Strategic Management: A Case Study of H&M

This document provides a case study analysis of the strategic management of H&M. It includes background information, external and internal analysis, strategic options, and recommendations for future growth.

Strategic Managemen

Table of Contents
INTRODUCTION.......................................................................................................................................3
Main Body...................................................................................................................................................3
Background Information of H & M.........................................................................................................3
External Analysis....................................................................................................................................4
Internal Analysis:....................................................................................................................................6
Strategic Options.....................................................................................................................................7
Strategy Selection and Justification.........................................................................................................8
Recommendation.....................................................................................................................................8
Conclusion...................................................................................................................................................9
REFRENCES............................................................................................................................................10

INTRODUCTION
Organizations are required to prepare appropriate strategies in order to achieve predefined goals
in minimum period of time. Under strategic management objectives are formulated by analyzing
external as well as internal environment to make optimum utilization of available resources
(Venkateswaran and Ojha, 2017). It is a process that contains ample of steps such as setting
goals, implementing as well as evaluating them in regular intervals. H& M has chosen for the
current report. It is renowned fast fashion brand based on has headquarters in Swedish. It
provides a range of designer clothes at consumers segments at global level. There are ample of
strategies are discussed in the report that are currently being applied by organization in order to
increase sales and profit margin. It includes a brief introduction about company in reference of
strategies. Further, SWOT analysis has been carried out to analyze the internal environment of
entity. To monitor the impact of external strategic environment over business operations
PESTLE framework has been included in report. Lastly, it includes some suggestions in order to
undertake necessary improvements to enhance positioning of organization among customers.
Main Body
Background Information of H & M
Hennis and Mautriz that is known as H & M established in the year of 1947 in Swedish. It is a
leading fast fashion brand which provides a range of designer clothes for men, women, and
teenagers. Majorly, brand targets wide segment of customers at international level(Balaman,
2016.) . This strategy make them differs them from other competitors such as Forever 21, Zara. It
is consider as a fashion brand that provides quality products at reasonable price to make it
affordable for all. Organization owns nearly 4000 outlets worldwide to serve global as well as
domestic audience. Most of its outlets are situated at such a place which is easily accessible by
customers. Company has head office in Sweden that monitors and keeps control over various
functions in order to operate it effectively.
There are ample of strategies that are used by H & M in order to attract more number of
buyers. The fast fashion model of company differentiates it from other rivalries by providing
designer clothes to end users at their nearby place in minimum period of time. Entity owns ample

of stores worldwide to make products available to customers at right time. In addition, efficient
logistic management and chain of retail stores provides sustainable competitive edge to
organization. Main focus of brand is to provide designer clothes to end users at reasonable price
to attract them towards products. With this, it is able to earn higher revenue by attracting more
number of buyers. In addition, managers of entity emphasis to reduce down the intermediaries in
supply chain management that helps them to minimize the unit cost of production thus improve
in profit margin. Further, all its outlets are easily approachable by customers that provide ease to
them to purchase necessary products. Hence, with above stated strategies company is able to
enhance the brand value at market place.
External Analysis
There are several external factors that significantly affect the sales as well as profitability of an
organization in an efficient manner. PESTLES analysis is a tool that is used to monitor how
macro environment put a significant impact on overall business setting (Banihabib, Hashemi-
Madani and Forghani, 2017). H & M is a leading company of fast fashion industry which is
highly influenced with external elements that can not be control by managers. In context of
selected organization various macro factors that are related to external environment are given as
under:
Political-It comprises present political condition, policies, rules and regulation such as
taxation, foreign trade policies and many more. H& M is operating in different countries thus it
is highly affected with the changes in current government policies worldwide. Company is also
working in some countries which are politically unstable such as Turkey, Egypt. In order o
operate business effectively in different nations entity needs to make necessary changes in their
existing strategies. For instance, managers had to adopt franchising practice in United Arab
Emirates, Kuwait and some other nations so that they can operate business in an efficient
manner.
Economic-IT comprises ample of elements like income, demand, supply, cost,
employment opportunities and many more. It is essential for an orgzation to constanly monitor
these elements to prepare effective strategies to operate business successfully. In context of H&
M, it is highly affected with Brexit that brings ample of uncertainties within country still
company manages to earn potential profit. Company provides goods at affordable price range

thus able to maintain higher demand at market place. In addition, change in taxation, import and
export policies in different countries make hamper the current performance of entity.
Social- As per the current market trend customers tends to purchase goods as well as
services that are highly innovative and creative. H & M is working in fast fashion industry where
people are influenced with social media, life style of celebrities and models. Now, the attitude of
customers has been changed as they are more conscious about their fashion statement. Thus give
preference to designer clothes. So, entity needs to analyze current market condition to cater the
needs of target segment (Barca, 2017).
Technological-In current digital era, it is essential for a company to adopt new and
evolve techniques to attain business goals in predefined period of time. Technological evolution
is necessary to create a difference and remain ahead in competition. H & M provides an option to
customers to purchase online through its website. In addition, company undertakes digital
marketing approaches in order to enhance its presence among domestic and global audience.
Further, effective methods to gather data from end user are also used by entity so that it can
provide most suitable products to them.
Legal-There are ample of rules, regulations, compliances that are made by
administrations of various nations to run business smoothly. These laws are essential to abide by
companies to avoid any legal disputes that may arise in future. H & M operates business at
global level thus it needs to follow the rules and regulation to operate business effectively.
Further, company is required to adopt intellectual property laws so that rivals cannot copy their
designs (Koseoglu, Law and Dogan, 2018).
Environmental-It is the moral duty of every organization to protect environment. There
is higher pollution is generated by textile industry through emissions during clothes
manufacturing. Government has been made ample of rules to minimize air and water pollution
and to secure environment. H & M adopts recycled materials in order to manage the waste in an
efficient manner. It also enhances brand image and goodwill of entity among potential buyers.
There are certain external factors that affect performance of H & M significantly thus it is
crucial for managers to analyze these elements and formulate effective strategies to minimize
future uncertainties.

Internal Analysis:
In order to make appropriate use of internal resources, it is vital to undertake internal
analysis. SWOT analysis is a tool which considered as a suitable framework to evaluate the
internal capabilities of an organization. With this company get to know their strength which
differs them for competitors along with the weak areas that need to improve. In addition, it also
comprises opportunities available in external market place and threats to organization from
rivalries. In context of H & M, internal strategic analysis of entity with the help of appropriate
framework is mentioned below:
Strength Weakness
Wide range of products such as accessories,
clothes for all segments are provided by
company that helps it to meet with the needs of
huge segment globally (Novikov, 2018).
H & M has strong presence at global market
place. It has expanded business nearly in 60
countries worldwide including potential
markets that are not targeted by entity till now
such as Asia, Africa.
Company possess good brand image among
market. H & M is perceived as quality products
provider in affordable price that helps to
increase its sales and profitability.
The most weak point of entity is that it is
depended on third parties to supply necessary
material thus it loss the control over
production. It is increasing cost of company
thus reduce down profit margin.
H & m focues to provide affordable clothes to
customers thus compromise with quality
sometime. So, premium customers do not give
preference to the brand.
Sometimes, entity also provides obsolete
designs that put negative impact on its image
among customers.
Opportunities Threats
There are huge opporutinites to make effective
use of unique techniques such as digital
marketing, automation in order to attract more
number of buyers.
Company can also expand its business in other
countries where entry barriers are low and it is
easy for H & M to survive at market place for
There are ample of rival firms present at
market place that is the biggest threat for
entity. It provides huge competition to entity.
Now, market trends are changing rapidly thus
company need to adopt effective strategies in
order to meet with the preferences of
customers in best possible way.

longer run. Raise in digital technologies are also a threat
for entity as now customers are shifting
towards the online ways of shopping that may
reduce down the number of visitors within
outlets.
Strategic Options
There are ample of strategic tool that can be used by an organization in order to explore
business at wide level. Ansoff matrix is a framework which comprises several strategies for
growth and success of an entity. In context of H & M, different strategies of business expansion
are given as under:
Market Penetration- It refers to provide existing products to existing customers segment.
Under this, company do not undertake any new practice in terms of market and products. For
this, managers offer various discounts, vouchers in order to attract more number of buyers. It is
analyzed that H & M provides ample of discounting offers on its fresh and well as old stock of
designer clothes. In addition, they located outlets at such a place which is easily accessible by
buyers that provides an edge to entity over rivalries. There are ample of small retailers have been
acquired by organization in order to enhance its market share. With this, it is able to sustain at
market place for a longer period of time.
Market Development-Here company launches existing product in new market place to
explore business at wide level (Priem, 2018). It can be done by entering into a new location and
targeting new segment of customers. H & M is a global brand that is working in various
countries worldwide. It can explore business by opening more outlets at various location across
the globe. For this, they need to create awareness among buyers so that they get to know about
the offerings of company. Further, company is using online platforms to market its product at
wide level that will enhance its presence in market place.
Product Development-In this, entity offers new products as well as services to existing
buyers. Mangers of H & M make modification in current products in terms of colour and designs
to attract more number of customers. Further, they take extensive market research to meet with
the needs of consumers effectively. In addition, managers of entity also aim to launch new range
of products to cater the requirements of huge segment at global market place.
Diversification- This is consider as an important strategy to expand business operations.
Under this, a new product is launched among new customers segment in order to enhance sales
and profitability of company. Although, it consider as better way to grow business but on the
another side there is high risk associated with this. In context of H & M, it can explore operations

by entering business by exploring in unrelated fields such as sports equipment, consumers
appliances and many more.
Strategy Selection and Justification
There are high competition is prevailing in market place thus it is crucial for companies
to adopt efficient strategies in order to sustain for a longer period of time. It is analyzed that there
are ample of ways by which entities can promote its product among buyers. From above stated
strategies Diversification seems to best suitable strategy for respective company. With this, H &
M can launch new product category by including some variants in that. In addition, they can
target to new segments of customers reside at differ countries worldwide. For this, organization
will be able to get competitive edge at market place. Further, Diversification is essential to
explore operations at large level as with this oorganizationorgororganiaxtuon orwitgoreorganiz
ation can open new outlets
Organization will be able to explore business operations at wide level. In addition, it helps to
make optimum utilization of available resources. In current competitive environment to sustain
in market for a longer period of time, it is crucial to adopt different diversify business. It is
analyzed that, in context of selected company it is the most suitable way to increase in sales and
profitability. Further, to enhance market share at global level. It is crucial for company to
diversify in different segment. In case of H & M, it can expand business in some related as well
as unrelated segment such as sports accessories, many more. Therefore, in context of respective
entity diversification can be understand as most suitable strategy to earn potential profit and get
competitive advantage. It will help to attract more number of buyers by providing them a wide
range of products (Shin, Park and Lee, 2016).
Recommendation
H & M is working at global level but it need to make some necessary improvements in
order to get future benefits that are elaborated below:
It need to invest in another categories such as sports, and other in addition of its present
category in order to expand business operations at wide level. It will help them to meet with the
needs as well as requirements of buyers in an efficient manner.

Further, company need to start their own manufacturing unit rather purchase goods from
suppliers as it increases their operating cost. With this, managers will be able to manage cost at
lower level.
In addition, entity can enter into new markets and expand business functions by
associating with other companies through undertaking joint ventures, mergers with another
organizations. It will assist them to serve wide range of customers worldwide.
Conclusion
With above discussion, it is monitored that strategic management are crucial function of
business entity. It is a wide concept in which several strategies are formulated to improve
position of company at market place. In addition there are a tool called Pestle analysis that is
essential to monitor the impact of external environment over business performance. Further,
SWOT analysis is undertake to internal capabilities of entity and make effective strtargies to
strengthen its position among buyers. Ansoff Matrix comprises several strategies to expand
business operations at global level and inflate the sales and profit margin. Recommendation have
been made in order to improve market position of entity

REFRENCES
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