Managing across borders

The report explains about the internationalization of H&M into Asian market. The report has been prepared to understand the concept of internationalization and the process of the company in the foreign market. This report takes thee concern over the various strategies and policies which have been followed by the company to enter into the international market as well as the few challenges which have been faced by the company in this paper.

Running Head: Managing across borders
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Project Report: Managing across borders

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Executive summary
The report explains about the internationalization of H&M into Asian market. The
report has been prepared to understand the concept of internationalization and the process of
the company in the foreign market. This report takes thee concern over the various strategies
and policies which have been followed by the company to enter into the international market
as well as the few challenges which have been faced by the company in this paper.
On the basis of the study over H&M and the Asian market, it has been found that the
performance of the company is better and the internationalization process have helped the
company to achieve the goals and expand the business and the activities at new markets.

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Contents
Introduction.......................................................................................................................4
Company overview...........................................................................................................4
Internationalization...........................................................................................................5
Strategies and process of the company.............................................................................6
Challenges and problems of the company........................................................................9
Recommendation and conclusion...................................................................................10
References.......................................................................................................................11
Appendix.........................................................................................................................13

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Introduction:
The report has been prepared on internationalism topic. For this report, a company has
been focused. The company must have entered into international market and running the
business at a great and significant level at international market. In this report, it has been
studied that how the company have entered into the international market? What were the
strategies of the company? What challenges have been faced by the company and how did it
overcome with it? In this report, a company H&M group has been evaluated. The company
has been internationalized a lot and running its business successfully at international level.
The H&M group has been chosen for the study because of two reasons: first is the data
availability and accessibility on H&M group was easier and second point is that this company
is related to fashion industry. Fashion industry is always enhancing industry which gets
change with the time and market share of the fashion industry is also higher.
In this report, it has been discussed that what the main goals of the company were.
How the company has chosen the policy of internationalism and how did it enter into the new
market? The study would make it simple to understand the international market and the
process of a company to enter into international market and operate the business at better
level. This report has been prepared to understand the concept of internationalism. H&M is a
Swedish company which has covered all the Asian market to retail the fashion products of the
company.
Company overview:
H&M (Hennes and Mauritz) is a Swedish international company which is operating
its business in retailing the fashion products. The company’s main products are clothing
segment in man category, woman category and child category, the company and its
subsidiary companies are operating in more than 62 countries to sell the products along with
the 4500 stores worldwide. Annual report (2017) of the company explains that there are
132000 people who are working with the company to achieve the common goal of the
company. H&M is the second largest company in global clothing retailer company. The
company is offering its product to the customers through online business as well.
The products of the company are clothing of man, woman, teenage and child and the
various accessories such as shoes, fashion accessories etc. The subsidiaries company of the
company are Monki, COS, Cheap Monday, ARKET and other stories. The company has been

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founded in 1947 by Erling Persson. The company is registered into the Stockholm Stock
exchange. In 2008, the company had just announced in a media conference that the company
would sell the furniture options as well in the market. The company has expanded its market
into Asian market and Middle East with the brand name of COS, Weekday, Cheap Monday
and Monki (About us, 2018). The company has been awarded as 21st most valuable global
brand and it has been found that the company is operating its activities and the business at a
very significant level.
Internationalization:
Internationalization is a procedure in which the organizations enhance their operations
and the market at the international level. The enterprises involvement in the international
market is called internationalization. However, no economist and managers have briefed abut
perfect definition of internationalism. This process is just followed by the company to
diversify the market and enter into the new market to achieve the goals and objectives of the
company (Wingborg, 2006). There are numerous theories of internationalization which
explains that why the companies enter into the new market and at the international market.
These theories explain that how could an organization enter into the international market.
The internalization theory explains about the absolute cost advantage, gravity model
of trade, comparative cost advantage, Heckscher –Ohlin model, Leontief Paradox, Location
theory etc. These theories explains that how could a company easily enter into the
international market to grab the opportunities and achieve the goals and objectives of the
company. There are various decisions of entering into the international market on the basis of
that it becomes easier for an organization to enter into the foreign market (Berrell, Gloet and
Wright, 2001).
Firstly, it is important for an organization to decide that which foreign market is the
best choice among all the available options to enter into the market and operate the business
of the company. The foreign market must be decided by the company after evaluating all the
related parts of the company and thus make a decision that which market is the best option to
enter. Further, the timing of the entry must also be decided by the company (Wild, Wild,
Han, 2008). Company should not enter too earlier before the other companies and it should
not enter tool late is the market. In both the condition, the company would lose the market
share and the objective of the company could not meet.

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Further, the organizations should evaluate the scale of entry. It evaluates that on
which level the company should enter into the market, the company should decide the large
scale, small scale etc on the basis of the market and the objectives of the company. The
company should also choose one options among the various different methods which are
available in the market (Wigley, Moore, 2007). These different methods of foreign entry are
exporting, projects, franchising, licensing, and establishing joint venture and host country
firm.
On the basis of the internalization study, it has been found that if the organization
follows the proper strategy and the process of the company than it becomes quite easier for
the countries to enter into the international market and perform the study into the
international market (Zhu and Dowling, 2000).
Strategies and process of the company:
Strategies are the plan which is prepared by the company to prepare a plan and
implement it in better way in an organization. Strategies and policies of an organization
measure that how well the company is performing and what would be the future performance
of the company on the basis of the strategies. The strategies and policies of H&M has been
evaluated which has been used by the company to enter into the Asian market and grab all
over the Asian market.
Verbeke and Yuan, (2007) explains that the retailing companies only enter into the
international market and the foreign markets to promote the products of the company and
enhance the sales growth of the company. On the other hand, manufacturing companies enter
into the foreign market to rescue the production cost and enhance the production capacity of
the company (Trompenaars, 1997). According to the study over the H&M, it has been
recognized that the company is following the same rule. The H&M has entered into the Asian
market and opened the store into the Asian market to enhance the sales of the company.
According to the recent news and annual reports, it has been found that the profitability level
of the company has been enhanced by around 183% after entering into the new markets and
due to the various new stores of the company (Pitelis, 2007).
In last 30 years, the company has a great marketing mix as well as low end image.
Until that time, the company has not achieved any height. Although, in 1980, the formers MD
of the company has made few changes into the strategies and the producer of the company to

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improve the quality, reduce the operational cost, bring new items in the market and manage
the market presence of the company (Hammarkvist, Håkansson and Mattsson, 1982 ). New
design directors have also been employed by the company to manage the presence.
Currently, the main concept of the company is to offer the quality and fashion t the
customers of best quality in better prices. The strategies of the company explains that these
concepts could be achieved by the company through entertaining few middleman, purchasing
huge stock, in depth idea about the fashion, textiles, current trend, designs, right product in
right market, efficient distribution etc. (Market and expansion, 2018)
In case of H&M international strategy, it has been evaluated that the company has
prepared a proper plan to enter into the Asian market and the preparation on entering into the
Asian market was followed by the company from a long time (Oviatt and McDougall, 2005).
The company has firstly evaluated the foreign market and discussed with the top level
management of the company about the foreign market, their culture, their strategies, choice of
the people etc. (Trompenaars,1997).
The company has entered into the partnership and offers the franchise business in the
host countries to manage the business of the company. In 2006, the company has decided to
change the strategy of general expansion to the franchise and partnership expansion strategy
and franchise strategy (Steen and Liesch, 2007). Franchise strategy explains about a business
in which a license is provided to a business to privilege to the franchisee to offer an
assistance to organize, merchandise, trade, manage and marketing and do the business in
return of the monetary amount.
Franchise is kind of business which is onward by the franchisor of a service, product
or methods which are obtained by the dealer through the strategy of distribution. Franchise is
one of the better options for the companies to enter into the foreign market as through this
policy, they need not to invest lot in the operations and the set up of the business and the risk
involvement of the company also becomes lower in the case. The company has expensed into
the following foreign markets till 2007.

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(Mtigwe, 2006)
However, company has also entered into the various markets after 2007 and the
business in each market is better. According to the new franchise business of H&M, it has
been found that the company sells the cloth to its partners on the wholesale basis which kept
the stock and sells the stock through its stores (Deresky, 2010). Till now, the company as
captured almost entire Asian market, the company has planned the strategy in such a way that
the company could achieve the heights with minimum investment (Entrants, 2018).
The franchise strategy of the company has helped the company to enter into the
market and the profitability level of the company has also been enhanced. The firm has
focused on the politically stable developed foreign country and the developing foreign
country to enter. It has been focused by the company has chosen the countries which which
has a good market system so that the company could set a good relationship among the total
cost, risk and the benefits of the company (Johanson and Vahlne, 2003).
In Asia, the company has firstly entered into the chain market which is still
developing the economy of the country. The country is highly growing its market with spend
and the purchasing power of the developing country’s people (Bartlett, 2011). In the same
way, the entering into the Asian market was quite helpful for the company to manage and set
a better relationship among the cost, risk, profits, benefits etc of the company (Ball et al,
2008).
However, on the basis of the study, it has been found that the H&M has entered into
the Asian market much later. Before the entering into the Asian market, the various other
fashion retailing companies have entered into the market and due to which the performance
of the company has been better (Swoboda and Anderer, 2008). The late entrant of H&M has
affected the market share and the profitability ratio of the company. Late entrant is the

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position where the company entre into the foreign market last even after entering the other
companies of the same industry in the market.
During the whole process of expansion and internationalization of H&M in Asian
market, it has been found that the H&M directly evaluates and investigates over the foreign
market in order to have a great evaluation and a better control on each factor if the company.
On the basis of the current report, it has been evaluated that the performance of the company
has been better and the marketing policies, strategies etc of the company has also been better
(Chetty and Campbell-Hunt, 2004).
On the basis of entire evaluation on the performance, internationalization, and the
other strategies of the company, it has been found that the comapny has impacted a great
impact on the Asia fashion industry. Though, it has been evaluated the company was late
entrant in the market, still, it has managed to manage the performance and the attractiveness
level of the company in the market.
Challenges and problems of the company:
Challenges’ and problems which have been faced by the H&M while preparing the
strategies and implementing the strategies to enter into the foreign market has been studied
further to manage and evaluate that how the internationalization process make an impact on
the organization. Ghoshal and Westney, (2005) explains that the internationalization and
globalization are used by the companies when explaining about the new entry of the country
at international level and in the foreign market. On the basis of the study over the
internalization process, it has been found that an organization is required to manage the
various factors while entering into the foreign market (Dawson, 2007).
The main issue with the internationalization process is to identify the perfect time in
which the comapny should enter into the new market. Further, the main issues with the
internationalization process are to determine that what the perfect foreign market to enter is.
This evaluation is quite tough for the company to measure and make better decision about the
performance of the company (Forsgren, 2002). To decide that which foreign market is the
best choice among all the available options to enter into the market and operate the business
of the company is also a challenge for the company.
The foreign market must be decided by the company after evaluating all the related
parts of the company and it is a big challenge for the company as the data are not enough to

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evaluate the process of the company. Further, the timing of the entry is also a challenge for
the company. In case of the above challenges, the company would lose the market share and
the objective of the company could not meet.
In case of H&M, it has been found that the company was late entrant in the market. It
is the position where the H&M has entre into the Asian market after entering the other
companies of the same fashion industry in the market. Due to this problem, the market base
and the opportunity of the company has been hampered at a great level. Hovered, it has also
been found that the company was using the different strategies for entering into foreign
market before 2007 and company has faced few issues in that strategy (Doyle, Moore amd
Morgan, 2006). Thus the company has planned to switch the strategy to other strategy.
The company has adopted the franchise strategy further. Franchise strategy explains
about a new business type in which a company is required to take a license which is provided
by a business to privilege to the franchisee to offer an assistance to organize, merchandise,
trade, manage and marketing and do the business in return of the monetary amount.
With the help of the franchise business, the performance and the position of the
company has been improved a bit (Dawson, 2007). It has been found through the analysis on
the market and the company that the few challenges have been faced by the comapny in last
few years. However, the policies and the strategies of the company were enough strong which
has planned the new plans for the management of the business and reduce the level of the risk
of the business.
Recommendation and conclusion:
The research paper has been evaluated and it has been found that the internationalism
is a huge topic nowadays. Every company is trying too adopt the strategy of internationalism
to enhance the market share and achieve the goals of the company. In the study, the
evaluation has been focused on H&M which has successfully entered into the international
market (Asian market) and the company is running its business at a great level. According to
the report, it has been found that the company has enter into around 68 countries at a great
level. the company has adopted the franchise strategy which has helped the company to
manage the business as well as the performance of the company. However, it has been found
that few issues such as late entrant has been faced by the company and the strategies and
plans have helped the company to enhance the sales turnover and the profitability level of the

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company. The company has been internationalized a lot and running its business successfully
at international level.
Further, on the basis of the evaluation, it has been identified that the main goals of the
company are to enhance the performance and measure the position of the company. The
company has planned the strategies and the plans after evaluating all the foreign market
through direct evaluation. This explains that the international market and the process of a
company to enter into international market and operate the business are quite better.
The performance and the study explains that the H&M is better option for the
company and the internationalization process of the company is also attractive.

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References:
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Ghoshal, S., and Westney, D.E., 2005, “Organization Theory and the Multinational
Corporation”, 2nd edition, Palgrave McMillan.

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Hammarkvist, K.-O., Håkansson, H. and Mattsson, L.-G., 1982, ”Marknadsföring för
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perspective”, Management International Review, Vol. 47, 2007/2.

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Wigley, St., Moore, Ch.M., 2007, “The operationalisation of international fashion retailer
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Appendix:

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