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, significantly calling the attention of increasingly sensitive and aware consumers and customers. Global society was urging apparel industry players to adopt a more responsible attitude to be embraced by their entire business value chain, including vendors and outsourced suppliers. Thus, Inditex was held responsible for what went on at outsourcing shop s owned by Moroccan, Peruvian, Chinese or Indian businessmen. This was precisely why Javier Chércoles, Social Responsibility Department director at Inditex, was losing sleep: how could they know for sure what happened in over 1,800 outsourcing shops scattered all around the world?
It was early in October 2005, and the date set for the next Social Council meeting was fast approaching. This advisory body provided counsel to Inditex Group on corporate social responsibility (hence CSR) issues. The upcoming meeting would assess the CSR policies and programs the Group was developing. The textile industry in general and Inditex ‐ as an industry leader ‐ in particular were facing complex social challenges that affected not only their image and reputation but their operations as well. Inditex CSR strategy had emerged largely in response to these challenging issues. The time had come to evaluate this strategy’s impact, especially focusing on outsourced shops, in order to outline a future course of action. Specifically, Inditex had launched a program in Tangier and needed to assess this experience and find a way to incorporate it into the Group’s global strategy. At the same time, Javier Chércoles wondered what options were available for social intervention in developing nations. What were the limits to the company’s social responsibility? Should Inditex strive to ensure the wellbeing of its suppliers’ workers? He also pondered the visibility issue : Should the company communicate its CSR efforts openly, or should it pursue a more “ subtle”, low ‐ profile approach? In recent years, the textile industry had become highly globalized as a result of a strong trend 1
Inditex Group Evolution
By late 2005, Spain’s Inditex (Industria de Diseño Textil) Group, owner of several retail brands including Zara, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and ...
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