Strategic Management of Inditex Group: SWOT Analysis and Recommendations

Running head: STRATEGIC MANAGEMENT
Strategic Management
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1STRATEGIC MANAGEMENT
Table of Contents
Overview of Inditex Group..............................................................................................................2
1. SWOT analysis............................................................................................................................2
2. Strategy evaluation......................................................................................................................3
2.1 Evaluating four current strategies:.........................................................................................3
2.2 Challenges and recommendation...........................................................................................4
Identify three main strategic issues..............................................................................................4
TOWS matrix of Inditex..............................................................................................................6
Strategic actions for the company................................................................................................7
Conclusion.......................................................................................................................................8
Reference List..................................................................................................................................9

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Overview of Inditex Group
Inditex is a Spanish multinational clothing organisation and it is working in fashion retail
industry. Inditex has it headquarter in Arteixo, Spain and it was established in the year 1985
(Inditex.com, 2018). Inditex is the biggest fashion organisation in the world and it operates with
approximately 7,200 stores in 93 different national markets. Revenue of the organisation touched
€23.32 billion in 2016 and almost 162,400 employees are working Inditex Group. Inditex has
numbers of subsidiaries like Zara, Bershka, Pull & Bear, Oysho and Ulterque.
1. SWOT analysis
Strengths of Inditex lie in the brand name of the organisation as it is the leading fashion
retailer and it is the parent organisation of formidable fashion brands. Inditex has taken the
strategy of vertical integration as Inditex has to work in the competitive market. Product life is
short and the competitors bring differentiated products. Inditex needs to use low-cost
outsourcing. Vertical integration of Inditex provides the strength of shortening the production
cycle (De Jorge Moreno & Carrasco, 2016). Inditex has a large customer base and it can reach
almost 93 countries. Inditex maintains a link between store staffs and products team through
real-time data and communication.
Weaknesses of Inditex lie in the underdevelopment of non-Zara brands. Zara is a world-
famous subsidiary of Inditex; however other brands are not famous as Zara generates almost 6.5
times more sales than other subsidiaries. In addition, Inditex is mostly depended on European
section and domestic markets (Choi, 2016). Inditex generates almost 60% sales from European
sector and 22% of the sales come from Spain.

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Inditex's opportunities lie in the online sales as Inditex has increased its online sales by
9% in the American region. Inditex is trying to use the social networking site to increase the
sales of Zara and other subsidiaries brands of Inditex (De Jorge Moreno & Carrasco, 2016).
Inditex has taken the strategy of expansion as the organisation has thought of 8% of growth to
make the organisation sustainable in next ten years. There is room to expand the business in the
Asian market and Inditex has opened 190 stores in 2011-12 in the Asian region.
Threats of the organisation lie in ‘fast fashion fatigue’ concept as fashion trend dies in no
time in the market. Inditex has been facing the threat of increased competition in the global
market from H&M and Mango (Turker & Altuntas, 2014). Inditex is expanding the business and
the organisation has been facing the issue of centralised design, distribution process and
logistics.
2. Strategy evaluation
2.1 Evaluating four current strategies:
MNE strategies: Multinational Enterprise means the business that locates in different
components of its operations in more than one country (Ross, 2015). Inditex has its operations in
more than 93 countries and it takes the strategies of ‘subsidiary companies'. Inditex has
subsidiaries like Zara, Oysho, Bershka, Zara Home, Pull & Bear and Ulerque. Inditex's
subsidiary strategy provides its benefits of a presence in abroad market and widens its reach. The
subsidiary strategy provides the benefits of lesser investment to open up new stores in the
different country.
Vertical Integration: Vertical integration strategy is the combination of one firm of two
or more stages of production normally operated by different firms. Inditex takes the strategy.