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SPAIN: Textile Industry

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Sarah Dalton

on 9 December 2014

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Transcript of SPAIN: Textile Industry


Country Background
Company Background
Purpose for Expansion
Project Specifications
Economic History
Current Economic State
Risks & Benefits
Regulatory Structure
Major and Minor competitors
Local financing options
overall attractiveness of the industry
Takes away a major competitor
Similar styles
Greater possibilities
Preexisting relationships
Stores and production facilities

Before WWII: one of least developed countries in Europe
World explorations and trade routes success had faded
Relied on economy based in agriculture
Post WWII rehabilitation
Developed strong manufacturing industry that became their leading industry by late 1960’s
Current Economy
2008 crisis
Popular Party & budget deficit-reduction plan
EU: €41 billion loan
Unemployment increasing (27%)
Strong recovery
Parliamentary monarchy
Chief of State: King Juan Carlos I
Prime minister: Felipe Gonzalez Marquez
Spanish Socialist Workers Party & Popular Party
Freedom from corruption
Risks & Benefits
Not considered a top economic producer
Geographic location
Trade and transportation advancements
Rural citizens
Concentrate larger cities: Madrid, Barcelona, Valencia etc.
Forever 21 with Mango
More valuable together
Takes away a major competitor

Similar styles

Greater possibilities
Larger markets
Wider selection
New markets
Preexisting relationships
o Producers and manufacturers
Better quality products
o Realtors
New and larger locations
Stores and production facilities
o Private stockholders
o Customer basis
Loyal market

• Executive team will meet with Mango’s executive team
• Goal
-Merger contract
-Establish headquarters
• Tour manufacturing facilities and possible store locations
• Rebranding
• Designers

o Enter into fashion driven cities
o Use employees to model clothing
Show versatility of pieces
o Discount strategy
Las Rebajas

Textile Sector in Spain
The textile sector holds an important position in the Spanish industrial structure.

The Industrial sector employs about 275,000 people. The textile sector contributes to 5% of the Gross National Product.

Country Background
Relations with the United States
Adoption of the Euro
One of the highest GDPs in the world

Fashion is a huge part of the industry in United States and even considered to be part of the culture in Spain resulting in high competition

Pay attention to the market share our competitors hold
Zara = 9.8%,
H&M = 3.2%,
Bershka =2.9%
Mango =2.6%.

Main Competitors = Inditex, Zara, H&M
Minor competitor= Bershka, Pull and Bear


1. Bank Loan
Most reliable bet in this situation
Set date when the debt of Forever 21 and Mango would need to pay back the bank in full, plus the interest.
purchase through a bank-lowest interest rates
-one is able to find which bank has an established reputation as a trustworthy lender.
would not ask for a very large loan request
-more difficult to be approved.

2. Revolving Line of Credit

Acts like a credit card
Line of credit= the maximum amount of money you can borrow at any given time
Money is already available --> now easier to arrange and lower financing charges
No fixed monthly payments.
-Monthly statement would list all the money we borrowed for our line of credit in the past month
-unable to afford it all at one time we could pay the balance at a different time period.

Overall Attractiveness/reasons to merge
Forever 21 with Mango

Spain is the leading global company in the textile sector by volume of profit
Spain has the largest financial institution in the euro zone making it very attractive to invest in.
Tax system
-Spain has favorable tax regimes for the investment in R&D and a special tax regime for international business holding companies that is among the best in the region of Europe.

Labor costs in Spain are below the average compared to the European Union.
-cost/hour, labor costs are below the average for the EU- 27 and are becoming increasingly attractive compared to other EU countries

2014 Index of Economic Freedom (2014). Economy: Facts, Population, Unemployment, GDP, Business, Trade. Retrieved November 12, 2014, from http://www.heritage.org/index/country/spain
Brand Story: Mango. Fashion Gear. Retrieved from:

Bureau of Public Affairs. (2013). U.S. Relations with Spain. U.S. Department of State. Retrieved from: http://www.state.gov/r/pa/ei/bgn/2878.htm.

Central Intelligence Agency. (2013). Spain. The World Factbook. Retrieved from:

Forever 21 Inc. (2014). Forever 21 Company History. Forever21.com. Retrieved from:

Geography of Spain - Economy - HowStuffWorks. (n.d.). Retrieved November 12, 2014, from http://geography.howstuffworks.com/europe/geography-of-spain.htm

Green, J. (n.d.). POLITICAL SYSTEM OF SPAIN. Retrieved November 12, 2014, from http://www.csudh.edu/global_options/375Studentssp96/spain/default.htmspain

Forever 21 Background
Begin in 1984 by a South Korean couple
Offer young and trendy clothing to a younger age group
Store sizes went from 900 square feet to 9,000 square feet
Company went from $35,000 to $700,000 in the first year alone
$3.5 billion in sales in 2013 alone
122nd largest publicly held company in the U.S.
Mango Background
Opened in 1984 in Barcelona, Spain
Within a year, they had 5 stores in Barcelona and was moving to other Spanish cities
They now have 2,300 stores in 107 different countries
Hangar Design Studio
Environmentally conscious & socially responsible
Purpose for Expansion
Similarities between companies
In Spain, shopping is apart of the culture
Access to some of the best clothing design studios in the world
Unique knowledge from each company
Project Specifications
Use Mango's knowledge of the market
Use Forever 21's different views of fashion
Keep the Mango name
2 Financing options
1.Bank Loan
2. Revolving Line of Credit (Both loans)

Bank Loan
closed-end credit (you and the bank agree on the exact amount of money you will borrow and the exact amount of time you have to pay the bank, also aware of interest)

Revolving line of credit
open-credit (the loan is not fixed, it is actually ongoing)
benefits: we would have a certain limit we would be able to borrow whenever we needed the money whether it be to hire employees, spend money on marketing and advertising our clothing
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