Answer the following question. Your response should be a maximum of two pages.Using Exhibit 6 from the case compare Inditex to their competitors on the DuPont Identity ratios of profit margin total asset turnover and equity multiplier. What does this analysis tell you about the relative advantages/disadvantages of Zara’s business model compared to H&M and Gap (note that Gap’s results for this year are on outlier relative to their normal performance)? What activities does Zara perform better/worse than their competitors?Document Preview:9-703-497 REV: DECEMBER 2 1 2 0 0 6 ________________________________________________________________________________________________________________ HBS Professor Pankaj Ghemawat and IESE Professor José Luis Nueno prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements sources of primary data or illustrations of effective or ineffective management. Copyright © 2003 President and Fellows of Harvard College. To order copies or request permission to reproduce materials call 1-800-545-7685 write Harvard Business School Publishing Boston MA 02163 or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced stored in a retrieval system used in a spreadsheet or transmitted in any form or by any means—electronic mechanical photocopying recording or otherwise—without the permission of Harvard Business School. PANKAJ GHEMAWAT JOSÉ LUI S NUENO ZARA: Fast Fashion Fashion is the imitation of a given example and satisfies the demand for social adaptation. . . . The more an article becomes subject to rapid changes of fashion the greater the demand for cheap products of its kind. — Georg Simmel “Fashion” (1904) Inditex (Industria de Diseño Textil) of Spain the owner of Zara and five other apparel retailing chains continued a trajectory of rapid profitable growth by posting net income of !?? 340 million on revenues of !?? 3 250 million in its fiscal year 2001 (ending January 31 2002). Inditex had had a heavily oversubscribed Initial Public Offering in May 2001. Over the next 12 months its stock price increased by nearly 50%—despite bearish stock market conditions—to push its market valuation to !?? 13.4 billion. The high stock price made Inditex’s founder Amancio Ortega who had begun to work in the apparel trade as an errand boy half a century earlier Spain’s richest man. However it also implied a significant growth challenge. Based on one set of…
