Strategic Management for H&M

This document provides an analysis of the strategic management of H&M in the fashion industry. It covers the strategies background, external analysis, internal strategies capabilities, direction tools, and future strategies options. The document also explores the Ansoff matrix and Porter's generic strategies.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................3
Strategies background for H&M.................................................................................................3
External analysis of H&M fashion industry................................................................................3
Understanding internal strategies capabilities.............................................................................5
Direction tools for H&M strategies and future strategies options...............................................6
Justification and recommedations for drection tools...................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Strategies management involves in developing and implementing plan for major goals or
objectives initiatives which is taken by top managers of organization. This management provides
direction to organization and involving in making objective, developing policies and allocating
resources for making plans (Abu Amun, Al Shobaki and Abu-Naser,2017). H&M Swedish
retailer one of the best brands in world's most recognizable fast fashion in clothing for men's,
women's, children and teenagers. Company was founded by Erling Persson as retailing clothing
industry, which makes online shopping in many other countries. These report examined about
strategies background of company, understanding external and internal strategies capabilities.
Also, evaluating direction tools used in choosing H&M strategies and future direction strategies.
Strategies background for H&M
The H&M company planning and putting our their efforts towards earning large number of
percentage of customer around the world and provide facilitate for customer online shopping.
The collection of company is numerous which covers all age group with high quality styles that
even more fashionable people can buy product within their budget. Due to decreasing their
global profit company has cancelled many international plans about to open stores (David,2019).
Their latest strategies involves in developing new products and operating structure and
modifying them for having higher profit margins. They have main focuses on providing more
stylish fashion to customer and while by adopting these strategies main aims to require
international business and develop themselves as important participant at fashion industry. They
have also started new incentive which is major responsible towards environment because their
management think that it would be the best successful key strategy for organization which
provide their customer best fashion brand with quality and at affordable cost.
External analysis of H&M fashion industry
In developing and understanding macro-environment company PESTEL will be followed as
discussed below-
Political:- H&M is international company which operates in several countries globally, so they
have to face various guidelines for political factor and quite have monitoring on political risk
which is increasingly important in H&M ( Firoz, Rashidirad and Firoz ,2019). The company has

avoided some international political risk by involving into franchising collaboration with
partnership with Saudi Arabia, Indonesia, Egypt and many more. As, international market of this
company has avoided many government regulatory requirements with these countries.
Economic:- Since from last past three years, company has threatened with US dollars which has
invariable strengths in market. H&M also suffers from many economic aspects such as inflation
rates, interest rates due to influence in many other countries. In economic factor sometime their
can e increment in import taxes, impart laws and duties it can be hard for H&M to adopt changes
in stable price strategy ( Loredana,2017). As per changing time financial stability of customer is
nit same their can be changes in buying behaviour of customer and many times they are enabled
to spend more on high level product and services as well as on luxurious items.
Social:- In recent time many of people are become more aware and have blindly trust on good
quality which are being socially responsible as well as value for many products. Generally
company also focused on fashion products to meet with raising demand of customer needs on
latest and new designs. Teenagers keep tracking many new products and keep analysing very
aspects of product, as they try to invest their earn money into the best quality product. H&M
research states about employees women than men, especially at office or store or at broad
level( Lynch,2018). The company has recently partnered with International labour organizational
in improving their working condition and better wages and salaries to their employees.
Technological:- Just having competition with other business, H&M has accepted the importance
of technology in business. For example, H&M has developed online shopping business through
e-commerce, according to H&M, this approach can be more dramatic specially at sales and
marketing field. To boost up online shopping company has launch mobile app that allow
customer to purchase online as well as collect rewards points ( Makadok, Burton and
Barney,2018). Hennes and Mauritz has reputed technology advancement and that have been
more impressive in maintaining strong technology supply chain network in their company.
Environmental:- H&M has contributed largely in unwanted environmental pollution. However,
the company started using recycled material and old materials form their
industry(Marmolejo,2018). Strategy for environmental factor company develop their new
products from old products while in doing these H&M has avoided problems from government
and communities agencies such as in protecting environment bodies.

Legal:- H&M is very concern about norms and regulation of government. Some rules and norms
are mandatory to follow which affects the company profits but still H&M do not try to break
down the rules (Martins, 2020). Company need to work with their own risk management for
organization to keep from future conflicts by that they can affect their brand image. It is
international company which follow the tax laws provided by different countries where they
have stores.
Understanding internal strategies capabilities
Hennes and Mauritz group is Swedish retailing company engaged in designing clothes and some
other accessories. It is second largest clothing brand in world and famed of its own fast fashion
brand. To understand more about company following are SWOT analysis for internal strategies
capabilities-
Opportunities and Threats to H&M
Opportunities:- H&M is retailing company which offers wide variety of range in products and
huge amount of profits. In comparing with other brand like Zara, H&M have more exploitation
in e-commerce channels and more revenue on their online sales. In recent time people are more
brand conscious and have more purchasing power as their lifestyle are improving across the
world, thus it provides the best opportunities for brand in making their brand image (Shtal and et.
al.,2018). The company has earned more from online market and soon it will open more online
market in many more countries. Hence, this growth will help company to improve their
performance and able to maintain themselves in market.
Threats:- Company is facing more difficult competition in market with other brands like Zara,
Macy's and so on, as these competitors are seeking to increase more market share whereas H&M
products demands are reducing. Basically fashion industry has more fake products with
increasing more commerce in fake products and profits from H&M is decrease from future
market(Trigeorgis and Reuer, 2017). In worldwide the profits for retailing fashion industry is
decreasing more because of increasing costs in raw material and labour costs. Recent pandemic
lock downs and quarantine has reduced profits and sales in H&M company and break with future
aspects.

VRIO Analysis
The following VRIO analysis depicts the internal resources and analyse that these resources of
H&M provide any sustainable advantage to company. The resources of the company are
categorized in the following 4 categories –
Valuable – For H&M, the financial resources are the most valuable resources as it helps the
company with investing in opportunities and in fighting threats. Employees who are human
resource and asset of the company are also valuable as company have highly skilled and trained
employees. Patents and distribution channel can also be considered in valuable resources because
it helps H&M in selling its products without any competitive interference and attracting more
customers. H&M’s cost structure and research and development are not the valuable resources
for the company.
Rare – Wile analysing the rare resource, it can be analysed that financial resources, H&M
products, human resources are rare because HR of the company is highly trained, Financial
resources are the company’s hardwork over the years and patents cannot be easily acquired as
they are expensive.
Imitate – Financial resources are expensive to imitate, products of the company are not that
expensive, employees are also not that expensive to imitate, patents and distribution network are
very expensive and difficult to imitate as it is developed gradually over the years.
Organised – It can be analyses that the financial resources and the distribution network of H&M
is well organised and patents are not that organised means company is not taking full advantage
of its patents.
Strengths:- H&M retailing business have effective on selling strategies at higher profit turnover.
Company uses fast fashion model for their customer trends and these strategies allow for fast
delivery from designer to each store. H&M has become most sustainable fashion retail company
which explore flexibility and effectiveness on cost to offer high quality product at cheaper rate
(Pellinen,Teittinen and Järvenpää,2016). It has strong online platforms where numerous of
audience are engaged through e-commerce. H&M is global company which has efficient supply
chain to maintain connection with their suppliers and customer more effectively.
Weaknesses:- In some countries like European and Asian, H&M outsourcing production is over
more thousands of independent suppliers (Rothaermel,2016). The company is popular for

making affordable clothes within budget, but sometime it affects the quality of products as well
as other products of H&M.
Direction tools for H&M strategies and future strategies options
Porter's generic strategies-
Porter generic strategies means organization pursuing their competitive advantages across its
chosen scope at market. There are generally three generic strategies which are as followed :
Cost leadership strategy:- This strategy focuses on low cost producing goods and services with
best quality. H&M sells their product at average price or within their budget ( Makadok, Burton
and Barney,2018). The cost leadership strategy mainly target to board market. The company has
acquire cost advantage in improving their process and gaining access their large source in
cheaper raw material.
Differentiation strategy:- This strategy helps in developing products and services that offers
attributes to customer and customer are satisfied for having better than other
competitors(Marmolejo,2018). Differentiation strategy involves risk to H&M from their
customer changing tastes or competitors.
Focus strategy:-This concentrates on segments of narrow and segments are achieving either
differentiation strategy or cost advantage (Martins, 2020). This strategy helps in H&M to enjoy
the customer loyalty and also discourages other firms from competing them directly.
Ansoff matrix in H&M-
To understand direction tools and future strategies in market of company the following are the
Ansoff matrix of organization:
Market penetration:- This penetration strategy for producing existing products in existing
markets. The first strategy company always use discount offers that can be in forms of sales in
specific time period on large purchase like buy one get one free. The company also motivates
their customer in buying their products and stay with their brands. H&M in different countries
acquired smaller retailer just to reduce their competition and increase its market share
(David,2019). By having marketing huge budget it also creates new barriers and developing their
brand name H&M to be successful and the company can set huge budget for advertising but
some other new entrants can't afford it. At strategies location company can create new outlets for
store that can encourages the customer to visit their stores and purchase some product within

their budget. This market penetration strategies helps company to increase their sales for the
brand.
Market development:- in these development exiting product are develop into new market. H&M
company regards to enter into geographical location for successful their market strategies. The
first way company can use to enter into new market where company has no new stores. Create
new strategy in new outlets in that market where company is already increasing their consumer.
When entering into new market company has to focuses on customer demands and needs and
company has also huge expenses for market in creating awareness among their customer for
brand. H&M has started focusing on online shopping at various stores in different countries
through e-commerce (Firoz, Rashidirad and Firoz ,2019). This also include low products or
premium cost for all customer at different levels. Each of them play a important roles for
succession in market development.
Product development:- This strategy helps in launching new products in existing market. These
can helps company in developing new products. There can be with some new designs or with
new colours in existing products. Basically company create new product because old product is
not been sold( Loredana,2017). At the time of launching new product they keep strategies of new
cloth trending and their material and designs, each designs is created with customer feedback,
accordance to their needs or market trends. Feedback is must taken form customer after
launching the product.
Diversification:- This require launching new products into new market. The company operates
only clothing and some accessories industry, so it can be diversified into various ways. Company
can vertically diversified by developing themselves into cotton fields and textiles mills form their
suppliers and it can be horizontally diversified into various other business such as sports, hosiery
and so on( Lynch,2018). Diversification is more risk for company as it diversify into unrelated
industry such as Smartphone, consumer electronic etc. and it can also helps in growing their
business.
Vertical and Horizontal integration-
Hennes and Mauritz company is the second largest company in world which pursing vertical
integration for fashion industry which describes about their own whole business, from sales too
supply. In vertical integration manufacture produces their owns goods and sell their own stuff.

H&M manages its own production, shipment, display, promotion, sales, design and also have
itself feedback for outsourcing work (Tukdeo,2016). This integration in retailer company has its
own brand stores as it owns manufacturing, retailing and maintain the distribution. Generally, it
cut down the middleman from their stores, as it can offer products with brand name at much
lower price.
Horizontal integration means where two companies providing same supply chain stage and also
produce same product and goods like H&M and Zara are horizontal integration which produce
same goods and product with their own benefits strengths (Abu Amun, Al Shobaki and Abu-
Naser,2017). These both company sales their same product in different countries and also
sharing some common resources to different products. It increased power in market and helps in
reducing cost.
Strategic Methods -
Organic Growth strategy – H&M is a well established company, it can use this strategic method
for its growth and development. Company has enough financial resources so it does’nt have to
borrow and can maximise its output, by increasing efficiency and speed which will lead to higher
production and higher revenue.
Merger and acquisition – In this method, generally strategic buyer undertakes does M&A for
their own strategic objective of expansion. Company like H&M who have great financial
resources may not go for merger but may acquire some company for its expansion.
Strategic Alliance – To expand its business, into new market or improve its product line with
developing an edge over its competitor, H&M can do an arrangement with some other company
who can mutually benefit themselves with this project while retaining their independence.
SAFE-
SAFE approach helps in assessing suitability, acceptability, feasibility and evaluation of
available options to H&M for choosing strategy –
Suitability – This is the key factor in this model, it helps the H&M to analyse where the strategy
that company has formulates will result into what company want it to do. It assess on the basis of
different criteria such as suitability on the basis of environment, expectation and capability.

Acceptability – This aspect of this model helps in measuring the risk involved, return expected
and stakeholder reaction from the selected strategy.
Feasibility – This factor is very crucial as it have ability to make or break the chosen strategy.
This aspect analyse the financial feasibility of the company by examining the cash flows,
performing break even analysis etc.
Evaluation – This factor in the model, analyse the chosen strategy by evaluating it by
considering all the above aspects in detail.
Stakeholders’ Analysis – This framework helps in analysing and determining the different
stakeholders which must be taken into account or considered while developing and implementing
policy.
H&M identifies its different interested stakeholder such as internal stakeholder (Owners, BOD,
managers, employees) and external stakeholders (customers, regulators, investors, shareholders,
suppliers etc.)and prioritize them and use the power interest grid to analyse the power and
amount of interest that people have in company’s project.
Justification and recommendations for direction tools
Vertical integration direction tools-
This integration can have a great advantage to competitors in market, which allow them to
produce or develop and invest in current market. H&M can raise their market share and
increased their profits sales (Pellinen,Teittinen and Järvenpää,2016). In company it maintain
supply chain which could help in control the production aspect in their distribution process.
These can also bring many more difficulties for company and may be results in decreased
flexibilities. H&M has to invest more money for maintain vertical integration while this make
things more difficult.
Horizontal integration-
It also has benefits in market share and market price for their products in H&M. Have some more
additional benefits as reducing production costs and reducing competition with other brand
(Rothaermel,2016). while two companies are operating the same product there will be large base
of customer.

While customer are more confused in same product with different price and reduce the growth of
company and also reduce flexibility.
Ansoff matrix-
These matrix helps H&M in developing business and increase market sales and price.
Market penetration is quick adoption for product in market and also helps in creating awareness
of product among customer as they can use referral points for shopping(Shtal and et. al.,2018).
H&M offers online shopping through e-commerce by which customer can have more offers and
discount on their products and earn more points and also gain customer loyalty card.
While starting before market penetration might involving loss in selling their product and it is
risky. If customer do not have loyalty card sometime it can decrease company sales.
Market development has low research about their product and have more cost in development.
H&M is more flexible about their customer while developing product and are willing to work
with their customer.
High price at time of market development and more productive efficiency with less choice for
customer about their product.
Product development in market of H&M they offers or discount on their product and it will
attract more customer within to their industry (Trigeorgis and Reuer, 2017). People will try to
connect to experts and innovators.
The process of developing product can be fail sometime and there are numerous number of
external sources are involve and this can influence the business and brand of H&M.
Diversification, as recent time people tastes change when their lifestyle and fashion developed so
it can help H&M to maintain balance between the people and company.
H&M is widely company so quickly changes in market could not be respond and their focuses on
operation is limited.
Porter generic strategies in H&M has three strategic:
Cost leadership helps in providing profits in company as team or individuals and also increase
market share(Tukdeo,2016). This cost increase capital growth that can be used more in business
and also reduce competition at market.
Cons in cost leadership reduce innovation in product and reduce customer feedback regarding
product. It requires more sales at huge amount to make H&M successful.

Differentiation strategy focus on marketing strategy and company generally focus on teenagers
for selling their products and give them some advice for motivating some other customer to visit
their stores.
Sometime on their brand people do not believe or either not understand their benefits.
Focus strategy develop relationship between their target market and also helps in improving
structure of pricing in H&M (Tukdeo,2016). Cons in Focus strategy that has limited future
growth in business and have less demand of product and services.
CONCLUSION
This report concluded the strategic management of company H&M which used different ways in
analysing the company internally and externally the fashion industry. Report emphasis in
identify and developing business resources and capabilities for their growth in future. Integration
involves expanding in supply value chain, company was entered into new suppliers business will
be forwarded to vertical integration. Developing of new product into market Ansoff have
suggested future strategic tools to states the direction of market and porter generic strategic cost
leadership in company have offers many cheap prices for selling products and services and also
focused on growth and expansion of market share.

REFERENCES
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