Mgw-Inditex Group

Topics: Inditex, Global Competitiveness Report, Zara Pages: 11 (3721 words) Published: November 11, 2011
The Inditex Group|
Spain’s Global Competitiveness|


Company Overview
Inditex Group, headquartered in Al Coruna, Spain, is one of the world’s largest fashion retail companies. Amancio Ortega Gaona found Inditex in 1963. The group is made up of over 100 companies operating in textile design, manufacturing and distribution. It owns eight retail fashion stores including Zara, Zara Homes, Pull & Bear, Msssimo Dutti, Bershka, Stradivarius, Oysho and Uterque. According to its website the company attributes its success to a “unique business model based on innovation and flexibility” and an approach to fashion that embraces “creativity, quality design and rapid turnaround to adjust to changing market demands.” This business strategy has lead to the international success of its flagship store, Zara, which is its most profitable retail store, accounting for over 60% of Inditex’s sales. Inditex also uses a cross border strategy of acquisitions and joint venture for international expansion. The company’s website states that for the 2010 fiscal year, Inditex has seen an increase of 437 stores, expansion into 3 additional countries (Bulgaria, India, Kazakhstan) and an increase in employees from 92,301 for fiscal year 2009 to 100,138 employees for the 2010 fiscal year. Even in the current world economic downturn, for the 2010 fiscal year Inditex has seen a 13% increase in net sales and 32% increase in net profits over its 2009 fiscal year. Furthermore, there net sales increased 12% to 6,209 million Euros in the first half of 2011, according to the website. Vision & Strategy

Inditex’s vision is creativity and quality design in fashion at reasonable prices with a rapid response to market demands, resulting in fast international expansion and an excellent performance of its commercial formats. “Agility and speed-to-market are vital elements of the Inditex vision of the fashion business,” points out General Manager, Juan Carlos Rodríguez Cebrián in an interview with Business Week Magazine. Cebrian also states “logistics is a basic component of our business model and allows us to move quickly when it comes to giving our customers what they want, and accounts for a sizeable chunk of our investments.” The group designs and manufactures almost everything by itself, and new designs are dispatched twice a week to Zara stores. The group's success and its unique business model, based on innovation and flexibility, have made Inditex one of the biggest fashion retailers in the world. Their approach to fashion creativity, quality design and rapid turnaround to adjust to changing market demands -- has allowed them to expand internationally at a fast pace and has generated an excellent public response to their retailers' collections Competitive Advantage

By acquisition of Gap in 2008, Inditex has become the largest retailer of clothing and footwear even though H&M is also expanding its stores and scope globally, and Inditex’s amount of retail stores are absolutely overwhelming. At the same time, Inditex operates manufacture and production not only in China, but also in Europe, mostly in Spain. So it can always keep its products fresh to the customers. High efficiency of organization and designing also contribute a lot to its profit margin. Inditex’s supply chain response for Zara is 2 ½ months in comparison to the 5-7 months industry standard. Furthermore, Inditex plays a significant role controlling the dyeing process which is essential to the supply chain cycle. For example, Zara purchases a dye and finishing plant to gain control over its dyeing process which is essential to the timeliness of the supply chain process. Does bulk of cutting itself, few subcontracting; 60% of manufacturing is outsourced in countries close to the headquarters in Spain for quick turnaround. Typically, Zara pre-commits to 50%- 60% of its production in advance of the season, whereas other clothing...
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