Zara Case Study
Zara is global apparel retail chain that designs, manufactures and sells apparel, footwear and accessories for women, men and children. Amancio Ortega Goana founded Industria de Diseño Textil (Inditex) in 1969, which owns and operates Zara. In addition to Zara, Inditex owned Massimo Dutti, Pull & Bear, Bershka, Stradivarius and Oysho in 2002. Zaras first store was opened in La Coruña, Spain in 1975. Zara expanded within Spain throughout the 1980s and began expanding internationally in 1988.
Zara operates under a vertically integrated manufacturing model, with a just-in-time system in place since 1990. Zara has its own centralized distribution system so all merchandise, whether it is manufactured internally or externally, passes through its distribution center in Arteixo, Spain. The company also has a centralized logistics model. Zara retail stores are opened in popular shopping areas in major cities, and are responsible for tracking customer data and transmitting this information back to headquarters, contributing to the companys in its quick response policies and practices.
Inditex had an initial public offering of 26% of its shares in May 2001, while Ortega kept a 60% stake. One year later, it was estimated that 76% of the stock price was based on expectations of future growth, hence the pressure for its star brand, Zara, to grow and not cause the share price to plummet.
This case examines Zaras rapid growth between 1988 and 2002, focusing on the brands business model, international expansion strategy as well as the companys structure.
International expansion is imperative for Zara to sustain its growth phase, given the necessity to fulfill shareholder expectations. How adaptable is Zaras business model for international expansion? When not adaptable, what are alternative business models to achieve successful international expansion?