A Case Study on H&M

CORPORATE STRATEGY
AND GOVERNANCE

Table of Contents
Title: To ascertain the influence of fierce competition and changing demands of consumers in
reshaping the global apparel market. A case study on H&M. .......................................................3
CHAPTER 1- INTRODUCTION....................................................................................................3
1.1 Background of research.........................................................................................................3
1.2 Significance of research........................................................................................................3
1.3 Research aims, objectives and questions..............................................................................4
1.4 Research questions................................................................................................................5
1.5 Structure of report.................................................................................................................5
CHAPTER 2 - LITERATURE REVIEW........................................................................................7
2.1 Concept of fierce competition and changing customer demands for reshaping the global
apparel market.............................................................................................................................7
2.2 Issues behind declination of sales and failure of corporate governance under H&M.........8
2.3 Effectiveness of Corporate strategy and Governance for H&M in improving sales
performance................................................................................................................................9
CHAPTER 3 - RESEARCH METHODOLOGY..........................................................................11
3.1 Primary method...................................................................................................................11
3.2 Secondary method...............................................................................................................12
3.3 Resources............................................................................................................................12
CHAPTER 4 : CRITICAL REVIEW OF RESULTS....................................................................15
4.1 Critical review on the basis of primary research.................................................................15
4.2 Critical review on the basis of secondary research.............................................................23
CHAPTER 5 : RECOMMENDATION AND ACTION PLAN....................................................25
5.1 Recommendation................................................................................................................25
5.2 Action Plan..........................................................................................................................27
CONCLUSION..............................................................................................................................30
REFERENCES..............................................................................................................................31
.......................................................................................................................................................32

Title: To ascertain the influence of fierce competition and changing demands
of consumers in reshaping the global apparel market. A case study on
H&M.
CHAPTER 1- INTRODUCTION
1.1 Background of research
In business management, concept of corporate governance is considered as a process to
develop strategic plan for conducting operations. It includes systems and procedures which are
designed to structure the organisational authority and responsibilities (Du,and et. al., 2013). It
also provides accountability to employees, customers and all stakeholders at each level. In other
words, under corporate governance, companies deal with issues of giving best results for their
stakeholders. They also promote interest of other stakeholders in the same time like lenders,
consumers and employees etc.
H&M is considered as the second largest company of UK in retail sector. This company
operates its business in more than 62 countries. Currently, near about 148,000 employees are
working in this organisation. It offers a wide range of trendy clothes and accessories on
competitive rates. For this firm, corporate governance and strategy is about balancing
performance of business with sustainability. But recently, it has faced issues related to keep
inventories matched with sales. This company is found struggling with a rising stock of unsold
inventories.
1.2 Significance of research
Corporate strategy is considered as main aspect or hierarchical strategic plan in an
organisation (Upadhyaya and et. al., 2014). It entails main goals of corporations as well as
different ways to achieve the same, within a specified period of time. But it creates various
difficulties in achievement of the same due to rigorous code of corporate governance, which a
company have to implement at domestic and international level. In the world of fashion retailing
like H&M, where shopping is moving fast through online and stores. It assists retailers to keep

their inventories closely matched with latest trends. In this regard, any stack of unsold items
reflects a bad sign on declining sales performance. The present company i.e. H&M faces same
issues related to $4.3 billion pile of shirts, accessories and dresses. Therefore, this research is
going to critically analyse whether H&M is able for adapting the fierce competition as well as
reshaping global apparel market as per consumer demands or not (Backaler, 2016). For this
purpose, its owners are required to understand concept of corporate strategy and governance, in
order to gain support of stakeholders for resolving such as issue. The present research is going to
reveal how corporate strategy and governance helps in struggling with stack of unsold
inventories.
Through present research, management of H&M can analyse how to meet requirement of
customers, by matching inventories with latest trends. Through developing proper corporate
strategy, its managers can get an appropriate framework for implementation of corporate
strategies in optimum manner.
1.3 Research aims, objectives and questions
Aims: It defines the overall purpose of study therefore, it is essential for researchers to
describe aim in clear and concise manner. This would help in conducting research and obtain
information related to particular issue more appropriately (Mishra, Pundir and Ganapathy, 2017).
Therefore, main aim of present research is - “To ascertain the influence of fierce competition
and changing demands of consumers in reshaping the global apparel market. A case study
on H&M.”
Objectives: After establishment of specific aim further, researchers are required to
formulate proper objectives. It provide ways to obtain information and way to accomplish the
given aim.
 To evaluate the concept of fierce competition and changing customer demands for
reshaping the global apparel market.
 To determine the issues related to declination of sales and failure of corporate governance
under H&M.
 To identify the effectiveness of Corporate strategy and Governance for H&M in
improving sales performance.

1.4 Research questions
 What is the concept of fierce competition and changing customer demands for reshaping
the global apparel market?
 What are the main issues behind declination of sales and failure of corporate governance
under H&M?
 How to identify the effectiveness of Corporate strategy and Governance for H&M in
improving sales performance ?
1.5 Structure of report
It is considered as a blueprint of a research which entails activities required for
completing the same (Sekakela, 2016). In context with present research proposals, to ascertain
the role of corporate-governance in business expansion of H&M, project is divided into five
main chapters, as explained in brief below:
CHAPTER 1 : INTRODUCTION – This section of project depicts an understanding of
related research topic. It covers an overview, background and rationale of research for carrying
out an investigation. In addition to this, it also specifies research aim, objectives and relatable
questions on the basis on chosen topic. These objectives further provides a basis to make entire
report for addressing the main issues of research.
CHAPTER 2 : LITERATURE REVIEW – It surveys scholarly articles, books and
other sources for providing a description related to particular issue. It critically analyse the
research problems according to perception of different authors and experts, who already made
investigation on same topic. Therefore, present research issues based on corporate-governance of
H&M for business expansion, are identified by using secondary sources.
CHAPTER 3 : RESEARCH METHODOLOGY – This section covers sources
required for gathering, organising and analysing information, related to particular research topic.
It includes scholar books and journals, articles and journals, interviews and questionnaire etc. to
collect a specific data (Chang, 2016). These sources are mainly classified into primary and
secondary research for critically reviewing research questions. With respect to present project,
both sources are used to analyse concept of corporate-governance for business expansion of
H&M.

CHAPTER 4 : CRITICAL REVIEW OF RESULTS – Here, entire information
collected under primary and secondary research are critically analysed. This would help in
drawing valid conclusion which covers main issues of present topic.
CHAPTER 5 : RECOMMENDATION AND ACTION PLAN – Under this segment
of research, on the basis of critical evaluation, recommendations are given to H&M for resolving
its issues. These suggestions will help this company in improving its sales performance by
developing effective corporate strategies and governance (Payne, 2016). Further, an action plan
is also made which provide stages for achievement of corporate goals and objectives.

CHAPTER 2 - LITERATURE REVIEW
In the present research, investigation is done to identify best solutions of problems that
are related with declination of sales. For this process, main focus is given on conducting
literature review where opinion of different professionals have evaluated. Under this process,
views and opinion of different authors are evaluated to analyse the concept of corporate strategy
and governance.
2.1 Concept of fierce competition and changing customer demands for reshaping the global
apparel market
As per article given by Carsten Keller and et. al. (2019), it has ascertained that dynamics
of apparel industries are considered as dramatically changes. Therefore, to gain success related to
shifting tides, companies dealing in cloth sector are needed to build up their competencies as per
new trends. Apparel customers are not seeking only to get a level of freshness in products, but
also wants to enhance their shopping experiences. The certain signs which shows changes in
global apparel market are- moving targets, sustainability, digitization, channel convergence,
deluge of data and urbanisation (Succeeding in tomorrow's global fashion market, 2019). In this
regard, companies like H&M seems to be reshaped its global apparel market, by interplay of
external influences. It includes emergence of new models and channels, changing demand and
expectations of customers, social and technological development etc. Apart from these, due to
fierce competition where many organizations like M&S, Zara, PRIMARK and Crew Clothing,
run their businesses in same sector. Among these companies, M&S is considered as the biggest
rival of M&S which generates high revenue. This company offers much trendy clothes on
reasonable price and discounts to customers. So, it leads to arise problems for H&M related to
decreasing sales performance.
Apart from this, it has also evaluated that there is large impact of digitalisation and
software on international retail industries. Therefore, such an interplay between changing in
customer demand and technologies, has created both challenges and opportunities for retail
industries. H&M always remains committed for providing insights which enable customers to
navigate such emerging trends. As today people expected to get products on time and hate to
face delay in payment modes (Du and et. al., 2013). Therefore, it has shifted behaviour of
customers which is driven by digitisation. With emergence of social media, new digital channels

and business models as well as access to global information, all have changed customer
expectations. They now seek to get best trendy clothes, having best qualities on reasonable rates
for trenching their needs. People are spending more time on discovering the new trend in fashion
industries to stay updated with modernisation. Therefore, companies like H&M tackle such
situations as head-on and its business has fallen out of fashion.
2.2 Issues behind declination of sales and failure of corporate governance under H&M
As per article given by Elizabeth Paton, it has been evaluated that in fashion world,
shopping is going to move more faster from offline stores to online. It has been also analysed
that matching sales with inventories is not an H&M problem only. It is considered as fast-fashion
issue for entire retail industries which deals in clothing sector. The reason behind this is changing
demand of consumers. They concern more on kind of quality before purchasing any product.
Fashion brand and styles refer to as particular demand of today's customers, that leads them to
spent time on online-purchasing. Therefore, due to increase in demand of people, H&M has been
fallen out of fashion (Loebbecke and Picot, 2015). In addition to this, it has also evaluated that
now the most difficult situation in front of managers of present company is how fast they can
ramp online operations. It has evaluated that H&M has run near about 4,700 stores in many
countries and primarily focuses on women's wear. Therefore, it fill the racks, it has produced
hundred of millions of clothes and other accessories each year. This would increases the level of
inventories and seems to be a major cause related to unsold stock (H&M, a Fashion-Giant, Has a
Problem: $4.3 Billion in Unsold Clothes, 2019). In addition to this, poor inventory management
as well as under-performing product offerings, has taken loyal customers away from shopping at
H&M's stores.
For boosting sales performance and to get rid of $4.3 billion stock of inventories, this
company also needs to concern on corporate strategy and governance. According to Benn,
Edwards and Williams (2014), it has evaluated that Corporate Strategy and governance can be
defined as a hierarchical strategical plan of a business. It provides information about corporate
goals and objectives with various ways to accomplish them. In context with H&M, it is founded
by Erling Persson and owned by Stefan Persson therefore, being a sole proprietorship, owner
managers the concern related to maximize profitability. Thus, there is no clash of interest among
persons. But in corporate section, there is a separation of ownership from management-
shareholders form Board of Directors and managers who conduct business as well as take major