Context of Business: Impact of External Environment, Leadership Style, CSR and Brexit and Covid-19 on H&M

CONTEXT OF BUSINESS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
1. Impact of external environment factors...................................................................................2
2. Suitable leadership style..........................................................................................................3
3. Corporate Social Responsibilities of H&M.............................................................................5
4. Impact of Brexit and Covid – 19.............................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
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INTRODUCTION
Context of Business i.e. the different strategies and practices that a business uses to perform
its operations and generate profits often influence their overall performance (Song and et.al.,
2019). H&M is one of the leading fashion retailers operating globally and having number of
stores. This report will evaluate the influence that external environment has over H&M’s
practices by using Pestle analysis. Further report will evaluate different leadership styles
identifying the most suitable one for H&M. CSR responsibilities and process of H&M along
with the influence of Brexit and Covid 19 will also be evaluated and steps taken by H&M will be
discussed in last.
MAIN BODY
1. Impact of external environment factors
H&M, it being a global organisation, is directly influenced by the trends and practices that
are prevalent in the external market. Pestle analysis can be used to identify how different factors
regulating the external environment influence the strategies formulated by H&M (Phan, 2021).
Political Factors: Political stability indicates a stable and measured growth of the industry.
H&M being a global organisation has its franchisees in the entire world. This influences their
profitability because every country’s stability is not consistent especially economies such as
Lebanon, Turkey etc. However, UK has been showing stability even post Brexit indicating a
strong growth market for its industries. Political factor therefore acts as a threat for growth for
H&M depending on stability.
Economic Factors: The pricing policies of H&M are directly influenced by the inflation rates
and currency fluctuations of different economies (Ullah, 2021). Since Covid- 19, the sales have
been influenced heavily in almost every industry. However, H&M by focusing on online sales
strategy was able to bridge up the intensive losses to an extent. In UK, the inflation rate has been
stable and the consumer buying behaviour has also improved post covid. Hence, economic
environment poses opportunity for H&M.
Social Factors: People are becoming increasingly aware of the company’s focus on
sustainability and their focus on different social groups. Trends indicate that youth focuses on
following whatever their idols, mainly celebrities endorse. H&M imposes upon the women
empowerment aspect robustly and they have engaged an extensive portfolio of celebrities in their
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advertisements. Hence social factors pose a number of opportunities for H&M to grow and
develop.
Technological Factors: In the fashion industry, technological advancements are a constant
process where regularly there are some or other new improvements in the overall supply chain.
UK also incorporates and leads such advancements in their industries (Ahmed and et.al., 2020).
H&M has heavily integrated technology with their logistics, supply chain and production
processes which have yielded long term benefits for the company. Hence integration of AI
creates opportunity for H&M to take advantage of this factor and gain benefits.
Legal Factors: Companies have to ensure compliance of laws in whichever country they are
operating which often makes it difficult. While operating in different companies, there are often
conflicting policies but companies have to ensure that they are complied with. For H&M this
factor acts as a threat because company has regularly been involved in activities which are not
entirely illegal but still do not stand approved in legal respect (Pandey and et.al., 2020). The suits
filed have been several and hence H&M needs to ensure that their policies respect the legal
aspects of different countries.
Environmental Factors: Fashion industry has undoubtedly highest environmentally taxing
requirements which create excessive pollution and are under constant scrutiny. Reusing and
recycling the products is one of the key strategies that was promised by H&M. the company has
been given high rankings in terms of their sustainable policies thus indicating that they can
develop this factor as an opportunity to create goodwill and loyalty for the company.
2. Suitable leadership style
Leadership is all about an ability that help an individual in order to influence and guide the
followers of the members so that they help a business to meet the defined aim. There are
different styles adopted by the company in accordance with their organizational culture which
include autocratic, democratic, affiliative, Laissez-Faire etc. This in turn assist to create a better
outcome and improve the performance so that it employees can share their views with people
and improve the brand image (Budur and Poturak, 2021). The leader of H&M uses democratic
leadership style which in turn assist to create a better outcome because it helps to attract the
employees and increase the employee involvement within a firm in order to improve the business
performance. Baloyi (2020) explained in their study that the leadership style in which members
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