Theories of Sustainable Competitive Advantage and Organizational Resources

Global Strategy & Foresight
London

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
QUESTION 1..................................................................................................................................4
Theories of sustainable competitive advantage...........................................................................4
Question 2: -....................................................................................................................................8
Relationship of Organizational Resources: -...............................................................................8
Pestle analysis of H&M.............................................................................................................10
Question 3: -..................................................................................................................................11
Innovation and Internationalisation: -........................................................................................11
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Global strategy refers to the strategies which focus on the organisation’s globalisations.
These strategies basically cover the areas like global, multinational and international. These
strategies focus on fulfilling the objectives of the organisation in the foreign market. These
strategies help organisation in sustainable competitive advantages and also achieving the aim of
the companies effectively and efficiently.
H & M is the multinational company of Sweden, it is a retailing company and it is basically
known for its quick fashion dresses and clothes for every age people like kids, teenagers, men
and women. Earlier it only deals with the women fashion stores but now it became the global
fashion group. Currently it is dealing in 72 countries with 4200 stores and 177000 employees. It
provides both the facilities to the customers such as online and offline, which benefits the
companies as well as customers.
In this report the theories for the sustainable competitive advantages of H & M, relationship
between the external environment and firm performance and the role of innovation in designing
the strategies in H & M will be discussed.
QUESTION 1
Theories of sustainable competitive advantage
Competition is very important for every business. It helps an organisation in achieving the
sustainable competition. Michael porter influences different types of competitive advantages.
They are cost and different advantage. A competitive advantage refers when an organisation
provides and supplies the same things that are supplied by the competitors but at lower cost and
higher advantage. There is competition in the market and all the organisations want to lead in the
market. Therefore all business applies different techniques to promote their business as well as
earning more profit with compare to another (Liao,2017
Porter’s 5 forces theory:
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The porter five forces theory basically helps H & M Company in identifying the competition
in the market. It helps in identifying the current trend and fashion in the market. The main
motive of this theory is to earn more profitability. The porter five forces theory of sustainable
competitive advantages are as follows:
Threats of new entrants: this force influences the easiness or difficultness in entering in the
fashion industry. The threats of new entrants are very less as new entries requires large number
of investments capital, high technologies, government rules and regulations etc. And is is
considered as a barrier for the new entries. It is difficult for the new entries to enter in the
competition and it is beneficial for the H & M Company, as it can earn large profit and
customer’s loyalty by fulfilling their expectations (Na,2019).
Threats of substitute: substitution refers to the using other products in the place of companies
product. In H & M Company, threats of the substitution are little. In fashion industries,
substitution directly refers to the competition. As the fashion changes very frequently, companies
have to be very fast in implementing the changes in the market, otherwise the chance of
switching brands increases by the customers .
Bargaining power of suppliers: The power of suppliers bargaining increases when they get
another option of the particular products or when the products are available at lower price at
another place. In the H &M suppliers plays an important role as they provide the raw materials to
the company for manufacturing goods. Is is necessary to maintain a strong relationship with the
suppliers. Many a time’s suppliers increase their price of raw materials with the new customers.
But if the relationship of Company and suppliers are good then it may not increases the price.
Suppliers have the power to increase the price of product when the products are very less. Due to
lack of alternatives, they are able to hold the quantities and increase the price without losing
sales (Choi,2018).
Bargaining power of buyers: the bargaining power of the buyers is very high. This force
includes the power of the buyers asking for same quality products in fewer prices. The
bargaining power of the buyers increases with the availability of the products in the same market.
Bargaining power of buyers is a threat for the H & M, because if the buyers are not satisfied with
the price of the products, they can search for the other option in the market. It is important for the
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