H&M's Global Strategy and Competitive Advantage: An Analysis

This report analyzes H&M's global strategy and competitive advantage through the lens of Porter's generic strategies and resource-based view theory. It also evaluates the relevance of innovation and internationalization in designing and implementing H&M's strategy/competitive position.

PGBM135 Global Strategy and Foresight London

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Question 1 -..................................................................................................................................1
Question 2 -..................................................................................................................................3
Question 3 –.................................................................................................................................7
Question 4 -................................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
It is important for company to develop effective and efficient business strategies that is helpful
for improving organisational practices and task. There are different factors that needs to be
consider by organisation for developing significant business as well as improving organisational
practices in order to attain desired goals (Velásquez, 2022). Global strategies of company is
helpful for creative action plan that is effective for successfully and accurately conducting
business practices in global market area. This report is based on H&M company. This company
is performing its practices in retail market area and it is a Swedish Multinational company.
Hennes & Mauritz AB that is well known as H&M company is a clothing brand this is providing
its products and services in large market area. Head office of this company is located in
Stockholm, Sweden and it was founded in year 1947. H&M company was developed by Erling
Persson and it is providing its high quality products and services in world wide market area. This
report includes information regarding the current global positioning of H&M taking in
consideration. In this the theories of competitive advantage and evaluate their relevance to
management. This report consist of the firm's strategy in relation to firm's resources, capabilities
and the firm performance. Apart from this the relevance of innovation and internationalisation in
designing and implementing H&M’s strategy/ competitive position has been evaluated in this
report.
MAIN BODY
Question 1 -
a)
H&M company is known for its high quality and fashionable products that is significant
for successfully meeting desire of customers. It has been analysed that there are different factors
and elements which could be consider as the driver for changes and it will lead to affect
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performance and functioning of business. it is essential for organisation to consider different
trends of fast fashion industry in order to develop right and accurate product that is able to
significantly meet customer requirements (Ferreira and et.al., 2022). Through this it has been
analysed that there are several external events such as Covid 19 that lead to have major impact
on performance and functioning of fast fashion companies. due to Covid 19 pandemic situation
the way of living and conducting practices has been highly changes. This can be consider as the
crucial factor that is affecting and influence the changes in fast fashion industry. It has been
analysed that now a days customers of fast fashion industry is considering online purchasing of
products in order to meet with the needs and wants of customers. This will lead to significantly
affect the way organisation is performing and conducting its practices as well as impact over
sales or profitability of organisation. digitalization and innovative technology has played crucial
role in the fast fashion industry. this could be consider as the crucial aspect that will lead to
increase performance of organisation as well as help in enhancing improving business practices.
through the support of these changes H&M company is able to develop strong and effective
relationship with its customers and lead to attract large number of customers towards business.
There is different new digital technology and platform that is significant for successfully
conducting business practices of fast fashion industry and it will lead to enhance overall
capability of company to attract more customers towards business.
b)
H&M is one of the largest company that is performing its business practices in large
market area. This is well established organisation that is providing high quality products and
services in order to meet needs of customers (Birkinshaw, 2022). The mission of H&M
company is to make the better choice easy as well as attractive in the entire garment industry.
The 5 year scenarios for H&M company includes consideration of sustainable business strategies
in order to successfully and effectively conducting its business practices. H&M company is
planning to consider innovative materials along with the processes that is helpful for making
products more sustainable. This will lead to have positive impact on organisation as well as assist
in overall growth and development practices of business. There are various kinds of products that
is offered by H&M company that is developed with high quality material as well as unique
design for meeting wants of customers. In the next 5 year scenarios for H&M company this is
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considering 50% independently certified materials such as organic or recycle fabric along with
the other innovative practices for meeting with the wants of customers. In the next 5 year
scenarios for H&M company its goal is to increase sustainability in its business practices with
the consideration of innovation practices. This will lead to have positive impact on overall
performance and productivity of organisation as well as help in attaining desired goals.
c)
It has been determined that H&M company includes several threats and opportunities that
will lead to majorly affect its business practices as well as influence the way it is performing its
business practices. There are different trends, disruptive forces along with the constructed
scenarios. H&M is the second major fashion retailer on the planet for a motive. As far as one
might be concerned, the organization's quick fashion strategy is a significant advantage over
competitor as well as has contributed to its achievement. H&M is confronting fierce opposition
from new and old brands like Zara, Gap, Boohoo, etc. competitor are for the most part seeking to
amplify market distribute as well as reduce demand for H&M's products. Internationally,
benefits for retailers are decreasing bit by bit with an increase in the expense of work and natural
substances. Increasing expenses of operation and creation threaten H&M's benefit (Tjahjadi and
et.al., 2022). The success of worldwide companies like H&M depends on the uninterrupted
progression of natural substances and finished products. Lockdowns and quarantine in the event
of another worldwide pandemic in the future can interrupt the stream as well as decrease H&M's
sales as well as benefits.
Online shopping has opened up new roads for fashion retailers. The brand can change this into a
significantly more immense opportunity for itself if it starts totally utilizing the resources
accessible to its. The online business stage is by all accounts arising as the eventual fate of the
retail business, which can take care of H&M. H&M as of now works in excess of 60 countries,
and there are a huge load of new developing business sectors that stay undiscovered by the
brand, particularly in Asian and African states. By investigating these new business sectors, the
association will really need to raise more advantages and grow its buyer base. Lifestyles and
purchasing force of individuals are both expanding across the globe. This builds the interest that
individuals have for marked items as they become more brand perceptive. H&M can exploit this
open entryway by profiting by the more appeal.
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Question 2 -
Competitive advantage is consider as crucial and essential part of organisation that is
significant for effectively conducting business practices. it has been analysed that companies are
conducting different practices with the motive of gaining competitive advantage over other rival
companies. H&M is one of the well known company that is providing high quality products and
services in large market area (Castro and et.al., 2022). This company is conducting its practices
in highly competitive market area so it is very important for this company to develop effective
strategies so that it can gain competitive advantages over other business performing its practices
in same market area. Competitive advantage happens when an organization gets or fosters a
characteristic or combination of attributes that allows it to overcome its rivals. These attributes
can incorporate permission to normal resources, like high grade minerals or economical power or
admittance to profoundly prepared and talented staff HR. New technologies, like robotics and
information technology, are either to be incorporated as a piece of the item or to help making it.
Information technology has become such an unmistakable piece of the advanced business world
that it can likewise add to competitive advantage by outflanking contenders as to Internet
presence. Competitive advantage is an organization's capacity to act in at least one ways that
contenders can not or would not coordinate. It has been determined that there are different tools
and techniques which could be consider by organisation for gaining competitive advantage over
other rival companies as well as enhance business practices. A competitive advantage is
supposed to be manageable when it possess the ability to beat rivals while seeking the blessings
of customers (Samitas and et.al., 2022). Despite the fact that manageability is the ideal case for
advantages, the most well-known competitive advantages are leverage able, and that implies that
an organization can involve them as an impetus to new ones. The competitive advantages that
companies foster will come up short in the event that the costumers don not esteem them as
significant. In this way companies should focus on building client advantages. There are
different theories related to competitive advantages which need to be consider by H&M
organisation for enhancing and improving its practices in market area. Porter’s generic strategies
and resource based theory of competitive advantage is mention below in detail –
Porter’s Generic Strategies
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This is consider as effective and useful model in order to determine and analyse competitive
advantage of companies over other rival companies. Through this model H&M company will be
able to develop effective strategies that is helping for gaining edge as well as enhancing business
practices. Competitive strategy is likewise affected by the particular relative situation inside the
business. Through positioning, organizations can have two fundamental sorts of competitive
advantage that is low cost and differentiation. These sorts of competitive advantage result from
the capacity to adapt to the modern powers better compared to the contenders.
 Cost leadership – This can be describe as the strategy in which company is planning to
offer its products and services at lower cost. This is critical for drawing in enormous
number of customers towards organization just as improving its practices. The Cost
Leadership Strategy is where a business focuses on reducing the cost to pass on the items
or services to a client, ensuring more productive and thusly can add financial backer
regard or put resources into various bits of the business. Cost leadership, when the
organization attempts to turn into the low-cost maker or administrator of the business
(Magee, 2022). H&M company will have to provide its products at the lowest cost in
market area for influence more customers towards business and gaining edge over other
rival companies.
 Differentiation – This can be describe as the strategy of organisation in which it is
planning to provide new and unique kind of products and services for successfully
meeting customer needs and wants. The Differentiation Strategy is the action plan where
a company focuses on separating their products or services from competitor. This
strategy has a wide variety from full item range through to interesting elements inside a
centre item. H&M needs to consider differentiation strategy as this will assist in
achievement competitive advantage over other opponent companies as well as enhancing
business practices (Zhou and et.al., 2022). Differentiation when the organization looks to
be interesting inside the business along certain aspects that are esteemed by purchasers.
H&M company needs to offer different and creative products which is not provided by
any other company in market area for gaining competitive advantage over other rival
companies.
 Focus – This consist of cost focus and differentiation focus strategy in which company is
providing its product and services to narrow market area. The Cost Focus Strategy is an
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advancement of the Cost Leadership Strategy. There are two viewpoints to this strategy.
The "Focus" which alludes to when an association focuses on a specialty market, either
by industry or geography, and transforms into the expert in passing on for that industry.
The "Cost" allude to the association making the thing or organization for a strong cost to
them, comparative as the Cost Leadership Strategy we discussed previously. The
Differentiation Focus Strategy is a headway of the Differentiation Strategy (Biswas and
et.al., 2022). Correspondingly likewise with Cost Focus, there are two viewpoints one
focusing on the Differentiation part of the strategy while various highlights the truth the
business is entering a specialty business centre. H&M company is providing its products
and services to large market area so this will not be effective strategy to provide its
products and services.
Resource based view
This can be describe as the managerial framework that is significant for determining and
analysing different strategies resources of organisation that will assist in gaining sustainable
competitive advantage. This theory of competitive advantage was developed by Barney in yea
1991 and this is significant for providing effective and efficient guidance to company for
enhancing business practices. The resource based view model expects that essential resources
can be heterogeneous and that these resources may not be totally portable. Organization's
resources incorporate all assets, capabilities, processes, attributes, information, knowledge, and
so on, constrained by an organization that empower it to execute strategies that advance
proficiency. This theory of competitive advantage is refer as the way of viewing the firm as well
as developing effective strategies for accomplishing desired goals. The proposed resource based
view structure reasons that resources heterogeneity and fixed status inside an industry allow
organization resources to be valuable, rare, imperfectly imitable and not effectively substitutable.
Such resources will then, at that point, lead to taking advantage of chances and killing dangers,
for supported competitive advantage to be accomplished. It has been analysed that there are
different resources of H&M company that is helpful for meeting needs and wants of customers in
significant manner. Resource-based hypothesis of competitive advantage contends that
innovations accomplish maintainable competitive advantage by aggregating and utilizing
resources to serve purchaser interests in manners that are difficult to fill in for or copy. It
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expresses that effective innovations are resolved not simply by the innovation. The major
resources of H&M organisation includes its assets, capabilities, organisational process, attributes
of firm, knowledge and so on. All of these are significant for determining valuable, rare,
inimitable as well as non substitutive products of respective company that is H&M in order to
gain advantage over other rival companies.
It has been analysed that theories associated which competitive advantages is significant
for could inform H&M managers in their quest to gain sustainable competitive advantage.
Through this it has been analysed that there are different factors of H&M company which could
be consider as its competitive advantage elements in order to enhance and improve business
practices (Bhattacharjya, Lenker and Ghosh, 2022). This will lead to assist performance and
productivity level of respective organisation. through these theory of competitive advantage it
has been analysed that H&M company needs to consider differentiation strategy as this will
assist in improving its capability and potential to gain edge over other rival companies. it has
been analysed that H&M company is developing highly valuable and creative products that assist
in attracting large number of customers towards business. so through the theory of porters
generic strategies manager of H&M company will be able to get accurate set of information for
developing effective and efficient strategies for enhancing and improving business practices.
Through the support of differentiation strategy respective company will be able to successfully
influence large number of customers towards company as well as encourage them to purchase
creative or different products that are not available to any other rival company. Through theory
of resource based views it has been analysed that resources of organisation play crucial and
critical role in order to improve business practices as well as gain competitive advantage. It has
been determined that human resources of H&M company is one of the crucial resources that
assist in enhancing and improving business practices. This will lead to develop high quality
products and services for attracting large number of customers towards company along with this
attaining desired goals. Human resources of respective company that is H&M is highly talented
and capable to successfully and effectively conducting business operations to enhance its
competitive advantage in market area.
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Question 3 –
It is important for H&M company to develop effective and effective firm strategy that is helpful
for enhancing and improving business practices. This will lead to have positive impact on overall
business practices as well as help in attracting large number of customers towards company.
Firms strategy can be describe as the action plan that is consider by company for to improve its
business practices as well as help in attaining desired goals. H&M firm strategy needs to
consider effective marketing of products so that its sales and profitability could be enhanced. In
order to significantly conduct marketing practices it is essential to consider digital and innovative
tools to successfully provide information to customers (Shah, Mat and Ibrahim, 2022). It has
been determined that by exploiting internal resources and capabilities and meeting the
demanding principles of worldwide competition, firms create value for customers. There are
different crucial resources of H&M company that could be consider as its major strength in
order to improve business practices as well as enhancing organisational practices. is estimated by
a thing's exhibition qualities and by its credits for which customers will pay. Those particular
heaps of resources and capabilities that give interesting benefits to the firm are viewed as core
competencies. H&M has a wide scope of thing contributions including clothes, beauty care
products, shoes and adornments for a wide scope of customers. H&M pack moreover have items
like covers, the assortment of jars and pots; light and flame holders and so on. This could be
consider as one of the crucial strategy that is helpful for attracting large number of customers
towards company as well as enhance business practices. H&M products are of high quality that
is significant for meeting customers needs and wants. Core competencies are resources and
capabilities that fill in as a wellspring of an organization's upper hand over rivals. Core
competencies separate an association seriously and mirror its character. H&M has a solid and
diversified presence geographically across the globe (Baena-Luna, Martínez-Román, and Liñán,
2022). H&M has stores in more than 60 countries across 6 continents. H&M has extended in the
new years in potential business sectors like Asia and Africa. Strong overall presence empowers
the association to limit business dangers. Core competencies arise after some time through a
progressive course of accumulating and figuring out how to convey various resources and
capabilities. Considering the mechanical headway in the current day and age, online stages have
become one of the essential roads of showcasing for brands. H&M has figured out how to create
a strong online presence that too one that is spread across various stages. This truly assists with
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online similarly as in store deals for the brand. This could be consider as effective firm strategy
of H&M company to attract more and more customers towards business along with this
increasing sales. H&M company has highly talented human resources that is capable for
developing effective and efficient strategy that will lead to growth and development of business.
Operation resources and limit are focused on performing definitive exercises effectively and
deftly with a base wastage of resources; in this way, these capabilities are connected with
productive collecting and facilitated factors. In the useful point of view, productivity outskirts
happens when a firm endeavors the business resources and capabilities all the more effectively.
In the monetary viewpoint, effectiveness boondocks implies at each risk point, picking a venture
set of the best aside from benefit. Operations capacity is the capacities and information that
empower a firm to be proficient and adaptable makers or specialist co-ops that utilization
resources as completely as could really be expected (Luo, and et.al., 2022). It is important for
respective company to consider financial aspects into consideration with the motive of
conducting business practices and task in significant manner. This will lead to improve
organisational performance. Operations ability is frequently based on processes that have been
benchmarked and codified. For example, H&M firm have pursued total quality management
and international guidelines association projects to enhance quality and efficiency. This company
is focusing on providing high quality and valuable products and services to its customers for
successfully meeting customers wants and increasing business practices significantly.
Additionally, many firms have executed business process re designing to upgrade business
frameworks and work process and to utilize information innovation to improve proficiency. It
has been investigated that actual capital power is a proportion of the firm explicit actual capital
resources that is exemplified in the apparatus and hardware that the firm uses in progress and
composed elements. The productivity with which this is done can essentially bring down cost,
consequently making more worth. Firms with a more elevated level of capital force are relied
upon to have high resource explicitness and possibly greater changeability in capital usage.
Through this it has been determined that H&M company has strong resources and capabilities for
performing its organisational practices in proper and accurate manner in order to improve its
practices. so through the consideration of digital media and innovation strategy respective
company will be able to successfully conduct its business practices and able to influence large
number of customers towards business. There are different social media and digital media tools
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that could be consider for H&M company to provide information its products and services to
customers and attract them to purchase products of respective company.
Question 4 -
Innovation and internationalisation is consider as significant in order to design as well as
implement H&M strategy along with this gaining competitive position. It is crucial for company
to consider innovation as well as internationalisation with the motive of enhancing and
improving organisational practices in proper manner. The innovation process is based on an
organization's capacity to initiate its current and accessible inside knowledge. It likewise relies
upon the firm's ability to acquire knowledge from outer sources through impersonation
strategies, permitting obtaining, partnerships or the acquisition of licenses. Trade strategies
increment the inventive limit of small and medium sized companies by expanding their
admittance to resources like accurate and high quality work. It has been analyse that businesses
capacity to spread across borders has turned into a deciding component in their competitiveness.
Their capacity to create and send off new products, services or inventive processes gives a
competitive advantage, can assist with guaranteeing a profit from speculation and a drawn out
upper hand. Internationalization gives the chance to build their resources by arriving at new
business sectors (Luo, and et.al., 2022). This leverage liberates inward financial resources.
Admittance to outside financing is likewise worked on through trade exercises, giving helpful
admittance to new organizations of potential financial backers more able to partake in innovation
activities. Proximity allows admittance to basic information as far as current and potential
customers 'assumptions. Much research thinks about customers as the fundamental switch of
item innovation. It has been analysed that innovation and internationalisation will prompt have
positive effect over execution of business as it will ready to draw in an ever increasing number of
customers towards business. Innovation is head to forefront and emerging economies, firms put
as much in the information based resources that drive innovation, similar to programming, data
sets, research and improvement, firm-express capacities and authoritative capital, as they do in
real capital, similar to apparatus, equipment or designs. The use of data and correspondence
technologies has become around the world in years and years and new applications arise day by
day. It is very important for H&M company to consider innovation for enhance and improving
organisational practices in proper and accurate manner. The innovation process inside a business
is affected by inward and outside elements and they are formed by entertainers and exercises. All
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through the innovation development, thoughts are changed into new products or services, new
process technologies, new organizational constructions, or new managerial methodologies.
Internationalization and innovation from the job of the business venture, which is related with
strangeness, the advancement of progress, and venture into new business sectors. Innovation
improves and utilizes outside knowledge ability to catch, absorb and utilize outer knowledge
(Luo, and et.al., 2022). H&M company is offering its products and service to large market area
so it is essential to consider internationalism activities while performing and conducting
organisational practices. This will lead to improve the quality of offering products and services
along with these attaining desired goals in accurate manner. Internationally broadened firms can
all the more likely utilize the resources accessible all around the world. The internationalization
likewise instigates the firm's abilities to deliver mechanical innovation, growing better products
and processes, quicker and at lower costs, it additionally helps taking advantage of innovative
development, ensure and fitting the innovation. Internationalization is likewise ready to advance
imaginative limit by overhauling the knowledge gathering process as well as expanding
organizational learning. Thusly, exceptionally global firm has the chance to develop and
simultaneously learn. The H&M company with the capacity to create and send off new products,
services, or imaginative processes which are better than their rivals verify a competitive
advantage, safeguarding a profit from speculation as well as an essential development in long
term. Through the consideration of innovation and internationalization while designing the
business strategy respective organisation that is H&M will be able to provide right as well as
accurate products or services to its customers.
It has been determined that innovation and Competitive advantage are interconnected by
perplexing and multi-layered aspects. Innovation and competitive advantages are the
considerable main impetus to Organizational development. Through the support or consideration
of innovation respective company which is H&M will be able to develop right practices as well
as increase sales of its product in market area. The accomplishment of an organization in the
process of creating competitive advantage lies not just in producing esteem through valuable
resources that are hard to mimic and supplant, yet is connected to an extra work completed by
the organization to cause the competitive advantages to become maintainable over period. A
competitive advantage is practical assuming the organization can keep developments furnished
they satisfy with the condition inimitable and indispensable, upheld by what a few creators is
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innovation itself, to comprehend it as an economical competitive advantage for companies
working in capacity to incorporate something new It as of now not utilized by the opposition
(Luo, and et.al., 2022). Innovation is one of the keys to fostering your business and extending its
seriousness that you can recall for your fundamental arranging process. It can help you with
additional fostering your proficiency, decline costs and become more productive. Since little to
fair estimated organizations ordinarily aren't as fit for benefitting from economies of scale also
that enormous organizations would be capable, the ability to propel ends up being fundamentally
more significant. Companies that can cause innovation a persistent practice by coordinating it
into the genuine approaches to attempting to have a vastly improved shot at succeeding now and
later on. products inside a similar showcasing from every supplier are very comparable and hard
for customers to understand the distinction. Innovation ability is the key usefulness that makes
competitive advantage by seeing or finding the new or better method for contending in an
industry and send off them into the market. It has been analysed that the market these days is
very unique and unstable in nature. What's more the primary explanations for the equivalent are
the always developing contest from the new just as the set up players on the lookout, advancing
preferences of the customers, and the changing standards and approaches of the public authority.
Consequently, in to effectively make due and flourish in the competitive market, it is
fundamental for the brands to think of the item and services contributions that are high on the
part of innovation giving the brand the much required competitive advantage.
CONCLUSION
From the above report it has been analysed that there are different aspects of market that
needs to be consider by organisation for developing strong strategies. Global strategies of
company is helpful for creative action plan that is effective for successfully and accurately
conducting business practices in global market area. Through this it has been analysed that there
are several external events such as Covid 19 that lead to have major impact on performance and
functioning of fast fashion companies. it has been analysed that companies are conducting
different practices with the motive of gaining competitive advantage over other rival companies.
It is crucial for company to consider innovation as well as internationalisation with the motive of
enhancing and improving organisational practices in proper manner.
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