Strategic Management

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Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
H&M Background information....................................................................................................1
External: fast Fashion Industry analysis ....................................................................................1
Internal: Strategic Capabilities:....................................................................................................4
Strategic Options:.........................................................................................................................5
Strategy Selection and Justification.............................................................................................6
Conclusion and Future Recommendations..................................................................................7
CONCLUSION................................................................................................................................7
RERERENCE..................................................................................................................................8

INTRODUCTION
Strategic management is defined as strategic uses of resources and capital which are
important to manage the business and increase the organisational productivity. This is important
for management to analysis the functions and activities in challenging environment then
formulate planning which can help to attain the competitive advantages by completing task and
goals (Barney and Hesterly, 2010). In other words, strategic management requires reflection on
the process and procedures that supports to run and manage the organisational performance. This
report is based on H&M Swedish multinational clothing retail company that known as fast
fashion clothing for men, women, teenagers and children. This organisation is operating business
in 74 countries with over 5000 stores under different company brands. This report covers
understanding about analysis of internal and external environment by involving PESTLE, VRIO
and porter's five forces.
MAIN BODY
H&M Background information
H&M is a Swedish multinational clothing retail company that is fast fashion clothing for
men, women, teenagers and children company. This organisation is providing variety of design
and trending clothes which attracts the number of customers. This was founded in 1947 by Erling
Persson for the purpose of providing variety of design and quality of clothes. This is serving
world wide area by selling their products and services. This is the second largest global clothing
retailer that is maintaining higher productivity and profitability. The management of such
organisation analysis the external environment and formulate the planning which can help to
attain the higher productivity and profitability.
Vision and Mission : To become the leading organization in fashion retailing company
in the whole world.
Objectives:
 To increase the profitability by 70% within 2022.
 To become the largest company in the fashion and retailing company.
 To bring the new technology and services in their organization.
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External: fast Fashion Industry analysis
External environment: For running a business it is important to analysis the external
environment which states what is going on market and how all factors are affecting the business.
This can help to manage the activities and functions by analysing environment. The evaluation of
external environment is explained below:
Political: This factor involves tax rates, government stability, fiscal policy, corruption,
foreign trade policy etc. that affected the business. As Pandemic has occurred in whole country,
government has forced to stop the all activities whether buying, selling, transportation and
distribution that has affected the Fast fashion industry such as H&M negatively and reduced the
organisational productivity (Potyshniak and et.al., 2019). It can be threat for H&M fashion
industry to operate their business in changing government regulations.
Economical: This factor involves economic growth, unemployment rate, inflation,
interest and exchange rates that are important to consider while running a business. After Brexit,
rate of interest has been increased that has created threat or challemge for organization to
reduced the organisational productivity. H&M is also facing the problem in case of expanding
business in other country as kit has to pay extra interest changes for getting loans which proceed
to low productivity and sales.
Social: This factor involves lifestyle and attitudes, health consciousness, age distribution,
and cultural difference. By considering the age distribution, H&M is selling their products as it
classified the products between the age group such as children, youngsters and old age and others
which helps to provide the products and services. This can be opportunity for H&M to manage
and organise the all activities and performance that helps to maintain good performance.
Technological: The environment is changing where needs and wants of people are also
changing faster, it is important for organisation to know latest trend and operate their business
successfully. By using the new technology in design, manufacturing, and distributing the
products H&M is developing their business as well as performance that helps to attain the good
performance and profitability. This is providing business opportunity to H&M by using new
technology and innovation in their business which helps to reach the targeted customers. This
also increases the activities by managing all task (Hitt, Ireland and Hoskisson, 2012).
Legal: This factor consider discrimination law, health and safety law, copyright and
patent laws, consumer protection laws etc. that are important to consider in running a business.
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H&M is required to follow all laws in relation to employment and organisation that is important
to manage the business and increase organizational performance in changing environment. This
also helps to manage activities and functions so that it can operate a business and attain the
higher profitability which is opportunity for selected industry.
Environmental: This factor involves weather and climate change, environmental
policies, green environment etc. that are important to consider while running a business. For
H&M, climate change is big threat for organization as demand of customers in this period is get
total changed which affected the organisational productivity and sales of products in changing
environmental (O'brien, 2019).
From the above it can be understand that analysis of external environment is most needed
that involves many factors which might be affect the business negatively. In this, political,
environment, and legal factors are those that create the challenge for Fast fashion industry. These
factors cannot be control but according to them strategies can be formulated which can reduced
the negative impacts which occurred on business.
SWOT analysis of H&M
Strength Weakness
 H&M uses Fast fashion model that
supplies designer tables with latest
fashion trends.
 This offers its products in 5,076 stores
in 74 countries that reduce risk and
enhances organisational sustainability.
 Variety of products and services are
providing by organisation.
 This adopted customer centric approach
that helps to build the high brand value.
 H&M outsources most of its production
to over 900 independent suppliers that
create the conflicts and
misappropriation.
 Coolest money in the Jungle
 Uninspired fashion.
 Changing in customer demand
regarding products and services.
Opportunities Threats
 H&M is clothing retailing company
which is offering variety of products.
 This has online and offline platform
 Recession in the market that can
reduced the demand of products.
 Increase in counterfeit.
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that make easy way for customers to
sales their products and services.
 This focuses on emerging market that
deliver better values of organisation.
 Expand business by using new
technology and organisational
performance.
 Rising operational cost.
 Trade tariffs in fast fashion industry.
 Global Pandemic that reduced the
productivity.
Internal: Strategic Capabilities:
To run a business, strategies are important which formulates by management by
understanding the current situation and make plans that can help to operate a business regularly.
The internal environment should be analysed which can help to manage the all activities and
bring the changes so that organizational productivity can be maintain. To analysis the internal
environment Porter's five forces model has been used that are as explained:
Bargaining power of suppliers: In the business environment, suppliers are playing
important roles by providing raw material and finished goods at lower prices which can help to
operate a business and maintain profitability. In context to H&M, suppliers power is high as very
less number of suppliers are having in market who sells products high prices. In case of suppliers
has decided to increase cost of there products that can be very challenging situation which
affected the business negatively (Majid, Yasir, Yousaf and Qudratullah, 2019).
Bargaining power of buyers: Buyers are defined as those people who analysis their
needs and make decision to buy after analysing prices, design and quality. H&M is multinational
clothing company that is selling variety of design and quality of products which attracts number
of customers. The bargaining power of buyers in relation to chosen organisation is low which is
beneficial for organisation as customers wants trending and better design of products, for which
they are ready to pay extra.
Threat of substitution: This means substitution of products are available that can help
customers to buy at low prices. H&M is facing high threat because it mainly focuses on good
quality and variety of products to its customers which attracts the customers. By selling their
products at lower prices it is overcoming the threat that supports to attain the higher productivity.
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Threat of new entry: In the business environment, many sellers and buyers are available
who are selling the products and services at different prices. In context to H&M clothing
industry, there is low threat of new entrants because to establish a clothing industry there is need
of high investment and resources that is difficult for organization to arrange the business.
Competitive rivalry: With detailed market research and well established marketing
strategy management should analysis the competitive environment which can help to define the
productivity. In context to H&M , competitors are Zara, Boohoo, Uniqlo that can be create
challenge for organisation and might be affected the business negatively (Beirman, 2020) that is
higher threat.
From the above it has explained that, for overcoming from competitive rivalry, high
threat of supplier's power and others which can be affected the business can reduced the
organisational productivity and profitability in the changing environment.
Strategic Options:
To managing and running the activities in relation to business it is important for
management to analyse resources which are available in organisation and uses them properly
which can help to attain the strategic objectives. The management of H&M company uses
different types of strategies for the purpose of running and attaining the higher profits. To know
the strategic option of H&M, VRIO analysis has been used that are as defined:
VRIO Analysis: VRIO analysis can be defined as framework which mainly by business
entity in order to increase capabilities and business performance effectively by understanding
needs and wants then provide products. By this technique H&M evaluate various resources to
take the competitive advantages and becoming productive organisation.
Resources Valuable Rare Inimitable Organised
Employees Yes No No No
Technology Yes Yes No No
Market presence Yes Yes Yes No
Design and quality Yes Yes Yes Yes
Valuable – This means resources which are important for organisation that needs to
consider while operation and managing the activities. In H&M, different resources are
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employees, technology, market presence and design & quality. All resources are valuable for
organisation as employees are skilled and talented who manages all activities and functions of
company in relation to manufacture and provide the different clothes. Technology is uses to
bring new products and services that increases number of customers. Marketing presence is
valuable to reach the targeted customers and increase the sales. And last, design and quality of
products is most important that influences the customers and attain competitive advantages in
changing environment.
Rare : This means products and services which are rarely available in market and uses to
influence number of customers so that it can maintain the higher productivity and sales. In
context to H&M, technology which is using by management is rarely available in other business
which helps to create the differentiation between products and services that attain the higher
productivity and sales in changing environment. By using technology and new techniques it
cover the larger area of market (Ostaev and et.al., 2019).
Inimitable : This means products and services which are inimitable in changing
environment that can help to operate a business and increase organisational productivity. In
context to H&M company, market presence is an inimitable resource which uses by organisation
for the purpose of running a business and reaching the target market that increases organizational
performance and profitability.
Organised : For running a business it is important to understand what resources are
important and how to organised them so all activities can be perform effectively. In context to
H&M, design and quality of products are important resources which are highly liking by
customers and helps to increase the organisational performance in challenging environment so
that it can maintain the higher productivity and competitive advantages.
From the above, it has analysed that all resources are good option for chosen organisation
which create the values of H&M company in retail industry by managing and organising all
activities. This important for management to understand the needs and make efforts to operate a
business continuously which can help to attain the higher performance and profitability in
changing environment.
Strategy Selection and Justification
Different strategies are evaluated by management of H&M that states by using the lower
pricing strategy under porter's five forces model is beneficial strategy which can help to operate a
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business continuously and increase the organisational performance in the challenging
environment. The management of chosen company should be analysis the current environment
and then formulate the planning which can help to set the competitive prices of their products
and services that supports to attain the higher productivity and profitability. The management
should be analysis the environment and needs of customers as trend is changing continuously.
This strategy will help to arrange the all resources which are important for organisation and
supports to complete the goals.
SAFE –
Suitability – All strategies in relation to internal and external environment are suitable
for organization which can help to increase the number of customers by bringing new ideas and
thoughts
Acceptability – This means strategies are uses by H&M company to bring the new
challenges and changes in their organization which can help to operate the business continuously
and maintain the higher profitability.
Feasibility – These are feasible strategy as it consume less cost, formulation of planning
and implementation of new changes which supports to develop the performance and maintain
good performance.
Evaluation – The management and leaders of H&M has evaluated all strategies and
planning which can help to operate and continue all functions as well as activities in changing
environment.
Justification: The selected strategy is most valuable and beneficial as it will satisfy the
customer's needs in relation to product and price which can help to operate a business and
increase the organization productivity. By reducing the prices of their products selected
organisation make feel to customers and encourage them to make again buying decision so that it
can attain the decided goals and objectives (Lim, Jee and De Run, 2020).
Conclusion and Future Recommendations.
From the above discussed strategies and model it has been recommended that PESTLE is
uses to analyse external environment that states how factors are affecting the organisational
performance. SWOT analysis states the internal strength and weakness of business so that it can
compete in environment easily. By offering the better quality and design of products H&M is
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attaining the competitive advantages as it reduces the prices of products and services which
influences the number of customers and attain the profitability.
Moreover, it has recommended to management to analyse the business situation and
formulate planning planning which can help to operate a business and complete the task in
certain period which helps to attain the higher productivity. By bringing new technology and
design of clothes, it can easily compete with competitors and develop the business effectively.
CONCLUSION
From the report it can be concluded that different types of models are uses by
organisation according to their position which can help to compete with other business. By using
the PESTLE it can get information how some factors are affecting the business negatively.
Porter's five forces model states that which is force can be uses to attain the higher brand image
and profitability in changing environment so it can operate a business regularly. Moreover,
VRIO analysis is uses to analyse all resources and make a conclusion to attain the higher
performance.
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RERERENCE
Books and Journal
Barney, J. B. and Hesterly, W. S., 2010. Strategic management and competitive advantage:
Concepts (p. 408). Englewood Cliffs, NJ: Prentice hall.
Hitt, M. A., Ireland, R. D. and Hoskisson, R. E., 2012. Strategic management cases:
competitiveness and globalization. Cengage Learning.
Potyshniak, O., and et.al., 2019. Assessment of the effectiveness of the strategic management
system of investment activities of companies. Academy of Strategic Management
Journal. 18(4), pp.1-5.
O'brien, J., 2019. Category management in purchasing: a strategic approach to maximize
business profitability. Kogan Page Publishers.
Majid, A., Yasir, M., Yousaf, Z. and Qudratullah, H., 2019. Role of network capability,
structural flexibility and management commitment in defining strategic performance in
hospitality industry. International Journal of Contemporary Hospitality Management.
Beirman, D., 2020. Restoring tourism destinations in crisis: A strategic marketing approach.
Routledge.
Ostaev, G. Y., and et.al., 2019. Strategic budgeting in the accounting and management system of
agricultural enterprises. Indo American Journal of Pharmaceutical Sciences, 6(4),
pp.8180-8186.
Lim, W. M., Jee, T. W. and De Run, E. C., 2020. Strategic brand management for higher
education institutions with graduate degree programs: empirical insights from the higher
education marketing mix. Journal of Strategic Marketing. 28(3). pp.225-245.
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