Economic Review of Inditex
Samantha White – Warwick University – MBA Programme
Contents:
Item
Page
Introduction to the firm and its market
3
Vulnerability of the firm
6
Market Exposure
-
GDP Development and Income Elasticity
6
-
Customer structure and degree of dependence
7
-
Competition and price elasticity
8
Macro Economic Exposure
-
Material Price Fluctuation
-
Exchange rate
-
Government Intervention
8
Mirco economic decisions – Protection
8
-
Brand development and Price positioning
10
-
Economies of scope
10
-
Technology
11
-
Low cost production and economics of scale
11
-
Current strategic positioning and competitive advantage
11
Summary & Conclusion
11
12
Appendices
Bibliography / References
15
Introduction to the Company and its markets (2006-2013)
Inditex SA, is a Spanish based company engaged in the textile industry. It was founded by a rail workers son named, Amancio Ortega Goana in 1963 and is headquartered in A Coruna, Spain.
The Company is active within the fast fashion market which includes:
•
•
•
•
•
•
•
•
the design, confection, manufacturing, distribution, and retail of men, women and children apparel, footwear and fashion accessories, together with home furnishings, and household textile products.
The Company’s products retail distribution is directed through a chain of commercial stores, which are structured across eight brands:
•
•
•
•
•
•
•
Zara, Pull & Bear,
Massimo Dutti,
Bershka,
Stradivarius,
Oysho,
Zara Home, and Uterque.
The Company operates globally, covering 87 countries and is the world’s largest apparel group by retail sales
(SEB Equity Research, 2014). Inditex SA reported revenue in 2013 amounted to EURO16.7bn. (Inditex.com,
2014) And the Company has largely outpaced its rivals (e.g. H&M and Primark) during the downturn in austerity wracked Europe. Ie: net profit in the nine months to the end of October 2012 rise 27pc to €1.65bn
(Inditex.com, 2012 & Telegraph.co.uk, 2012)
(Chart 1)
Inditex have performed
Contents:
Item
Page
Introduction to the firm and its market
3
Vulnerability of the firm
6
Market Exposure
-
GDP Development and Income Elasticity
6
-
Customer structure and degree of dependence
7
-
Competition and price elasticity
8
Macro Economic Exposure
-
Material Price Fluctuation
-
Exchange rate
-
Government Intervention
8
Mirco economic decisions – Protection
8
-
Brand development and Price positioning
10
-
Economies of scope
10
-
Technology
11
-
Low cost production and economics of scale
11
-
Current strategic positioning and competitive advantage
11
Summary & Conclusion
11
12
Appendices
Bibliography / References
15
Introduction to the Company and its markets (2006-2013)
Inditex SA, is a Spanish based company engaged in the textile industry. It was founded by a rail workers son named, Amancio Ortega Goana in 1963 and is headquartered in A Coruna, Spain.
The Company is active within the fast fashion market which includes:
•
•
•
•
•
•
•
•
the design, confection, manufacturing, distribution, and retail of men, women and children apparel, footwear and fashion accessories, together with home furnishings, and household textile products.
The Company’s products retail distribution is directed through a chain of commercial stores, which are structured across eight brands:
•
•
•
•
•
•
•
Zara, Pull & Bear,
Massimo Dutti,
Bershka,
Stradivarius,
Oysho,
Zara Home, and Uterque.
The Company operates globally, covering 87 countries and is the world’s largest apparel group by retail sales
(SEB Equity Research, 2014). Inditex SA reported revenue in 2013 amounted to EURO16.7bn. (Inditex.com,
2014) And the Company has largely outpaced its rivals (e.g. H&M and Primark) during the downturn in austerity wracked Europe. Ie: net profit in the nine months to the end of October 2012 rise 27pc to €1.65bn
(Inditex.com, 2012 & Telegraph.co.uk, 2012)
(Chart 1)
Inditex have performed
References: Bjork, N (2013). Inditex - General Retail. Spain: Kepler Cheuvreux. p1-10. Crofton, S & Dopico, L. (2007). ZARA-INDITEX AND THE GROWTH OF FAST FASHION. Essays in Economic & Business History Ewing, J. (2011). Europe’s Banks Relying on Money From E.C.B..Available: http://www.nytimes.com/2011/11/23/business/global/banks-seek-emergency-funds-fromecb.html?adxnnl=1&adxnnlx=1402600021-9XY+fqmYKqyHr6XnWJS0Yw KACHI,H & MAXWELL,K. (2012). Japan Puts a Snag in Uniqlo 's Ambitions. Available: http://online.wsj.com/news/articles/SB10000872396390444657804578050250978231358 Inditex. (2014). Various. Available: http://www.inditex.com/. Last accessed 20th March 2014. Jasnino, M. (2012). Understanding Zara’s success. Available: http://dm9barcelona.wordpress.com/2012/03/15/understanding-zaras-success/ Lopez, C & Fan, Y. (2011). Internationalisation of the Spanish fashion brand Zara. Available: http://www.emeraldinsight.com/case_studies.htm/case_studies.htm?articleid=1793756&show=html Unknown. (2012). Fashion forward. Available: http://www.economist.com/node/21551063. Last accessed 24th May 2014. Unknown. (2014). Porter 's 5 Forces. Available: http://www.investopedia.com/terms/p/porter.asp Unknown. (2011). Spain Creates 'Hiring ' Tax Break to Ease Unemployment. Available: http://news.kyero.com/2011/02/17/spain-creates-hiring-tax-break-to-ease-unemployment/ Unknown. (2012). The Story of Zara. Available: http://www.uniquebusinessstrategies.co.uk/pdfs/case%20studies/zarathespeedingbullet.pdf. Unknown. (2012). Zara owner Inditex shrugs off Europe woes as profits rise.Available: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9738899/Zara-ownerInditex-shrugs-off-Europe-woes-as-profits-rise.html