INDITEX

Topics: Transaction cost, Multinational corporation, Market Pages: 154 (39384 words) Published: December 3, 2013
INDITEX INTERNATIONALIZATION
PROCESS

Author: Rocío Sánchez Heres
Supervisor: Jens Vestergaard

Aarhus School of Business
MSc. in Finance & International Business
February / 2007

TABLE OF CONTENTS
ABSTRACT…………………………………………………………………………..3 1. INTRODUCTION………………………………………………………………..4 1.1.
BACKGROUND……………………………………………………………..6 1.1.1. Inditex brief history……….…………….…………………………...7 2. REASONS BEHIND INDITEX INTERNATIONALIZATION………………9 2.1.
DEFINITION OF INTERNATIONALIZATION……………..……………..9 2.1.1. Motives for Internationalization………………………….……...…10 2.2.
REVIEW OF RELEVANT THEORIES…………………………………….16 2.2.1. Traditional Internationalization Approach….……………………...17 2.2.2. Transaction Cost Approach / Internalization Theory…………..…..19 2.2.3. Eclectic Paradigm Theory…….……………………………………22 2.2.4. Product Cycle Hypothesis……………………….…………………24 2.2.5. Internationalization Process Model……………….………………..27 2.2.5.1. Uppsala Internationalization Model…………………..27 2.2.6. Network Approach…..…………………………………...………...35 3. WHY DOES INDITEX GO ABROAD..............................................................37 3.1.

Spanish Retailing Industry………………………………………………….38 3.1.1. Political / Legal factors………………….…………………………39 3.1.2. Economic factors……………………………………….………….40 3.1.3. Technological factors……………………………….……………...41 3.1.4. Socio - cultural factors……………………….…………………….41 3.2.

Competitive Advantage / Manufacturing Process…………………………..42 3.3.
Industry Analysis……………………………………………………………44 3.3.1. Porter’s Five Forces………………………………………….…….44 3.3.2. Actual Competitors………………………………………………...50 3.3.3. Demand………………………………………………………….…52 3.3.3.1. Market Share…………………………………………52 3.3.3.2. Demand Analysis ……………………………………56 3.3.4. SWOT………………………………………………….…………...58 3.4.

Why does Inditex go abroad?..........................................................................65 4. INDITEX INTERNATIONALIZATION PROCESS………………………..71 4.1.
Spanish Market towards Internationalization……………………………….71 4.2.
The internationalization of the Spanish companies…………………………73 4.3.
Inditex international evolution………………………………………………74 4.3.1. Zara goes abroad…………….……………………………………..75 4.4.
How companies enter into foreign markets?..................................................77 4.5.
Factors Influencing Entry Mode Selection………………………………….79 4.6.
How does Inditex enter into foreign markets?................................................86 5. CONCLUSION………………………………………………………………….98 6. REFERENCES………………………………………………………………...102 7. APPENDIX…………………………………………………………………….107

-2-

ABSTRACT

This study intends to be a useful guide for companies thinking about entering the international arena, alternatively, constitutes an explanatory analysis of the conditions leading firms to expand their activities to foreign markets. Through the different sections of this paper, I have carried on an analysis of the factors influencing the internationalization of the firms, taking as a reference the growth process of the company Inditex, a big Spanish multinational with a high international presence, examining

its

distinctive

characteristics

together

with

the

most

relevant

internationalization theories. In this research some questions were formulated in order to gain insights about the international growth of the company. These questions were; why does Inditex enter international markets? What are the internal and external motivations faced by the company on its internationalization process? How does Inditex select its foreign markets? And finally, how does Inditex choose its mode of entry into foreign markets?

To be able to answer these questions, useful analysis of the existing literature were conducted as well as the environment, like the SWOT analysis or Porter’s Five Forces model. Once the internationalization is examined, the study focuses on the choice of modes of entry providing not all, but the main strategies followed by the company and its reasons to choose those strategies....

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