The company that is going to be analyse in this essay is Inditex and particularly Zara, its main brand. Inditex Group is a textile company, the most important in the Spanish textile sector and one of the most important multinational and one of the most weighty multinationals in Spain.
A Multinational Corporation can be defined as enterprises which own or control productionor service facilities outside the country in which they are based (definition by the UN). Inditex can be classified as a multinational since they offer their services in 800 outlets in 25 countries all over the world, although the production is done in Spain, its home country. It also follows some of the appropriate strategies to trade abroad as a proper multinational, which will be explained inthe following essay.
2. INDITEX GROUP
Inditex Group is a conglomerate of companies, mainly textile enterprises, but also from other sectors. It gathers an important number of companies all around the world, trading in the USA, Mexico, France, the Netherlands, Belgium, Luxembourg, Italy, Germany, Greece, Portugal, Andorra, UK, Israel, China, Cyprus, Malta, Sweden, Norway, Japan, Turkey, Canada,Argentina, Uruguay, Chile and, of course, Spain.
In 1973 Amancio Ortega Gaona, Inditex Group president and main shareholder, created a company specialised in producing dressing gowns and underwear. Two years later he opened the first Zara store in La Coruña.
That was when he started building the whole holding. During the 70's and the 80's he surrounded by cloth-designers whoused to travel to the main catwalks in Europe, where they can copy the most original ideas.
The big growth of the company happened in the 90's, when the Group increased the supply with new brands. In 1991 Pull & Bear was created. On the same year they acquired the 65% of Massimo Dutti, percentage that has increased to a 100% in 1995.
During these last years Inditex Group has created theother brands such as Kiddy's Class, Brettos, Lefties, Bershka and Deep Blue Jeans. It also adquired Zara's competitor Stradivarius in October 1999.
Its main brands and stores are: ZARA, Pull & Bear, Massimo Dutti, Kiddy's Class, Brettos, Lefties, Stradivarius and Deep Blue Jeans.
The most important of all the brands of the Group is Zara, which was the first to be created. Itis specialised in men, women and children wear.
Massimo Dutti is focused on young men and women who look for quality, while Pull & Bear is developed for youngers who prefer a casual way of dressing rather than the formal schemes of Massimo Dutti.
The last brand that the Group has created in Bershka for young disco-girls. This brand is very similar to the Stradivarius style_._
Corporations search for better opportunities to enter and expand in other markets, due to their experience and advantages that they can offer to these markets. This motivation can arise due to several different aspects and circunstances; as for instance since the customers are gone or the home market is saturated, the company moves abroad to retain business, or because production costsare cheaper in a foreign country than in the home country, or even due to a change of host government policies. Or, as in the case of Inditex Group, due to it has become crucial for the company the physical presence in foreign countries, they have to make sure that their brand names are familiar to these target markets.
The aim is to gain an advantage from operating in more than one economy,so they can profit from all the economies where the company is trading and at the same time, the company minimises the potential risks that might arise, therefore, for example, Inditex Group follows different strategies depending on the market they are operating in (Israel! Franchising, Germany! Joint Venture....).
Depending on the objectives that company has, it will follow...