Strategic Management

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Strategic Management

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Background information ...........................................................................................................3
External analysis ........................................................................................................................4
Internal analysis .........................................................................................................................5
Strategic options .........................................................................................................................7
Justification of strategy ..............................................................................................................9
Conclusion and recommendation................................................................................................9
REFERENCES .............................................................................................................................11

INTRODUCTION
Strategic management is defined as goal setting, examining competitive environment so
as to lead business opportunities. Strategic management is providing proper understanding
regarding vision or the company by which appropriate strategies can be adopted and the same
can be used for obtaining competitive edge (Wheelen and et. al., 2017). This report is prepared in
order to understand basic concepts of strategic management and their role for business
development. The report is based on H&M which is a Swedish multinational clothing company
and highly known as fashion clothing and accessories for men, women and kids. The company
was founded in 1947 and as of 2019 H&M is managing 5000 stores across 74 countries in global
periphery. This report consists of internal and external analysis of H&M and justification for
their selected strategy for business development.
MAIN BODY
Background information
H&M is a Swedish multinational brand which is renowned for their fashionable clothing and
accessories for men, women and kids. The company is having global presence in 74 countries
along with 5000 retail stores. In the current time company is using strategy to expand in varied
international market in order to intensify their business and to access global markets. CEO of the
organisation is planning to develop long term perspective in which they are trying to establish
new retail stores in emerging market so that to enhance their reach to customer and to deal with
needs of them as well. H&M is having capacity to introduce a new design to their store within
time gap of 2 weeks this proves their power to deal with market needs and response to customer
needs. Besides this company is very much active on using sustainable practices which adds value
for their customer and gives them reason to stick on this brand (Papulova and Gazova, 2016).
H&M uses varied resources in order to maintain quality within their products and in this way the
company is keeping higher customer base. H&M is using strategy to deliver quality products in
lower prices which enable them to explore new segment of market along with attaining success
opportunities. The company is managing huge competitors list such as M&S, ZARA,
BURBERRY and many more but at the same time H&M is having robust portfolio of products

and customers as well. H&M uses value based pricing in which prices of products are set by
value perceived by customers. On the other hand target market for H&M is women so the
company is using various promotional tools in manner that to attract them.
External analysis
External analysis is defined as examination of external environmental factors those may
provide implication to business operations in negative or positive way (Lasserre, 2017). As this
is being analysed that there are numerous external factors through which profitability or
operational efficacy of the business get higher impact and for every business this is necessary
that they examine these factors effectively so that to align their organisational objective in such a
way that market prominence can be attained. With the PESTLE analysis external analysis can be
done and all those essential factors can be analysed those are providing impact to the business.
Political factors: These factors are defined as political instability or stability. H&M is a global
brand so political factors are drawing high impact on their business operations. H&M has faced
various controversies regarding hurting sentiments of Africans which adversely impacted
business of H&M. On the other side as the company is having an international operation so trade
war between US and China is major concern for H&M. Besides this due to Brexit implications,
high political instability is being faced by UK and this creates difficulties for business to operate
and specifically for fashion retail industry as this industry is driven by customers.
Economic factors: These factors are related with economic growth, inflation rate, employment
rate and many other factors those are related with economic condition of nation. As current
strategy of H&M is to expand their business in various international market and for this sound
economic situation is required. Besides this labour cost at every nation are varying due to which
change in profitability can be seen by H&M. Economic factors are varying from nation to nation
such as fluctuations in currency rate, interest rate and these are giving high influence to H&M in
operating their business at global level (Qin, Liu and Tian, 2020).
Social factors: These factors are associated with taste and preferences of customers. H&M is
focused over women segment so they are providing high value to their customers. On the other
hand the company is taking care of market trend and needs of their customer. H&M can
introduce a new design or clothing style within their store in just 2 weeks which is a very less

time but as the company is highly emphasising over needs so this is the approach which is used
by them to retain their customer by providing latest trendy clothing and accessories range.
Technological factors: These factors are defined as using of technological advancement in
business processes in order to deal with aims and objectives in appropriate manner. With this
context H&M is using emerging technology in order to attract their customer and to give them
additional value as well. On the other hand H&M is having prominent presence in online
channels in which they are selling products via online media. Besides this the company is using
AI technology in their process in order to enhance efficacy of their activities and to remove any
errors as well. In this way technological factor are inhaled by H&M through which they are
trying to attain competitive edge and sustainability in marketplace (Venkateswaran and Ojha,
2017).
Legal factors: These factors include abiding of various laws and regulations. As H&M is a
global organisation which is putting efforts for enhancing their business at global periphery so
this is required by them that they follow those rules in optimal manner so as to avoid any legal
proceedings. In this context H&M is trying to be adhered with national law and regulation in the
country wherever they have operations. This way company is avoiding any loss to their goodwill
and prominence within marketplace. Besides this H&M had faced various controversies which
had given negative impact to their market image.
Environmental factors: These factors are defined as using those business processes which are
environmental friendly and suitable for the climate. In this regard, H&M is using sustainable
business practices and sustainable clothing material in order to reduce impact of carbon
footprints. On the other hand fabrics used by H&M are recyclable due to which company is
meeting environmental demands. These practices adopted by the company are leading them to
become a prominent brand which understands their responsibility towards eco-system.
Internal analysis
Internal analysis is defined as analysis of intrinsic capabilities due to which competitive
edge can be attained by business. This is undertaken as in examining resources and competencies
through which weakness and strengths of a business can be analysed. For H&M internal analysis
can be done with the help of SWOT analysis and the same is elaborated as under:

Strengths: H&M is market leader in retail fashion industry so the company is having
various strengths which are given below:
Strong Distribution Network: H&M is having their business operations in 74 countries
and the have more than 5000 retail store, for this company has made their distribution channel
strong and smooth enough which enable them to attract customer n better manner.
Strong Brand Value: H&M is having prominent brand image within market which provides
them higher value from their customers as in comparison of other competitors (Nazarova and et.
al., 2019).
Process Automation: H&M is investing huge amount in automating their processes in order to
minimise manual interruptions. This enables the company to meet overall targets in appropriate
manner.
Strong Diversification Performance: H&M is continuously diversifying their products and
streams in order to reach out to desired aims and objectives. This strength of H&M is making
them to enter into new product lines.
Weakness: There are various areas in which improvement is required by H&M in order to
run their business in smoother manner. Some of the weaknesses are defined as under:
High Attrition Rate: Employee turnover rate in H&M is higher as compared to other
organisation due to which their training cost is increased and resultantly output gets decreased.
Higher Inventory Days: Inventory days for H&M is higher due to which overall costing is
higher for the company as compared to other rivals.
Lack of New technologies: Although H&M is using emerging technology but at the same time
the company is using various technologies which are out-dated.
Opportunities: Opportunities are defined as positive signs that enable the organisation to
inhale growth and market prominence opportunities by which improvement can be done by
H&M in their existing business line. For H&M there are various opportunities which are
examined as under:

Organization’s Core competencies: H&M can enhance production of their best selling in order
to capture more customers and to grab opportunities to sustain as well.
Global market presence: H&M is having global market presence which enables them to deal
with variety of customer at once. On the other hand company is having vision to open up new
retail stores in varied market areas (Ozkan-Canbolat, Beraha and Bas, 2016).
New Environmental policies: The Company is adhered to environmental policies in order to
attain prominent opportunities to attract high base of customers. By using new technologies
H&M can enhance their market share within newer stream.
Threats: H&M is having varied threats as the company is dealing with global market and
this is imperative that they face various threats as well. These threats are enlighten as below:
Intense Competition: H&M is having various competitors in the marketplace such as
ZARA, BURBERRY and many more. All their competitors are making homogenous
products which are the major threat for the company to maintain their distinct identity in
the marketplace.
Different laws of different countries: H&M is having global presence due to which
they are required to abide them as well. Enforceability of these laws creates liabilities
through which complexities in business is arising for the company.
Seasonal Nature of high Profitability products: H&M is prominently known for winter
wears and for countries winters are a season. So this may give them loosing of their
profitability.
Strategic options
Strategic options are defined as those action plans which are established due to respond to
external changes. H&M is using these options in order to sustain in the market. Ansoff growth
matrix is used as strategic options which are elaborated as under:

Market penetration: Market penetration is defined as the strategy which is used for launching
existing products in existing market. Under this huge discounts are given by businesses in order
to pitch more customers and enhance their customer footfall. Under this H&M is using various
marketing strategies in order to inhale market prominence and to eradicate those barriers by
which sales can be intensified. This strategy is beneficial as new customers are not required to
pitch only existing are attracted and retained (Lu and et. al., 2019) .
Market development: This strategy is defined as taking existing products into newer markets so
as to enhance customer base and market reach as well. This strategy can be used by H&M as the
company is having strategic intent to enhance their market presence in global market. Company
will have to bear huge expanses which may hamper their profitability. Besides this H&M is
having robust market image which provides them additional coverage over any expansion so this
can be fruitful for them when they inhale market development strategy.

Product development: Under this strategy a brand new product is being introduced within
existing market. H&M can develop new designs and fashion deals within market in order to
attract more customers and to enhance profitability as well. H&M is an organisation which is
highly active in bringing new designs and inhaling fashion trends in their products so in this case
product development strategy is having high lead for the company so as to meet business
objectives in appropriate manner. H&M is having their own designers so this is easier for them
to work for some newer design and market the same in short run as the company is known for
launching new products in a very short span of time (Li and et. al., 2018).
Diversification: This is defined as the most risk strategy in which the company get entered into
some brand new field. H&M is only dealing in clothing and accessories so the company is
having opportunities for expand business in new market segment so as to unleash the same.
Diversification is an unrelated business expansion so H&M can go with business expansion in
sport gears or electronics.
Justification of strategy
From the above discussion this can be concluded that H&M is required to undertake
market development strategy as company is having long term vision to explore new market
segments. With the help of exploring new market segment H&M can enhance their customer
base and meet long term strategic intent as well. By market development H&M can enhance their
market capture in such a way that this can intensify customer base and profitability as well. On
the other hand market development may lead H&M to inhale higher amount of growth through
which the company can grab higher market opportunities by keeping their pace higher and
accomplishing sustainability as well. On the contrary market development will lead H&M to deal
with their competitors in intense manner as market is having fierce competition and for this
businesses are required to have distinct feature or presence in varied market.
Conclusion and recommendation
From the above discussion this can be concluded that strategic management is one of the
essential aspect which is required to be inhaled by organisation so as to deal with market changes
and other complexities as well. For H&M strategic management is playing significant role in
managing their business in appropriate manner and to attain desired outcomes in short period of
time. In current time H&M is using value based pricing approach which is providing path to

them for leading to prominent objectives. This is recommended to H&M that they focus on using
emerging technology so that to deal with their competitors in effective manner. On the other
hand as H&M is having their major focus on women wears so by focusing on men's wear they
can enhance their customer base and their turnover as well (Cohen and et. al., 2016. Besides this
as the company is planning to initiate their functions in more nations and for this H&M is
required to come up with some distinct feature or strategies in order to unleash those markets in
effective way and to attain their desired objectives as well.

REFERENCES
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