Zara

Topics: Inditex, Transaction cost, Costs Pages: 15 (5218 words) Published: December 15, 2013


Aalborg University
BSc Economics and Business Administration
2012 October 24BSc Economics and Business Administration

Mini Project
The ZARA Case Study in
Economics and The Organisation of Economic Activity

The report has been prepared by:

Inga Dragunaite ___________________________________ Justina Vaidziulyte ___________________________________ Kristina Kirilova ___________________________________ Aleksandar Varbanov ___________________________________ Nebojsa Abadzic ____________________________________

Delivery date: 26-10-2012
Number of words of the report: 5425

Contents

Introduction
Inditex is an eight-brand group of the world’s largest fashion retailers with its headquarters located in La Coruna, in Spain. Founder and majority owner of the company is Amancio Ortega, famous Spanish entrepreneur. Chairman and CEO of the company is Pablo Isla Alvarez de Tejera. Inditex’s corporate culture is based on close communication between the customers and the employees. Today company has more than 100.000 employees worldwide. The largest brand of Inditex is Zara, which runs three independent product lines for women, men and children where most of the accent is stressed on women’s garment. Each of the lines is managed by separate team which consists of Diression de Tiendas (DTs). DT’s collaborate with commercials, country managers, HR managers and headquarters. We can freely say that Zara is a pioneer in fast fashion industry. The customer is at the heart of their unique business model, which includes design, production, distribution and sales through their extensive retail network. The Zara case study is an interesting example on how one company can be successful on the market. The dynamics of the company and its adapting ability show how important is the right thing regarding market’s needs. Zara is an apparel chain that works differently from traditional retailers. The main characteristic is the vertically integrated model. Instead of relying fully on outside partners, the company manages all design, warehousing, distribution, and logistics itself. The products are distributed in small batches. Due to the stylish garment and affordable prices, consumers visit Zara’s stores very often.

Describe the Value Chain of Inditex
Value Chain Inditex
Primary Value Chain Activities
Inbound Logistics

Inditex Group is a vertically integrated group, which controls most of its supply chain. About 50 % of its products are manufactured in Spain, 25% comes from Europe, and the remaining fraction is produced in locations in Asia and Africa1. After that, the whole production is received and warehoused in the logistics centers in Spain before being sent to the stores. It does not matter where they have been produced, the main categorization is happening in Spain. Materials and fabrics are kept in warehouses without exact colors or prints, due to be able to react quickly to market changes. If it turns out that the demand is higher for the particular product, the company is able to react quickly and produce additional items with a particular design or color2. Sometimes, transportation of merchandise is by plane; for example: clothes, which are produced in Asia, have to be transported in logistics centres in Spain, there categorized and again transported to the Asia. Furthermore, many countries have small warehouses where they keep extra or returned goods3.

Operations

Inditex country offices represent headquarters at the country level, supervising and coordinating the operations of the various Inditex brands4. Zara's headquarter in Spain consists of three spacious halls for each of these centers. There designers work together with market specialists and planners for procurement and production. Also, here designers can quickly check initial drafts with their colleagues...
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