The company that is going to be analyse in this essay is Inditex and particularly Zara, its main brand. Inditex Group is a textile company, the most important in the Spanish textile sector and one of the most important multinational and one of the most weighty multinationals in Spain.
A Multinational Corporation can be defined as enterprises which own or control production or service facilities outside the country in which they are based (definition by the UN; Czinkota, 1992; page 298). Inditex can be classified as a multinational since they offer their services in 800 outlets in 25 countries all over the world, although the production is done in Spain, its home country. It also follows some of the appropriate strategies to trade abroad as a proper multinational, which will be explained in the following essay.
Inditex Group is a conglomerate of companies, mainly textile enterprises, but also from other sectors. It gathers an important number of companies all around the world, trading in the USA, Mexico, France, the Netherlands, Belgium, Luxembourg, Italy, Germany, Greece, Portugal, Andorra, UK, Israel, China, Cyprus, Malta, Sweden, Norway, Japan, Turkey, Canada, Argentina, Uruguay, Chile and, of course, Spain.
Its main brands and stores are: ZARA, Pull & Bear, Massimo Dutti, Kiddy's Class, Brettos, Lefties, Stradivarius and Deep Blue Jeans.
The most important of all the brands of the Group is Zara, which was the first to be created. It is specialised in men, women and children wear.
Massimo Dutti is focused on young men and women who look for quality, whilst Pull & Bear is developed for youngers who prefer a casual way of dressing rather than the formal schemes of Massimo Dutti.
The last brand that the Group has created in Bershka for young disco-girls. This brand is very similar to the Stradivarius style (brand that Inditex acquired in October 1999) (El Correo Gallego Newspaper).
In 1973 Amancio Ortega Gaona, Inditex Group president and main shareholder, created a company specialised in producing dressing gowns and underwear. Two years later he opened the first Zara store in La Coruña.
That was when he started building the whole holding. During the 70's and the 80's he surrounded by cloth-designers who used to travel to the main catwalks in Europe, where they can copy the most original ideas.
The big growth of the company happened in the 90's, when the Group increased the supply with new brands. In 1991 Pull & Bear was created. On the same year they acquired the 65% of Massimo Dutti, percentage that has increased to a 100% in 1995.
During these last years Inditex Group has created the other brands such as Kiddy's Class, Brettos, Lefties, Bershka and Deep Blue Jeans. It also acquired Zara's competitor Stradivarius in October 1999.
The Group has about 800 outlets in 25 countries all over the world. Nearly 500 are opened in Spain where the market is almost saturated with all the different brands.
Zara's policy about how stores have to be, is the following:
The store has to be located in the very central and commercial streets of the city or inside very well-known shopping centres.
The minimum area of each store has to be 1500 squared metres; this was the main reason why they were not succeed in Italy.
Zara only establishes in cities larger than 100,000 inhabitants.
Motivations for going abroad
Firms can be classified into four different categories according to the motivations that make them moving overseas: Resource seeking, Market seeking, Efficiency seeking and Strategic Asset seeking.
Every company uses to follow at least one of these motivations, and furthermore, they tend to have more than one. In the case of Inditex, and particularly Zara, the main motivations are market seeking, as the Spanish market is saturated and they cannot grow any more; but also efficiency as they diversify their business. These two types of motivations...
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