Strategic Problems in H&M Sector

This case study discusses the strategic problems facing the overall sector of H&M, including intense competition, social changes, and development of unpopular items. It also provides solutions to these challenges and suggests implementing technology investment as a practical solution for H&M.

INTEGRATED CASE STUDY

Table of Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
Question- 1 Three strategic problems facing overall sector of H&M..........................................2
Question-2 Three challenges facing Hennes & Mauritz UK Ltd.................................................3
Question-3 Three solutions to challenges facing Hennes & Mauritz UK Ltd.............................4
Question-4 One specific solution could practically implemented by company...........................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................6

INTRODUCTION
The current report is based on H&M Ltd, is Swedish international clothing retail firm
known for their fast fashion apparel for children, men, teenagers, women and also for kids. This
study explains 4 questions that are related to chosen firm as it examine three challenges facing
organization and its sector. Furthermore, this report justified three solutions and defines how
company could practically implement one solution from those listed in question 3.
MAIN BODY
Question- 1 Three strategic problems facing overall sector of H&M
Issue- 1
Intense competition is one of the strategic issues facing by fashion sector, that impact on
its business practices and productivity. This industry is known as an extremely competitive
sector, it has grown rapidly over period, around 1980 a rough amount of 34 M individual were
employed, recently it has increased to approximately 80 Million. Changes in consumer behavior
& competitive arrangements, a combination of technologies changes and evolution of various
production costs are the main reason behind high competition that directly impact on apparel
sector productivity and companies working under it.
Issue- 2
Social changes is another strategic problem facing by apparel sector that directly affect its
production procedure as well as profit margin negatively, because when these types of changes
occurred it bring many issues for industry. Thus, it put pressure to modify their whole businesses
practices as well as activities according to needs and requirement that consumes a lot of efforts
and time, which is not suitable for Fashion industry.
Issue- 3
On one of the biggest issue facing fashion sector is development of some items which do
not command a big following; it leads to these goods staying in distribution outlets for a long
period leading to stagnation of capital. Losses are incurred as limited sales made are unable to

meet production costs of item. It can be very difficult for organizations under fashion sector to
gain revenue rather than before, because this issue affect negatively on profitability and sales of
fashion industry. Without commanding a large following, it is impossible to gain increase profit
margin and consumer base.
Conclusion
From above analysis, it has been concluded that Fashion sector face three major strategic
issues. They can overcome with it by using and developing the best solutions after conducting
deep analysis that is really very important for them.
Question-2 Three challenges facing Hennes & Mauritz UK Ltd
Challenge 1
Due to intense competition within sector in which H&M operate, directly affect
production operation as well as sales (Dubey, Gunasekaran and Childe, 2019). To gain
competition advantages and become a global leader, large brands under fashion industry give
tough competition to each other as they adopt new and advanced technologies within operational
function in order to improve productivity level rather than before. H&M feel more pressure from
this kind of environment within sector because it threatens them to lose their market position
which is not suitable for company.
Challenge 2
Changes in socio culture create challenging situation for H&M with which they can deal
because it directly impact on overall business practice and performance negatively (Daniels and
et.al., 2017). A number of modification on socio cultural level have impacted how people shop
and make their purchasing decisions or which brands they like to shop from. It is one of the
biggest challenges facing by H&M as an effect of a strategic issue. Consumers do not just want
convenience but also require low prices with better quality that satisfied their needs in effective
manner.
Challenge 3
Due to lack of investment in new technologies, H&M face challenge to beat their
competitors and gain consumer attention towards purchasing products more than past few years.

Without advanced technology firm was unable to increase the level of production operation in
effective manner as it impact on sales and financial performance negatively (Amankwah-Amoah,
Osabutey and Egbetokun, 2018). Organization reported their worst sales on record in 4 quarter of
2018, they increasingly losing to fast fashion competitors like ASOS and ZAR, who have
increase up their supply chain to keep on top of trends by adopting advanced technologies.
Conclusion
From above analysis, it has been summarized that H&M face strategic issues due to lack
of investment in new technologies, instance competition within fashion industry and changes in
socio culture. These three challenges affect H&M negatively as it can be decrease their profit
margin rather than its competitors.
Question-3 Three solutions to challenges facing Hennes & Mauritz UK Ltd
Solution 1
In context of first challenge or strategic issue, H&M must take right action and be aware
of competition in order to be on par with new fashion and trends (Yang, Song and Tong, 2017).
The best think they can do to keep competitive within its sector is developing plan for
conducting market research and hire skilled applicants to build up strong team who are able to
continue this plan. With the help of market investigation in every season, organization is able to
analyze the needs of consumers and collection information about technology enhancement,
which they can use to enhance process of supply chain. As it help to gain competitive advantages
more than Zara and other brands operating within same sector since for so long.
Solution 2
In context of second challenge, H&M can analyze the changes in socio cultural level
because it helps to sustain organization within market place for longer and keep their consumers
loyal with them. They can bring affordable and good quality material to produce their products
for consumers. It will aid to attract new customers and also support to retain the potential one for
long period.
Solution 3

Hennes & Mauritz Ltd UK recommended putting more money or investment in
technology to integrate their business procedures across board. It helps to strengthen their brand
image within market and enhance productivity level rather than past few years.
Conclusion
The above solutions are made after analyzing issues or challenges faced by H&M which
has been identified by using PESTLE and SWOT analysis models.
Question-4 One specific solution could practically implemented by company
Hennes & Mauritz UK Ltd can practically implement one solution from those listed in
above question that is technology investment because it will help them to gain competitive
advantages, increase consumer base and enhance productivity as well as profitability level rather
than before. It is one of the best solutions company can focus on it that help overall business
practices and performance. The investment in new or latest technologies to speed up their supply
chain and growing online business will be quite beneficial in term of increasing sales and
profitability. In recent time, people prefer to purchase products from online instead of outlets
because it saves their time and efforts. Via online shopping consumer are able to find out the best
outfit for themselves as well as their family members as there are number of better options
available for each occasion either its birthday party or wedding. H&M can implement
technologies while offering products, as it allow management to deliver items according to the
needs and preferences of consumers. It strengthen brand to keep pace with digitalization and
permit meet evolving target market demand. Organization need to spend a lot of money to
upgrade their online offering as well as logistics infrastructure as well (Bini and Bellucci, 2020).
Furthermore, H&M can develop an application where they offer its latest and fast fashion for
people in order to keep them loyal with their brand for longer and retain with them forever.
Conclusion
From above analysis, it has been determined that by implementing and investing in new
technologies within supply chain and other business practices H&M gain many benefits.

CONCLUSION
It has been concluded that by implementing new technologies and focus on consumer
needs H&M gain advantages as result it increase profit margin, operational efficiency and
productivity level.
REFERENCES
Book and Journals
Amankwah-Amoah, J., Osabutey, E.L. and Egbetokun, A., 2018. Contemporary challenges and
opportunities of doing business in Africa: The emerging roles and effects of
technologies. Technological Forecasting and Social Change. 131. pp.171-174.
Bini, L. and Bellucci, M., 2020. Business Model Disclosure in Sustainability Reporting: Two
Case Studies. In Integrated Sustainability Reporting (pp. 117-150). Springer, Cham.
Centeno, M.A., Kohli, A. and Yashar, D.J., 2017. Unpacking states in the developing world:
Capacity, performance, and politics. States in the developing world, pp.1-34.
Daniels, H and et.al., 2017. Design as a social practice: The design of new build schools. Oxford
Review of Education. 43(6). pp.767-787.
Dubey, R., Gunasekaran, A. and Childe, S.J., 2019. Big data analytics capability in supply chain
agility. Management Decision.
Fernie, J. and Grant, D.B., 2019. Fashion logistics: Insights into the fashion retail supply chain.
Kogan Page Publishers.
Kennedy, A.M., Kapitan, S., Bajaj, N., Bakonyi, A. and Sands, S., 2017. Uncovering wicked
problem’s system structure: seeing the forest for the trees. Journal of Social Marketing.
Yang, S., Song, Y. and Tong, S., 2017. Sustainable retailing in the fashion industry: A
systematic literature review. Sustainability. 9(7). p.1266.
Online
Inside H&M’s $4 Billion Inventory Challenge. 2019. [Online]. Available through:<
https://www.businessoffashion.com/articles/professional/hm-inventory-retail-supply-
chain>