Strategic Management and Business Model
Zara: Fast Fashion
Report Questions
1) With which of the international competitors listed in the case is it most interesting to compare Inditex´s financial results? Why? What do comparisons indicate about Inditex´s relative operating economics?
Financial results of Inditex Group and its competitors GAP, BENETTON, and H&M (Table 1) have to be evaluated under a common bases, in other words, identifying variables that are common for the four companies due to at the end the business strategy of each one are different. For example, the format of each of the stores varies per company, and so the market where they are located . Figure 1, shows the product market positioning map of Inditex stores and its competitors.
Source: Exhibit 5. HBS case Zara: Fast Fashion
As it is stated in the HBS Case ZARA: Fast Fashion, the main characteristic that differentiates Inditex from the rest of the group is that the vertical scope of Zara is wider that the other three competitors, a result of that Zara owns much of its production and most of its stores . Characteristics of each of the four companies that analysts consider comparables are identified in Table2.
Table 2. Key Issues of Inditex Closets Competitors.
Concept Inditex GAP H & M Benetton
Production Own most of production Outsourcing Outsourcing Outsourcing
Stores Most owned Most owned Most Owned Franchise
Area of focus on sales Europe 77% USA 87% Europe 96% Europe 78%
Lead times Short 5-6 weeks Too long (Months) Significantly longer than Zara
Stores type Multiformat Single format, Outlets Single format Single format + Outlets
Source: Case data
Based on the considerations presented above and the data provided by the case (Table 1) we calculated a series of financial indicators for the companies in order to compare them and select which could be comparable to Inditex. There were some important indicators that could help us to evaluate the efficiency of the business model of each company, especially
Report Questions
1) With which of the international competitors listed in the case is it most interesting to compare Inditex´s financial results? Why? What do comparisons indicate about Inditex´s relative operating economics?
Financial results of Inditex Group and its competitors GAP, BENETTON, and H&M (Table 1) have to be evaluated under a common bases, in other words, identifying variables that are common for the four companies due to at the end the business strategy of each one are different. For example, the format of each of the stores varies per company, and so the market where they are located . Figure 1, shows the product market positioning map of Inditex stores and its competitors.
Source: Exhibit 5. HBS case Zara: Fast Fashion
As it is stated in the HBS Case ZARA: Fast Fashion, the main characteristic that differentiates Inditex from the rest of the group is that the vertical scope of Zara is wider that the other three competitors, a result of that Zara owns much of its production and most of its stores . Characteristics of each of the four companies that analysts consider comparables are identified in Table2.
Table 2. Key Issues of Inditex Closets Competitors.
Concept Inditex GAP H & M Benetton
Production Own most of production Outsourcing Outsourcing Outsourcing
Stores Most owned Most owned Most Owned Franchise
Area of focus on sales Europe 77% USA 87% Europe 96% Europe 78%
Lead times Short 5-6 weeks Too long (Months) Significantly longer than Zara
Stores type Multiformat Single format, Outlets Single format Single format + Outlets
Source: Case data
Based on the considerations presented above and the data provided by the case (Table 1) we calculated a series of financial indicators for the companies in order to compare them and select which could be comparable to Inditex. There were some important indicators that could help us to evaluate the efficiency of the business model of each company, especially