4.2.5 Example and a Case Study

Focus strategy is illustrated below with a success story:

INDITEX, a European SME success story1

The story of INDITEX Group from Spain demonstrates how innovative design and trademarks helped a small family-owned business grow into a solid international firm. INDITEX has introduced a kind of revolution in the fashion sector that impelled other companies to rethink their strategy.

INDITEX Group´s chairman and founder Amancio Ortega Gaona made his modest start working at the age of 14 as a gofer in a shirt store in La Coruna, Galicia. From the first venture into his own business in 1963, Mr. Ortega reached an initial milestone in 1975 with the opening of the first ZARA store in La Coruna. A decade later, he founded INDITEX as holding company for its various subsidiaries, paving the way for the Group´s expansion outside Spain, first to Portugal in 1988, followed by the opening of outlets in New York in 1989 and in Paris in 1990. INDITEX Group launched the "Pull & Bear" chain of casual wear in 1991 and in the same year purchased 65% of the "Massimo Dutti" Group, a high-end fashion concern, which was fully acquired in 1995.

Meanwhile, it continued the drive into the international market by opening various stores in Mexico, Greece, Belgium and Sweden, respectively from 1992-1994. The Group started the "Bershka" chain targeting the younger female segment in 1998, when it also set up stores in Argentina, Japan, UK, Venezuela, Lebanon, UAE, Kuwait and Turkey.

In 1999, INDITEX acquired "Stradivarius", making it the fifth chain of the Group, and opened its stores in new countries namely the Netherlands, Germany, Poland, Saudi Arabia, Bahrain, Canada, Brazil, Chile and Uruguay. In 2000, INDITEX built its headquarters in Arteixo, A Coruna, Spain, while opening stores in four new countries. The company was listed in the Spanish stock market in May 2001 with its shares sold out the day it went public, the year when it added six more countries to its global footprint.

INDITEX has seven different firms with seven different trademarks under its umbrella. It has 1,376 stores in 42 countries across the world. INDITEX success lies in the goodwill value of the Group´s trademarks: Zara for the middle-class segment, Massimo for the high-end, and Pull & Bear for casual clothing line. The Group does not invest a lot in advertisement campaigns, but it focuses on investment in the "image" of the shops. It focuses on delivering value for money, and the capacity to adapt to consumer´s tastes. The Group´s future looks promising, with its blueprint establishing presence worldwide, while launching a new product line: women´s underwear.

After reading the case study ABC Furniture Company Limited (see the additional case study, provided as related material for download), please reflect on the following topics:

  1. What does the case study mean to you?
  2. ABC Furniture Co has developed the most suitable strategy by reference of its vision?
  3. What can you learn from it?

And now why don´t you take five minutes to find out if these strategies work for your firm? After reading and reflecting about the general strategies, the INDITEX example and the case study (see Related Resources), what would be the most convenient one(s) for your firm? Please illustrate your choice with at least five arguments.