ESADE Business School Barcelona
This case study focuses on Inditex Group (Industria del Diseño Textil), a Spanish corporation that ranks among the world’s fashion industry leaders, along with companies such as GAP, Nike, Benetton and H&M. Inditex owns several brands, including Zara, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, and Kiddy’s Class. The company featured an unusual peculiarity: its core strategy was based on the implementation of a corporate social responsibility (CSR) plan that spanned its whole productive and sales processes. This distinctive trait had made Inditex a leading company in this field.
This adoption of this strategy had been brought about by profound structural changes undergone by the company. On the one hand, while in 1980 all production operations were based in Spain, by 2003, Inditex had expanded to include production centers as well as certified suppliers in America, Africa, Europe and Asia. On the other hand, the initially family-owned company had gone public at world level. At the time, several NGOs and other worldwide organizations had begun to look into and report on the overall textile sector in the midst of a campaign against labor exploitation, child labor and corporate social irresponsibility at large. This situation posed new challenges for the company, especially regarding labor, and workers’ social and economic conditions. In order to address these challenges, a Corporate Social Responsibility Department and a Social Council were created, intended to ensure that corporate actions reflected social responsibility and commitment and to communicate sustainability values and respect for human rights across the company’s production, distribution and sales chains.
The case zeroes in on a meeting to be held by Inditex Social Council, which consisted of five third-sector relevant members. The meeting´s agenda focused on analyzing a pilot project developed in Tangier (Morocco). This program had involved the identification of female workers’ needs at outsourcing factories and shops in Tangier. In order to confront this difficult challenge, the Group had entered a collaboration agreement with Fundación Codespa. First, the program identified the needs of production chain female workers and their families, most of whom lived in Tangier´s poorest boroughs, especially Beni Makda and Charf. At the same time, four local community associations (Ain Hayani from Dradeb-Ain Hayani borough; Mesnana, from its namesake borough; Mouatina, in Jerari and Beni Makada neighbourhoods; and Ben Kirane from Charf) were chosen to build an alliance that would contribute to improving living conditions in their respective communities. Within the program, these centers were known as “basic community service centers” (BCSC).
The work at basic community service centers (BCSCs) was intended to respond to the specific needs of workers, their families and communities directly or indirectly linked to Inditex supplier base. Currently, BCSC’s social offerings included: day-care facilities for female workers´ children, literacy programs, health services, informal education, basic technical training on textile manufacture, legal counsel, administrative and labor assistance and awareness programs on health and hygiene-related issues.
This case can help students understand how a multinational corporation may implement an operation outsourcing policy through a CSR initiative, the barriers and drivers that are likely to surface in the process, and how to develop and execute adequate policies and practices, taking into account resulting organizational changes. In addition, the case may enable an analysis of the actual decisions a Corporate Social Responsibility Department (and a Social Council) should make within a large multinational company. Case discussion should allow students to gain a better grasp of the CSR-related issues affecting corporate management, communications and image, as well as the challenges often found in CSR ventures.