Zara Case Study

Topics: Management, Generally Accepted Accounting Principles, Depreciation Pages: 4 (973 words) Published: July 18, 2007
Zara is the flagship brand of the Spanish retail group, Inditex SA, one of the super-heated performers in a soft retail market in recent years. When Indtiex offered a 23 percent stake to the public in 2001, the issue was over-subscribed 26 times raising Euro2.1 billion for the company.

Zara is unique model in business world today it has its own principles which may varies from its competitors in the same industry starting from production strategy ending with supply chain management strategy, these strategies has to be examined carefully to analyze the this leading example.

At the end of 2001, Zara operated 507 stores around the world, including Spain (40% of the total number of Inditex), with 488.400 square meters of selling area (74% of the total) and employing 1050 million euro of the company's capital (72% of total), of which the store network accounted for about 80%.

Zara, which contributes around 80% of group sales, concentrates on three winning formulae to bake its fresh fashion that are short lead time makes more fashionable clothes, lower quantities makes scarce supply and more styles that equals more choices and more chances of hitting it right.

Zara main competitors' are three according to the near analysis of the market that are Gap, H&M and Benetton. They are having their own characteristics for example they completely outsource their production to factories around the world ,many of them in low cost Asian countries which is not in considerations of Zara who produce in Europe although the high labor cost but it's the business game and each one has his roles.

Case analysis:

To dig deep down in Zara case we have to answer many questions each one will lead us to know how is this unique model act and success in leading the fashion industry.

Question 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...
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