Amancio Ortega And Sheer A Case Study Of Zara

ZARA is a Spanish clothing and accessories retailer based company founded by Amancio Ortega

and Rosalia Mera in the year 1975 in Arteixo Galicia. It was first named as ‘Zorba’, but within a

few days, they renamed it as ‘ZARA’. Zara is the biggest brand of the Inditex with over 2000

stores in more than 88 countries. The Inditex group also include other famous brands such as

Massimo, Pull&Bear, Untreque, Oysho, Beshka and Dutti but ZARA earns almost 75% of its

total revenue.

By 1976, Zara had 4 fully functional factories and 2 retail stores. Ortega had bought his first

computer by then and by using IT and IS of this computer, what he observed was that what the

retailers were buying from his factories was different from what the

For achieving these goals, they have adopted business models like vertically integrated business

model, centralized distribution system, Just in time production, decentralized decision making

system, etc.

Vertically Integrated Business model

From 1975, when the ZARA’s first store was opened, they adopted a vertically integrated

business model and it remains the foundation of its successful working system. More than 60%

of its products are manufactured by ZARA itself.

From designing to retailing, all the phases that are required to complete the operating cycle of a

business are all fully controlled by ZARA itself. There are mainly four phases to operation,

which are (Figure 1):

 Designing,

 Sourcing and Manufacturing,

 Distribution, and

 Retailing.

Figure 1: ZARA's Business Model.

How it works is, the retailer gives the feedback regarding of designs of the stock last sold to the

designers (team of commercials) in Spain, the designer works according to the feedback