Inditex Report: Financial and Strategic Analysis

Running head: INDITEX REPORT
INDITEX REPORT
Name of the Student
Name of the University
Author Note

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Executive Summary
The business environment is dynamic and hence, all the businesses as present in the business
environment would be required to undertake processes which would help to attain their overall
targets easily. The given report is based on the report of the Inditex group and the overall
analysis of the firm has been done. The report begins with a brief introduction which has then
been followed by the overall financial and strategic analysis of Inditex and benchmarked with its
competitors H and M and GAP. This is then followed by the recommendation of strategies which
the Inditex can adopt. The recommendations have been scrutinized with the help of the SAF
Framework and the Recommendations modelling has been done.

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Table of Contents
1. Introduction..................................................................................................................................4
1.1 Report objectives...................................................................................................................4
1.2 Case context of analysis.........................................................................................................4
1.3 Overview of Organization.....................................................................................................6
1.4 Current key issues and rationale for choosing the organization............................................7
2. Financial Analysis.......................................................................................................................9
2.1 Profitability............................................................................................................................9
2.2Liquidity...............................................................................................................................12
2.3Leverage...............................................................................................................................13
2.4 Investors...............................................................................................................................15
3. Strategic Analysis......................................................................................................................17
3.1 Macro environmental analysis- PESTLE............................................................................17
3.1.1 Summary...........................................................................................................................27
3.2 Micro environmental analysis-Five Force...........................................................................28
3.3 Identification of Opportunities and Threats.........................................................................34
3.4 Key performance Indicators................................................................................................34
4. Proposed strategy –Ansoff.........................................................................................................37
4.1 Market Penetration...............................................................................................................38
4.2 Market development............................................................................................................39

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5. Limitation of the Analysis.........................................................................................................40
5.1 Limitations of the Strategic analysis....................................................................................40
...............................................................................................................................................40
5.2 Limitation of Financial analysis..........................................................................................40
6. Conclusions................................................................................................................................41
6.1 Overview..............................................................................................................................41
6.2 SAF Analysis of Strategies..................................................................................................42
7. Recommendations modeling.....................................................................................................45
References......................................................................................................................................49
Appendix........................................................................................................................................52

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1. Introduction
1.1 Report objectives
Strategic Management can be considered to be a crucial part of the organization and in
this aspect, it becomes essentially crucial for the firm to see to it that, it is successfully able to
meet the needs of the stakeholders (Inditex.com 2019). Hence, the primary focus of the report
can be understood to be to understand the overall business strategy of the Inditex group and in
line of this, compare this strategy to the overall strategy of other business as present in the
similar industry. This analysis will help in comparing the overall performance of the business
and in line of this, recommendations for a strong growth can be provided to the company. Hence,
by following these recommendations, the firm will successfully be able to achieve competitive
advantage in the long run.
1.2 Case context of analysis
The luxury clothing environment has become considerably competitive in nature and
hence, in line of this, it can be rightfully mentioned that, in order to attain success in the long
run, the different firms as present would be required to undertake considerable initiatives so as to
maintain their considerable share in the market. In line of this, when Inditex will be compared
with H and M and GAP, the analysis will be based on the manner in which these firms have been
able to meet the needs of the different firms and in a manner similar to this, it shall also analyses
how the organizations have been successful in the industry. Through the analysis, Inditex will be
able to assess and analyses how they will be able to win over the competition as present and
additionally be able to examine the manner in which, they can attain success in the long run. For

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this reason, the external environment of the firm will be measured, along with the financial
performance and the other key factors as well.
Inditex
(Zara)
H and M GAP
Date of
incorporatio
n
27 October
2009
16 December 2013 April 15, 1988
Date of
listed
27 October
2009
16 December 2013 April 15, 1988
Business
divisions
Zara for kids
Zara Home
Clothing
Clothing
H and M home
Clothing
Kids
Home
Number of
employees
1,62,450 1,48,000 150,000
Current
revenue
€26145 SEK
210400
$16580
Current
market
positioning
1st 2nd 3rd

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Logo
1.3 Overview of Organization
The Inditex can be understood to be a Spanish multinational clothing company which has
its headquarters in Galicia. The Inditex can be understood to be one of the biggest fashion groups
as present around the globe and thereby tends to operate more than 7200 stores in 93 markets
around the globe. Although the company`s Flagship store is Zara, but it also owns the chains like
Zara Home. Oysho, Pull and Bear, Uterque and the Stradivarius (Inditex.com 2019). The
company has owned stores as well as dealings in the franchising model.
The company began its operations back in the year 1963 and what began as a small
family business, the business has turned out to be a huge name in the fashion industry around the
globe. The customer is at the center of everything which the firm undertakes and hence, in line of
this, the company aims to serve the customers in the right manner by focusing on the elements of
fashion production and bringing the customers closer than ever so as to be able to provide the
customers with a more affordable price (Inditex.com 2019).

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1.4 Current key issues and rationale for choosing the organization
The Inditex group has had a considerable unique marketing strategy from the very
beginning of the operations and hence, it does not make use of the traditional media to advertise
its products. The group believes that if it wants to ensure success in the long run then in such a
case, it will be required to adopt suitable customized strategy which would allow the firm to
improve its overall operations (Lasserre 2017). Hence, the first issue lies to determine the overall
marketing strategy which the firm has to adopt on its own. In addition to this, when the company
opens various branches of production of selling in the other countries it rends to be affected by
various labor unions and related activities at large (Inditex.com 2019). Hence, it can be largely
understood that the competition of the business against the various local manufacturers and
designers along with the international brands have increased considerably and in line of this, The
Zara and Inditex has been finding it increasingly difficult to perform well due to these increased
pressure. For this reason, it is crucial that, the business understands the manner in which it will
be required to combat this competition and make a string standing for itself in the long run will
be examined and discussed accordingly in the coming sections.