Inditex Analysis

Essay by maartino8888University, Master'sA+, December 2014

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Facultad de Econmicas


Maarten Arnouts

A´ngel Miguel Gonza´lez Capizzi Lucile Poitevin

November 19, 2014

1 Company Introduction

Inditex SA Corporation, a Spanish company based near the port of La Corunia, Spain is the world's largest fashion retailer. It has eight store brand names: Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarious, Oysho, Zara Home, and Uterque. With operations in 87 countries, it has 6,340 stores and more than 128,300 employees. Indi- tex's unique management model, based on innovation and flexibility, and its vision of fashion, based on creativity and quality designs, together with the capacity to react quickly to market demands, have enabled it to enjoy rapid international expansion and an outstanding reaction to its various commercial concepts.

Their business model of low-cost outsourcing and fast supply chain-moving have created an outstanding competitive advantage. Many firms tried to copy that success formula, but Inditex's expertise and effort were another factor that led the way to an annual 16 billion euro's revenue.

2 Macro Events concerning Inditex

2.1 Interest rates

Interest rates were left unchanged by the ECB on November 6th at record low of 5% for banks to encourage greater lending. Policymakers also said further stimulus measures were being prepared for use if need and are to be presented in December. The ECB has begun to purchase covered bonds under their new two year program and will soon begin to purchase asset-backed securities, together with the series of longer-term refinancing operations to be conducted until 2016. This will enhance the functioning of the monetary policy transmission mechanism, supporting financing conditions in the euro area, facilitate credit provision to the real economy, and generate positive spillovers to the other markets.

2.2 Risk

The risks surrounding the economic outlook for the euro area continue to be on the downside. In...