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? Its relative capital efficiency? Note that while the electronic version of Exhibit 6 automates some of the comparisons, you will probably want to dig further into them.
Background: Inditex is an international fashion retailer that designed, manufactured and sold apparel, footwear, and accessories for women, men, and children through Zara and other five chains around the world. The six retailing chains were organized as separate business units within an overall structure that also included six business support areas and nine corporate
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The geographical close network by keeping the production close to the headquarters in Europe and keeping the whole team working in the same building might also lead to reduction of the lead-time. Making collaborating and meeting less time taking. In addition, they have carefully integrated a good IT- structure. Further, by owning a big part of the facilities they are able to have better control of the production and are always able to reschedule each factories production plan to concentrate on that part of the collection that is most important at that moment.
In the fashion industry the customer's demand changes rapidly, and what the customers finds fashionable today might be impossible to sell tomorrow. Therefore, to base the future revenue on always offering fashionable clothes depends on good predictions of customers future preferences. The chance for a miss prediction is quite big and knowing that there is a chance of ending up selling the whole collection on discount, or not be able to sell it at all, the prediction of the next fashion has to be prepared carefully.
Zara's short lead-time gives a higher chance for a more accurate predicting the next fashion. This makes them able to meet the customers demand and offer a higher level of fashionable clothes in their
Zara takes a no bells and whistle approach to the technology used outside of the manufacturing (ex. use of technology in the fabric cutting) side of their business. They have been very successful with their reactive supply chain process and do not have to rely of tends and forecasting because of their Corporate Mandate to produce low quality (10 wears) high fashion garments. I believe this is a very unique approach to business and would not be applicable or appropriate anywhere. This business practices would not function well in an environment where customers want a reliable products that last nor would it not work for companies who’s stagey to purchase large quantities
Zara is one of the retail sale format of Inditex group and well-known an international fashion clothing brand which is very famous for its apparel and accessories. Zara is a place where we can buy all the latest fashionable clothes in the world as they launches 10,000 designs every year. Zara is one of the Spain famous fashion clothing brand which is located in 70 countries in the world. Zara company is started earlier in 1975 by Amancio Ortega, a famous business person who planned to enlarge his small factory by opening a big store. In 1988 the Zara Company started to enter in to the international market to expand their business globally. Zara opened first international store in Portugal. Portugal store got a big success and then Zara decided to open a store in USA. By the next year they opened another store in Paris. These all made a tremendous growth to Zara and it became as an iconic representation of Spanish fashion. Zara began to enlarge their business quickly in 1990s. Around the world there are 1763 stores in 2013. In this assignment we are going to discuss about Zara’s strategy structure, infrastructure and process development, work scheduling and its reward products.
Established in 1975 in A Coruña (North – Eastern Spain) by Amancio Ortega, Inditex has grown rapidly to become one of the largest fashion retailers in the whole world competing with the American Gap and the Swedish Hennes & Maurizt (H&M). “In addition to Zara, the largest of its retail chains, Inditex has another seven commercial formats: Bershka, Stradivarius, Massimo Dutti, Oysho, Pull and Bear, Skhuaban and Zara Home (all of the targeting different age and disposable income segments). The group also includes more than a hundred companies associated with different textile, manufacturer, infrastructure and distribution businesses” (Inditex 2006 p.2). Inditex is listed since 23 May 2001
It is not only distance that causes replenishment lead-times to lengthen in global sourcing. It is the delays and variability caused by internal processes at both ends of the chain as well as the import/export procedures in between. The end result is longer ‘pipelines’ with more inventories in them with the consequent risks of obsolescence that arise.
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? Its relative capital efficiency?
Zara produces of-the-moment fashion and has developed a very successful vertically integrated company which can design, manufacture, and distribute garments to retail stores in as little as three weeks. Zara 's target market is comprised of urban, fashion-conscious consumers who shop frequently for the latest trends. Currently under debate is a proposed upgrade to the POS system throughout the Zara chain. With over 550 stores, this would be a huge undertaking for Inditex, Zara’s parent company. The current DOS-based system meets the needs of the company, and despite some of the benefits of upgrading, we feel it is best to continue with the current system in place.
Inditex is an international Spanish company that designs, manufactures, and sells apparel, footwear, and accessories for women, men and children through its chains and shops around the world. Zara is the largest and internalized of all the Inditex products such as: Massimo Dutti, Pull & Bear, Bershka, Stradivarius, and Oysho.
The first Zara store was opened in 1975 and now there are over 1500 Zara stores around the world. Zara is now recognized as one of the top 100 most valuable retailers all over the world mostly thanks to its “fast-fashion” strategy. (Rachel Tiplady, 2006) Zara is famous since it only needs 4 to 5 weeks to design, produce and distribute a new style of clothing while other famous brands usually need 6 to 9 months to develop a new style. Currently Zara has over 200 fashion designers working for it, and it is able to develop over 1,000 new styles every month. Zara is using a “fast-fashion” strategy; it focuses on finding the popular styles of clothing in every different country or area in the world and design large quantity of styles to follow the fashion. Zara believes that more styles mean more choices and more chance to hit the market demand.
Inditex, as stated on its website, is one of the world’s largest fashion distributors: nearly 6 million of items were put on the market in 2006 (Figure 1). With eight sales concepts Zara, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Kiddy 's Class they boast nowadays 3,701 stores in 68 countries, distributed as shown in Table 1.
Zara’s vertically integrated supply chain management has had a great advantage on this retailer’s sales. The risk that other retailers take with trying to predict fashion trends a year in advance is eliminated for Zara. Due to the store’s rapid restocks of new designs every two weeks, customers are introduced to the latest fashion trends. This is a trait that puts Zara above its competitors such as H&M and Gap. Zara possesses a very wide-ranging merchandise assortment sold in stores but produce a low quantity of garments so if an item does not sell as well as they had hoped, they wont lose as much revenue as there is not as much stock to be discounted. This also allows Zara to react quickly and analyze a fast response should the market change rapidly.
* The company has a good production system in place. The production line runs in various countries including Britain and Korea as they are chosen to be the best location for different stages of production (Dale et al, 2008). They are able to decrease the costs in product by working together in the production line. For example the first stage of production is in Poland and the finishing part is in NZ.
· Zara was able to react swiftly to the emerging trend in the fashion industry. In contrast, other retailer took between 8 to 12 months to
The relatively biggest and famous fashion distributor Inditex is parent company of Zara. In august 2008, Inditex acquired another famous brand GAP. This resulted in making Inditex as world’s biggest retailer (The Guardian, 2008). Zara has a contribution of 2/3 of the sales in the parent company which makes them the important brand of the company.
Today’s fashion market is highly competitive and companies need to always be up to date. Zara has many competitors such as H&M, Mango and Gap. The successful concept of “Fast fashion” has created many retail stores to change their retail strategy but have not yet to compete with Zara system.
Not many people know this, but Zara is a very unique fashion company compared to other mega fashion brands. Instead of focusing on inventing the next clothing item people want to buy , Zara built an advanced technology that can bias or push their entire clothing line production in blazing speed to meet what real customers are actually buying across the stores. This “fast fashion” system depends on a constant exchange of information throughout every part of Zara’s supply chain.