Strategic Management Analysis of H&M: External and Internal Factors

This report provides a comprehensive strategic management analysis of H&M, a global clothing retailer. It begins with an introduction to the importance of strategic management in the business sector. The main body of the report includes an external analysis using the PESTEL framework, examining political, economic, social, technological, legal, and environmental factors influencing H&M's operations. An internal analysis, employing the SWOT framework, assesses the company's strengths, weaknesses, opportunities, and threats. The report then explores strategic options using the Ansoff Matrix, evaluating market penetration, product development, market development, and diversification strategies. The selected strategy, diversification, is justified based on its potential benefits, supported by a SWOT analysis of the strategy itself. Finally, the report offers recommendations based on the analyses, concluding with a summary of findings and a list of references.

STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION.................................................................................................................................3
MAIN BODY........................................................................................................................................3
External Analysis-.............................................................................................................................3
Internal Analysis-..............................................................................................................................4
Strategic options- Ansoff Matrix.......................................................................................................5
Strategy selection & justification.......................................................................................................6
Recommendations.............................................................................................................................7
CONCLUSION.....................................................................................................................................9
REFERENCES....................................................................................................................................10
Books & Journal:.............................................................................................................................10

INTRODUCTION
In business sector, strategic management is important which is to be considered and
adopted by every organisation as it helps in achieving objectives in effective manner.
Strategic management is defined process of on-going monitoring planning and analysis of all
necessary requirements which are the required to goals and objectives within the time period
(Büyüközkan, 2019). Main purpose of this report is to understand the importance of strategic
management within a business field. H and M Swedish international clothing retailing
company headquartered in Sweden. Organisation is located globally and has wide number of
competitors such as Zara, ASOS, and GAP etc. This report comprises of background
information of a company, external environment, (PESTEL Analysis), internal environment
(SWOT Analysis), strategic options through Ansoff matrix, selection strategy and
justification and recommendations.
MAIN BODY
External Analysis-
External factors put a great influence on the overall business setting. There is a
framework called Pestle that is used to evaluate the impact of external factors that
significantly affects business performance. It comprises several variables that are related to
outside environment and cannot be control by companies. This analysis is essential to prepare
appropriate strategies in order to attain predefined goals. It is analyzed that these factors are
essential and need to be monitor constantly by mangers. In context of H & M these elements
are mentioned below:
Political-It refers to the policies, tax, compliances, political environment of country
that significantly influences business operations of textile industry. H& M is working at
global level thus it is affected with political conditions of different countries. It is analyzed
that there are instability income developing nations in which company is operating its
operations. Tax slabs, laws, compliances are varies in different nations across the globe thus
it is essential for entity to modify its strategies accordingly (Chintalapati, 2020).
Economical- It is essential for companies to access economic conditions of countries
in which they are operating. H & M is a renowned brand which is functioning worldwide thus
affected with economic status of different counties. Brexit brings a lot of uncertainties in
terms of labor and raw material availability. It also affected purchasing power of customers
that minimize profitability of organization. In addition, current pandemic condition also
influences functions of entity so that it needs to prepare appropriate strategies in order to face
future uncertainties (Darling, 2019).
Social - It comprises factors such as buying behavior, status, personality, attitude of
consumers. Now people are highly influenced with social media, fashion status of models,
celebrities thus it is important for H & M to monitor the recent trends to cater the needs of
customers in an appropriate way. For this, organization takes feedbacks from its potential

customers to provide them products accordingly. With this, it is able to attract more numbers
of buyers that will increase its brand value in market.
Technological- As per the recent trend, it is essential for every organization to evolve
unique techniques as well as methods to perform business operations in an efficient manner.
In the current digital era e- commerce is getting high recognition by customers. They prefer to
purchase products online rather visit physical stores. H & M is fast fashion brand that offers
an option to buyers to do online shopping with its own mobile application and website.
Further, it also uses digital platforms such as social media marketing to influence more
number of buyers (David, 2018).
Legal- Legal factor included several compliances, rules, regulations that are made by
government so that companies can operate effectively. There are business, labor, and
consumer’s protection laws in different countries which need to be abide by H & M to ensure
smooth functioning of business. Intellectual property rights need to follow by company to
protect its designs from rival firms. In addition, firm need to make necessary alterations in
present policies as per the modification made by higher authorizes in their respective laws.
Environmental- Organization needs to make sure that their activities do not harm
environment. Now, it is mandatory for all companies to make appropriate contribution in
social development and environmental protection. They need to give a significant part of
profit margin for societal development. Mangers of H & M adopt various practices to control
emission and manage waste in an efficient manner. For this, they execute recycling of used
material to minimize waste and secure environment. It enhances the brand value of company
among customers and provides it long term benefits (Deephouse, 2019).
Internal Analysis-
It is crucial for an entity to execute internal analysis on continuous basis to make
effective use of available resources. With this company is bale to know its strong as well
weak points that is essential to make necessary improvements. Internal Analysis of H &
Musing SWOT framework is mentioned below:
Strength Weakness
 Company has expanded its business
in nearly 60 countries that helps it to
target huge segment of customers.
 It is analysed that H& M has sound
financial position which is essential to
attract investors and keep them stay
with entity for a longer period of
time.
 H & M possess strong brand value at
global market place. It is a renowned
fashion brand that is known for
quality products at reasonable price.
 Quality of products being offered by
H & M are not better as it emphasis to
provide lower price products thus
compromise with quality. Due to this
it not prefer by higher income or
premium groups of customers.
 It depend on vendors to provide
material that it sales to customers. It
minimizes the control of entity over
its business operations and also
reduces down profit.
 Products of organization faced a lot of
controversies due it’s one of the
advertisement in which it

demonstrates racism. It affected the
brand image of entity at global level
Opportunities Threats
 There are huge opportunities for H &
M to explore business in emerging
market place. It can expand
operations in developing countries to
target wide range of customers.
 E-commerce is getting recognition
now days so entity can use digital
platforms to promote its products in
domestic as well as international
market place.
 There are several rival firms such as
Forever 21, Zara are present in
fashion industry who are giving
extensive competition to respective
organization by providing quality
products.
 It is monitored that buying behavior
of customers are chaining rapidly thus
organization need to monitor the
recent trends and provide products
accordingly.
From above discussion, it is analysed company has ample of strengths that
differentiate it from other but it also has some weak points that need to improve. In addition,
there are ample of opportunities are available for brand at market place along with threats that
may harm its existing brand image.
Strategic options- Ansoff Matrix
In enterprise, it is important to adopt and implement strategies as well as tactics with
the management so that it is easy to survive in this competitive market. With rise of
competition in every field selecting a most appropriate strategy has become a necessity. Most
of the organisations use some strategic directional tools to gain competitive benefit and with
purpose of adapting with appropriate strategy. In context of retailing industry, it has become
essential to implement effective and working strategies as because of changing market trends
as well as change the behaviour of consumers at larger scale. It necessary for enterprise to
conduct market analysis is being conducted through which it is easy to implement tactics and
policies so that better results are achieved (Eckardt, 2018).
Ansoff matrix
It is a matrix which is being adopted by many businesses as well as organisations to
develop strategy options for their business. It is being considered as one of the most
recognised and commonly used tool because of its easy to use as well as simplicity. Through
focusing on this matrix, it help enterprises to improve and develop appropriate strategy
through which they can gain comparative advantage and which is beneficial for their growth
as well as development. In relation with selected enterprise, they also use this strategic
directional tool through which it is easy for them to make effective decision making. It
comprises of four quadrants and strategies which are discussed below-
Market penetration- It is the first quadrant of Ansoff matrix in which it reflects the
expansion of existing product of organisation within existing market It is most easy strategy
which can be adopted and risk associated with this strategy is also less. Also, in relevance of
retailing sector, this type of strategy is mostly used by those enterprises who want to defend

themselves from competition and grow the market at a slow speed. In reference of H & M,
they can opt for the strategy as a strategic direction within those markets where their stores
are not performing well. This will give them benefit of stabilizing there performance
progress. Moreover limited amount of money and services are used at low level when going
With this strategy.
Product development-
It is another variant of Ansoff matrix in which it states that expansion is done with
existing market introducing of new products. This is mostly used by enterprise and they are
about to enlarge their product portfolio by customisation modifying or developing a new
product. It is mostly used by all business organisations as because introducing a new product
within a pre-existing market help in achieving of better results. It is duty of the manager to
make ensure that reliable information is presented prior to the adopting of this strategy. In
relation with selected firm, by adopting this strategy it will help the men increasing their
goodwill in effective manner as market and customers both are familiar which give them a
competitive edge (Ferreira, 2018).
Market development-
Further, company market development strategy in which new markets are being
targeted with existing products. This strategy includes several types of questions such as how
market can be extended through new Market sectors, geographical areas etc.
Diversification
It is a completely different strategy in which it reflects that new markets as well as
new products are being focus by enterprises to gain higher profit. In context of selected
organisation they can opt for the study as it will give them an opportunity to develop their
business within a different country (Makadok, 2018).
Strategy selection & justification
From the above analysis of Ansoff matrix it has been seen that it is play important
role in development and growth of enterprise at larger scale. So, in this section for future
analysis strategy which has been selected is diversification. Main reason for choosing the
strategies that throw focusing on the strategy will help H &m to improve their market level
and product effectiveness.
Justification
Reason for selecting a diversification strategy will be justified by using SWOT
analysis of the chosen strategy which is further discussed below-
DIVERSIFCATION
Strength
 Main level of selecting of
Weakness
 Weakness is that as market and

diversification is that it increases the
confidence level of a brand to target
new customers with new ideas and
tactics.
 Strength of the strategies that it has a
strong impact on employees and
management of working at a new
place with new people in different
countries and market which results in
better efficiency.

customers both are unknown it is
difficult for selected enterprise to
make decisions effectively.
Opportunity
 This enterprise has an opportunity of
merging up with other brands through
carrying out the activities in a new
market and at a new place.
Threat
 Biggest threat of this strategy is that a
change in certain events can cause
negative impact on overall
organisational structure.
After examining of the above justification of a selected strategy it is being seen that it
is necessary for chosen entity to focus on their business to focus on development at larger
level so that sustainability period increases (Mohezar, 2017).
Recommendations
From the overall analysis of an above report it has been stated that there are some
weak areas which are to be improved by H & M Company as it will help them to make
effective decisions. Furthermore several recommendations are discussed below-
 It has been recommended that company need to update their store layouts as well as
management structure through which it is easy for them to target and engage with
customers easily.
 It is also recommended to selected organisation that they need to hire skilled
employees as well as staff which will help them to identify and analyse risk level
which can disrupt the work environment.
 Moreover, another recommendation is to selected organisation is that they have to
produce more effective decisions within their business structure so that low
performance stores in various countries are able to improve their progress level at
high level.
 It is being also recommended to choose an enterprise that they need to be aware about
their competitors and emerging trends so that everything is carried out in most
efficient way without facing any issue or problem.

Therefore from the above analysis of paragraph it has been seen that it is important to
conduct a research analysis within a specific market through which it is possible for
organisations to update positive results. It is suggestive to organisation that they need to
adopt these recommendations as it will help them to improve their work structure
effectiveness and will help them in producing more innovative products.
CONCLUSION
After a brief analysis of a report, has been seen that strategic management is a wider
and broader concept which is to be understood in proper way so that objectives are being
achieved within a period of time. More discussions have been made about PESTEL Analysis,

SWOT analysis studying direction to and justification of a strategy. So, it is seen that through
properly focusing on specific market it is easy to eliminate risk as well as achieve objectives.
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Management Journal, 39(6), pp.1530-1545.
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Pestel analysis based on neutrosophic cognitive maps and neutrosophic numbers for the
sinos river basin management. Infinite Study.
Ansoff-Matrix. In Top 100 Management Tools (pp. 31-33). Springer Gabler, Wiesbaden.