H&M Analysis Of strengths and weaknesses

Running head: H&M ANALYSIS
H&M Analysis
Name of the Student
Name of the University
Author’s Note:

1
H&M ANALYSIS
1. Porter’s Five Forces Analysis of H&M Analysis
Porter’s Five Forces is a specific model, which eventually identifies as well as
analyses five distinct competitive forces for shaping the industry and helping to determine the
industrial strengths and weaknesses (Youell 2013). This type of analysis is being utilized for
identification of the industrial structure for the purpose of determining corporate strategies.
Porter’s Five Forces analysis for the organization of H&M is provided below:
1.1 The Threat of New Entrants
H&M is an UK based organization and the market of UK is not at all saturated. There
exists no major barriers to entry within distribution of lower capital that is needed for opening
a brand new store. The fashion products even comprise of a higher margin and since there are
several substitute products that can replace brands (Jamshidi 2019). Several fashion retailers
are present, where the customers can get better quality products with lower price.
1.2 Bargaining Power of Different Suppliers
This particular force is not at all high for H&M as there exists several suppliers in
different countries with lower labour costs (Danemo 2018). Hence, the retailers could easily
and promptly impose different demanding conditions since they comprise of higher power
than the suppliers.
1.3 Bargaining Power of Buyers
The respective switching costs are lower in H&M and price is the most vital variable
for consumers (Juliusson 2015). It is quite vital to check if the volume of the purchase is
smaller and a single consumer is completely irrelevant for the organization.

2
H&M ANALYSIS
1.4 The Threat of Substitute Products
The threat of different substitute products is always high for H&M as there are several
popular brands and shops in the UK fashion world (Arrigo 2018). They should take up some
of the most basic and significant steps for dealing with the threat of substitute products.
1.5 Intensity of Rivalry
Several local, international and national competitors are present for H&M and hence
the opportunities towards growth are not at all high, since the sector might get matured
eventually (Jamshidi 2019). Moreover, the price variable is highly influential within
customers, while consideration of options.
2. The Business Model of H&M
2.1 Customer Segments
Customer segments of H&M include demographic customer segment, geographic
segment, behavioural customer segment and smart customer segment. It refers to the fact that
they design clothes for different age groups in various countries with different behaviours
(Caro and Martínez-de-Albéniz 2015). Moreover, they are also considering smart customer
segmentation, which means that they have divided the customers as per several categories
and then mixed and matched different types of available combinations.
2.2 Value Proposition
The value propositions of H&M to the consumers can be considered by following on
trend clothes at the most affordable price (Mo 2015). The retailer eventually offers a
complete range of different clothing staples for swimwear, accessories, outerwear, footwear
and several others. For maintenance of value proposition, they have considered outsourcing
of products with experienced logistics (Khasbani 2018).