H&M Business Strategy: Situational Analysis and Recommendations

This report provides a comprehensive analysis of H&M's business strategy. It begins with an introduction to business strategy and its importance, followed by a situational analysis using Porter's Five Forces to assess the competitive landscape. The report then employs a TOWS matrix to identify H&M's strengths, weaknesses, opportunities, and threats, leading to strategic recommendations. These recommendations focus on innovation, marketing strategies, and cost reduction to enhance profitability and gain a competitive edge. The report concludes with a summary of findings and a list of references.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Situational analysis......................................................................................................................1
TOWS Matrix..............................................................................................................................2
Recommendations........................................................................................................................4
CONCLUSION................................................................................................................................5
REFRENCES...................................................................................................................................6

INTRODUCTION
Business Strategy refers to the different types of strategies and tactics which can be
applied in order to ensure that the overall goals and objectives in the future can be attained
effectively and efficiently (Ciampi and et.al., 2020). Thus in this way it can be said that for the
organizations the application of Business Strategy is quite useful because it can be helpful in
ensuring that the different types of activities are carried out in a proper manner. This report will
focus on H&M. It is a company which provides a wide range of products to its various types of
customers and clients. In this report, detailed focus will be made on conducting a formal
situational analysis, using the TOWS matrix. Additionally, specific analysis on
Recommendations to be used in the future will be made as a part of this assignment.
MAIN BODY
Situational analysis
The use of situational analysis is quite helpful in ensuring that the different types of
situations can be considered and actions can be taken accordingly (Kong and et.al., 2020). For
this purpose, the use of a specific tool is recommended in the organizations so that they are able
to prepare their strategy properly. Therefore, it is required that the use of a model like Porter's
five forces is made. The analysis of this model is explained as follows in the following manner-
Competitive Rivalry- This refers to the level of competition which is prevailing in the
market (Abugre and Anlesinya, 2020). Zara, Uniqlo, ASOS and Macy's are the chief competitors
of H&M in the market. Therefore, it can be said that for the company this lead towards the
creation of higher-level of power and can create a lot of impact on it.
Supplier Power- This means the power which the suppliers in the market hold to make
sure that they are able to influence a lot of businesses in the market by changing the prices of
inputs (Agrawal, 2016). Thus, it can be said that for H&M this force has a higher-level of power
because the suppliers in the fashion industry hold a lot of power to influence the prices of inputs
in the market.
Buyer Power- This refers to the power of the buyers to ensure that they are able to
influence the prices of goods and services in the market (Aldea and et.al., 2016). Therefore, In
the context of H&M it can be said that this particular force holds a lot of power because the
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buyers in the fashion industry are price-sensitive and can influence the prices by increasing or
decreasing their level of demand in the market effectively and efficiently.
Threat of substitution- This refers to the force created by the substitute products in the
market (Anderson, 2019). In the context of H&M, this force has a higher-level of power because
there are a lot organizations in the market which provide substitute products in the market and
can thus influence the level of prices in the right manner.
Threat of new entry- This means the force created by the entry of new products in the
market (Gupta, 2016). In a company like H&M, this force has a lower-level of power because it
is not easy for a company to enter the fashion industry because entering into the industry requires
making a lot of investment.
Output of analysis- 4 out of 5 forces have high power and only 1 force has low power.
Thus, It can be said through the analysis that for H&M, it becomes quite important that it is able
to take appropriate actions effectively and efficiently and ensure that it is able to attain the goals
and objectives in the short-term, medium-term and long-term. Therefore, it is crucial that the
managers of the company are able to ensure that they take decisions accordingly and are able to
make the use of appropriate methods and techniques in a right manner.
TOWS Matrix
The use of this particular matrix is quite helpful in ensuring that the identification of
Strengths, Weaknesses, Opportunities and Threats can be made and their application can be done
strategically in a proper manner so that the goals and objectives can be attained (Navissi and
et.al., 2017). Their identification can be explained in the following manner-
Strengths-
 H&M is a brand which has a wide range of products and services which it can provide to
the customers in the market (Lohmann and Spasojevic, 2018). Thus, In this way the
company can make sure that it is able to provide a lot of options to the customers.
 H&M has a wide range of reach in the different countries of the world. Therefore, In this
way it is able to make sure that it can provide appropriate products to the customers (Tsai
and Lin, 2016).
Weaknesses-
 H&M is quite weak in the execution of its marketing strategies which therefore creates an
overall impact on the level of sales and profitability of the company.
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 H&M's some products are not earning sufficient level of profits which is thereby creating
an overall impact on the profitability level of the company.
Opportunities-
 H&M has an opportunity of ensuring that it can use appropriate marketing strategies in
order to be able to attain higher-level of goals and objectives in the future (Munandar,
2017).
 H&M has an opportunity of ensuring that it makes the use of opportunities in the right
manner to innovate so that it can help in attaining higher-level of revenues and
profitability effectively and efficiently (Seifzadeh and Rowe, 2019).
Threats-
 H&M faces a threat in the market from the higher-level of taxes which are being levied
by the government in the market.
 H&M faces a lot of competition in the market which can therefore create an overall
impact on it and can affect the overall level of profits which it is earning in the market.
Strategies on the basis of SWOT-
SO-
 Using the strength of providing wide range of products and services to the customers in
the market the opportunity of using appropriate marketing strategies can be maximized.
 Using the strength of wide rang of reach in the different countries the opportunity of
making the use of opportunities can be maximized.
ST-
 Using the strength of providing wide range of products and services to the customers the
threat from higher-level of taxes can be minimized.
 Using the strength of wide range of reach the threat of higher-level of competition can be
minimized.
WO-
 Through the use of wide range of products and services the weakness of execution of
marketing strategies can be minimized.
 Through the use of wide range of reach the weakness of insufficient profitability of
certain products can be minimized.
WT-
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 Through the use of strategy of reduction in the costs the weakness of execution of
marketing strategies can be minimized. Also through it, the threat from the competitors
can be minimized.
 Through the launch of new products in the market the weakness of insufficient profits
and the threat of competition in the market can be minimized effectively and efficiently
in the right manner.
Strategies-
 H&M has to ensure that through the use of TOWS analysis in an appropriate manner
which will be quite helpful for it in ensuring that it can attain higher-level of profits in a
proper manner.
 H&M needs to make sure that by making a proper use of TOWS analysis it is able to
effectively and efficiently attain the higher-level of goals and objectives in the short-term,
medium-term and long-term in a proper manner.
Recommendations
H&M needs to make sure that it can pursue an appropriate strategy through which it will
be able to make sure that it can attain its goals and objectives in the future and attain a strategic
edge over the competitors in the market (Razak and et.al., 2016). Thus it is important for the
company that it is able to adopt the strategy of making the use of innovation in the market as
through its use it will be able to enhance the overall level of profits in a proper manner. The
following are the recommendations for the use of this particular strategy-
 The recommendations for this particular strategy is that the managers of H&M should
identify the wide range of products and services in a proper manner which will help it to
be able to achieve the particular goals and objectives effectively and efficiently (Sia, Soh
and Weill, 2016). This will help the company to be able to pursue innovation which will
help it in attaining a strategic edge over the competitors in the market.
 For the managers of H&M, it is recommended that they are able to identify the channels
through which the use of innovation can be made so that the company is able to make
sure that it can attain a strategic edge over the competitors (Suoniemi and et.al., 2020).
Thus in this way it can be said that the management of the company will be able to make
sure that it can effectively and efficiently raise the overall standards which will be quite
helpful for the company in the short-run and long-run.
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The evaluation of the strategy of innovation in the market can be done by ensuring that
the use of SAFe criteria is made in a proper manner (Yucel, 2018). Thus the application of this
particular criteria is done in the following manner-
Suitability- It is an important factor in this strategy model (Yuliansyah, Gurd and
Mohamed, 2017). Thus the innovation strategy of the company is highly suitable as it will be
quite helpful in ensuring that it is able to help in the attainment of the goals and objectives
effectively and efficiently.
Acceptability- It is also a crucial factor in this strategy model (Yuliansyah, Rammal and
Rose, 2016). Therefore the innovation strategy of the company can be accepted because it will
help a lot in ensuring that the strategic aims and objectives of the company can be applied in the
right manner quite effectively and efficiently.
Feasibility- It is also a crucial factor in this strategy model (Paulus-Rohmer, Schatton
and Bauernhansl, 2016). Thus the innovation strategy of the company can be accepted because
through it is quite feasible enough for the purpose of effectively and efficiently raising the
overall level of profits in a highly effective manner.
Rationale- The use of SAFe criteria can be made in the organizations because by making
its use the company will be able to make sure that it can attain a higher-level of efficiency and
effectiveness which will enable it to be able to attain its goals and objectives in the future
(Savitri, 2018).
CONCLUSION
From the above report, it can be concluded that Business Strategy refers to the different
types of strategies and tactics which can be applied so that the overall goals and objectives can
be attained effectively and efficiently. The use of Porter's five forces is quite useful in order to
ensure that a proper justification of the business environment can be made. With the use of
TOWS matrix the strategic options can be identified by the businesses. The use of
Recommendations can be made so that the company is able to make sure that it can use them in a
proper manner which will allow it to effectively and efficiently attain the goals and objectives in
the future.
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