Strategic Management: H&M Analysis

This document provides an analysis of the strategic management of H&M, including background information, PESTLE analysis, VRIO analysis, Ansoff Matrix strategy, and strategy selection and justification. It explores the factors affecting H&M's success, such as political, economic, social, technological, environmental, and legal factors. The document also discusses H&M's market penetration, market development, product development, and diversification strategies, along with their advantages and disadvantages.

Strategic management

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1 Background information of H&M.......................................................................................3
2 Pestle analysis of H&M.......................................................................................................3
3 Vrio analysis of H&M.........................................................................................................5
4 . Ansoff Matrix Strategy......................................................................................................6
5.Stretegy Selection and Justification.....................................................................................8
CONNCLUSION.............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic management means the use of resources to achieve certain goals and objectives.
Strategies are changed according to changes in business environment. To achieve success proper
strategies are to be made constantly with proper planning (Ansoff and et. al, 2019). Whether the
business is small or its a large organisation strategies should be made with proper planning. It
includes setting the goals of the organisation, evaluating the strategies of competitors and then
making startegies for the company after proper planning (Côté, Vézina and Sabourin., 2017).
The below analysis is based on H&M. It is the clothing retailer Hennes and Mauritz which is the
most recognized and famous brand in fashion industry. It outsource the production mainly in
Europe and Asia and also introduced the pilot program through which company purchased
factories outputs.
MAIN BODY
1Background information of H&M
H&M business provides fashion at the best. It offers latest fashion and at the price which is
affordable by middle class people too. It provides best quality goods and has maintained
standards. To ensure that all goods are of best quality the manufacturing is done without the use
of any chemical and under better conditions (Hilorme and et .al ., 2019). It has become the
world's most famous and successful fashion retailer. It has sold more than 300 million garments
and has always sold clothes of good quality. In 1998 company entered France with 6 stores in
Paris. The strategy of H&M has always been same that is providing fashion and quality at best
possible price. The company is being the most consistent brand over all other fashion brands. It
was founded by Hennes who was salesman of another company. Hennes enhanced its clothing
beyond women's fashion and goals were achieved by the purchase of Mauritz which was a gun
shop (Gans, Stern and Wu, 2019). So, the name of the brand became Hennes & Mauritz. This
brand is still the most loved brand in comparison to all other brands. H&M expanded
internationally and enhanced the image in the existing market also. It became successful because
it provided good quality garments at a reasonable price.

2Pestle analysis of H&M Political factors: It means how the government policies may affect the organisation. It
includes political stablity as well as instability, tax policies and so on. In case of H&M, as
it is operating across the world so there will be high politcal risks for them. As there are
many unstable countries in which brand is operating like Egypt and Turkey. So, to deal
with them company makes various plans. Political instability will affect both company as
well as goals of the organistion. H&M also avoided some risks like it did not collaborate
with partners in Egypt, Thailand and so on (Key and Popkin,., 2016). There was an
incident happened in Bangladesh because of fire cases which led to decrease in their
sales. So, it made them belived that it is ruining their brand image. So, they started work
with those industries who does everything with proper safety measures. Economic Factors: It includes interest rates, inflation rates, unemployment as well as the
income of consumers. Due to these factors company may get affected in a major way. In
case of H&M , it got affected by Brexit. Due to this the prices got really high and as the
company were acquiring raw materials from asian suppliers due to which their profits
were decreasing. The brand also got affected by interest rates. As various laws changed
and changes occurred in taxes too so it became difficult for the company to have stabllity
in the prices. So, for this they decided to buy all the raw materials in bulk quantity from
those suppliers who are offering it at best rates. Social Factors: There are many factors like lifestyle, health issues, cultural barriers and
so on. The fashion industry is the only field which gets affected easily by social media.
As various celebrities promotes the brand which enhances their business as for every
brand promotion is very much necessary. In today's world everyone wants to have
designer clothes only so promoting the clothes on social media has increased the brand
success (Montanari and Bracker, 2018). For every company analyzing customers demand
is very much important so that strategies can be made according to that. The young
generation is active on social media so they should be targeted well enough and the
trends should be properly analyzed so that promotion is to be done according to that. Technological factors: Any change in the technology may affect the organisation in both
positive as well as negative way. It affects the decisions of the company that whether they
should launch the particular product or not. Most of the customers wants to purchase

everything online instead of going to stores and spent more time. H&M did the same, it
changed the technology according to the demands of individuals. It started its online
business as well. The company was also providing reward points to consumers due to
which customers were getting more interested in purchasing good from that particular
brand. Environmental Factors: It includes climate change which can affect especially the
farming industries. So, companies ahd to make various strategies according to that also.
As clothing industry is considered the most polluting one because huge amount of water
is wasted by the companies (Pollard and Hotho, 2016). H&M made an objective that only
recycled material would be used which enhanced their performance in the clothing
market. They made sure that they will not provide any harm to the environment so that no
conflict occurs.
 Legal Factors: It includes certain laws like safety related law, employment law and so
on. Every company must know what is legal and what not and work should be done
according to that. Earlier H&M faced various disputes but it followed all the laws in a
proper way. They were not allowing any individual who is underage and all the work is
done with all type of safety requirements (Preble, 2017). As in many companies
sometimes issue arise because of discrimination being done in the organisation and the
brand never did any discrimination on the basis of caste, gender and so on. It followed all
the laws properly and did everything in a legal manner. All employees were given proper
wages according to the work they were doing in the organisation. So, because of these
factors the brand developed a good image in the organisation.
3 Vrio analysis of H&M Value: It means the company manages all its functions whether in terms of designs,
warehousing and so on by itself. It does not rely on third parties. The company values the
employees and gives respect as well as rewards to employees. H&M respects the
employees as well as consumers demands very well (Teece, 2019). As all consumers
have different personality, there may be changes in their tastes regarding fashion so they
followed it very well. It also followed the different trends and reduced the costs as well.
The value of the brand is always been at top because all consumers were happy while
purchasing goods from the company as their main focus was on fulfilling the demands of

people and make the organisation more profitable as well as leads to success. And H&M
achieved it at the best level. Rarity: H&M focused on distribution as well as retailing and became the industry as
more labour intensive. The brand produce new products and delivers within three weeks
instead of taking six months average which is required for luxury brands. It is able to
produce around 11000 items and competitors were only producing 3000-4000. The rare
factor in case of H&M is not much because among all other successful brands they were
at a good position. Imitability: If any organisation wants to be same as H&M then it will be possible only in
the long-run period of time. There will be huge involvement of costs while copying any
business model which is not possible for almost all organisations (Thomas, 2016). The
brand has developed itself in many other segments as well. The distribution network also
became costly for the brands there were many competitors. Organisation: H&M has generated huge profit and became the most successful brand in
the fashion industry. This has happened with the help of every person who is working in
the organisation and has led to success. There are many things that are required in the
organisation to be improved for growth in the organisation. It is using the resources by
making proper strategies and have the competitive advantage. The brand focused more on
digital technologies rather then staying on the same. A major transformation occurred in
the organisation. Every brand estabilishes certain strategies so that their organisation
always remains in the positive stage. When any change occurs in the organisation it can
be in a favourable way also but it may be an unfavourable way also. The brand is still the
most famous clothing brand because it had done everything related to the growth of the
organisation. A brand can only succeed if it is focusing on changing trends of individuals
as well as on the demand of consumers.
4. Ansoff Matrix Strategy.
The process of Ansoff Matrix is type of framework which is explains about the scope of
market and product in new and existing competitive marketplace. The main objective to
implement Ansoff Matrix is to just mapping the overall structure about new product, new market
and existing product within existing market are inter related with each other. In perspective of
H&M company there is analysation of Ansoff matrix in following:

 Market Penetration: It is strategy which is mainly explain about existing product to sell
win existing market. As the H&M company is one of leading retail company who is one
of well fashioned based product and service is tend to deliver towards customer in
systematic manner. they approach seasonal days to provide various traits of product and
service which enhance to allows purchase in terms of discount rated. H&M company is
also acquired a smaller retailer in context to reduce or eliminates competition which is
increase the market share (Popkin., 2019). The huge marketing share is one of creates
barriers as to developing a successful brand which is enhance to advertising to better its
market share. The H&M undertakes large advertising budget which is they create
platform for new entrant but they could not able to afford it.
 Market development: This strategy is states about selling of existing product in new
market. According to the first is reflecting about product which is exploring or more
demanding in particular existing market can be an opportunity to introduce in new market
for more customer attainment. In situation of H&M company can approach better
opportunity to provide expectional product and service which is mmore demanding in
United kingdom, as they can introduce in other countries like United States, Spain and
others. But H&M need to work on two strategies, first is way to enter in the market
where there is does not have any stores, Second is the factor in which the strategy is
commence about to new outlet that already is serving better market for access towards
consumer. The company is showing tehri concern where it doesn’t not have any platform
expect online sales where many customer easily get to access for better buying and
product in effective manner. by creating specific pricing policies to target certain market
in terms of providing economic range off product.
 Product Development: This strategy is commence about more advancement about
selling of new product in existing market. By implementing new strategy by H&M
company is to adopt new raw materials along with new design of product and services
that can boosts up the market to selling new product. By launching new product creates to
accompanied through massive marketing campaign. Each design of customer creates to
sharing feedback that allows most influencing consumer need market trends through
effective manner. Through this practise it get to developed the existing product which is

needed to improved sales after initial launching. The company is having their own
designer who better work for creates product in company.
 Diversification: This is strategy is states about to requires towards an organisation
towards launch new products in new market. As H&M company is only focuses to
manufacture clothing type product on accessories within industry. It mainly diversified
towards getting more effectively produce more traits of product (Hotho., 2016). The
company get to diversified in terms of horizontally and vertically in various situation
where textile is having more demand to procuring fabric from suppliers. The one of most
risk strategy is involve by producing and selling sprots equipment, smart phones and
further more. Meanwhile, each diversification can helps to grow company.
5.Stretegy Selection and Justification.
In above discussion towards H&M company where internal and external capabilities
within examine about applying Ansoff Matrix in any particular format the suitable approach
would be Diversification is because there is to tuff competition between other brand as well as
retail companies like Marks and Spencer, Tesco. Asda, Walmart etc. In Which H&M company is
one of leading venture who is generally produce clothing of branding products in market so there
is an opportunity towards new market with coming along new product.
In Following there is advantage and disadvantages of Diversification.
Advantages: By approaching of Diversification through H&M company which provide
more economic, political, social, legal and technological benefits in terms of new business
growth which they can set the criteria to implement better strategy. By unpleasant of surprises
can be evaluated that can be reformed in terms of maximum utilisation of product and services.
Disadvantages: There is uncertain challenges and barriers can be evaluated through
enhancing cost incurred as well as investment criteria to up lifted the expenses in terms of
revenue generates. In new Market the new product who have to faces more challenges through
policies or norms between government regulation which can diverse the revenue in complicated
manner.
Justification: By suggesting Diversification factor is to H&M company because as in above
section discussion that many other retail companies has already capture the competitive market
were H&M need to invest more capital to sustain (Thomas 2020). But there is chance to origin
with new concept of product and service in new market where they would easily target their

market as well as customers in terms of taste and preferences. Furthermore, United States, Spain,
Germany are these countries having better economic growth where H&M can introduce its new
products like electronic gadgets, branded clothing and further which easily get to attain market
share as well as competitive advantages.

CONNCLUSION
As per above discussion of repot is all about Strategic Management in terms of studying
related with external and internal factor which creates more exploring of market competitive
advantages in better ways. Using of Pestle and Viro is one of external and internal assessment
that helps to provide raw data about different challenges and scope of compete in marketing.
Apart from it there is further explain about strategic implementation which help to scrutinize
product and market scope in existing or new segmentation. By suggesting Diversification factor
that helps to economic range of retail company for commencing their business towards long run.

REFERENCES
Books and Journals
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