Zara is the flagship brand of the Spanish fashion giant Inditex (Industrias de Diseño Textil S.A.) and as its pioneer founded in 1975 (Kumar and Linguri 2006). The company is engaged in textile design, manufacturing and distribution. The most characteristic aspects of Inditex’s management model are the customer orientation of all activity of the company’s professionals and the vertical integration of all the fashion business phases, from design, manufacture and logistics to sales in its own stores (Inditex Group 2008). Inditex’s commercial formats further include Pull and Bear, Massimo Dutti, Bershka, Stradavarius, Oqsho, Zara Home and Uterqüe.
The group operates approximately 1,520 stores in 72 countries for the Zara brand (Inditex Group 2009). Inditex primarily operates in Europe, where about 80% of its sales are made. The company is headquartered in La Coruna, Spain and employed about 89,112 people of financial year 2008 (Datamonitor 2008). Zara contributes 65.6% to the overall sales of the company, Inditex’s net profit being € 1,253 Millions in 2008 (Inditex Group 2008).
• Expansion of the EU’s territory. Due to more recent additions to the European Union, import and export, from and to countries within, has been facilitated. Because of general trade as well as legal arrangements, setting up new stores in those new member countries has become more attractive than ever.
• Generally, especially in Eastern countries (including Asia), political systems are less stable than in the Western world. Hence having fixed assets in politically unstable countries is risky.
• Due to the economic downturn, the consumer feels worse off and hence, spends money more carefully. Those circumstances might benefit as well as inhibit the cheap fashion sector. Less money will be spend on designer clothes as well as accessorises.
• A decrease in prices for raw materials and fuel, will work in...