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Corporate Strategy H&M - Assignment

   

Added on  2021-04-16

18 Pages4663 Words143 Views
Running Head: Corporate Strategy H&MCorporate Strategy

Corporate Strategy 1Table of ContentsIntroduction......................................................................................................................................2Strategic Issues................................................................................................................................3Macro Environmental Factors (PESTLE)....................................................................................3Porter’s five forces.......................................................................................................................4Internal factors.............................................................................................................................6Factors of competitive advantage....................................................................................................6Porter’s generic strategy adopted by H&M.................................................................................8Competitive Strategy.......................................................................................................................9Strategy Improvement................................................................................................................10Conclusion.....................................................................................................................................12References......................................................................................................................................13

Corporate Strategy 2Introduction Hennes & Mauritz (H&M) is a Swedish multinational apparel manufacturing and distributingcompany. It is majorly known for its fast-fashion apparels for women, men, children as well asfor teenagers. It was founded in 1947 and it is headquartered in Stockholm, Sweden. Company isoperating from approximately 4500 stores in more than 62 countries and expanding its stores inother parts of the globe constantly. More than 150,000 employees are working with H&MCompany across the globe and this has helped the company to acquire second position across theglobe in terms of largest global retailer of apparels. Parent company of Zara i.e. Inditex which isa Spain-based company stands on the peak position in the fashion industry. In order to expandorganizational presence, organization also sells its products through online shopping websites inmore than 33 countries. Success and growth of the organization could be estimated by itseffective strategic management. Strategic management is the process under which variousstrategies are being constructed with the view to execute organizational functionalities in aneffective manner. Apart from this, another objective behind developing strategies is to upliftorganizational performance so as to gain competitive advantage in the target market as well as toacquire a decent market share in the global market. In relevance with the strategies, companies also need to bear challenges and issues which comealong with them. In this report, strategic issues will be discussed in relevance with the secondlargest apparel brand in the global market. Along with this, key success factors will be discussedthrough which organization is able to gain adequate competitive advantage in the market. Thelast part of the report will focus over the effectiveness of organizational competitive strategies inrelevance with the strategic issues and as per the evaluations, recommendations will be given.

Corporate Strategy 3Strategic IssuesThere are numerous issues faced by H&M in their daily operations. Some of them are change inthe customers’ tastes, preferences, choices, etc. Apart from these issues, changes in the macroand micro environmental factors also affect organizational performance. In order to overcomefrom these issues as well as to gain competitive advantage in the target market, it is necessary forthe organization to develop appropriate and effective strategies. Development of strategiesshould include assessment of the issues and competitor’s effectiveness and their strategies.Following are the main strategic issues faced by H&M:Macro Environmental Factors (PESTLE)Political: As H&M is performing its operations at international level, thus, the company issupposed to consider every country’s rules, regulations and laws in order to perform itsoperations in an effective manner. Apart from the policies, rules and regulations, governmentscould also impose overnight policies through which organizational business may get affected.Thus, considering all these aspects, it is required for the management of H&M to develop theirstrategies in such a manner so that political factors does not affect organizational performancethe desired goals and objectives could easily be attained (Yu & Shi, 2013).In order to reduce cost of production, H&M outsourced manufacturing of their apparels toBangladesh due to cheap labour and raw material costs. But due to weak economic conditions inBangladesh, they do not have many measures in relevance with workplace safety. In 2006,various incidents occurred in Bangladeshis’ factories under which approximately 1100 peoplewere died and amongst those factories, one of those factories was producing H&M’s apparels.Due to this incident, organizational goodwill decreases and this affected their revenues andprofitability. From that incident, organization has taken and promoted various measures inrelevance with workplace safety. Along with this, to uplift their declined image in the market,organization adopted effective measures (Thompson & McLarney, 2017).Economic: Economic factors such as inflation rate, interest rates, exchange rates, economicconditions of countries, etc. As H&M is engaged in various parts of the globe, thus, managingtheir operations as per the different economic conditions in different countries becomes a bitdifficult task for the organization. Due to expansion at large scale, organization is not able to

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