Strategic Management of H&M: Internal and External Analysis

Strategic Management

Table of Contents
INTRODUCTION................................................................................................................................3
MAIN BODY......................................................................................................................................3
1. Background Information of H&M.........................................................................................3
2. External Environment of H&M.............................................................................................3
3. Competitor Analysis of H&M and its Industry Competitors.................................................5
4. Internal Environment of H&M..............................................................................................6
5. Strategic Options of H&M.....................................................................................................7
6. Justification of Selected Strategy..........................................................................................9
CONCLUSION.................................................................................................................................10
REFERENCES...................................................................................................................................11

INTRODUCTION
The external environment in which a business organisation operates in is convoluted,
multi-dimensional, complex entity, that is highly influenced by various factors present within
the business environment. These internal and external factors can have immense impact on the
productivity, performance, efficiency and profitability of a business organisation in the
consumer markets (Hamilton & Webster, (2018)). Such internal and external factors in the
business environment can also present the business organisation with multiple opportunities to
grow and expand their business operations in addition to providing the business with various
threats have the potential to affect the business’s productivity and profitability in a negative
way. This report evaluates the internal and external environment of H&M.
MAIN BODY
1. Background Information of H&M
Hennes and Mauritz AB commonly abbreviated and known as H&M is a multinational
retail business organisation specialising in the clothing and fast fashion apparels for women,
man and children of all ages. H&M was founded in 1947, an astonishing 73 years ago and
continues to operate from its headquarters in Stockholm, Sweden. Operating successfully in the
retail industries for such a long time has presented H&M with various opportunities to grow
and expand its business operations to international markets. Currently, H&M operates in 74
different countries, operating more than 5000 distinct establishments around the world.
Though their expanded operations, H&M have grown on to become the second largest clothing
retailer in the world. To operate successfully in the retail markets, H&M employees close to
126,376 individuals to look after their operations and functions.
2. External Environment of H&M
To evaluate the external environment in which H&M operates in and the various factors
present in the external environment that can affect H&M’s productivity, performance,

efficiency and profitability in the consumer markets, we can perform the PESTLE analysis for the
fast fashion retail industries. PESTLE analysis evaluates various political, economic, social,
technological, legal and environmental factors present in the external environment of H&M
that can have an impact on its productivity and profitability.
Political Factors: The current political instability in UK, due to the turmoil that Brexit has caused
can have a significant impact on the operations of H&M. As the exact details of changes are still
highly debated by analysts and economists, they have not been currently made public adding to
the uncertainty (Perera, (2017)). Brexit will scrap the complex and opaque international trading
laws for simpler and transparent policies which can aid the trading operations of H&M.
Economic Factors: The government of UK has recently announced a deduction in the corporate
tax that was charged on the profits made by businesses from 19% to 18%. This will surely result
in greater profits generated by H&M, as they will have to pay less corporate taxes on their
generated profits from April 2020 onwards, increasing their profitability in the UK’s consumer
markets.
Social Factors: One of the most prevalent consumer social trend to arise in the last few years is
the rise of consumer choosing to exclusively shop through online or digital means. This can
have an immensely positive impact on the productivity and profitability of H&M as they have
already garnered a significant online presence amongst their competitors online and can
effectively and efficiently increase their market share, customer base, productivity and
profitability by servicing consumer through their online digital stores.
Technological Factors: Advancement and innovation in technology can also have immensely
positive impact on the profitability and productivity of H&M. H&M can upgrade their
operational manufacturing equipment to increase their productivity and decrease their
operational losses incurred.
Legal Factors: Changes to government mandated laws and regulations such as minimum wage
laws, labour laws, health and safety laws, can have a negative impact on the profitability of