Zara Case

Contents

Inditex comparative competitive advantage 3

Inditex financial analysis 4

Analysis of Inditex and Zara, using management tools 5

Advice to the Inditex CEO Pablo Isla Alvarez de Tejera 8

Inditex comparative competitive advantage

According to the information from Inditex website, Zara is in tune with its customers, who help it give shape to the ideas, trends and tastes developing in the world. This is the secret to its success among a wide range of people, cultures and generations, who, despite their differences, all share a special fondness for fashion. Inditex’s philosophy and creativity and quality design together with a rapid response to market demands- has resulted in fast international expansion and excellent response to their sales concepts.

The business model for the company is based on a unique value proposition - offering the latest style in a high quality product at a good price, faster than its competitors. With a creative team of more than 200 professionals, Zara’s design process is closely to the public. (1)

Zara has focused on a vertically integrated demand and supply chain, while most of the other textile chains rely on outsourcing and cheap labour from China. This leads to short turnaround times and achieves greater flexibility, reducing stock to a minimum and decreasing fashion risk to the greatest possible extent.

In terms of speed to market, Zara has much in common with the computer company Dell. Instead of building computers according to a sales forecast and letting other companies sell them, Dell sells directly from its own website and call-centers and then builds to order. That way, it not only cuts distributors and retailers out of its supply chain but also gets paid up front (2).

According to Zara: Fast Fashion data, it takes 60 to 90 days in order to design and deliver a new fashion style in a traditional value chain, and it only takes 12 to 15 days for Zara who is vertically...