Strategic Management of H&M: Analysis and Review

Strategic Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
PESTLE framework of H&M......................................................................................................3
Porter’s Five Forces for analysing Internal Environment............................................................4
VRIO Analysis of H&M..............................................................................................................5
SWOT Analysis of H&M............................................................................................................7
Strategic Options.........................................................................................................................8
Strategic Selection.......................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic Management denotes to identify and describe strategies that can be used by manager to
attain the better performance and competitive advantage at the organisation. In other words, it
can be described as bunch of decisions and actions which the manager of the company
undertakes which decides the outcome of company’s performance.
Hennes & Mauritz is a multinational retail company dealing in fast fashion clothing for children,
teenager, women and men. It has its operations in various countries across the world, selling its
clothing online and offline, and is the second largest multinational clothing retailer.
This report conducts the strategic review of H&M, analyse the external and internal
environment, evaluating the strategic choices of the company.
PESTLE framework of H&M
Pestle analysis helps in analysing the H&M’s business tactics, and several external environment
factors such as environmental, legal, social, political and economical factors which impacts its
business. Discussed below are the factors which influence the business of H&M –
Political – H&M is a well known global company having its operation in several countries
across the world for eg. UK, Asia, Taiwan, Singapore etc. Every country has its own political
systems and rules and regulations that are to be followed by the company strictly otherwise the
company cannot sustain in that country (Perera, 2017). H&M understands and follows the rules
and regulations of the country but the political instability like Brexit in UK impacts the business.
Economical – Economical Factors such as GDP, inflation, Employment, recession etc. Have
great influence on the business of the company. The rising purchasing power in some countries
contributes in the revenue of the company. Inflation in Europe is increasing which bring hike in
demand of the buyers and this provides company advantage of getting more profits.
Social – H&M have its operations in UK, social factors are related to customers and the
increasing awareness about the company in UK makes H&M more transparent towards them.
Company with the proper research attract the customers by knowing the socio cultural difference
existing in the country, it formulates and bring strategies related to that(Chen and Fang, 2019).
Technological – Every multinational company is now focusing on the technological
advancement to benefits itself like H&M. Company has its presence online on its own website
and also has its own app for the smart phone users. To increase its customer base online it

keepon providing new features that attract customers which provide them more easier facility in
ordering company’s product.
Legal – H&M in UK follows the all the laws set by the country such as minimum wage payment,
laws related to taxes, tariffs, customer protection, safe working-environment to employees etc. so
that no legal factors affect the company’s operation as facing legal issues also effects the image
of brand.
Environmental – Company has its responsibility or obligation to give back to the environment as
it is using the resources provided by the nature. Also because of the pressure from the
government and public in UK, H&M contribute its part as corporate social responsibility by
planting as many plants as possible in the country and recycling the leftover stock.
Through the help of PESTEL analysis it can be identified that if the company makes it research
and development team stronger, they can help company with the rising opportunity of expansion
to new locations as company have the good financial resources and advanced technology. H&M
also needs to take care that it follows the rules and laws set by the countries government because
any disturbance in that can also lead to cancel its licence by the government.
Porter’s Five Forces for analysing Internal Environment
The Porter’s Five Forces is framework which is used on the strategic business management. This
business model helps H&M in easily identify and analyse the competitive market, also helps in
understanding the current trends and strategies which can help the company to grow more.
Negotiating Power of Suppliers (Low) – H&M is a big multinational company and have
operations in various countries, company needs suppliers from different geographic locations in
order to purchase the raw materials at lower prices and it also works to strengthen the supply
chain management with the cost effective business. It can be analysed the bargaining power of
supplier is basically low as there are more supplier in the fashion industry in compare to any
other industry.
Negotiating Power of Customers (High) – H&M always come up with the well established
marketing, and provide innovative, best quality and unique products focuses on creating loyalty
of its brand along with huge customer base. Low cost production due to large customers, helps
company in providing the products to customer at low price, this strategy of company attracts the
buyers.