Strategic Management: H&M Case Study

This study focuses on the strategic management process and analysis of H&M, a Swedish multinational retailer. It covers the company's background, external analysis using PESTLE, evaluation of strategic capabilities using VRIO analysis, strategic options using Ansoff matrix, and strategy selection and justification.

STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
1) H&M – background information............................................................................................1
2) External: Fast fashion industry analysis.................................................................................2
3) internal: strategic capabilities.................................................................................................3
4) strategic options:.....................................................................................................................5
5) strategy selection and justification..........................................................................................6
REFERENCES...............................................................................................................................8

INTRODUCTION
Strategic management is the process of formulation and implementation of the objectives
and goals of the organisation. That are based on the resources and an evaluation of the internal
and external environment in which the organisation operates. This provides the overall direction
to the organisation and includes specifying the business objectives that has to be achieve by the
management by working according to the following strategies. It also involves developing plans
and policies to achieve the objectives and allocation of the resources in order to implement the
plan into the action (Ansoff and et. al., 2018). For this managers have to develop various models
and framework to help in strategic decision making in the preceptive of the complex
environment and competitive dynamics. Strategic management is not static in nature this changes
according to the departments and according to the internal and external conditions. This model
also includes the feedback to monitor the execution and to making the strategies for the future.
Strategic management process is guide up by the top level actions and decisions which also set
the objectives and goals of the organisations. Companies of all size and and in all industries use
this model in order get its benefits of achieving goals and objectives effectively.
This study is based on the H&M company that is swedish multinational retailer that deals
in the fashion clothing and accessories for men, women, teenagers and children. This operates in
the 74 countries with over 5000 stores. This project study involves H&M background
information, PESTLE analysis of company to evaluates the external environment, furthermore it
has VRIO analysis to understand the strategic capabilities of the company, strategic direction
tools, selection and justification of the strategies.
MAIN BODY
1) H&M – background information
HENNES & MAURITZ is a Swedish multinational retailing company. It deals in fast
fashion clothing for men, women, teenagers and children. H&M operates in the 74 countries with
over 5000 stores that sells under the various company brands. this company is founded by the
Erling Persson in 1947 and after ward runs by his son stefan persson and Helena Helmersson.
This got the second largest clothing retailer in the world (Baumgartner and Rauter, 2017). And
this makes online shopping stores available in 33 countries. First shop was opened in the

Vasteras, SWEDEN called Hennes(Swedish for “hers”) that exclusive sold women's clothing.
H&M continued to expand in the europe and started retail online in 1998 when it got the domain
hm.com from a company called A1. Branding consultancy interbrand ranked this company as the
twenty-first most valuable global brand in 2009 and 2010. now H&M has the stores located
internationally. H&M has announced that they are planning to close 5% of their worldwide
stores in 2021 due to the result of COVID-19 pandemic.
2) External: Fast fashion industry analysis
To examine the external factor pestle analysis is the most suitable model. As it is the
framework which used as a tool to analyse the macro environment of the organisation. H&M
external analysis is explained below:
Political factor: This factor refers to the laws and decision made by the government. It
involves tax rates, labour policies and political stability etc. this factor provides advantage to the
company as UK has a adequate political stability (Bryce, 2017). Furthermore, it also has negative
impact due to the massive political controversy of racism and hurting the emotions of the
Africans. That effects the brand image and productivity of the company. As to overcome this
company later apologized and more focusing on to the following the laws and decision of the
government effectively.
Economical factor: This factor is consist of the goods, services and willingness of the
customers. Economy of the UK is quite strong and has a flexible tax structure which is a positive
aspect of the company as customers are willing to pay even higher prices. That will increases the
sales revenue but on the other side company get effected negatively due to dynamic borrowing
and lending rates. In order to overcome this company develop and formulates the effective
economic strategy.
Social factor: This factor includes family, friends, colleagues, and social groups. That
effects the individuals lifestyle, attitude and opinion that directly effects the sale of the product
and sales revenue. Clothing is the field where people get influenced by the social media and
celebrities. Thus promoting the goods through social media and creating the ads with the famous
faces increases the product image and sales (Hanson and et. al., 2016). Moreover, as it is the fast
fashion industry where people prefer more designers clothes and changing trend attitudes effects
company negatively. As it is hard to recognise the customer preferences on a daily basis. For this

buying behaviour has to be analysed so that optimum level of satisfaction provided to the
customers.
Technological factor: This is defines as a change in the technologies and process that is
use by the company for its production. Technology improves the customer base that provides the
advantage to the company as UK has a rapidly growing technology environment. With the
support of this H&M increases its productivity and operations by using latest technology. But
this is also a disadvantage as technology is changing so fast which needed heavy investment in a
regular period of time. To solve this company need to do a proper analysis on the upcoming
technology and on their durability.
Legal factor: This is define as a rules and regulations made by the legal authorities that
positively or negatively effects the result of market action and decision of management. UK has
many laws for the employees like holiday pay, sick pay maternity and paternity leaves etc. that
has to be followed by the company (Hitt and Duane Ireland, 2017). That will make H&M
employee more motivated and feel job security which results in to effective productivity and
performance. On the other side UK has a rigid and strict rules regarding the negligence of any
law made by the government. Company bear the obligations and heavy penalties. For this
company gets the experienced and legal advisor which did the proper analysis and make policies
and strategies according to the laws.
Environmental factor: This involves temperature, food, pollutants, natural calamities,
pollution density, light and sound that influenced living organism. Government in UK provides
compensations and subsidy to companies who are using the eco-friendy process. But textile
industry is the second largest polluting industry for that government made regulations in order to
control pollutions. Which restrict the company to produce with the full efficiency. H&M
formulates the goal to use recycled clothes material for its production.
3) internal: strategic capabilities
VRIO Analysis is a analytical tool which is used to evaluate resources of company and
this creates competitive advantage for organisation. This model was developed by Jay B. Barney
for evaluating resources of firm such as human, financial, material and non material resources.
This analysis is a complement of PESTLE analysis (Hitt, Ireland and Hoskisson, 2016.). This
matrix is used for assess situation which is inside enterprise as their competitive implication,

resources and potentiality in improvement in given segment by given resources. This is
considered as basic process of strategic that each company is begins with vision and mission
statement by consistency in their objectives.
RESOURCES VALUABLE RARE IMITABLE ORGANISED
EMPLOYESS YES - - -
TECHNOLO
GICAL
ADVANCEM
ENT
YES YES - -
PRODUCT
DIVERSIFIC
ATION
YES YES YES -
FINANCIAL
RESOURCES
YES YES YES YES
• Valuable: In case of H&M company, employees are the valuable resources that helps in
achieving the targets of the company. If the employees in the organisation works with the
full potential and effectiveness then it helps business in to gain the competitive
advantages. And also earn the high revenue and profit margin that is needed for the
longer sustainability in the market.
• Rare: For the H&M company its technology which is used in the operations is rare. That
is not be used by the other company. By customer got attracted and gain the fair profit by
using the techniques in a effective manner (Lynch, 2018). Technology can be used for
clarifying the customers problems and provides the them optimum level of satisfaction by
which they feel connected to the enterprise and get connected with company.

• Imitable: In this product of H&M are imitable and cannot be copied by the others which
makes the company unique and different from others on the basis of there goods and
services. This attract the new customers by providing them quality services.
• Organised: Financial resources of the company are organised effectively and efficiently
so that they can invest in a adequate manner in the project to gain the customer trust and
in competing with rival firms in the market place (Meyer, Neck and Meeks, 2017).
4) strategic options:
Ansoff matrix is a widely used model which is used for strategic planning for the
marketing. Where it can be applied to look at the opportunities to grow revenue for the business
through developing new products ans services or entering into a new market. It involves various
alternative combinations for new market against product and services. It describes four growth
alternatives for growing organisation in existing and new market. Ansoff matrix analysis in
context to H&M is explained below as:
• Market penetration: It is the strategy, where business tries to grow its market share by
offering existing product in the keep going market. It involves giving discounts, sales
during specific times or adding a new feature in a existing product. H&M has also
acquired various small retailers and in order to decrease the competition and to increase
the market share. H&M has also creates a new store outlets at a strategic locations that
encourages the customers to buy from that store. Theses market penetration strategy is
adopted to increases the sales of the company.
• Market development: In this strategy company promotes and launched its existing
product in the new market (Michael, Storey and Thomas,2017). H&M also use in this
strategy by entering into the new geographical markets where company does not have
any stores. Where incurs huge expenses in marketing to aware consumers about the
product. I has also creates different pricing policies to target specific market segment.
That provide support in to the low cost products or premium products which aims at a
certain social class. By which company focuses more on the quality of the services.
Theses market development strategy initiative helps in to success of the organisation.
• Product development: This is the strategy of launching new product in existing markets.
H&M does it various ways in terms of new design and colours in the existing product.

Company also develops new products which is not selling earlier. Each new design that is
develop is based on the customers feedback, consumer needs and market trends. Once a
new product is developed it is launched across the industry. The launch of new product is
needed massive marketing activities to make consumer aware about that. Existing
product is also improves after initial launch. Every development of new design needs
time and efforts. Each strategy is useful for the organisation as it results in to make the
brand recognise and brand image at the market place.
• Market diversification: This strategy is used when organisation requires to launch new
product in the new market (Morden, 2016). H&M is only operates in the clothing and
accessories industry. Various ways adopted in context to diversified the market like
horizontal diversification and vertical diversification. Related industry diversify is easy
rather then a unrelated industry for example sports equipments, electronics etc. And each
strategy helps in to the expansion and success of the company.
5) strategy selection and justification
Strategy selection is the task of choosing the best alternatives among the various
combination of alternatives. Decision maker has to re-examine all the major assumptions on
which strategies are based and that has to be in consideration. This selection is to be based the
their potential returns it will provide to the firm. As it has the responsibility to guiding the whole
organisation in performing their operations. Strategy selection is the important and critical part as
functioning of the organisation is based on the strategies that is selected by the upper level
managers. Wrong decision can hamper the performance and productivity of the organisation.
That effects the growth and success of the organisation.
Product development strategy should adopted by the H&M company. In which firm
launched new product in the existing market in order to make brand image. This increases the
quality of the product and performance that helps sales team to develop the competitive
advantages in order to perform better then the competitors (Peppard and Ward, 2016). Improved
performance also helped in increase the profit and sales revenue by charging higher prices for the
premium products. And its also improves reputation in order to provide better quality. Setting
targets for the quality improvement in the product development enhance the sales and sales
revenue. Company can introduce the reliable and redesign the products to meet the customers

quality specification and requirements. Cost reduction is also a important product development
strategy. Lower cost provides flexibility in to lower the prices and win new business and
maintaining the prices increase the profit margin of the company. Here product development
team reduces the cost by using lower cost materials, process and eliminating feature so that
company does not need to redesign or produce new product that simplifies the manufacturing
process. Before adopting Product development strategy it requires market analysis (Pozdnyakova
and et. al., 2017). That is related to the customer needs, market requirements, available
technology and manufacturing process. That helps the organisation in to the identify the risk and
threats. And by this company is able to reduces the risk that results in perfection in the
implementation and success of the strategy in the market.
Conclusion And Recommendation:
from the above analysis it has been evaluated that strategic management is the essential
element of the company. as it associated with the formulation and implementation of the
strategies that provides the way of working in order to attain the organisational goals and
objectives. It includes development of the various models and framework to help in decision
making in the context to complex environment and competitive dynamic.
H&M is multinational company with the global brand recognition, thus time is changing
and new competitors are entering into the market. To compete with them effectively company
should adopt the competitive strategies like market diversification. This includes entering into
the new market with the new products that will increases the profit margin and market share of
the company. H&M can go for the horizontal diversification which can includes the products like
sports clothing, apparel, hosiery etc. it can also adopt the vertical diversify by establishing its
cotton fields and textile mills rather purchasing material from suppliers. This reduces the annual
cost and increase the profit and provide growth to the comapny
REFERENCES
Books and Journals

Ansoff, H.I. and et. al., 2018. Implanting strategic management. Springer.
Baumgartner, R.J. and Rauter, R., 2017. Strategic perspectives of corporate sustainability
management to develop a sustainable organization. Journal of Cleaner Production, 140,
pp.81-92.
Bryce, H.J., 2017. Financial and strategic management for nonprofit organizations. Walter de
Gruyter GmbH & Co KG.
Hanson, D., Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2016. Strategic management:
Competitiveness and globalisation. Cengage AU.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2016. Strategic management: Concepts and
cases: Competitiveness and globalization. Cengage Learning.
Lynch, R., 2018. Strategic management. Pearson UK.
Meyer, G.D., Neck, H.M. and Meeks, M.D., 2017. The entrepreneurship‐strategic management
interface. Strategic entrepreneurship: Creating a new mindset, pp.17-44.
Michael, S., Storey, D. and Thomas, H., 2017. Discovery and coordination in strategic
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Morden, T., 2016. Principles of strategic management. Routledge.
Peppard, J. and Ward, J., 2016. The strategic management of information systems: Building a
digital strategy. John Wiley & Sons.
Pozdnyakova, U.A. and et. al., 2017. Strategic management of clustering policy during provision
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