Inditex -A company analysis with focus on growth

University essay from Göteborgs universitet/Företagsekonomiska institutionen

Author: Carina Eriksson; Simon Jonsson; [2011-06-14]

Keywords: ;

Abstract: Background and problem: Inditex is a company that has grown substantially since the launch of the first Zara store. In the last decade, it has increased its sales approximately five-fold. Even through economic declines, Inditex has managed to grow. The first Zara store opened 1975 in La Coruña, Spain. Today, 36 years later, Inditex operates 8 brands, in 77 countries with a total of 5,044 stores spread over Africa, Asia, Europe and North and South America. It has managed to expand, while maintaining its profitability and strong finances. This is interesting as not all companies manage to do this.Purpose: The research purpose is to establish the factors that have enabled Inditex‘s success and substantial growth, as well as to examine if these factors still make it possible for Inditex to expand further.Scope of research: This study focuses on the internal workings of Inditex. Therefore, it ignores most external factors, however, some external factors considered are Inditex‘s suppliers, the fashion market and e-commerce.Method: This study is conducted by using existent theories in the field of business economics and applying these on the empirical findings. We use both quantitative and qualitative research methods, for a greater understanding. The qualitative method is used when analysing textual material while the quantitative method is used for financial and other numerical data. This study is solely based on secondary data. However, we do present some earlier, personal observations.Analysis: The subjects analysed in this thesis are associated with Inditex‘s personnel, products, brands, supply chain and finances.Conclusions: We have come to the conclusion that most internal factors of Inditex‘s success remain. However, there have been changes in its supply chain over time, possibly as a result of external factors. Inditex‘s financials are stronger now than a decade ago and should not be a limiting factor of its growth. Additionally, there may be external factors affecting Inditex‘s growth.Further research: A few external factors are identified as possibly having an effect on Inditex‘s growth. These could be the subject for further research. A couple of these are the possibility of market saturation, competition and barriers of entry for international expansion.

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