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Inditex Analysis

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Analysis Inditex Group
Unit Introduction- GBO
Group Award: Global Trade and Business
SCN: 0137219061
Candidate’s Name: Cristina Diaz Alama

HND Centre
Xianda College of Economics and Humanities
Shanghai International Studies University
Date: 2013/10/08

Assessment 1
Select a Global Business Organization and describe its development from inception through to its present status as a global trader.
Describe its expansion including any global acquisitions and mergers, and its business structure- whether centralized or decentralized.

1. Introduction Industria de Diseño Textil, S.A. (Inditex) is a Spanish multinational clothing company headquartered in Arteixo, Galicia, Spain. It is made up of almost a hundred companies dealing in activities related to textile design, production and distribution. Amancio Ortega, Spain's richest man, and the world's third richest man, is the founder and current largest shareholder. The current chairman of Inditex is Pablo Isla.
Inditex operates over 6,000 stores worldwide and owns brands like Massimo Dutti, Bershka, Oysho, Pull and Bear, Stradivarius, Zara, Tempe and Uterqüe, and also a low-cost brand Lefties. The majority of its stores are corporate-owned; Franchises are only conceded in countries where corporate properties can not be foreign-owned (in some Middle Eastern countries, for example).
The group designs and manufactures almost everything by itself, and new designs are dispatched twice a week to Zara stores.
Most manufacturing is now in low labour cost countries, mainly in Morocco, China, and Turkey, although much production continues in Spain and Portugal, particularly for its Zara brand. In addition, Inditex has a factory for shoe design, production and distribution in the town of Elche, on the Spanish Mediterranean coast.

2. Describe its development from inception through to its present status as a global trader. Describe its expansion including any global acquisitions and mergers.
The first Zara shop opened its doors in 1975 in A Coruña (Galicia, Spain), the city which saw the group's early beginnings and which is now home to its central offices. Today Inditex's stores can be seen in places like New York's Fifth Avenue, Milan's Corso Vittorio Emanuele II, London's Regent Street and Oxford Street, Frankfurt's Zeil, Shanghai's Nanjing West Road, Tokyo's Shibuya, Istanbul's, Seoul's Myeong-dong, and Vienna's.
In the 1990s, Inditex began creating or acquiring subsidiaries to manage different collections: Bershka, Pull and Bear, Massimo Dutti, and Stradivarius.
Inditex won the 2006 Wharton Infosys Business Transformation Award for their innovative and successful implementation of information technology to drastically decrease the time it takes to get new merchandise from the design stage to the in-store stage.
In 2010, Zara has sales of € 12.5 billion with only twice a year newspaper advertisements.
On 20 April 2011, opened the first Zara flagship in Australia. Thus, the Inditex group was present for the first time in 5 continents, and in 86 countries. Today Inditex is the biggest fashion group in the world.

Time Line of Inditex
Zara shows its revamped image based on four guiding principles: beauty, clarity, functionality and sustainability. Simplicity is the byword throughout the store as part of Zara's mission to bring customers into direct contact with fashion. Inditex opens its first stores in Armenia, Bosnia-Herzegovina, Ecuador, Georgia and the Former Yugoslav Republic of Macedonia and reach 6,000 stores worldwide.

Stores opened for the first time in Taiwan, Azerbaijan, Australia, South Africa and Peru, bringing Inditex Group's commercial presence to five continents. Inditex thus passed the 5,500-store mark, with shops in 82 markets. Building on its multi-channel retail strategy, the company launched online stores for all of the Group's brands and opened online Zara stores in the United States and Japan. At the company's General Shareholders Meeting, Pablo Isla was appointed Inditex Chairman and CEO.

Inditex opened its first stores in Bulgaria, India and Kazakhstan, bringing its presence to 77 countries. Zara began selling its products online and by years end the online store was available in 16 European countries. At the Annual General Meeting of Shareholders, Mr Pablo Isla, CEO and Deputy Chairman of Inditex, presented the Group's new Strategic Environmental Plan.

Inditex signs a joint venture with the Tata Group to open stores in India beginning in 2010. The Group debuts its first stores in Syria, while the concepts Stradivarius, Bershka and Pull & Bear open its first stores in China.

Launch of Uterqüe, a retailer specialising in accessories and other fashion extras. Inditex reaches the 4,000-store milestone with an opening in Tokyo. The number of countries on its global store map rises to 73, following openings in Korea, Ukraine, Montenegro, Honduras and Egypt.

Two new Spanish distribution hubs begin operating in Meco (Madrid) and Onzonilla (León). Zara celebrates the launch in Florence (Italy) of Zara shop number 1,000, while Bershka and Pull & Bear each pass the 500-store mark. The Group opens establishments in four new markets: Croatia, Colombia, Guatemala and Oman.

Serbia, mainland China and Tunisia join the Inditex global store map.

Inditex opens its first stores in Monaco, Indonesia, Thailand, the Philippines and Costa Rica.

The Group unveils store number 2,000 (in Hong Kong), expanding its global footprint to 56 countries in Europe, the Americas, Asia and Africa.

The Group celebrates its first store openings in Slovenia, Slovakia, Russia and Malaysia.

Zara breaks ground on its new distribution hub in Zaragoza, Spain. The Group opens its first outlets in Finland, Switzerland, El Salvador, the Dominican Republic and Singapore.

Launch of lingerie retailer Oysho. Inditex begins trading on the stock market on 23 May 2001. The Group opens its first shops in Ireland, Iceland, Italy, Luxembourg, the Czech Republic, Puerto Rico and Jordan.

Inditex headquarters moves to a new building in Arteixo (A Coruña, Spain). The Group debuts in four new markets: Andorra, Austria, Denmark and Qatar.

Inditex acquires Stradivarius, the Group's fifth retailer. Stores open in several new markets: the Netherlands, Germany, Poland, Saudi Arabia, Bahrain, Canada, Brazil, Chile and Uruguay.

This year marks the launch of Bershka, a retailer aimed at young women and teen girls, and store openings in new markets: United Kingdom, Turkey, Argentina, Venezuela, United Arab Emirates, Japan, Kuwait and Lebanon.

The Inditex store map expands to Norway and Israel.

Inditex acquires 100% of Massimo Dutti. The Group launches its first shop in Malta in 1995, and its first Cyprus establishment opens the following year.

Inditex continues to disembark in new international markets: Mexico in 1992, Greece in 1993, Belgium and Sweden in 1994.

Retailer Pull & Bear is founded, and Inditex buys 65% of the Massimo Dutti Group.

The Group begins welcoming shoppers in the United States and France with stores in New York (1989) and Paris (1990).

Zara opens its first store outside of Spain in December 1988 in Oporto, Portugal.

The Group manufacturers devote their entire output to Zara. The Group lays the foundations for a distribution system that can meet the needs of its expected rapid pace of growth.

Inditex is founded as the holding company of the group of businesses operating at the time.

Zara’s approach to fashion is well received by the public, which prompts the retailer to extend its network of stores to major Spanish cities.

Zara traces its roots to this year’s opening of the first Zara store on a street in downtown A Coruña, Spain.

Amancio Ortega Gaona, chairman and founder of Inditex, begins his career as a clothing manufacturer. The business grows steadily over the decade until Ortega owns several factories, which distribute their merchandise to other European countries.

3. Business structure
Inditex Group Philosophy
Getting the product the customer to the store, that is, to adapt quickly to fashion public begging.
The obsession of the last four years increasingly improve quality. Inditex has 36 designers who are in charge of designing the clothing enough so that the landscape of Zara stores are filled with news continuously.
Sell a modern design that the public needs with quality at an affordable price.
A perfect distribution system, just in time.
Operation of Inditex
It employs a dozen people on the phone with agents 4 continents stores, requesting and interpreting information that the customers are buying and how demand.
Another working group travels around the world visiting college campuses and nightclubs to see how young people dress. This information is also sent to the headquarters of Inditex, often using handheld computers capable of transmitting images.
Zara is vital to closely follow trends, because only manufactured with a very small advance of their collections. The process is capital intensive and labor. Remember that the traditional business apparel usually labor intensive but not capital. Zara has 250 designers and other employees in the area 14000 La Coruna. The clothes are moved by conveyor using underground rails 200 km long connecting the factories with the logistics center. Each garment has an electronic tag so that it can be mechanically packed and sent to the correct destination.

The Spanish sector status of the preparation in the boom years of age zara high rigidity, with two annual seasons "preset". This caused all the product that did not sell during the season came to rebates, which sold at a price much lower than the start, as the consumer know I could buy the same item on sale at a much lower price. Given this limitation the company to force the buyer to purchase goods in times of no sales, chose to try to change the mindset of the consumer, establishing a concept of "prêt à porter". That is promoting the idea of shortages and their short stay at the hotel. The renewal of stock in its stores twice a week was essential for achieving change this mentality that had prevailed throughout the twentieth century.
Once you have changed the mindset of the consumer, choose to adopt a structure based on operational and strategic flexibility.
Operational, because thanks to its vertical integration model got and get a reduced risk of fashion. No one fits in so short a time as possible zara trend changes. This designs all the products it sells in its stores.
Regarding the manufactured, about 50% is done directly in the factories of the group in Spain.
Strategic inditex because the model is the result of the development of new formats, as in the case of Zara, Bershka, Pull & Bear and Massimo Dutti. His philosophy is clear, to offer the most innovative at a reasonable price.
A few years ago the industry was dominated by companies with well-known brands, which usually design and fabric quality go hand in hand. Good design clothes was inaccessible to the vast majority of potential consumers: Zara entered the game with different rules. While most establishments to fashion changes meant problems for Zara were opportunities, as indeed stimulated and continues to stimulate, continuous fashion changes.
The new distribution system adopted by the company forced to take a new organizational form that totally differed from the previous. They seek a direct line of command in which the CEO or president, is the main figure, their responsibility is greatest and who is responsible for accepting or rejecting the last major decisions of the company, which obviously affect the smooth running thereof.
Between the president and the vice president found the staff or advisory body of the company shall advise in decision-making. It consists of the Secretary General, the responsible corporate and legal advice. At a lower level there is the vice president who oversees different departments such as: tax, financial, commercial, capital markets, corporate communications and internet.
Below this is the General Manager who is responsible for coordinating other corporate departments and systems administration and human resources, in addition to change business units and business support areas.
Thanks to these changes Zara can take less than one or two months to put an item in their stores, since it is designed, for about nine months it takes for half the competition, called the "time to market". Another management feature is its advertising policy rather "no advertising". Zara is only publicized when they start their sales.

4. References
Miguel Jiménez (13/03/2013). «Las ventas y los beneficios de Inditex baten todos los récords en 2012». El País. Consultado el 14 de marzo de 2013. «Helena Revoredo y Rosalía Mera, ricas y poderosas». El País (18/01/2013). Consultado el 14 de marzo de 2013.
[Inditex, Memoria anual de 2010]
Hernández, Santiago (07 de 2011). El país (ed.): «El imperio Zara cambia de timonel». Consultado el 17 de julio de 2011. El Confidencial (ed.): «Trabajo esclavo en la India: tres empresas españolas están incluidas en la lista negra» (05 de 2012). Consultado el 23 de marzo de 2012.
Ethics (ed.): «Inditex, implicada en un escándalo de esclavitud en Brasil» (05 de 2012). Consultado el 6 de noviembre de 2012.
«Zara produce en condiciones de esclavitud en Argentina». Diagonal (17 de mayo de 2013).

5. Websites * * * *

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Zara Case Study

...Donghua University Shanghai Contents • • • • Historical background Overview of the Inditex Group Zara’s business model The competitive landscape – The Gap, H&M, Fast Retailing (Uniqlo) • Zara’s global store and online expansion • Questions Zara Case Study 2 Corporate history (1 of 2) • 1963: establishment of clothing production company in A Coruῆa, Spain • 1975: first Zara store opens in A Coruῆa • 1985: Inditex Group is established • 1989: first international Zara store opens in Portugal Zara Case Study 3 Corporate history (2 of 2) • 1990s: acquisition of brands Massimo Dutti and Stradivarius • 2001: Inditex IPO • 2006: first Zara store opens in China • 2010: first Zara store opens in India • 2010: Zara launches first online store Zara Case Study 4 Inditex’s performance indicators, 2012 • Net income totalled 2.3 billion euros, an increase of 22% from 2011 • 6,009 stores, 482 more than a year earlier • Online store network covers 23 markets, with new launches in China and Canada • Creation of 10,802 new jobs in 2012, bringing workforce to 120,314 employees Zara Case Study 5 Inditex Group Brand Portfolio (1 of 8) Zara • Fashionable, yet affordable clothes for a wide range of people, cultures and generations, who, despite their differences, all share a special fondness for fashion • 1751 stores in 86 countries • Zara Case Study 6 Inditex Group Brand Portfolio (2 of 8) Pull & Bear • Casual, laid-back fashion for......

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