Inditex (Zara) Jordi Llena Vila 90892 Operations Strategy Pär Åhlström

3485 words - 14 pages

INDITEX (ZARA) Jordi Llena Vila 90892 Operations Strategy Pär Åhlström Stockholm School of Economics Index Index 2 History and description 2 The resource perspective 3 How does Inditex reach its customers? Different brands 4 Management 5 Marketing 5 Decision Areas 5 Capacity 5 Supply networks 6 Process technology 6 Development and organisation 7 The market perspective 7 Market Requirements 7 Competitors and market positioning 7 Importance-performance matrix 8 Performance Objectives 9 Recomendations 10 Transition 10 Cannibalisation in commercial areas 10 Logistic plant in Arteixo 10 Sources 10 History and description Armancio Ortega Gaona started as a businessman in the beginning of the sixties creating his own firm of lingerie. He did both the design and the production, first in his own house and later in a rented store. He took advantage of his knowledge and relations from his background as employee in the textile sector in order to obtain: ? Good prices when buying clothes ? Optimization of the clothes.? Confection y distribution without intermediaries.? Selling to old customers.? Lower prices than their competitors.The first Zara shop opened its doors 26 years ago in La Coruña (Spain), the city which saw the Group's early beginnings and which is now home to its central offices. It was a shop where clothes for women, men and children were sold. This was a market segment already attended by other firms (Gap, C&A or The Next) who offered quality clothes at a reasonable price. With this shop Zara was also taking responsibility of the distribution of its own production, which represented an innovation in the sector. With this strategy, Zara was able to have better margins than its competitors and coul also have lower prices.At the beginning of the eighties it was necessary an expansion process in order to satisfy the growing demand of the Spanish market. In order to accomplish this objective he hired some managers that were able to help him with his lack of business education. That is what they did: ? They increased the production capacity.? Outsourced production to little firms.? Increased points of sales.In 1985 Inditex was created as a head of the corporate group. In this year the group had this caracteristics: ? 7 firms of clothes production ? 1100 employees ? 41 points of sales in Spain ? Turnover of 100 million ? ? The growing of the company was financed through: ? Resignation to the distribution of dividends ? High liquidity level that brought the points of sales (speed of getting money faster than paying inputs) In 1988 Inditex opened the first Zara store outside Spain, in Oporto (Portugal). During the next few years the United States and France were the next markets in which the Group began its activity with the opening of outlets in New York (1989) and Paris (1990).1991 saw the birth of the Pull&Bear chain, focused on young people, and the purchase of 65% of the Massimo Dutti Group, existing chain focused on...

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