Strategic Management: H&M - Background, Analysis, and Strategies

This document provides an overview of strategic management in the context of H&M. It covers the background information of H&M, external analysis of the fast fashion industry, internal strategic capabilities, and strategic directions. The document also includes a market development strategy and VRIO analysis of H&M.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
H&M - Background Information.....................................................................................................3
External: Fast Fashion Industry Analysis...............................................................................4
Internal: Strategic Capabilities...............................................................................................5
Strategic Directions (Options)................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Strategic management is the process by which an organization has been dealing with
various kinds of strategies that has been developed for making an organization
enhanced(Barney, 2017). Further these strategies are required for covering various kinds of
factors that makes impact upon an organization. In this file both internal and external factors are
to be covered with the help of PESTEL and SWOT analysis. In the end recommendation has to
be given upon.
MAIN BODY
H&M - Background Information
Hennes & Mauritz AB is a Swedish multinational clothing-retail company known for its
fast fashion clothing for teenagers, children, women and men. H&M is working across 74
countries with over 5000 stores with various firm brand. It is the second largest retailer of
clothing globally. H&M is founded by Erling Persson and operates by his son Stefan Persson and
Helena Helmersson, the company is doing online business in 33 countries. The company
established by Erling Persson in 1947, Company opened his first shop in Vasteras, Sweden
(Barney, 2020). The shop is exclusively for women's clothing. The company also got listed in
Stockholm Stock Exchange in 1974, Also stared retail online business in 1998. First store was
opened in U.S. OM 31 March 2000. From then to 2020, H&M operates 2325 stores and planned
to close 5% of their worldwide stores in 2021, as a result of COVID-19 pandemic. (Chopra,
Gupta and Chhabra, 2017)
H&M invest maximum time in advertising and promotion. Digital Marketing is also used
in H&M company as a marketing tool. It uses press, celebrities to carry out advertising content to
their potential customer, also make use of videos, social media and print to make the product &
service available and familiar to its users(Berman, Evans and Chatterjee, 2018). H&M uses
premium pricing strategy as it offers exclusive and high quality clothes to their targeted
customer, which includes youths, women, men, high profile people and children. Organisation
includes everything from designer clothes to daily wear and yoga wear(Banihabib, Hashemi-
Madani and Forghani 2017).

External: Fast Fashion Industry Analysis
PESTLE analysis is the tool that is being used to analysed external factors of an
organisation. PESTLE analysis is in the context of H&M .H&M is a Swedish multinational
clothing retail company. It has a headquarter in Sweden. (Bryson and Edwards, 2017)
Political Factor- Political factor externally effects an organisation. In this factor looking
for the government rules intervene the economy that affect an organisation. In this factor
includes the Tax policy, Tariffs, Bureaucracy ,Trade restrictions. Government policies affect to
H&M in positive and negative manner. The Positive impact on H&M is Government policies of
trade restriction may affect the trade of H&M(Bolland, 2020). When the government relies in
restriction and taxes it easy to expand the market. Negative -when government increases the
taxes then the export is costly for company. Due to the taxes the selling rate is decrease.
Economic Factor- In this factor includes economic growth, interest rates, exchange rate.
These factors affect how an organisation operate and make decisions. These factors directly
effect on the business and its profit(Kenny, 2017). Economic factor affects the H&M in positive
manner. H&M needs raw material for production, that’s why when recession is increase in
market they will buy raw material from cheap supplier or seller.
Social Factor- In this factor focus on social trends and styles. Factor include educational
level, changes in lifestyle, cultural levels. This is helps to marketer to understand the
requirements and needs of their customers. This factor is important for marketer when targeting
the market. Social factor affects to an organisation .H&M follow the social factor then it will
expand the own market and increase the sale . It is very important for understand to customers
need and requirement an d social trends for increase the selling rate.
Technological Factor- In technological factor affects an organisation in production dealing
marketing. Technological innovation affect the performance of an organisation . It may affect the
market performance positively or negatively. Due to technological innovation production rate is
increase that is properly full fill the demand of customers. When demand is increase and
production rate is low due to technological factor then the market performance is decrease.
Legal Factor-In this factor various kind of laws are include that are bound to be followed by
an organisation to establish itself within a country. In this laws like trademark, labour law,
industry regulation and permits or license. The factor affects its costs or demand. H&M follow
these laws in a proper manner when it will not follow the laws they will facing legal issues .

Environmental Factor-In this factor include the ecological system, climate, climate change,
whether. These factors are specially affects industries like tourism farming and agriculture
insurance. These factor influencing the market of various industries like tourism, farming,
agriculture. H&M develop the waste product treatment plant for utilize the waste product in
production for connect new customers they follow eco friendly system (Wicks and Harrison,
2017). H&M is a garment industry. It is use the fibres for garment production they will use
organic fibres for ecofriendly customers. It sets a great example for eco-friendly.
From the above PESTLE analysis this can be concluded that each and every factors are
giving appropriate positive and negative impact over working of H&M and in this manner the
company can sustain and attain market prominence as well. For H&M market is pertained with
higher opportunities to deal with success and business betterment as well.
Internal: Strategic Capabilities
SWOT analysis is structural planning strategy that evaluates the strength, weaknesses,
opportunities and threat of the organization. SWOT analysis carried out for person, place, price
and promotion. It identify the objective of the organization and evaluating the micro and macro
environment that are favourable and unfavourable to achieve that goal. (Parayitam and
Papenhausen, 2018)
Strengths Weaknesses
1. Motive of the organisation is to sale best
product at lower price that can be affordable to
everyone.
2. H&M offers wide range of product like
apparels, cosmetics, shoes and accessories and
offer product like blank kit.
3. Reliable suppliers are there, which give
sufficient amount of raw material.
1. Easy to copy a design of the product, which
effects the profitability of the organisation.
2. The profitability ratio and Net Contribution
% of H&M are below the industry average.
3. H&M manufacturing the affordable cloths,
which effect the quality of clothes and other
product of H&M.
Opportunities Threats
1. Encouraging popularity of online stores,
which gives customer easy purchase of the
product.
1. Competitors enters in the market and
introduce the new product and effect the
existing organisation.

2.H&M improving the lifestyle of people
across the globe. People are more brand-
conscious.
3. Increasing global presence, expansion in
India and other developing countries.
2. Shortage of skilled workforce global market
leads to continuous growth of the company.
Strategic Directions (Options)
ANSOFF MATRIX:
H.lgor is a developer of Ansoff Matrix, which was first published in Harvard Business
Review in 1957. “Strategies for Diversification” was article title, which gives a broad knowledge
to the generation of marketers and business leaders also gives the strategies to grow and maintain
the work environment.
The strategies used in Ansoff Matrix are: Market Penetration- It is the factor which gives the leverages of existing firm to sustain
in the market and can increases market share by encouraging the existing product in the
existing market, (Stoyanova, and et. al., 2019). On other hand Market Penetration has
limit, once there is a dynamic market and competitors using other strategy, this will effect
the growth of company. For example, H&M manufacturing clothing, in which firm can
modify the product and sell the existing marketing. Product Development- In this factor, A new product is developed by firm to serve the
exiting environment. It is done on the basis of market research and by developing the
wide product range. This is done efficiently, when employee have a good knowledge of
market and the current environment. For example, H&M can introduce the traditional
clothing and cover the market. Market development- In this factor , firm approaches to enter in the new market with the
existing product, which means entering in new market expanding new areas and new
segmentation of costumer etc. It is beneficial when your product matches the customer
needs and also profitable for the company. For example H&M company is not in the
Pakistan then company should go for it.
 Diversification- This is the hazardous for the company, as it require both product
development and market development. In this organisation needs to develop new product
for new market. It involves huge cost in developing new product and finding new

market , with the potential customer. For example, H&M can introduce the sports car in
new geographical area by analysing the product need for potential customer.
From the above discussion this can be concluded that H&M can adopt market
development in order to enhance their market share and to deal with market contingencies in
proper manner. Besides this by using this strategy H&M can acquire higher market share and
market prominence as well in short period of time.
VRIO Analysis of H&M
Resources Valuable Rare Inimitable Organized Sustainable
competitive
advantage
Financial
Resources
✓ ✓ ✓ ✓ ✓
Human
Resources
✓ ✓ ❌ ✓ ✓
Patents ✓ ✓ ✓ ❌ ✓
Distribution
Network
✓ ✓ ✓ ✓ ✓
From the above table this is clear that for H&M their financial resources, human
resources and distribution network are highly valuable and the same can be helpful for the
organisation to attain sustainable competitive advantage. Besides this these resources are rare for
the organisation which may lead the business to inhale organised manner working. On the other
hand human resources of H&M is inimitable which adds higher uniqueness to the company in
order to deal with market challenges.
Porters five forces model:
Competition in the industry: This is the force which is associated with existence of competition
within industry. In the context of H&M inside rivalry is high as there are numerous competitors
which may obtain with challenges for the company to survive.
Potential of new entrants into the industry: This threat is associated with new entrants within
the industry. In the context of fashion industry this is easier for another business to get enter as

new and emerging trends are coming on daily basis. So this can be examined that this threat is
providing higher threat for H&M.
Power of suppliers: Bargaining power of supplier is defined as impact over suppliers by change
in prices. In the context of H&M they are having numerous suppliers so this threat is not having
much power to create barrier for H&M.
Power of customers: Consumers are the ultimate reach for the business and in context of H&M
there are huge competitors available for them which makes switching cost lesser. This is the
major reason that for industry of fashion this threat is keeping higher existence.
Threat of substitute products: This dimensions is defined as number of existed substitutes, as in
context of H&M there are lots of substitute available for customers such as M&S, Zara and
many more.
Strategy Selection and Justification
Market developing strategies has been developing various kinds of steps that is taken by
an organization like H&M for developing an existing product that makes looking into new
market. The organization looks to new buyers in order to pitch the product over various
segmenting of consumer that is going to increase sales of an organization. This strategy has been
making development of those products in which new buyers is being seek and searched to make
sure that products is being able to target customers of various range. Also it makes an
organization to enhance its product capability and cover market. Market development is an 2 step
process that has been untapped market (Yilmaz and Flouris, 2017). This begins with research to
be done in market as per which an organization like H&M makes analysis worth pursuing. H&M
makes an attempt to utilize existing product and services to make customers base in a market.
The goal of expansion is to be achieved by H&M through this kind of strategy is able to develop
those factors that has been helping an organization like H&M to attain stability with its new
product. Segmentation is being defined as the small sub-group of large population. This can be
understood through the example that marketing manager of H&M's segment the market on the
basis of geography, demographics as well as income levels etc. After segmenting the specific
market, the next step of market development is to create a promotional strategy to enter into the
market. For this the organization have been taken support of both audio and visual media for
pushing product deeper within the market. Other aspects that is being covered is going to have
pricing product and competitors within market that has to price according to product that is being

launched by H&M. In order to counter competition marketing team could look at the penetration
of pricing with aggressively making price of a product below competitor’s product to gain
market share. The major challenge that is been based by firms like H&M. This makes indulging
by promoting price of product for gaining of shares. In this major challenge is being faced by an
organization by managing cost. For this H&M is required to invest huge capital investment for
keeping project going (Berman, Evans and Chatterjee, 2018)
Conclusion and Future Recommendations.
These strategies is going to be helpful for an organization like H&M in a way that it
makes development of the organization possible. This makes an organization like H&M to
capture the market while covering all customers in market. It is also helpful in gaining of
stability within market. Also new product is going to be launched by an organization in a market
that makes all products to be sold in the market. This also further enhances employees’
capabilities by increasing there efficiency. Also these starters make sure that product is being
sold within the market at wide range. It is helpful in enhancing of various strategies that has been
affecting an organization by making them build customers base.
In future these strategies have been affecting an organization like H& in a manner that
they help in forming of large customer base. This means that all the customers is being targeted
present within market. Also the organization is related to developing various kinds of customers
and make them attracting them within an organization. H&M sales is going to enhance and it is
going to cover all area of market. This also make sure that changes are being made in future
within the plan and strategies that that to be followed by an organization.
CONCLUSION
From the above file it is concluded that strategies management is that kind of
management that has been used to develop those kind of strategies. This is there to make sure
that all strategies are enhanced that is being used within an organization. In this file various
things have been covered like PESTEL and SWOT. PESTEL is that kind of analysis which is
based on the impact of internal factors that has been affecting an organization's growth. Further
SWOT analysis is being done which is helps in dealing with internal factors of an organization.
Also ans off matrix is covered that has been dealing with enter of new product or existing
product in an organization. In the end future expectations has been explained and how the
organization can progress in future has been told.

REFERENCES
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Autocratic leadership style: This style is used by Jeff Bezos when the company is about to
provide working with team as this is an effective strategy when team work is supported.
Transformational leadership: This style is used by Jeff Bezos when the company is trying to
expand market share as this is helpful in managing motivation and inspiration within employees.
Leadership theory
Situational theory
This theory is used by leaders in order to deal with various situations and in this leader
adopt differentiated theory in varied situations.
Trait theory
This theory is associated with study of personality and behaviour so under this leaders are trying
to examine behaviour of their team mates in order to align goal and objectives of business in
sufficient way.
For Jeff Bezos situational style of leadership is being adopted by him and Amazon is an
organisation which is dealing in various market sector and range of product and services so this
is imperative for them that they face varied situation at every point of time.