Business Model Analysis: Zara

Topics: Strategic management, Manufacturing, Inditex Pages: 3 (872 words) Published: April 28, 2012

Inditex is a global specialty retailer that designs, manufactures, and sells apparel, footwear, and accessories for women, men and children through its chains around the world.  Zara is the largest and most internationalized of the six retailers that Inditex owns: Zara, Massimo Dutti, Pull & Bear, Bershka, Stradivarius, and Oysho.  At the end of 2001, it operated 507 stores in countries around the world, including Spain (40% of the total number for Inditex), with 488,400 square meters of selling area (74% of the total) and employing €1,050 million of the company’s capital (72% of the total), of which the store network accounted for about 80%. During fiscal year 2001, it had posted EBIT of €€ 441 million (85% of the total) on sales of €€ 2,477 million (76%of the total).

Just over 80% of Inditex’s employees were engaged in retail sales in stores; 8.5% were employed in manufacturing; and design, logistics, distribution, and headquarters activities accounted for the remainder which is located in the region of Spain called Galicia.

The role of the corporate center at Inditex’s headquarters is that of a “strategic controller” only, and is involved in setting the corporate strategy, approving the business strategies of the individual chains, and controlling their overall performance rather than as an “operator” functionally involved in running the chains.  This gives Zara autonomy to operate independently and be responsible for its own strategy, product design, sourcing & manufacturing, distribution, image, personnel and financial results.

With this freedom, Zara was able to make major investments in manufacturing, logistics, and IT, including establishment of a just-in-time manufacturing system and a 130,000 square meter warehouse close to its corporate headquarters.  Zara manufactured its most fashion-sensitive products internally and its designers continuously tracked customer preferences and placed orders with internal and external...
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