Report on Strategy, Enterprise and Innovation

This report evaluates the internal and external sources for assessing competitive advantage of a given organisation. It identifies the key drivers of change present in extrinsic environment and evaluates their impact on entrepreneurial activities. It also evaluates the impact of main competitive forces that can impact on entrepreneurial operations of a chosen company.

Report on Strategy,
Enterprise and Innovation

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Critical evaluation of internal as well as external sources for assessing competitive advantage
of a given organisation.................................................................................................................1
Identification of key drivers of change present in extrinsic environment and evaluating their
impact on entrepreneurial activities.............................................................................................1
Evaluation of the impact of main competitive forces that can impact on entrepreneurial
operations of a chosen company..................................................................................................2
CONCLUSION................................................................................................................................2
REFRENCES...................................................................................................................................3

INTRODUCTION
An innovative strategy can be understood as a plan which is used by organisations for
encouraging advancements in technology (Amara, Hong and Hafeez, 2019). It is usually
performed by investing monetary resources for development activities. Innovative strategy is
considered as significant for organisations for securing competitive advantage. Effective
innovative strategy have to be inspiring and motivating so that it can add some unique value to
product or service. For better understanding of innovative strategy, H&M have been taken into
consideration. H&M is a Swedish based multinational company which essentially focuses on
clothing for men, women and children. It was established in 1947 and has its headquarters at
Sweden, Stockholm.
This report highlights the understanding of external and internal environmental factors
which can influence organisational operations. This project report also demonstrates an
understanding regarding entrepreneurial recognition in respect to innovative and creative tasks
for taking full use of varied market opportunities.
MAIN BODY
Critical evaluation of internal as well as external sources for assessing competitive advantage of
a given organisation.
VRIO framework can be understood as a strategic analysis tool which is used by
organisations to determine which resources they want to hold or dissolve (Bespalova and
Kadyrova, 2018). It is beneficial for organisational managers to formulate their strategies in
order to sustain competitive advantage. It is used by managers of H&M for evaluating varied
threats and identify their valuable resources in order to make their brand image differentiated.
Varied elements of VRIO analysis in relevance with H&M are as follows:
Resource or
capability
Valuable Rarity Costly to
Imitate
Exploited
organisation
Competitive
implication
Customer
services
Yes No Competitive
parity
E-commerce Yes Yes No Temporary
competitive
advantage
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Distribution
network
Yes Yes Yes No Unused
competitive
advantage
Innovation Yes Yes Yes Yes Sustainable
Competitive
advantage
Valuable resources are those capabilities which and some value to an organisation and
ensure them to neutralize competition (Chen and Song, 2019). Valuable resources in context to
H&M are as follows:
 Efficient customer service support are considered as valuable resources to H&M as
through this they have built their differentiated brand image all over the globe.
 Innovative practices are valuable to H&M as for they have a separate lab called Circular
Innovation Lab through which they discover new processes as well as materials that are
used in their collection.
 Distribution network of H&M is valuable as they use one channel network which
undermines the role of intermediaries and led them to earn more profits.
 E-commerce can be considered as valuable resource for H&M as through this they have
make their reach to varied countries like India, Thailand, China and many more.
Rare resources can be understood as capabilities that are scarce in market but their demand
is very high which provides temporary competitive advantage to an organisation (Dodgson,
2018). Rare resources in relation to H&M are as follows:
 Circular innovation lab is a rare resource for H&M as they use it for improvising their
processes as well as products. Through this lab, they have captured carbon dioxide from
industries emissions and transform that it into polyester pellets by using molecular
chemistry. These practices have made their innovative practices rare.
 Distribution network of H&M is rare as it aid them in increasing their profits by
lowering the role of intermediaries.
 E-commerce practices of H&M are rare to them as they provide products which are
sustainable as well as fashionable.
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Inimitable resources are those which cannot imitate by any other organisation. Even if they
try to make similar things it would cost very high to them (Durmanov and Et. Al., 2020).
Inimitable resources in context to H&M are as follows:
 Distribution network of H&M is inimitable resource as they use differential strategies
and have a large network of warehouses set-up in every country which is very costly for
its competitors to copy.
 Innovative practices of H&M re inimitable for their competitors as they use advanced
technology in making the yarn and fabrics for their products.
Organised resources can be described which get support of management, employees,
processes and methods (Guo, 2020). This resources if used effectively definitely provide
sustainable competitive advantage to organisations. This type of organised resource in relevance
to H&M is their innovative practices. These are constantly practiced in their labs and always
supported by varied stakeholders as well as collaborators.
Identification of key drivers of change present in extrinsic environment and evaluating their
impact on entrepreneurial activities
PESTLE analysis refers to a strategic framework which is used by companies to evaluate
fluctuations in external environment which may impact on their business operations.
Varied factors of PESTLE analysis in accordance with H&M are mentioned below:
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Political factors encompasses of varied aspects such as taxation laws, regulatory
practices and administrative system of a specified country (Chepsarakov, 2022). In relevance
with Sweden, it has systematic administrative board and political stability which supports
businesses operating there. In relation to H&M, it is an international brand which has to lookout
varied legislations that are framed by different countries. They have to follow regulations like
trade legislations, consumer protection rules of countries in which they have their franchises.
Economic factors are principally concerned with inflation rates, unemployment rates and
consumer spending potential of a specified nation. In relation to Sweden, global pandemic and
strict covid protocols have impacted business operations every brand in a significant manner.
Although, H&M are running their online stores which could not eradicate the losses but helped
them in a sizeable manner. Apart from this, currency fluctuations, increase in import duties and
high inflation rates effect entrepreneurial activities of H&M.
Social factors essentially consists of market demographics, buying patterns and lifestyle
trends of population of a particular nation (Koev and Et. Al., 2020). In relevance with Sweden,
people are willing to shop expensive clothing and move with a fast-pacing dynamic market
trends. They also believe sustainable practices that would help them to attract more customers.
H&M has a prominent presence on social media which is considered as key driver and have
impacted positively on their business operations.
Technological forces principally co-relates with new advancement or improvement in
technology based in a particular country. Sweden is considered as a leading country for bringing
innovations in many fields such as engineering, pharmaceuticals, electronics and many more.
They have implemented technology for offering instant services to their customers whereby they
get their orders within 24 hours.
Legal factors essentially concerned with aspects like business laws, safety guidelines and
local lows of a certain country. In Sweden, government have formed regulations regarding
employees and consumer protection that needs to be followed by business houses. They also
provide their employees comfortable working environment and does not allow underage
employment in their franchises all over the globe.
Environmental factors comprises of issues related to environment waste disposable and
energy consumption practices followed by people of a specified nation. Sweden government has
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implemented environmental protection laws that are required to be complied by business
organisations.
Evaluation of the impact of main competitive forces that can impact on entrepreneurial
operations of a chosen company
Porter five forces can be described as a framework which is used by organisations to
analyse competitiveness in industry in order to formulate corporate strategy (Leiand Xiuping.,
2017). This model is beneficial for organisations as it aid them in gaining insights regarding their
long-term profitability. This framework is used by strategists of H&M for assessing their
competitive advantage in order to formulate strategies. Varied elements of Porter five forces in
relevance with H&M are mentioned below:
 Competitive rivalry refers to number of competitors as well as their capability to handle
the competition. If there are large number of competitors present in market offering
similar products, then company has low power and vice versa. Ratio of competitive
rivalry is high in apparel industry due to its dynamic nature. In relation to H&M, they
have established their differentiated position and focus on a niche market. Although,
managers have to develop strategies in order to being competitive.
 Threat of new entrants can be understood as likelihood or probable chances of entrance
of a new market player in industry (Nikolaeva, 2018). This is basically depends on
resources and capital that are needed by a new entrant to enter into market. Threat of new
entrants is high in apparel sector as there are no strict barriers to entry as well as
emergence of online platforms have open the doors for new market players to enter. It is
imperative for manager of H&M to bring constant innovations which help them to keep
their position.
 Bargaining power of suppliers can be understood capability of distributors to build
effective deals with companies (Shao and Et. Al., 2020). Their power is affected through
many aspects such as number of suppliers, uniqueness in raw materials and switching
power of an organisation. Bargaining power of supplier is high as there are few providers
of quality raw materials in apparel industry. In context to H&M, in order to maintain their
quality standards managers collaborate with specific suppliers.
 Bargaining power of buyers refers to ability of customers to drive prices of a particular
product. This is affected by several forces such as number of buyers, their significance
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and cost incurred by organisations to attract the new one. In apparel industry, bargaining
power of buyers is relatively higher as they can easily switch to other brands due to fierce
competition. In relation to H&M, their customers are loyal to the brand and are satisfied
with new advancements and digital practices.
 Threat of new substitutes can be described as similar commodity which can take place
goods offered by company (Pang and Et. Al., 2019). Threat of substitute goods is high in
apparel industry as market dynamics are constantly changing and new tends are coming
on routine basis. In relation to H&M, they have adopted innovative practices and
extensively search market needs led them to keep a pace with changing dynamics.
CONCLUSION
From the above presented information, it has been assessed that it is imperative for
organisations to develop innovative strategies in order to gain competitive advantage. VRIO
framework is performed by establishments for assessing their valuable, rare, inimitable and
organised resources for minimizing potential threats. PESTLE analysis can be understood as a
strategic tool which help organisational managers in scanning and evaluating varied forces that
are present in external environment and have impact on business operations in a significant
manner. Porter five forces is a model which is used by organisations for measuring their position
and analyse competitive forces which aid them to determine their strengths as well as
weaknesses.
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REFRENCES
Books & Journals:
Amara, D. B., Hong, C. and Hafeez, M., 2019. Evaluating the eco-innovation strategy in
business opportunity identification-enterprise business growth nexus. International Journal
of Information Systems and Change Management. 11(3-4). pp.272-291.
Bespalova, V. V. and Kadyrova, O. V., 2018. Process Innovation Projects In Enterprise
Development Management. Business Strategies.
Chen, W. and Song, X., 2019. Enterprise management innovation in the internet of things from
the perspective of contingency. Journal of Intelligent & Fuzzy Systems. 37(5). pp.5829-
5836.
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalization in innovation. Routledge.
Durmanov, A. and Et. Al., 2020. Features of application of innovative development strategies in
international enterprise. International Journal of Entrepreneurship. 24. pp.1-9.
Guo, Y., 2020, July. Innovation of Enterprise Training Management Based on Information
Technology. In International Conference on Frontier Computing (pp. 1289-1297).
Springer,
Chepsarakov, A. V., 2022. Building An Innovative Strategy For Enterprise
Development. Business Strategies.
Koev, S. R. and Et. Al., 2020. Resource strategy for enterprise management as a tool to ensure its
competitiveness. Academy of Strategic Management Journal. 19(4). pp.1-8.
Lei, Z. and Xiuping, L., 2017. Brief discussion on enterprise marketing management and
innovation strategy [J]. Macroeconomic management.
Nikolaeva, N., 2018. PLANNING AND IMPLEMENTATION OF INNOVATIONS IN THE
ENTERPRISE. In 5th International Multidisciplinary Scientific Conference on social
sciences and arts SGEM 2018 (pp. 709-716).
Pang, C. and Et. Al., 2019. Integrative capability, business model innovation and performance:
Contingent effect of business strategy. European Journal of Innovation Management.
Shao, S. and Et. Al., 2020. Environmental regulation and enterprise innovation: a
review. Business Strategy and the Environment. 29(3). pp.1465-1478.
Wijethilake, C., Munir, R. and Appuhami, R., 2018. Environmental innovation strategy and
organizational performance: Enabling and controlling uses of management control
systems. Journal of Business Ethics. 151(4). pp.1139-1160.
Yiping, L., 2021. Innovation strategy driven by enterprise digital transformation. Academic
Journal of Business & Management. 3(9).
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