Impact of Organisational Culture on Performance

This assignment examines the impact of organisational culture on performance in different contexts, including sport management, human resource management, and environmental management. It also delves into H&M's main business activities, SWOT analysis, PESTEL analysis, and effective performance management strategies. The analysis provides insights into the strengths and weaknesses of organisational cultures and their implications for overall performance.

Understanding
Organisational Performance

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Organisational Performance is defined as comparison between actual results which is
measured against standard in an organisation (Al Saifi, 2015). There are three areas of results
such as financial performance, shareholder return and product market performance. It involves
analysis of performance of organisation against their goals and objectives. This is assessment
system which can help business to achieved their set targets in effective and efficient manner.
The chosen organisation for given assignment is H&M which was founded in 1947 at Sweden. It
is multinational clothing retail firm which is known for fast fashion clothing for children, men,
women, teenagers. It is operating business in 62 countries with 4500 stores having more than
150000 employees. There are various product of H&M such as clothing and accessories and
operating business globally. The report covers understanding of organisational performance with
use of internal and external model along with tool and techniques for improvement.
MAIN BODY
The organisation chosen for investigation is H&M which was established in 1947 by
Erling Persson at Vasteras, Sweden. It is international clothing company manufacturing clothes
for different segments such as children, men, teenagers, women. This is operation business in 62
countries having 4500 stores with employing more than 150000 employees. It is also known as
second largest retailer business after Inditex (parent firm of Zara). H&M has online presence in
33 countries for convenient of people. The product of H&M are accessories and clothing. There
are 4958 number of location where it is providing goods and services (Bennett, Pitt and Price,
2012). It is renowned brand in different parts of world which provides all fashionable clothes to
their consumers.
H&M has to perform various activities and work in competitive market in order to fulfils
their consumer's need and demand. The respective organisation moves with changing market for
their target people so that the can easily grow and sustain in market. The main business activities
performed by H&M are offering wide range and variety of clothing for men, children, women
and teenagers (H&M Main Business Activities, 2019). This offers inspiring fashionable clothes
with are unbeatable value for money. The main aim is to meet expectation of consumer along
with maintaining quality. It has ensured best price through in house design, efficient logistics,
large volume purchasing, no middlemen, buying goods from right buyer or marketer and others.
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There are different operations which are carried in H&M such as finance, human resource
management, information technology, production, accounting and others for effective results.
Each and every organisation is running their business in competitive market. It is very
important for them to analyse environment where they are operating business. There are various
model and tools through which environment can be analysed and decision can be made for
effective outcome. Here, H&M has analysed environment through internal and external analysis
where they have used SWOT for internal and PESTLE for external market. This can help them
to know about various activities running in market. With analysis, strength, weakness,
opportunities, threats, political, legal and other factors can be known. This can help to know
about performance of organisation and area required for improvement. The learning outcome of
respective organisation can be achieved with help of theories, model and tool for better results.
In order to evaluate environment of H&M, SWOT and PESTLE analysis is done which is
described below:
SWOT Analysis
It is strategic planning tool which is used by organisation for identification of strengths,
weaknesses, opportunities and threats related to project planning or business competition (Carlos
Pinho, Paula Rodrigues and Dibb, 2014). This can help H&M to know about organisational
performance and areas for improvement. They are described below:
Strengths- This helps to know about strength of business where it is carrying business.
H&M has wide range of products such as shoes, accessories, apparels and cosmetics, blankets,
pots, vases, candle, candle holders. It is selling product portfolio with help of many brand like
Monki, COS, Weekday. The brand has unique identity in market. H&M has diversified global
presence in 60 countries across 6 continents. It is expecting to increase market in Africa and Asia
continents. This international presence helps in minimizing risk. Each year performance of
organisation is increasing where there is increase in market share and growth (SWOT Analysis of
H&M, 2019). Through strength analysis it can be said that performance of organisation is better
than other organisation.
Weaknesses- There are some weaknesses of H&M where it has to depend on third party
suppliers for products. It has 800 independent suppliers where control for production is low. Due
to dependency on partiers can impact order commitments and consumer can feel bad experience
which effect brand image. As it is dependent on supplier so it pick after trends clothes from
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luxury and famous brands. It produces affordable clothing which can sometime affect quality of
products. This reflect organisational performance of H&M where improvement should be made
for suppliers. As it depend on supplier which can impact business and decline brand value in
case of bad production of clothes.
Opportunities- H&M is renowned brand in market which has various opportunities
available in competitive market. It can focus on more expansion for increasing productivity.
During financial 2016, it has added more 400 new stores which can help them to earn maximum
profits and growth. H&M can move towards e-commerce in order to serve large market and
make best use of platform for their potential consumers. This has opportunity of expanding
business in emerging market such as Africa and Asia for fulfilling demand of their consumers
(Pereira and Gomes, 2012). Nowadays, group are more brand conscious, in order to fulfil their
requirements they can improve their quality. As it reflect positive organisational performance of
H&M which can help them to survive in competitive market and earn maximum profit. Due to
its brand value and quality, it is reaching to highest peak which continuously improving their
performance for their consumers and itself.
Threats- Every organisation running their business in competitive market has to go
through threat phase which can create problem for survival and growth at marketplace. Fashion
industry is fast moving and keeps on changing with trends. Here, social media plays an effective
role in changing trends of people and society. It is threat for H&M to deliver as per new trends
and demand of consumer in market for survival. The other threat is new entrants of E-commerce
business to provide goods and service which can impact business of H&M. The respective
organisation has intense competition of both local and global brands. The firm should be aware
of new fashion and trends in order to beat competition. H&M is facing threat in terms of
fluctuations in currency. The competitors of H&M are: Burberry, Prada, Gucci, Versace, Zara,
Chanel and others. Threat can reduce performance of business and decline profits. This need to
be improved in better and effective manner so that goal and objectives can be achieved.
PESTLE Analysis
In order to know more about H&M environment, PESTLE analysis has been done. It is
tool that is used by organisation for monitoring and analysing macro or external factors which
can impact performance (De Roeck and et. al., 2014). Such tool can help firm to know about
various factors which is effecting business. They are described below:
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Political Factors- The political factors can greatly impact business and their performance
in competitive market. It include government policies, plans and so on. H&M is international
brand which is operating business in different parts of world. It is important for respective
organisation to monitor political risk. It has franchised outlets at different countries and market
which is politically unstable such as Egypt, Turkey, Lebanon (H&M PESTEL Analysis, 2019).
With rise in regulation, H&M should collaborate with franchising people for operating brands in
Qatar, Saudi Arabia, Egypt, Jordan, Thailand, Indonesia and others. The respective organisation
should follow all rules and regulation formulated by government in order to improve their
performance in effective manner. This can help them in better understanding of organisational
performance and improving accordingly.
Economic Factors- This factors include interest rate, exchange rate, gross domestic
product and others. Due to Brexit, it has brought negative effect to currencies across Europe but
H&M has rose sales by 7% on local currency as compared to previous year and rise by 10%
when it is converted into Swedish Currency. With change in labour laws, tax systems, economies
of scale has impact business and their activities. There is rise in income of people which leads
them to buy more product which increase economy of country. This can help H&M to rise
employment opportunities for large number of people which ultimately increase productions and
profits of business.
Social Factors- The need and demand of consumers changes with trend and fashion. In
present scenario, transparency has increased where customer investigate their money for product
which they have purchased from market. In order to increase demand, H&M announced that they
will release quarter updates and publish their CSR report online (Hennes & Mauritz (H&M)
SWOT & PESTLE Analysis, 2019). It is very important for H&M to manufactures clothes as per
new trends and latest designer for their consumers. The performance of H&M is increasing
because it is employing more women at offices for economic activities. It is also following
International Labour Organisation in order to give hygiene working conditions and better wages.
This helps in increasing organisational performance because of fulfilment of need and demand of
consumers.
Technology Factors- It is external factors which can impact business and their
operations in effective and efficient manner. H&M is increasing their performance through use
of online application such as mobile device, online site that assist users for collecting rewards
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point from online. It has strong supply chain management technology for tracking logistics
operations and serving to their consumers. H&M should move with changing environment and
adopt new and latest technology for surviving in market. It need to use innovative technologies
for data analytics and AI in order to better efficiency. This reflect organisational performance of
organisation which can help them to achieve their goals and objectives in better and effective
manner.
Environment Factors- There are various environmental factors which can help H&M to
improve their performance. They need to follows various rules and regulations related with
environment so that efficiently manufacturing can be done. H&M has aim to become 100%
circular and renewable where old products of firms should be generated and recycled only
durable materials (Rasula, Vuksic and Stemberger, 2012). In present world, consumer prefer eco-
friendly products for their consumption. It is very important for them to focus on eco products
for consumers. With change in climatic seasons, requirement of customers in terms of apparel
changes which should be fulfilled by organisation. Therefore, following of environment laws can
provide help to business in increasing and improving their organisational performance.
Legal Factors- Every countries has their own legal laws while starting their business
which need to be followed by firm. In case of non following strict actions against them can be
taken by organisation. The suppliers of H&M should follow national law where they are
operating their business and in case of any conflict they should be informed. The child labour is
prohibited in manufacturing products. H&M manufacturing unit should possess emergency and
safety exists, fire alarm and extinguishers and others (Scott and et. Al., 2018). This can impact
performance of respective organisation as it should follow equal employment opportunity for
individuals, wages should be provided to them. It is also necessary for H&M to perform financial
audit on regular basis for maintenance of transparency in business operations.
In order to improve the weakness, H&M can adopt various strategies for effective
outcomes. The performance management is part of organisation which evaluate performance of
business in better manner and control over it. There are various types of business strategies
which are made for solving problems of organisation by providing proper guidelines and
approaches for performance improvement. They are described below:
Market Development Strategy- It is the growth strategy where firm want to sell their
existing goods into new market. H&M has wide variety of goods and services in different
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countries and continent. With adoption of such strategy, it can diversify business in Asia and
Africa where it is lacking their operations. Through this strategy, they can improve their business
performance in better and effective manner. The main goal of corporation is to earn maximum
profits and grow their market share. This is risky strategy as product is existing but market is
new. The respective organisation need to analyse market in better and effective manner so that
product can be sold to consumers (Truss and et. Al., 2013). It is recommended to firm to do
expansion in that place where consumers has high demand of this brand. It is planning to expand
business in Asia and Africa so it should know about trends of those place and requirement of
consumers. Unless, organisation can know about taste and preferences of users they cannot
improve their performance in competitive market.
Online Strategy- For better performance of organisation, it can use online strategy for
selling of product in those places which lack online facilities. There are variety of products
which are offered by H&M to their consumers. The people of today generation are more busy as
compared to previous and they prefer quality products with less delivery time. Here, it can make
their own site and application for providing help to their consumers so that they can order it from
any part of world (Gadenne and et. al., 2012). Through online selling of goods, they can take
easy feedback from consumers to improve themselves. It is recommended to H&M to use
attractive tag line and description of products in order to influence their consumers. As people
are more brand conscious so they focus on quality of products and use of online tools and
channels for distributing goods and services to consumers. This can help to improve performance
management of business in better manner so that goals and objectives can be achieved.
Supply Chain Management- It is defined as management where flow of products and
service and process is used for transforming materials into final goods. It is activities which
requires to control, plan and execute flow of products from raw materials acquiring through
distribution to final consumers (Gerschewski, Rose and Lindsay, 2015). H&M has to depend on
third party for buying of goods and services. Due to dependency on other creates problem for
H&M. Sometime supplier fails to follow commitment provide for products which leads to
decline brand value in competitive market. It is recommended to H&M to have their own
suppliers rather than depending on third parties which can provide help to them to fulfils their
consumer requirement and customisation can be followed for users. This also helps in saving
time and cost and can get products whenever they required. This increase economies of scale
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where production is large and cost incurred is low. Thus, with use of supply chain strategies can
make organisation more better and effective to deal with their clients from stage of raw materials
to final products.
Performance Management is defined as procedures for creation of work environment
where people perform their best with use of abilities. It is on going procedure of communication
among employee and employer which occur throughout year for accomplishment of goals and
objectives of business (Maitland, Hills and Rhind, 2015). It is very important for organisation to
have proper performance management system in order to manage performance of each and every
employees working in corporation. The performance management has different features such as
quality, quantity, process discipline, manner of performance, efficiency and effectiveness. It
focus on both action and monitor centred management. With implementation of performance
management by H&M can get several benefits. It can be in terms of financial gains such as
earning revenue, reducing operation cost. This can help employees of H&M to align goal and
objectives of organisation with their action and behaviours (Effective Performance Management
& it’s Impact on Organisation, 2019). The respective organisation requires effective
performance management for carrying different activities and solves issues and problems which
are faced by it. If organisational performance is good in market then it can easily fulfils need and
demand of their consumers in better manner. Performance management can easily motivate
staffs and employees for high performance that can help in earning incentives and optimising
results. This also create transparency in goal and objective achievement. H&M is large
organisation dealing in clothing segment which requires proper performance management. As
each and every work and activities is evaluated so it can help to provide better result. This also
improve employee engagement as everyone knows their role and responsibility for assigned
work. There are different areas which requires to improve at H&M such as online media,
supplier and expansion of business in other countries. For making decision related with such
issues, they should analyse each and every factors which can provide them more benefits (Mohr,
Young and Burgess, 2012). The decision should be made on basis of considering present and
future aspects of business so that problems would not arise.
CONCLUSION
From presented report, it has analysed that organisational performance helps in
achievement of goals and objectives. It is very important for respective organisation to evaluate
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their performance for growth and sustain in market. There are various activities and operations of
corporate in market for carrying out work in better manner. Each organisation runs business in
competitive market. The respective organisation is operating in PESTLE and SWOT
environment. In order to improve online, supplier and market development strategy,
recommendation are provide which can be applied by firm for improving their organisational
performance. There is effective relationship among organisational performance and decision
making to carry out activities and operations. This should be practice in business in order to
achieve goal and objectives. Therefore, it is very important for company to maintain their
standards and has high organisational performance for different operations.
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REFERENCES
Books and Journals
Al Saifi, S. A., 2015. Positioning organisational culture in knowledge management
research. Journal of Knowledge Management. 19(2). pp.164-189.
Bennett, J., Pitt, M. and Price, S., 2012. Understanding the impact of generational issues in the
workplace. Facilities. 30(7/8). pp.278-288.
Carlos Pinho, J., Paula Rodrigues, A. and Dibb, S., 2014. The role of corporate culture, market
orientation and organisational commitment in organisational performance: the case of
non-profit organisations. Journal of Management Development. 33(4). pp.374-398.
De Roeck, K. and et. al., 2014. Understanding employees' responses to corporate social
responsibility: mediating roles of overall justice and organisational identification. The
International Journal of Human Resource Management. 25(1). pp.91-112.
Gadenne, D. and et. al., 2012. The influence of sustainability performance management practices
on organisational sustainability performance. Journal of Accounting & Organizational
Change. 8(2). pp.210-235.
Gerschewski, S., Rose, E. L. and Lindsay, V. J., 2015. Understanding the drivers of international
performance for born global firms: An integrated perspective. Journal of World
Business. 50(3). pp.558-575.
Maitland, A., Hills, L. A. and Rhind, D. J., 2015. Organisational culture in sport–A systematic
review. Sport Management Review. 18(4). pp.501-516.
Mohr, D. C., Young, G. J. and Burgess, Jr, J. F., 2012. Employee turnover and operational
performance: the moderating effect of group‐oriented organisational culture. Human
Resource Management Journal. 22(2). pp.216-233.
Pereira, C. M. and Gomes, J. F., 2012. The strength of human resource practices and
transformational leadership: impact on organisational performance. The International
Journal of Human Resource Management. 23(20). pp.4301-4318.
Rasula, J., Vuksic, V. B. and Stemberger, M. I., 2012. The impact of knowledge management on
organisational performance. Economic and Business Review for Central and South-
Eastern Europe. 14(2). p.147.
Scott, T. and et. Al., 2018. Healthcare performance and organisational culture. CRC Press.
Truss, C. and et. Al., 2013. Employee engagement, organisational performance and individual
well-being: exploring the evidence, developing the theory.
Tung, A., Baird, K. and Schoch, H., 2014. The relationship between organisational factors and
the effectiveness of environmental management. Journal of environmental management.
144. pp.186-196.
Online
H&M Main Business Activities. 2019. [Online]. Available through:
<https://studylib.net/doc/9646991/handm-main-business-activities>.
SWOT Analysis of H&M. 2019. [Online]. Available through:
<https://www.marketing91.com/swot-analysis-hm/>.
H&M PESTEL Analysis. 2019. [Online]. Available through:
<https://businessteacher.org.uk/pestel/hm.php>.
Hennes & Mauritz (H&M) SWOT & PESTLE Analysis. 2019. [Online]. Available through:
<https://www.swotandpestle.com/hennes-mauritz-hm/>.
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Effective Performance Management & it’s Impact on Organisation. 2019. [Online]. Available
through: <https://www.hrzone.com/community-voice/blogs/elan/effective-performance-
management-its-impact-on-organisation>.
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