Strategic Management: Analysis and Recommendations for H&M

This report provides an analysis of the strategic management of H&M, including an evaluation of the external environment, industry sector, resources and capabilities, and strategic options. It also offers recommendations for future strategic direction.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
External environment.............................................................................................................3
Industry sector........................................................................................................................4
Resources and capabilities......................................................................................................5
SWOT Analysis .....................................................................................................................6
Strategic Options ...................................................................................................................7
Strategic Selection and Justification ......................................................................................9
FUTURE RECOMMENDATION.................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategic management depict the effective development of prominent objectives for the
competitive business environment. It also identify the internal features of an organisation which
is useful in developing prominent strategies by ensuring that management execute these
strategies for the growth (Hitt and Duane Ireland, 2017). Strategic Management consider to
enhance and set the objectives after this analyse the competition level and also analysing the
internal situations of the organization. Strategic management help to create and evaluate the
effective strategy which ensures success to the management of the organization. Strategic
management provide the right direction so that company easily develop their plans and policies
so that company can achieve effectively organizational objectives. To carry forward this report,
H&M is considered which is a Swedish multinational clothing retailers and also known for the
fast fashion clothing for men, women, children and also founded in 1947 by Erling Persson. The
report tends to evaluate the internal and external audit with the help of prominent frameworks
and models. This report identify the the strategic options so that it will gives future strategic
directions to the organization. This report use Ansoff matrix model which help in marketing
planning of the company.
MAIN BODY
External environment
PESTLE Analysis: Political: Considering the global brand operations for the number of stores across the
globe it depict the effective monitoring of political risk for H&M. For this, company
tends to have franchised outlets in market which become its strengths and also tends to
expand its functioning considering Egypt, Turkey and so forth (Certo and et. al., 2016).
For this, company tends to closely monitor the political conditions which is feasible for
the stakeholders of company. Economical: Despite form the negative impact of Brexit it tends to brought the
currencies and respective company tends to report for its enhanced sales which is
increased by 7% for the local currency based and in 2016 it tends to grew around 10%
which is converted into Swedish currency.

 Social: Here, customers are impacted by media and celebrities in terms of opting the
materialistic lifestyle and new trends in terms of for the new designs for the fashion
products. For this H&M announces its latest designs that helps in meeting effective sales
and revenues. Technological: H&M tends to develop their app for the mobile devices in terms of
unveiling the usage of H&M and its functioning that tends to allow customers in terms of
collecting the reward points from their manual and online store to purchase products with
the help of apps on the mobile devices. Legal: H&M prominently involved in various legal disputes considering the
infringements for the clothing retailer (Trigeorgis and Reuer, 2017). For this, retailers lost
their patent dispute against the UK manufactures for infringing the coveted technology
that leads to damage the image of company.
 Environmental: The objective of H&M is the 100% renewable products by 2030 which
depict the meaning of the products that tends to generate from the old product and it
become strength for company considering the CSR activities which are durable and
recycled.
Industry sector
Porter's Five forces: It is an appliance to check competencies and ability to stand in the
competitive market of an industry which ensures its strength and level of high expectancy
growth. These appliances are used to check influence of all the forces which affects the industry
by its market share and try to acquire available resources to its full potential. There are 5 ways to
evaluate the problems an industry can face. Threats of new entrance: The problem of competition arises by facing new entrances in
the market who can be a barrier for the existing industry working on adequate level, by
challenging them through price discrimination, size of the venture, differentiation of
products at low price strategy, better quality product (Aguinis, Edwards and Bradley,
2017). Threat of new entrance is adequate for H&M as it has its own speciality with high
quality clothes. Bargaining power of suppliers: The suppliers of raw materials, semi-furnished goods,
inventories of renowned industry can set its bargaining powers by charging their own
price rather then market price and enjoy immense level of profit but it could not happen

with the H&M as it has not only one supplier but many of them are there who is ready to
join hands with them so the threat of bargaining power of suppliers is quite less or nil the
key of their success are in hands of its dealing company. Bargaining power of buyers: Consumer wants money worth satisfaction. Their utility
power is based on products which gives low price and more consumption. For a product
one is charging high price as compare to the one charging minimum market price at the
same market, consumer will shift its demand for less price product. The risk of
bargaining power of buyers Is quite high for H&M as some consumers are not quality
settled rather they prefer low price satisfaction until and unless consumer wants its
quality and the same flavour they used to get which will not shift their demand at any
cost. Threat of substitute products or services: Consumer is demanding and has enormous
needs. They can rise their demand as well as fall at some point where they could find
their substitute product at less price. In relation with H&M there is high possibility for
substitute products as many competitors came up in the global market like M&S, ZARA
for which H&M needs to focus on product oriented rather than service oriented, aid on
benefits, customer cost satisfaction.
 Competitive rivalry: when there is high competition in the market, an industry should
maintain its uniqueness in their product so that an industry itself enjoy its competition.
every huge firms has its competitors which are ready to take market forces into their
hands by providing relative product substitutes in the international market (Meyer, Neck
and Meeks, 2017). H&M has high competitive rivalry as it has some unique products
which can only be sell by H&M and maintains its brand image in the global market.
Resources and capabilities
VRIO Analysis:
Resources Valuable Rare Imitable Organised
Products and
services
Yes - - -
Employees Yes Yes - -

Distribution
network
Yes Yes Yes -
Financial
Resources
Yes Yes Yes Yes
 Valuable: It tends to depict the valuable factors which are essential for company in terms
of opening doors by showing up the importance in market and also helpful for company
in terms of joining the dangers outside the market area. It undertake effective factors
which are valuable for company including financial resources, products and services,
employees and distribution network. Rare: It depict those resources which are rare for the company including the assets for
the effective investigation on the basis of effectively developed the significant ability for
the representatives (Baumgartner and Rauter, 2017). It also offer prominent deal for the
speculation for the future to arrange the effective factors. It tends to undertake various
resources including employees, financial resources and distribution network. Imitable: It include those resources which are copied and imitated by other individuals
and organisations and for this, company tends to use various techniques that need to be
follow to use the prominent assets for company. It leads to undertake financial resources
and distribution network.
 Organised: It tends to undertake those resources which are composed and effective
recognised for the effective examination of company on the basis of suitable sources. It
also leads to open doors for the market in terms of offering effective information and
include financial resources.
SWOT Analysis Strength - H &M company contain a global presence with the effective brand image
which influence many customers. Company gain high customers satisfaction through
affordable and convenient price. Company financial stable so that it is also consider the
strength of the company. Weakness – Company faced huge increase unsold stocks and inventory and company
response slowly on the changing the latest trends. H &M company also failing their
mall strategy in US.

 Opportunity – Company has a opportunity to improve their popularity on online stores
so that company can increase their sell in global market which help in increase the
consumer power of the customers. Company can develop a effective strategy so that
company can launch existing products into new market.
 Threat - H &M company need to change the global dynamic. High level of
competition also a big threat for the company. Company has lack of innovative and
creative products according to the current trends.
Strategic Options
To evaluate the strategic choices and future strategic direction purpose H&M Company
analyse the Ansoff matrix model which is a very useful strategic direction tool. The explanation
of this Matrix as follows -
Ansoff Matrix
Ansoff model developed by the Icon Ansoff and it is considered as a core strategy tool
for the business. Basically this matrix model is used for the marketing planning purpose. This
model is useful to identify that which strategy company should use so that company can achieve
their market task. It is also known as the Market grid matrix. There are four strategies involved
in this matrix which are discussed below-
 Market Penetration: It is a lower risk strategy for every business that sell existing
products into existing market place. That strategy possible when market place are
growing and companies still trying to make other marketing mix strategy and
promotional activities. Through this strategy H & M company mainly increase the sales
with the help of existing products in the old and well established market. This strategy is
less risky than other Ansoff strategy (Ansoff, et. al., 2018).

Illustration 1: Ansoff Matrix Model, 2020
 Product Development: This a second strategy tool of the strategic option. These model
develop new products into a existing market and sell new products to the existing
customers. In this strategy the product and it's promotion will change that's why risk is
more in this strategy as compared to the market penetrate. The success of product
development strategy is depend upon the company research which company conduct at
Marketplace to know the customer need and the internal capabilities of the company to
innovate different things. H&M Company is very famous company for fashion brand this
company introduces products time to time and follows the latest trends. Through this
strategy H&M launch new products in the old existing market so that company provides
different features and variety of products to their existing customers. Market Development: This is third strategy given by the Ansoff matrix. This third
strategic option develop an existing products and services in to the new market
place .This strategy is more risky than the market penetration strategies because new
market contain own complexities. The marketing mix consider the changes in the "place"
and promotional activities .H &M is a big brand and company main focus is to expand
their market all over the world so company expand their old and existing products in to

the new market place so that company sell increase and H & M company can earn more
profit (Bindra, Parameswar and Dhir, 2019).
 Diversification: This is a fourth and last strategy of the Ansoff matrix. The main motive
of this strategy is to develop new products in to totally new marketplace. This strategy is
more risky than other strategies because the company expands their business in the new
and unfamiliar market. This strategy contains the potential to earn more revenue. H & M
is a most famous brand well established brand.(Makadok, Burton and Barney, 2018).
Through this strategy, H &M is fashion brand which offer fashionable products in a low
price. With the help of this strategy, company can reaching new the market place with
new products. This strategy provided a good potential for the development and growth
but also a huge risk and failure.
Strategic Selection and Justification
Strategic Selection
For H & M company purpose, this report suggested the “Market Development" strategy
of Ansoff matrix for the future strategic purpose. Through this strategy H & M company easily
access their current products and services in new market segment. This is considered as a growth
strategy which expands their sales in to entirely new market. H&M Company can try to sale their
existing products with additional features so that it gives benefit in the enhancement of company
market value and sales. The strategy in boost the company sale and generate more profit and
besides this, this strategy create more marketing opportunities for the company because company
expand their business in new market (Kaar and Stary, 2019).
Justification
The justification to use "Market Development" strategy for the future purpose growth of H
& M Company considered some basic aspects that determine the market growth of the business.
Through Market development strategy, H&M company easily target various geographical areas
and market at home country or abroad. Company can use various sales channels like online
platform or direct sales channels through stores. H &M company also can use Market
segmentation so that company easily identify and target different people and group of people ,
ages ,gender consider demographic profile. H& M can use marketing Mix so that company easily
know how to establish proper way in new market and how to create good impact so that
company re position their products value in new market.

FUTURE RECOMMENDATION
In this report , H& M company identified the impact of external environmental through
PESTLE analysis and identify that economical and legal factors affected the most so that H & M
need to revisit their budget plan and determine company financial priorities and use specific
tools so that company can increase employees retention. To deal with legal factors, company
should familiar with the specific applicability of Laws and keep things confidential. Through
porters five forces model, H&M analysis the competition in the market and identified the
number of competitors at the marketplace. H& M need to provide specific discounts and offers
with good quality products so that company can attract large number of customers. VRIO
analysis basically internal analysis tools which help to protect the company all resources that
provide company a long time competitive advantages ( Schawel and Billing, 2018). H & M need
to use this framework to analyses the value of their products and who to take advantage. This
report also evaluate the Ansoff matrix which provide four strategies in which strategies,H& M
need to use Market Development strategy which help in operate current products in a new
market segmentation so that company can expand their market and take benefits from the new
audiences (Tsatsoula, 2018).
CONCLUSION
With the help of above discussion, it is identified that strategic management is essential
to identify the prominent condition of company by offering suitable direction considering the
development and growth. For this, prominent strategies and frameworks are identified for having
effective direction to an organisation. Moreover, it is also identified that current vision and
mission of company align with the demand of market and also tends to develop prominent
strategies for the core business.
As per this report it is concluded that strategic management help to maintain all the
marketing activities of the company so that company easily survive at the marketplace. For
company growth internal and external analysis is really essential. This report mainly deal with
the internal and external analysis tools which help the company to identified the impact of
internal and external environmental factors. Company can conduct market research and analyses
influence of these factors through specific analysis tools. Company used PESTLE analysis to
identified the impact of external environmental factors and used porters five forces model to
determine the competition level so that company can take competitive advantage. Company

evaluate VRIO model so that company can cover their capabilities of research which help in take
the competitive advantage for a longer period of time . In this report, Ansoff matrix is also used
to analyses the strategic option for the future purpose of the company so it analyzed the company
should apply Market Development strategy for future growth purpose.

REFERENCES
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