Successful Entrepreneur

AMANCIO ORTEGA GAONA

Former Chairman of INDITEX
Fashion Group(ZARA)

GROUP-6 Presentation
(27.12.2020)
Successful Entrepreneur
€ Who?
€ What Start?
€ How Start?
€ What Failure?
€ When Success?
 Strategic Mindset
 People Management Skills
 Holding nerve during a downturn
 Perseverance
Next
AMANCIO ORTEGA GAONA (1936~
• Former Chairman of INDITEX Fashion
Group(ZARA)
OTHER INTEREST OF AMANCIO:
 horse riding a hobby, own an equestrian center in
Galicia, Spain.
 He is the owner of Spanish soccer team Deportivo La
Coruna.

BOOKS ON AMANCIO ORTEGA:

1) On October 21, 2008, the book was published in the Spanish
language under the title Así es Amancio Ortega, el hombre que
creó Zara.
2) In March 2012, the book was published in the English language
under the title The Man from Zara: The Story of the Genius Behind
the
Inditex Group.
In the street, I only want to be recognized by my family, my friends and people I work with.
INVESTMENT PILLARS
oAmancio Ortega’s business portfolio, which
has made his net worth, includes not only
fashion, but also some additional
investments, such as Gas, Banks, Tourism,
and worldwide Real estate holdings.
oFinancial magazines report the fashion
business allowed Ortega to become the
owner of real estate holdings in London,
Paris, Madrid, and Lisbon, as well as Miami
luxury accommodations.
ZARA Background
• Inditex founder, Amancio Ortega Gaona, started his fashion business
in 1949 at the age of 13, as a delivery boy for a local shirt maker in La
Coruña, Spain and in a little over a decade was working as shop
manager. With the knowledge and experience gained along the way,
he began developing his own designs, after which he left his job to
start his own business in the early 1960s.

• With only $25 in startup capital and working out of his sister’s home,
Ortega’s vision was to replicate popular fashions using affordable
materials, creating high demand clothing that could be sold at lower
prices. He sold his gowns, housecoats, and lingerie to his former
employer and other local shops. By 1963 he had opened his first
factory, and by the early 1970s began dabbling in retail (Geller, 2013).
It was in 1975 that Ortega opened the first Zara store in La Coruña.
HOW START?
In 1950s(Age16),Ortega started to organize women into
sewing cooperatives.(Spain; Galicia)
Product Line: lingerie, babywear, and nightgowns.
In 1963, founded his first company, Confecciones GOA,
S.A.
In 1975, he opened his first Zara store. Today, Zara is part
of the Inditex group, of which Ortega owns 59.29%, and
aside from over 6,000 stores includes the brands Zara,
Massimo Dutti, Oysho, Zara Home, Kiddy's Class, Tempe,
Stradivarius, Pull and Bear, Bershka and has more than
92,000 employees.
HOW START?
 In 1985, Inditex was formed as a holding company
for Zara and the other companies in the group. It is
presented in 88 countries, with 6,683 stores and
137,054 employees around the world, including
1923 Zara stores. (www.Inditex.com)
 Despite his wealth, Ortega has never had his
personal office, as he enjoys working together
with other designers in the open-plan space
developing new trends and discussing new colors
and fabrics.
• Zara’s online retail format launched in 2010, and is now available in

27 countries, covering most of Europe, Asia, Australia, and the United

States, and will continue to be rolled out in smaller markets.

• Nowadays, this brand generates about two-thirds of group sales.

Zara’s core consumers are 20-45year old women, though they also

have kids and menswear offerings. Zara is the group’s most

geographically diverse retail concept with 80% of its full line stores

located outside of Spain. There are 2,162 Zara stores in 88 countries.

 Young Entrepreneur Life
At the age of 16, Amancio Ortega was pondering on how to figure out potential client
desires and, what is even more important, meet that demand. In the 1950s, an an
autonomous community of Spain, Galicia, was a perfect spot for his business plan: poor
job alternatives in combination with numerous single women who could sew pretty
good. Ortega started to organize women into sewing cooperatives. The product line
included: lingerie, babywear, and nightgowns. Ex-employees of the sewing cooperatives
ran by Ortega shared with media how thrilled the Galicia ladies were to get that job with
great conditions, and how excited they were to see their boss being very close to the
workers.
o In 1963, having gained ten years of managing sewing cooperatives experience, Amancio
Ortega Gaona founded his first company, Confecciones GOA, S.A. (his initials if to read
backward). The founder of the bathing robes business organized Confecciones GOA into
a family company. Amancio was responsible for developing new fashion trends, Antonio
(his brother) was heading the commercial issues, Josefa (his sister) was responsible for
bookkeeping, and Rosalía Mera Goyenechea (January 28, 1944 – August 15, 2013) was
performing as his business partner. In 1966, Amancio Ortega married Rosalía Mera.
 Plz Fill in this Title.
WHAT FAILURE?
1) Family Business ?
2) use Personal Digital Assistants (PDA)
3) never attend fashion shows
4) late to the potential of mobile commerce
5) new ways to engage its customers digitally, not
just through its online store, but through online
communities and social media.
WHEN SUCCESS?
What’s the secret to Zara’s competitive advantage?

1) Supply Chain Process 

2) Fast Fashion(Business Strategy& Operation
Process/Overarching strategy)
3) Just in Time Production
4) Demand Forecasting (Bespoke system)
5) Pricing& Cost reduced Strategy
6) Solid Distribution Network
7) Cross-Functional Operation Strategy (Well-
managed inventory)& Logistics
1 Zara supply chain analysis - the secret
behind Zara's retail success
• It's not unusual to pass a Zara store and do a
double-take - didn't you just see that on the
catwalk? As a brand, their speed and
responsiveness to the latest fashion trends
are key to Zara’s competitive advantage.
Owned by the distribution group Inditex, we
had a look at what makes Zara so fast that
the New York Times called it "mind-
spinningly supersonic".
1

• Zara produces around 450 million items a year.

How can it stay so efficient with the sheer volume
that passes through its supply chain? Regular,
small-batch deliveries happen with clockwork
precision twice a week to all of their stores
around the world.
• Ensuring all this runs smoothly is what Zara does
best - controlling more of its manufacturing and
supply chain than most of its competitive
counterparts.
2Synergy between Zara’s business strategy and
operational processes
• Zara’s overarching strategy is achieving growth through
diversification with vertical integrations. It adapts
couture designs, manufactures, distributes, and retails
clothes within two weeks of the original design first
appearing on catwalks. This is in stark contrast to the
average six months it takes to produces items in the
fashion industry.

• The company owns its supply chain and competes on

its speed to market, literally embodying the idea of
'fast fashion'.
3
Just in Time production
• The retail giant delivers fashionable and trendy numbers
catered for different tastes through a controlled and
integrated process – Just in Time production.
• Zara’s success relies on keeping a significant amount of its
production in-house and making sure that its own factories
reserve 85 percent of their capacity for in-season
adjustments. In-house production allows the organization
to be flexible in the amount, frequency, and variety of new
products to be launched.
• The company often relies heavily on sophisticated fabric
sourcing, cutting, and sewing facilities nearer to its design
headquarters in Spain.
• The wages of these European workers are higher than
those of their developing-world counterparts, but the
turnaround time is miraculous.
4
Demand Forecasting Data
• Zara also commits six months in advance to only 15 to 25 percent of a
season’s line. And it only locks in 50 to 60 percent of its line by the start
of the season, meaning that up to 50 percent of its clothes are
designed and manufactured smack in the middle of the season.
• If a certain style or design becomes the new must-have on the street,
Zara gets to work. Designers churn out the new styles and they're fast-
tracked to stores while the trend is still going strong.
• Store managers communicate customer feedback on what shoppers
like, what they dislike, and what they’re looking for. That 
demand forecasting data is instantly funneled back to Zara’s designers,
who begin sketching on the spot.
• Zara also has extra capacity on hand to respond to demand as it
develops and changes. For example, it operates typically 4.5 days per
week around the clock on full capacity, leaving some flexibility for extra
shifts and temporary labor to be added when needed.
• This then translates to frequent shipments and higher numbers of
customer visits to the stores, creating an environment of shortage and
opportunity.
5
• Zara’s business strategy allows the company to sell more items
at full price because of the sense of scarcity and exclusiveness
the company exudes. Zara’s total cost is minimized because
merchandise that is marked down is reduced dramatically as
compared to competitors.
• Zara makes 85 percent of the full price on its clothes, while the
industry average is 60 to 70 percent. Unsold items account for
less than 10 percent of its stock, compared with an industry
average of 17 to 20 percent.
 Most companies are riddled with penny-wise, pound-foolish
decisions to reduce cost.
 Zara understands that if they don’t have to discount as much,
they can spend money on other things.
 This is also the reason why Zara can afford the extra labor and 
shipping costs needed to accommodate and satisfy 
changes in customer demand.
6 Solid distribution network

• Zara’s strong distribution network

enables the company to deliver goods
to its European stores within 24 hours,
and to its American and Asian outlets in
less than 40 hours.
7
Well-managed Inventory System
• Zara’s success story shows the strength of its
operations. Its cross-functional operations
strategy, coupled with its vertically
integrated supply chain, enables mass
production under push control, leading to 
well-managed inventories, lower
markdowns, higher profitability, and value
creation for shareholders in the short and
long term.
7
Inventories& Logistics

• Zara is all about staying on top of the

hottest trends, and exuding an
exclusive feel, but its supply chain is the
real star of the show. These rockstar-
level logistics take it from being just
another fashion retailer to an industry
example of fast fashion done right.
Reference
 https://successstory.com/quote/amancio-ortega
 https://www.tradegecko.com/blog/supply-chain-management/zara-
supply-chain-its-secret-to-retail-success
 http://www.profitmagazin.com/editions/number_038.365.html
 http://knowstartup.com/2016/11/10-success-lessons-from-amancio-
ortega/
 https://www.cnbc.com/2016/09/16/5-secrets-for-success-from-zara-
 billionaire-amancio-ortega.html
 https://www.forbes.com/profile/amancio-ortega/
 https://astrumpeople.com/amancio-ortega-gaona-biography/