Zara is an Inditex retail chain specializing in high fashion at reasonable prices. Over the past 12 months, Inditex's share price has increased by 50% despite bearish market conditions. The 50% increase is due to investors' expectations regarding Inditex's growth. Inditex's growth can be aided by decisions made in creating a centralized, vertically integrated process. The centralization of its vertically integrated operations in Europe has provided it with its competitive advantage; however, I believe it will fail even if it decides to grow substantially in other markets. Financial Analysis Compared to Competitors Comparing Inditex's financial performance with that of its competitors, it is evident that Inditex is performing very well compared to its competitors in terms of workforce productivity, net revenue and cost of goods sold. Their return on investment is also significantly higher than others. Success Factors Zara's vertical integration has been successful due to the following key tactical decisions: Ownership and control of production: Unlike many of Zara's competitors, Zara has decided not to outsource the majority of its production. Instead most of the production was done in Europe. Proximity of operations to headquarters enabled better and faster communication between functional areas for faster decision making. It also provided an added sense of quality to the product as the labels would be labeled “made in Europe” rather than “made in China”. More importantly, Zara owned much of the fabric dyeing, processing and cutting equipment which gave Zara greater control and flexibility to adopt new trends on demand. The increased flexibility has helped Zaraon two......halves of paper......or creative nature and providing designs that meet the needs of each market. Ultimately, I believe teams will be able to leverage many of the fashion patterns from all countries as fashion is starting to converge to some extent with globalization. In conclusion, Zara has done a great job in creating a highly vertically integrated business where it is able to control product quality and be able to quickly adapt to market trends and customer desires through highly affective operations. Zara should continue to expand its operations in Europe as it understands the market best and can leverage the existing architecture. Entering the Asian and US markets will be more difficult and will cause severe stress to their current centralized and vertically integrated system. They will likely have to decentralize their manufacturing operations to adapt to markets.