Challenges Faced by H&M in Digital Transformation

This document discusses the challenges faced by H&M in adapting to digital transformation, including the impact on sales and profitability. It also provides suggestions for H&M to overcome these challenges using change management models.

Major Project

TABLE OF CONTENTS
TASK ONE......................................................................................................................................3
1 Identification of one of the challenges that is faced by Hennes and mauritz UK LTD............3
TASK TWO.....................................................................................................................................5
2 One of the suggestions for H&M..............................................................................................5
TASK THREE.................................................................................................................................7
3 The way company can practically implement solution............................................................7

TASK ONE
1 Identification of one of the challenges that is faced by Hennes and mauritz UK LTD
There are various external changes in environment such as changes in taste and
preference of customers, transformation in technology or more use of digital media by people to
have fun, entertainment and strong connectivity with each other. H&M is not able to adapt to
digital transformation that leads to decreased in overall sales volume and profitability of
enterprise. Company is not able to attract more customers thus it have to loss its market share
and competitive positioning of firm. Despite H&M has launched its online stores in 1998 most of
the people think that company has adapted a changes at very slow pace that lead to
dissatisfaction among customers. Therefore it can be stated that digital disruption has eaten
business of H &M in fashion retailer so company needs to take several steps in order to cope up
with external changes of environment for enjoying profitability for longer period of time (H&M
FACES AN UNCERTAIN FUTURE AS IT STRUGGLES TO ADAPT TO DIGITAL, 2019).
So one of the most important challenges that are faced by H&M can be understand with helps of
Bruke Litwin change model such as:
External environment: There were several changes in external environment that was not
adapted by Hennes and Mauritz such as digital transformation, increasing use of social media
and search engine by customers to know about various products and services of different brands
so that they can select best alternative options (Bacevice and et.al., 2020). Therefore company by
not identifying opportunities that are available in external environment have to face reduction in
sales and profitability of enterprise.
Mission and vision statement: H&M mission was to bring innovation and changes in fashion
retail industry and incorporate ethical, fair and equal practices within enterprise. Company is not
able to achieved its mission and vision statement due to ineffective management and adaptation
of external changes of environment.
Leadership: It can be stated that CEO of company Karl john have used transactional leadership
style to manage diverse individual within enterprise. Transactional leadership does not allow
employees to perform task as per their choice as they have to abide to strict rules and regulation
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that are made by company. So, it was one of the reasons that H&M leaders were not able to cope
up with external changes as employees have no freedom to exchanges their creative and
innovative ideas which can contribute in growth and success of enterprise.
Organisation culture: H&M manager has maintained good organisation culture as it have
motivated and inspired each individual to give their best so that company can attained its
respective objectives (Suddaby and Foster, 2017). But it have not encourages active
participation of employees in decision making which reduces their satisfaction level and
creativity thus impacted on overall profitability of firm.
Organisational structure: Firm have rigid organisation structure that needs to be followed by
individual in order to communicate with each other. Employees are not free to share their view,
ideas and opinions to other that hinder open and transparent communication and changes of
external environment within firm.
System: Manager of H&M have planned strict rules, policies and procedure that needs to be
followed by employees while performing their respective task so that standard services or
products can be delivered to customers.
Management practice: HR manager of H&M has not hired appropriate candidate or individual
that can performed better task as it have selected several individual because of pressure that lead
to availability of similar workforce within firm. Thus, HR manager needs to improve its hiring
and selecting process to have diverse individual fort growth and success of enterprise.
Working culture: Employees of H&M are provided work cultures that have strict policies and
procedure thus most of the individual resist to accept changes such as digital transformation
(Chang, 2016). So, it has provided opportunities to other companies in fashion retailer to expand
their business operation.
Task and skills: In H&M there is lack of skills within enterprise for performance of various
task as HR manager have recruited employees that have similar skills, knowledge and creativity
that creates barrier in effective adaptation of several changes.
Individual and task need: In order to promote products and services through digital technology
H&M needs employees that have good command on new technologies thus less availability of
such individual within firm have created challenged in smooth operation of business.
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Motivation level: Manager of H&M has make used of expectancy theory to motivate several
individual that means person that put more efforts will be promoted in the organisation (Vidgen,
Shaw and Grant, 2017). Therefore such theory have less motivated or influenced people to
accepted external changes of environment thus causing threat on operation of business.
Individual and general performance: It can be illustrated that company in not able to changes
its operation as per demand, needs of customers and development in technology that have
provided chance to competitors to expand their business operation through increasing their
presence in online. In 2018 H&M has to close its 170 stores due to financial crises and lower
sales so performance of firm is much lower than its competitors in market.
TASK TWO
2 One of the suggestions for H&M
From the above analysis of one of problem faced by H&M that is ineffective adaptation
to external environment or transformation in digital technology which have lead to reduce
customers satisfaction and profitability of enterprise. Manager of H&M by making use of
Mickey 7S key change management model or framework can effectively remove challenges of
business and contribute toward better operation of firm in retail fashion industry. Such as:
Strategy: H&M manager needs to plans various strategies that it can use to adapt to recent
technologies or external changes so that firm can regain its market share. It have to planned
various alternative option which can be used by enterprise such as to organised training and
development program so that employees can have sufficient knowledge to delivered qualitative
services to end users (Van Dijk, 2017). It should also decide or plan about number of resources
or skills present and required so that it can hired individual that have expertise knowledge in
digital technology. Manager should also decided types of technology or social media should be
used that is Facebook, twitter and instragram, email marketing and content or information that
needs to be uploaded so that maximum number of individual can be attracted to make purchased
of products over other competitors in market.
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Structure: Company has to changes its organisational structure or adapt to flexible organisation
structure so that several changes of external environment can be incorporate within firm in
limited time frame and cost. Manager needs to provide clear direction about task, roles and
responsibilities that needs to be performed by particular person in organisation for better
achievement of standard objectives. All such will contribute towards effective coordination,
cooperation of efforts of different individual towards common goals of H&M that is better
services to customers and increased profitability.
System: From the above analysis it have been learned that H&M manager have clearly stated
about procedure and policies that needs to be considered by employees while performing their
respective duties in organisation (O'Brien and Cairns, eds., 2016). Well defined system of
procedure that needs to be followed by individual can helps in maintaining quality of products
and services delivered to customers through online.
Shared values: Company should have to promote ethical practice that is moral principle and
ethical values within enterprise for satisfying needs of various individuals. Shared values and
ethics of firm contributed in building strong brand image and retention of employees within
firms for longer period of time. Manager needs to values or give respect, recognition to peoples
that have put their hard work for growth and success of firm to increase performance and more
customers’ satisfaction.
Styles: Leaders of H&M can also make use of democratic or situational leadership styles in order
to guide and motivates several employees to accept changes of environment for growth and
sustainability of firm in fashion retail industry. Leaders by encouraging views, ideas and opinion
of people is able to motivate and influenced them to adopted to external changes of environment
so that company can earned more profitability and market share. Democratic leadership styles
makes employees more satisfied and happy thus motivated them to put their best to make
optimum utilisation of available opportunities.
Staff: HR manager of H&M needs to improve its practices while hiring or selecting various
individual in firm so that it can easily perform its task by using innovative technology. HR
manager should not pressurise to fill vacancy rather its should focus on select best candidate
among pool of individual so that qualitative services can be render to end customers.
Skills: It can be illustrated form above evaluation that individual or employees of H&M have
similar skills, knowledge that result in skill gap within firm so HR manager needs too hired
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individual that have innovative and creative ideas, more skills and knowledge about recent trends
and changes, preferences of customers (H&M: Challenges Adapting to New Business Trends,
2019). HR manager by development of skills or hiring people that have differentiate skills can
contributed in optimum utilisation of digital media to deliver services to customers.
TASK THREE
3 The way company can practically implement solution
Manager of H& M can make used of Kotter model of change to effective implement
solution or changes in organisation so that existing as well as new customers are attracted to
make purchased of products and services of its firm rather than other competitors in fashion
retailers. Therefore several stages that need to be considered by manager of H&M while
implementing solution for growth and expansion of business are illustrated below:
Increased urgency: The first and foremost steps that needs to be taken by manager of H&M is
to aware employees of company that why it required to make use of digital media in order to
serve large range of customers. Manager needs to conduct market researched in order to find
future opportunities and threat in external environment so that several changes can be planned in
advanced for smooth operation of business (Strähle, 2017). It should promote more convincing
reasoning so that employees are motivated to think about use of more digital media to render
services to customers.
Build team: The next steps that need to be taken by manager of H&M is that it needs to
coordinate and cooperates work of different individual towards common goals. Manager in order
to bring changes needs to build strong relationship, encourage employees to work as a team
rather than individual for achievement of specific objectives.
Get correct vision: Manager needs to create a vision that organisation needs to achieve within
specific time frame so that effective strategies or plans can be made for growth and expansion of
business. Employees can be guided or provide direction regarding task that they needs to
performed thus there will be less or minimum error in delivering services to customers by use of
digital media.
Communication: Another step that needs to be incorporated by manager of H&M is that it has
to communicate or exchange information about vision and mission of company to employees so
that they can feel important or crucial part of organisation.
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Removal of obstacles: H&M manager in advanced have to identified key obstacle or barrier in
effective implementation of digital technology in firm in order to find appropriate solution or
recommendation to remove barriers or obstacles (Guercini, Bernal and Prentice, 2018). Such as
employees that are resisting to accept changes of external environment or digital technology so
manager have to planned innovative motivation method which can induce them to adapt changes
for survival and growth of firm.
Short term goals: Manager by creating short term goals motivate employees to takes certain
steps so that particular goals can be attained and they will be get reward and recognition. It is
best method to engage employees of H&M in accepting digital technology to delivered better
services to customers.
Consolidate improvement: In this stage of implementation of change manager of H&M needs
to monitor and evaluates performance and outcome of online presence of company in order to
take corrective action to remove challenges of business.
Incorporate changes: It is last step which need to be followed by manager in order to remove
challenges for long time or promote long term sustainable business (Van Dijk, 2017). It should
develop a culture where employees are ready to accept changes or innovation in technology that
can be used to deliver services to final consumers.
REFERENCES
Books and Journals
Bacevice, P and et.al., 2020. Research in Organizational Change and Development.
Chang, J .F., 2016. Business process management systems: strategy and implementation. CRC
Press.
Guercini, S., Bernal, P. M. and Prentice, C., 2018. New marketing in fashion e-
commerce. Journal of global fashion marketing, 9(1). pp.1-8.
O'Brien, H. and Cairns, P. eds., 2016. Why engagement matters: Cross-disciplinary perspectives
of user engagement in digital media. Springer.
Strähle, J., 2017. Green fashion retail. In Green Fashion Retail (pp. 1-6). Springer, Singapore.
Suddaby, R. and Foster, W. M., 2017. History and organizational change.
Van Dijk, J. A., 2017. Digital divide: Impact of access. The international encyclopedia of media
effects, pp.1-11.
Vidgen, R., Shaw, S. and Grant, D. B., 2017. Management challenges in creating value from
business analytics. European Journal of Operational Research, 261(2). pp.626-639.
Online
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H&M FACES AN UNCERTAIN FUTURE AS IT STRUGGLES TO ADAPT TO DIGITAL,
2019, [Online]. Available Through:<https://ecommerceiq.asia/hm-struggles-digital/>.
H&M: Challenges Adapting to New Business Trends, 2019, [Online]. Available Through:<
https://gradesfixer.com/free-essay-examples/hm-challenges-adapting-to-new-business-trends/>.
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