SWOT Analysis and Porter's Five Force Model for H&M

The assignment is a comprehensive analysis of H&M, including a SWOT analysis that identifies the company's strengths, weaknesses, opportunities, and threats. Additionally, it applies Porter's five force model to analyze the competitive forces within the industry. The assignment aims to provide insights into H&M's business environment and potential competitive advantages.

Managing Information and
Technology

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
1. Introduction to organisation, current business strategy and its products and services ...........1
2. Porter's 5 forces analysis.........................................................................................................2
(Source: Porter's five force model, 2018)...................................................................................4
3. Analyse any two primary activities and two support activities in Porter's value chain and
also evaluate the strength and weaknesses of your chosen business..........................................4
4. Build the understanding gained by the above activities, summarize and reflect on how the
business could deploy IT.............................................................................................................7
CONCLUSION................................................................................................................................8
REFRENCES ................................................................................................................................10

INTRODUCTION
Information and technology is use of computers as well as software managing
information. Computers play crucial role in IT and result in making operational activities of
business easier and faster (Allsop and et. al., 2015). Moreover, it also assist them in performing
work in more effectual manner. This assignment is based on H&M which is retail sector
organisation founded in 1947 and its founder is Erling Persson. Respective organisation deals in
clothing and accessories of men's, women's as well as childes at worldwide level. This report will
going to discuss current business strategy, products and services of H&M. Along with this, for
analysing competitive environment porter's five force model will be conducted. In the end of
project, role of Information Technology in different business activities will be discussed along
with innovative ideas that can use for performing more effectively.
TASK
1. Introduction to organisation, current business strategy and its products and services
Introduction to organisation – Hennes & Mauritz is an multinational clothing-retail
organisation popular for its fast fashion clothing of men, women, teenagers and children. H&M
is an associated organisation which operates in approx. 62 nations with 4500 stores. It is the
second largest global clothing retailer and also have online presence in approx. 33 countries.
Most of the stores are in United Kingdom, Germany, United States, France, Spain and Sweden

and these are in every continent (Avgerou and Walsham, 2017). Mission and vision of H&M are
as follows :-
 Vision – Business operations of H&M are aimed to run or do their activities in the
manner that it will be economically, socially and environmentally sustainable. With such
sustainable activities it mean fulfilling needs and wants of both present as well as future
generation.
 Mission statement – Purpose of H&M is to offer fashionable and quality products to their
customers at best price. Respective organisation believes that quality of offerings play
crucial role in meeting or exceeding expectations of customer’s. H&M is continuously
working for making their products better by doing production within good working
conditions, as well as with less impact on the environment surroundings.
Business strategy of H&M – It is the course of action or decisions that will help an
organisation in achieving particular business objectives. In simple term it can be said that
business strategy is the master plan which is designed for gaining competitive position in the
market area (White, 2015). Thus, strategy applied by H&M result in covering broad market share
from high class people only. But for gaining market share from other peoples respective
organisation have to implement low cost competitive strategy. Along with this, respective
business strategy will also assist H&M in grabbing market place and move in to the new market
through market segmentation, development, penetration and so on. Moreover, market
penetration is the strategy that can be use by H&M with the motive of selling their present goods
or services into emergent market because it will result in enhancing growth of company. Apart
from this, market development strategy is also used by the H&M for selling their current
products or services in the new market. This strategy will be advantageous for organisation in
attracting large number of customers from market area.
Products or services of H&M – This organisation is one of the trusted apparel brands and
have approximately two thousand, seven hundred and eighty six merchandises under their
portfolio. H&M core range of products includes accessories as well as clothing such as pants,
jeans, fashion shirts, cardigans, vests, basic jumpers, sleeved jersey dresses, shoes, purses
(Bryson, 2017). Jackets, T-Shirts and so on. Respective brand mainly focus on the quality of
offerings and latest fashion. All these at reasonable price and they launch new products with
regular intervals. H&M do proper market analysis which result in identifying current market

trend as well as customers taste or preference. For fulling expectations of customers they launch
new innovative product along with this it also result in profit maximisation.
2. Porter's 5 forces analysis
Porter's five force model is introduced by M.Porter in 1979 for understanding that how
key competitive forces will affect an industry. It is the competitive analysis tool which will use
by H&M for determining intensity of competition within the industry as well as its profitability
level. Explanation of five elements in relation to H&M are as follows :- Threats of new entrants – In today's competitive era everyone is entering in the market
with their won start-up which affect existing organisation (DeLone and McLean, 2016).
But in the case of H&M threat of new entrance is low because without investing huge
amount it is difficult to enter in retail industry. There are several investment is required
such as initial amount, inventories, advertising cost, research and development expenses
etc.. large scale companies like H&M are already established and having strong footholds
in several nations. Thus, threat of new entrance is low for respective organisation because
there is requirement of huge funds for entering into retail market. Along with this, there is
requirement of taking permission from the government of United kingdom before
offering products at wide level, it is needed for an association to have proper permission
(Fuller and et. al., 2017). Thus, they can manufacture products in effectual manner which
is not easy. Moreover, there is requirement of huge investment by an company so they
can give competition to H&M as well as it may be risky for start-ups to enter into retail
sector. Power of buyers – It is one of the crucial factor for an company because it play vital role
in the success as well as failure of business. H&M is one of the biggest association of
retail sector, they are offering products such as clothing, accessories and other home
decors. There are numerous national as well as international organisations in the
respective sector who are offering same kind of products or services (Laudon and
Laudon, 2015). This will assist customers because they will have several options of
purchasing products or services. Thus, bargaining power of buyers will be high due to
several alternatives available in the market such as Zara, UNIQLO, M&S, Gap and so on.
Customer easily switch brand because no switching cost involved in selecting other
fashion products and it will result in no customers loyalty. So to overcome with this

situation, H&M have to monitor needs and wants of their buyers because these are main
source of generating revenue.
 Threat of Substitutes – Threats of substitute product for H&M is low because apparels
are irreplaceable. Moreover, online competitors may destroy sales from physical stores of
H&M, the same firm is developing their online sales strategy in USA for enhancing
recognition. In simple term it can be said that their is no perfect substitute for clothings.
(Source: Porter's five force model, 2018)
 Power of Suppliers – Bargaining power of suppliers is low because there are several
number of suppliers or manufacturers available in the market (Huh, Cho and Kim, 2017).
Apart from this, various organisation import their raw material from other nations. As
labour cost are decreasing which result in lowering bargaining power of suppliers at wide
level.
 Competitive Rivalry - Business environment is competitive in nature and in fashion
industry trends are emerging which result in competition for organisation working in it.
H&M use to provide goods and services at worldwide level, where same organisation
have to face competition form the local as well as international association also which are
Illustration 1: Porter's five force model

doing business in same sector or environment. Apart from this, when it come to
competitors of H&M the huge name like ZARA, M&S, TESCO and so on. These
organisation are also providing same type of products such as household, clothing and
accessories etc.. Therefore, all these organisation are result in high level of competition
for H&M in their existing rivals.
3. Analyse any two primary activities and two support activities in Porter's value chain and also
evaluate the strength and weaknesses of your chosen business.
A value chain is the combination of different activities of an organisations operation
within a particular sector performance for delivering a valuable products or services within
marketplace (Porter's Value Chain, 2019). There are numbers of activities which consist in
Porter's value chain are primary activities as well as support activities. Explanation of these are
as follows :-
Primary activities – There are five primary activities which are essential for organisation
because it result in adding values as well as generating competitive advantages. Primary
activities have its direct impact on production, maintenance, sales and support of goods or
services that will be supplied. Below mention are two elements of primary activity :-
 Marketing and Sales – It is the primary factor in that advertisement related to goods or
services offering by company will be done with the assistance of various channels like
social media, digital marketing and so on. All the respective marketing and sales channel
will provide assistance to H&M in grabbing competitive advantages within market area.
Advertisement and promotional tools help H&M in providing awareness to their
customers about organisation and their offerings (Laudon and Laudon, 2016). For
performing these activities in better manner there is requirement of involving human
resource department along with marketing. Due to engagement of H&M different
countries, advertisement and promotional activities are necessary.
 Inbound and outbound logistic – Inbound logistic is the procedure related to internal
distribution of product or services within the company. Respective process have its direct
relationship with suppliers. It involves all the activities that are needed for receiving as

well as storing. On the other hand, Outbound logistic is the procedure in that activities
related to the delivery of goods and services to the customer are involved. In respective
process organisation and it customer have direct relation with each other. It involve all
the activities that are needed to store, collect as well as distribute the end product.
Supportive Activities - These are the activities that provide assistance in the procedure of
primary activities. Some of the supportive activities activities are as follows :-
 Human-Resources management – Major role of human resource department is hiring,
recruiting motivating as well providing training to their staff members. In relation to
H&M respective department play important role in providing training and hiring staff
members. So that all the activities related to marketing and sales will be conducted in
effectual manner (Schwalbe, 2015). In simple term it can be said that HR department
assist in enhancing sales of same organisation.
 Technological Development - This Division is helpful in implementing latest and some
innovative technology which assist in conducting several activities in effective manner.
Implementation of advance technology result in gaining competitive advantages within
market area. In case of H&M, this section is helpful in rendering the services to the
customers in better manner. If their will be any issue in taking reviews or feedback of
customers then technology provide assistance so that issues can be minimised.
SWOT analysis is the tool which help H&M is identifying their strength, weakness,
opportunity and threats (SWOT Analysis of H&M, 2019). Explanation of these are as follows :-
Strength Weakness Wide range of products – This
organisation is offering wide range of
products including apparels, cosmetics,
shoes, accessories and so on for
numerous customers. Apart from this,
H&M have some different products
also such as candle and its holders,
blankets, collection of vases or pots
etc..
 Depended on the third party suppliers
– H&M is totally depended on the third
party suppliers for their merchandises.
Respective organisation outsources
product manufacturing about 800
independent suppliers which result in
less control over production. When an
organisation is depended on third party
it may sometimes result in affecting
order commitment and bad experience

 Diverse global presence – H&M is the
company which have its diversified as
well as strong presence geographically
across the world. It have their stores in
approx. 60 countries across 6
continents (Lv and et. al., 2016). Along
with this, in recent years H&M have
expanded their business in potential
markets such as Asia and Africa.
Strong global presence result in
minimising business risk.
of customers. These all have negative
impact of brand image.
 Affordable pricing pricing affects
quality – H&M is the organisation
which is well known for its affordable
clothings but sometimes it affects
quality of clothes and other offerings.
Opportunity Threats Focus on expansion to improve
profitability – H&M is focusing on
business expansion across the world.
Such plan related to expansion assist
respective organisation in improving
their bottom and top both line. E-Commerce as a platform – In
various nation H&M is present through
E-Commerce and they can expand
through the same platform and serve
large market area.
 Rising labour cost in developing
countries – Rising in labour cost result
in affecting cost of production for
H&M. Along with this, such increasing
cost have wide impact on the
profitability of business.
 Intense competition – Retail sector
have high level of competition from the
local and global both brands (Martin,
2017). Every organisation should have
awareness of the competition in order
to be on par with the new trends as well
as fashion.

4. Build the understanding gained by the above activities, summarize and reflect on how the
business could deploy IT.
From the above activities it has been analysed that Porter's value chain model have set of
different activities as well as operate in particular industry for delivering products or services to
the existing and potential customers. There are two activities which consist in respective model
such as primary and supportive. Thus, in primary activities there is an direct impact on the sales
and production of goods or services. In this, company have its direct relation with suppliers and
it involve several elements, out of which are explained in the present report, which is named as
Inbound and Outbound logistics, marketing and sales (Noe and et. al., 2017). Inbound logistic
have its internal distribution of products or services in the company. Whereas, outbound logistic
is related to the activities of stores as well as collect and have direct relation with customers.
Moreover, marketing and sales is the activity which help in doing advertisement and promotional
activities of the H&M for providing products and brand awareness to people.
On the other hand, Support activities are that which provide assistance to primary
activities for gaining success as well as growth in the market area. There are several elements
which included in respective activity. Out of which two are elaborated which are named as
Human-Resources management and Technological development. From these two, technological
development help in providing better services to customers. Main aim behind activities of value
chain is to gain competitive advantage in the market area.
Reflection : From the above discussion it has been identified that H&M are use various
primary and support activities. Such as Inbound and Out bound activities as well as marketing
and sale as an primary. Whereas, Human Resource Management and Technological development
as using as supportive activities. Reflection on all the activities are as follows :- Inbound and outbound logistic – Inbound logistic is the procedure which is concerned to
the receiving, storing as well as distributing the material that is helpful for association in
production process of their products or services (Orna, 2017). On the other hand,
Outbound Logistic is the activities that is related to the elements outside the company, for
instance customers. Marketing and sales – Major role performed by marketing and sales department is
advertisement and promotional activity which is necessary for providing awareness to
customers about products and company profile.

 Human Resource Department – It is an department on which overall working of the
association is depended. As it help in managing man power and also play important role
in providing them training and development session. Along with this, it play important
role in maintaining record of their staff members as well as in filling vacant position.
 Technology Development – It is an activity that is utilise by the organisation, so H&M
can enhance their performance by involving some innovative technology in their
operations as well as function (Pearlson, Saunders and Galletta, 2016). Respective
organisation use latest technology in production of new products because it will result in
enhancing customers satisfaction. Along with this, it also assist them in making some
innovative modification in their company.
CONCLUSION
From the above discussion it has been concluded that, Information Technology play
important role in easy and smooth running of business. Along with this, it is necessary to design
business strategy in proper manner so company can sell their products and services to existing
and potential customers. Business environment is full of competition and it is necessary for
H&M to analyse this in better manner. So that, several competitive advantages can be gained by
the company. Along with this, IT play important role in different operational activities of the
business.

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