2001. Over the next 12 months, its stock price increased by nearly 50%—despite bearish stock market conditions—to push its market valuation to € 13.4 € billion. The high stock price made Inditex’s founder, Amancio Ortega, who had begun to work in the apparel trade as an errand boy half a century earlier, Spain’s richest man. However, it also implied a significant growth challenge. Based on one set of calculations, for example, 76% of the equity value implicit in Inditex’s stock price was based on expectations of future growth—higher than an estimated 69% for Wal-Mart or, for that matter, other high-performing retailers.1 The next section of this case briefly describes the structure of the global apparel chain, from producers to final customers. The section that follows profiles three of Inditex’s...
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...9-703-497 REV: DECEMBER 21, 2006 PANKAJ GHEMAWAT JOSÉ LUIS NUENO ZARA: Fast Fashion Fashion is the imitation of a given example and satisfies the demand for social adaptation. . . . The more an article becomes subject to rapid changes of fashion, the greater the demand for cheap products of its kind. — Georg Simmel, “Fashion” (1904) Inditex (Industria de Diseño Textil) of Spain, the owner of Zara and five other apparel retailing chains, continued a trajectory of rapid, profitable growth by posting net income of € 340 million on € revenues of € 3,250 million in its fiscal year 2001 (ending January 31, 2002). Inditex had had a heavily € oversubscribed Initial Public Offering in May 2001. Over the next 12 months, its stock price increased by nearly 50%—despite bearish stock market conditions—to push its market valuation to € 13.4 € billion. The high stock price made Inditex’s founder, Amancio Ortega, who had begun to work in the apparel trade as an errand boy half a century earlier, Spain’s richest man. However, it also implied a significant growth challenge. Based on one set of calculations, for example, 76% of the equity value implicit in Inditex’s stock price was based on expectations of future growth—higher than an estimated 69% for Wal-Mart or, for that matter, other high-performing retailers.1 The next section of this case briefly describes the structure of the global apparel chain, from producers to final customers. The section that follows profiles three of Inditex’s...
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...Zara: IT for Fast Fashion Case Supply Chain Management Module 1 Date: October 7th, 2009 Executive Summary My decision is to upgrade the POS terminals used by Zara to ensure the company is current with technology and compatible with the hardware vendor’s machines. January 1st 2004 is the scheduled date the POS terminals will be upgraded and running in all Zara stores around the world. The upgraded POS terminals will include more applications for store managers such as the ability to look up their own inventory balances and the inventory balances of other store locations. This factor alone is considered an advantage by store managers as it will allow each store to look up what they have been selling the most as well as avoid having to canvass the store at the end of each day. Secondly in the event Inditex’s hardware vendor upgrades their machines Zara’s POS terminals will be up to date with current technology. Key Assumptions It is anticipated Inditex’s hardware vendor may update their machines in order to stay current with technology. Inditex has no control over whether or not their hardware vendor will update their machinery therefore it would be wise to stay current with technology to avoid disrupting their largest chain of stores (Zara). Updating the POS terminals is not a guarantee of easing or rather improving current operations, however the statement of issues provided in the next section will elaborate...
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...CASE STUDY ZARA: Staying Fast and Fresh In early 2011, despite a successful decade of continued growth, fashion retailer Zara’s CFO Miguel Díaz was anything but complacent. When asked about the future, Díaz responded: Challenges abound. At the pace stores are being added in the rest of the world, the inevitable question is whether we should open our first major distribution center outside Spain. Another concern is that the prices of raw materials and labor are not going down, in part because the cost structure in Asia is changing. The old textile model in which each year better garments were produced at lower costs will not hold on forever, and we have to remain alert to these changes. Zara, the flagship brand of the Spanish retail conglomerate Inditex, was one of the leading retailers of fast-fashion, churning out frequent in-season assortment changes of knockoffs of popular runway styles and trendy fashions. The company had received a lot of attention for its centralized distribution model. In the past 10 years, Inditex and more specifically Zara had been studied by MBA students, the world over, to understand its success in distribution and supply chain efficiency. Numerous cases had been written by academics to better understand Zara's operations, marketing, information systems, and overall strategy, but the same authors had always questioned Zara’s long-term sustainability. (See Exhibit 1 for a brief survey of previous cases.) Nevertheless, Zara's...
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...CASE STUDY : Multinational Outsourcing and CSR. Inditex: The worldwide outsourcing garment industry and social community development in Morocco “Intermón claims that pressures on foreign clothing suppliers are smothering employees. […] In Morocco, where Cortefiel, Inditex (Zara), Mango and Induyco (El Corte Inglés) manufacture their products, a Tangier based textile factory sold a pair of slacks to large Spanish retailers for 3.3 euros three years ago; today, the same item sells for 2 euros. Female factory workers work 12 to 16 hours a day during the high season, because orders from Spain demand six ‐ day delivery terms in order to suit shop window change schedules.” (El País Newspaper, “Mujeres en Aprietos”, 10 ‐ 02 ‐ 2004) towards process outsourcing that responded to its characteristic labor ‐ intensive production and current competitive pressures for cost reduction and flexibility. Sector companies had been forced to redesign their business strategies, focusing on performance measurement, new competence and skill development, product quality improvements and more strategically oriented human resources management. Yet, this new strategic focus entailed unprecedented risks, especially as regards labor practices, environmental care and unfair competition. As multinational companies embarked on this process, multilateral agencies and global NGOs had begun to look into and report on wrongful practices by large corporations...
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...STRATEGIC MANAGEMENT PAPER ZARA Created By: Anggita Sulisetiasih 1006718706 Kenji Wibawa Junardy 1006718990 Patricia M. A. Adam 1006805694 International Undergraduate Program Faculty of Economics University of Indonesia Depok 2013 TABLE OF CONTENTS Chapter 1 4 INTRODUCTION 4 1.1. Company Background 4 1.2. Vision and Mission 4 1.3. Long-term Objectives 5 Chapter 2 6 VISION – MISSION ANALYSIS 6 2.1. Importance (Benefits) of Vision and Mission Statements 6 2.2. Characteristic of a Mission Statement 7 2.3. Mission Statement Components 8 2.4. Vision and Mission Relation: Is It Achievable? 10 Chapter 3 11 EXTERNAL ASSESSMENT 11 3.1 Michael Porter’s Five-Forces Model 11 3.2 External Factor Evaluation (EFE) Matrix 13 3.3 Competitive Profile Matrix 15 Chapter 4 19 INTERNAL ASSESSMENT 19 4.1 Resource-Based View Analysis 19 4.2 The Internal Factor Evaluation (IFE) Matrix 22 4.3 Financial Analysis 27 Chapter 5 33 STRATEGIES IN ACTION 33 5.1 The Strategies 33 5.2 Michael Porter’s Five Generic Strategies 34 Chapter 6 36 STRATEGY ANALYSIS AND CHOICE 36 6.1 The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix 36 6.2 The Strategic Position and Action Evaluation (SPACE) Matrix 37 6.3 The Boston Consulting Group (BCG) Matrix 39 6.4 The Internal-External (IE) Matrix 40 6.5 The Grand Strategy Matrix 41 6.6 The Quantitative Strategic Planning Matrix (QSPM) 44 Chapter 7 46 IMPLEMENTING...
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...STRATEGIC MANAGEMENT PAPER ZARA Created By: Anggita Sulisetiasih 1006718706 Kenji Wibawa Junardy 1006718990 Patricia M. A. Adam 1006805694 International Undergraduate Program Faculty of Economics University of Indonesia Depok 2013 TABLE OF CONTENTS Chapter 1 4 INTRODUCTION 4 1.1. Company Background 4 1.2. Vision and Mission 4 1.3. Long-term Objectives 5 Chapter 2 6 VISION – MISSION ANALYSIS 6 2.1. Importance (Benefits) of Vision and Mission Statements 6 2.2. Characteristic of a Mission Statement 7 2.3. Mission Statement Components 8 2.4. Vision and Mission Relation: Is It Achievable? 10 Chapter 3 11 EXTERNAL ASSESSMENT 11 3.1 Michael Porter’s Five-Forces Model 11 3.2 External Factor Evaluation (EFE) Matrix 13 3.3 Competitive Profile Matrix 15 Chapter 4 19 INTERNAL ASSESSMENT 19 4.1 Resource-Based View Analysis 19 4.2 The Internal Factor Evaluation (IFE) Matrix 22 4.3 Financial Analysis 27 Chapter 5 33 STRATEGIES IN ACTION 33 5.1 The Strategies 33 5.2 Michael Porter’s Five Generic Strategies 34 Chapter 6 36 STRATEGY ANALYSIS AND CHOICE 36 6.1 The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix 36 6.2 The Strategic Position and Action Evaluation (SPACE) Matrix 37 6.3 The Boston Consulting Group (BCG) Matrix 39 6.4 The Internal-External (IE) Matrix 40 6.5 The Grand Strategy Matrix 41 6.6 The Quantitative Strategic Planning Matrix (QSPM) 44 Chapter 7 46 IMPLEMENTING...
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...Case study Zara 1. 1. ZARA is a Spanish clothing and accessories retailer based in Arteixo, Galicia. Founded in 24 May ,1975 by Amancio Ortega and Rosalía Mera. Zara needs just two weeks to develop a new product and get it to stores, compared to the six-month industry average, and launches around 10,000 new designs each year. Zara was described by Louis Vuitton Fashion Director Daniel Piette as "possibly the most innovative and devastating retailer in the world. 1763 stores , 78 countries worldwide. Zara has continually maintain its mission to provide fast and affordable fashionable items . Inditex (Industria de Diseño Textil) of Spain, the owner of Zara and five other apparel retailing chains, continued a trajectory of rapid, profitable growth by posting net income of €€ 340 million on revenues of €€ 3,250 million in its fiscal year 2001. Zara welcomes shoppers in 86 countries to its network of 1.763 stores in upscale locations in the world's largest cities. Zara's approach to design is closely linked to their customers. 2. 2. Around the world Zara 1.763 Zara Kids 171 Pull & Bear 817 Massimo Dutti 630 Bershka 899 Stradivarius 794 Oysho 529 Zara Home 364 Uterqüe 91 TOTAL 6.058 Inditex is a global specialty retailer that designs, manufactures, and sells apparel, footwear, and accessories for women, men and children through its chains around the world. Zara is the largest and most internationalized of the six retailers that Inditex owns. By the end...
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