Group

: Henri Dunant

Business Ethics: Case Study

1) What business Inditex is in?
They operate in the textile industry, it is not the brand itself that operate in it but the brands it owns
that do (Zara, Pull and Bear, Kiddy’s Class…)


2) How Inditex is doing economically?
They have opened plenty of new stores during the last years as they have also entered new markets.
Moreover, the have implemented a very global strategy that have proven to be a success (even if it’s
mostly due to its main brand Zara).
Using numbers, they had a net income of €628 millions of euro and a consolidated evenue of €5.67 billion
in 2004.

3) What are the major changes in this industry the last 10 to 20 years?
• More and more pressure coming from NGOs targeting the social responsibility of the company
• Leading to the implementation of a social responsibility policy (Code of conduct, the social audit
program)
• The group started operating abroad
• Their main competitors started moving production in low labour cost countries leading to strong price
competition (Nike, Levis condemned for indirectly making Chinese’s work under slavery conditions)
• More demand and more competitors
• The beginning of outsourcing worldwide (globalization)

4) Why Inditex outsources production in Morocco? (bullet points)
• Lower production costs
• Geographically close to Europe (their main market)
• Morocco’s main industry is textile and so has both the infrastructures and the labour force.
Preventing them from building costly infrastructures elsewhere.


5) Why inditex decided to set up a CSR policy in Morocco?
In 2001, the SITEM NGO bought Inditex’s stocks to attend the sharholders’ meeting. Then, the NGO
expressed it wish that Inditex start implementing a real socially responsible policy.
After that, some top managers at Inditex said that it wouldn’t be a bad idea and Morocco seemed to be
the best place to start this experiment (as main manufacturing place for the company)



6) What is the CSR policy Inditex tries to develop in Tanger ? (describe the elements)
Inditex’s Code of conduct for outsourcing manufacturers worked on issues such as compensation policies,
workers’ minimum age and wage, health and safety, freedom of association and antidiscrimination
problems or even environmental care.


7) Should Inditex implement this policy in Tanger?
• Yep, at least they act as an example in the industry, showing that they are trying to improve the
situation and not fleeing to China or India like a lot of their competitors.
From an economical point of view, it has a reputation outcome giving the company a better image
leading to “long-term profits”.
• Nope, it is money wasting, they need to make profit and it lead to be less competitive compared to
their main competitor that have no problem with outsourcing in China and India for example. They
take away their competitiveness.