Strategic Management of H&M

This assignment requires students to analyze the strategic management of H&M, a global fast-fashion retailer, using established theories and frameworks from the field of strategic management. Students are expected to research and critically evaluate various aspects of H&M's strategy, including its competitive positioning, product development, marketing strategies, operational efficiency, and overall performance in the dynamic retail landscape. The assignment also provides a detailed bibliography of academic sources for further research and understanding.

Strategic
management

Table of Contents
INTRODUCTION...........................................................................................................................1
Internal and external analysis of the firm....................................................................................1
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Present report is based on H&M (Hennes & Mauritz) a fashion enterprise. An
analysis is done of its business environment ans study has been done on it competitors.
The strategy adopted by the company to undertake business operation to fulfil
objectives are described under this. All the relevant information is given in report like
market share of the company and current and future trends are also discussed under
this. Features of the company are described on the basis of demographic
segmentation(Chandes and Paché, 2010).
Internal and external analysis of the firm
Internal analysis is a process of identifying an evaluating the characteristics and
competencies of the enterprise including its resources, capabilities and its core competencies.
H&M can do the internal analysis in order to know what are its main competencies or qualities.
Internal analysis will help the firm to know the area where improvements are needed.
Following analysis techniques are available in order to do the internal analysis:
 SWOT analysis
 Value chain analysis Stakeholders analysis
SWOT analysis: SWOT analysis is a internal tool analysis which helps the enterprise in
identifying its strengths, weakness, opportunities, threats. This analysis technique helps the
enterprise in using its strengths to capture greater market share and try to minimize or remove its
weakness(CHUANG and Liao,2010). In addition, this technique helps the enterprise in
identifying the opportunities prevail in the market and helps the enterprise in knowing the threats
for the company and take action in order to minimise the effect of threat.
The main strengths of H&M are as follows:
 This is one of the largest clothing retailer.
 This offers quality and fashionable and trendy clothes at very affordable prices. One can
say designer clothes at an departmental store.
 There are almost 2300 stores of this company in 45 countries approx
 Delivery time is very low.
 They have been associated with designers and big celebrities.
 This company present lot of flexibility control to the customers.
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Weaknesses of this company are as follows:
 Their target customers get affected by the changes take place in the economic conditions.
 Buying the stock in large quantities increase the cost of storage.
 All the different type of machines used to make different type of clothes needs a lot of
maintenance and lot of funds are required to maintain the equipments.
Opportunities of H&M includes the following:
 Emerging economies support H&M's market or expansion plans.
 Online shopping are gaining importance day by day.
 H&M are in a well position to provide services to the niche market.
Threats of H&M are following:
 Weak competitive position because number of branded increase. Many of the business line of this enterprise fails to fulfil the specific demand of the
customers.
Value chain analysis: Value chain analysis is very important to see or study how a
company structure is created. Value chain is a combination of two activities including:
 Primary activities: This includes marketing, sales, operations and logistics.
 Support activities: Human resource management, technology and infrastructure comes
under this.
Basically it is a process of creating final product from the raw material. This include adding
value to raw material and than deliver it to the final customers(Cinquini and Tenucci, 2010). It
helps the firms in knowing the main activities which added value to the product.
This method of analysis helps the firms in knowing the main activities and do the
necessary improvements in the process which are important.
Stakeholders analysis: Stakeholders analysis is a process of analysing the effect of
decision taken by the enterprise. This information is used to analyse how the interests of
stakeholders should be given attention or importance by the enterprise. This is a technique of
internal analysis this helps the enterprise in learning attitudes and behaviours about the
stakeholders. By doing this analysis H&M can take that decisions that will result in satisfying the
needs of the stakeholders.
These all the techniques of doing internal analysis of the firm. Other than this the important
internal factors which affect the business is its customers. Customers plays an important role it is
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the responsibility of every enterprise before delivering the final product to the customers analysis
of the needs of the customers should be done(Doz and Kosonen,2011). By analysing the needs of
the customers the enterprise can better satisfy their needs. Other than the customers suppliers of
the raw material to the firm also affect its activity. Quality of the raw material directly affect the
quality of final product. In addition, the culture and structure of the enterprise affect its final
output. Evaluation or analysis of all the factors results in increasing the overall effectiveness of
the firm.
External analysis is a technique of doing analysis of the external factors which affect the
activity and business operations of an enterprise. Competitors, government policy, technology
and social factors comes under this. It is very important to analyse these factors because these
factors affect business factors a lot(Killen and et.al., 2010) One of the important factors comes
under this is the analysis of competitors. It is very important for the enterprise to do the analysis
of competitors because every decision or step taken by the competitor or strategy used by the
competitors affect the enterprise decisions. There are mainly two techniques of doing external
analysis.
 PESTLE analysis
 Porter's five force analysis
PESTLE analysis of H&M will them them in doing necessary changes in order to get the
competitive position in the environment.
 Political: Major political factors which affect the business activities of H&M are the
restrictions by government on imports and exports activities. Other than this the cost
occurred on these activities results in increasing the overall cost of the product and
companies fail to maintain the profit margins because they have to provide the product on
low cost to the public.
 Economic: Market size and income level of the customers affect the consumer spending
behaviours(Eden and Ackermann, 2013). Rise in the concept of “disposable fashion”
allows the customers to reduce spending without doing any compromise with the fashion
and these largely affect the activities of H&M.
 Sociocultural: H&M target both adults and youth of different gender. Customers of
different regions affect the perception and buying patterns of them and this largely affect
the H&M activities. Information about the different perception of the people lead to
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H&M in changing their patterns off doing the work because the styles of consumers are
changing more quickly than before.
 Technological: In fashion industry a lot of technology improved in the logistics facilities
and this logistics capabilities helps the firm in better utilizing technologies in order to
maintain the inventories and reduce the waste(Freeman, 2010). Other than this an a lot of
changes or improvements take place in communication technologies and this helps the
firm in better communicating with the customers.
 Legal factor:All legal laws and rules comes under this. It makes compulsory to all the
suppliers to follow the laws in which the company operate not only this this laws help in
solving any issue related with the enterprise.
 Environmental factors: H&M has to give proper attention on the whatever actions or
decisions they take because it is a giant enterprise. Whatever the actions or decisions
taken by the company should be free from environmental hazards. It is the duty of every
company to follow environmental law(Hodgkinson and Healey,2010)
If all the factors have been critically evaluated by the firm than it will allow the firm to take
effective decisions and ensures in fulfilling the objectives of the firm.
Porters five forces analysis:- The determination of the level of the competition among
the business and development of the strategy of business id referred as porters five forces
analysis. The identification of the intensity of the business competition and the attractiveness of
the business the forces draws upon the economics of the industrial organisation. The overall
profitability of the business is said as attractiveness of the business(Gooner, Morgan and
Perreault, 2011). The porters five forces includes Threats of new entrants, Threats of substitute,
Bargaining power of customers, Bargaining power of suppliers and Industry rivalry. These
elements are discussed as follows.
Threats of new entrants:- The high profitability business markets lead to attraction for
the emergence of the new business in the economy. This leads to the new entries in the business
market. The newly started business leads to decline in the profits of the established firms. The
abnormal profits will decline to the Zero till the new entries are not blocked by the incumbents.
Threats of substitute:- The existence of the similar products in the business world leads
to the switching for the other substitute products by the customer in the business world. The
potential factors to the threats of substitute are as follows:-
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Propensity of the buyer for substitute
switching cost for the individual buyers.
Deprecation of the quality
The availability of the number of substitute products.
Bargaining power of customers:- The bargaining power of the individuals determines
the level of the output of the market. The prices changes with the ability of the customers to but
the business in pressure for the price of the product.
Bargaining power of suppliers:- Bargaining power of suppliers can be described as the
the market of inputs. In industry it can be possible that there is only one suppliers of a particular
raw material and for which the company has no alternative(Greco, Cricelli and Grimaldi,
2013). In the situation where suppliers denies and refuse to supply the product in any reason than
this situation will create problem for the enterprise.
Industry rivalry:- Industry rivalry is the major determinant of the competitiveness of the
industry. Potential factors of industry rivalry are as follows:
 Competitive advantage through innovation
 Online and offline competition
 Level of promotion activities
 Transparency
These tools helps the enterprise in analysing its external factors. It is very important for a firm to
do the analysis of the external factors because these factors affect business activities.
Competitors: Competitor of every company exist in the market and these affect a lot the
activities or decisions taken by the enterprise(Grewal, Janakiraman and Tolerico, 2010). Same as
with the H&M there are number of customers of H&M which provide the same products as
H&M in an affordable price and this becomes necessary for H&M to critically examine the
activities of its competitors in order to better serve its customers and provide better products to
them.
Top three competitors of H&M are the following:
 La Isla company
 Uniqlo company
 Gap profile
Other than these the other competitors of H&M include the following:
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 Zara
Brand value of H&M and of its competitors can be understood by the following:
Analysis of internal and external analysis help or provide guidance to the firm in taking
appropriate decision in order to get effective results. This analysis will help the firm in doing
effective segmentation on the demographic factors(Hill, Jones and Schilling, 2014). H&M
provide its facilities to the people of different gender including male and female. The company
do the study of needs of the people about what kind of clothes they and H&M provide designer
clothes to their customers at an affordable price this helps it in capturing great market share and
influence potential customers.
CONCLUSION
From the above information it can be concluded that the internal and external
environment of H&M affect its decisions or business activities a lot. It will be helpful for the the
enterprise to analyse all the factors before taking important decisions for the enterprise. Analysis
of all the factors provide relevant information to the firm related with its competitors and other
important factors. Any decision taken by the competitors of the firm affect the activities of
decisions(Hitt, Ireland and Hoskisson, 2012). By doing analysis of its competitors H&M can
make better strategies and can achieve its objectives.
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REFERENCES
Books and journals
Chandes, J. and Paché, G., 2010. Investigating humanitarian logistics issues: from operations
management to strategic action. Journal of Manufacturing Technology Management.
21(3). pp.320-340.
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CHUANG, C.H. and Liao, H.U.I., 2010. Strategic human resource management in service
context: Taking care of business by taking care of employees and customers. Personnel
Psychology. 63(1). pp.153-196.
Cinquini, L. and Tenucci, A., 2010. Strategic management accounting and business strategy: a
loose coupling?. Journal of Accounting & organizational change. 6(2). pp.228-259.
Doz, Y.L. and Kosonen, M., 2010. Embedding strategic agility: A leadership agenda for
accelerating business model renewal. Long range planning. 43(2). pp.370-382.
Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management.
Sage.
Freeman, R.E., 2010. Strategic management: A stakeholder approach. Cambridge University
Press.
Gooner, R.A., Morgan, N.A. and Perreault Jr, W.D., 2011. Is retail category management worth
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Greco, M., Cricelli, L. and Grimaldi, M., 2013. A strategic management framework of tangible
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Grewal, D., Janakiraman, R.and Tolerico, S., 2010. Strategic online and offline retail pricing: a
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Swayne, L.E., Duncan, W.J. and Ginter, P.M., 2012. Strategic management of health care
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Pearson Education India.
Online
H&M Hennes & Mauritz AB in Retailing [Online].Avaiolable
through:<http://www.euromonitor.com/handm-hennes-and-mauritz-ab-in-retailing/report>.
[Accessed on 18th may 2017].
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