Report on H&M's Organisational Strategies: A Comprehensive Analysis

This report offers a detailed examination of Hennes & Mauritz (H&M)'s organizational strategies. It begins with an introduction to organizational strategy and its application to H&M, a leading global clothing retailer. The main body of the report analyzes macro environmental factors, including political, economic, social, technological, environmental, and legal aspects, and their impact on H&M's operations. It then delves into H&M's industry position using Porter's Five Forces model, assessing the bargaining power of buyers and suppliers, the threat of new entrants and substitutes, and competitive intensity. The report also conducts a SWOT analysis to evaluate H&M's internal resources and capabilities. Finally, it examines stakeholder perspectives, including those of employees, customers, government, and suppliers, highlighting their influence on H&M's strategic decisions. The report concludes with a summary of key findings and insights into H&M's strategic approach.

Organisational
Strategies

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
(a) Macro environmental factors..................................................................................................1
(b) Industry position.....................................................................................................................2
(c) Internal resources and capabilities..........................................................................................4
(d) Stakeholder perspectives........................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Organisational strategy is dynamically a long term plan which routes are towards
company goals and vision. Strategies are straight forward which are planned in formulating
vision, mission and values. This report will be carried on Hennes & Mauritz(H&M) which is the
leading British multinational clothing retail company known for its fast-fashion clothing for men,
women, teenagers and children. Its specialisation is in selling clothing, home products and luxury
food products. Regarding with an organisation their describe environmental factors relating with
resources and employees capability. This report will be carried on identifying and analysing the
various macro environmental factors along with industry position of the company. Lastly, this
report will cover the aspects of internal resources & capabilities and stakeholder perspective of
the company (Baker, 2014).
MAIN BODY
(a) Macro environmental factors
Macro factors are those external aspects which put both negative and positive impacts on
business function of any organisation. It includes political, social, economical, technological etc.
factors which has effected the environment and economic culture of the business entity. In
context with H&M, such factors is used to get the current strategic situation of the company and
also it reflects the impact of given variables on the future operation of H&M. The discussion
regarding macro environment analysis is as follow:
Political: H&M is one of the leading brand operates number of stores across the globe, as
a result, the probability and chances of political risk has increased which is necessary for H&M
to overcome for business productivity. H&M have number of clothing stores in almost 7 Arab
countries where political influence is high, due to religious & social factors. As a result, it has
put negative impact in less selling of the fashion & clothing products of H&M. In the positive
side, factors such as less product differentiations and demand of limited fashion trends has
brought an opportunities for H&M to apply such fashion to other global side of the clothing
business. It is why because limited fashion trends and less differentiation of product has risen up
the sale of existing products in one particular region.
Economic: The major economic factor is the stepping back of entire United Kingdom
from the “European Union” which has risen up an individual value of the Pound Sterling. It has
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put both positive and negative impact on economic condition such as currency valuation, high
interest rates along with price fluctuation. The positive response is that H&M products presence
has reached at the global platform, because European Union has limited market access for the
retail firms. Along with this, the negative impact was loosen of common interest by trade
organisation and other unions.
Social: In the present time, increasing level of transparency has created business for the
fashion brands, including the H&M. Transparency means that customers are now spending their
money along with investigating its right use and benefits in the future. In context with H&M,
social factors includes transparency towards media platform and more familiarity with current
trends of fashion has raised more customer's spending over designer fashion goods. The negative
impact of this external force is that it has decreased image of traditional clothing products of the
H&M, just because of less importance to the old fashion.
Technology: H&M is continuously developing their Apps and websites to attract their
customer on the larger basis. It has raised their business and profitability, because today more
and more customers are engaged with the technology such as using mobile phone, constant
engaging to the Internet etc. As a result, it has given pin point to H&M to target customer
accordingly. The positive response is that H&M business will grow at the higher level, because
of such technological transformation and negative aspect is that still customer's are giving
priority to the traditional purchasing which has forced H&M to investment to open traditional
outlets.
Environment: These factors includes readability, business sustainability, ecological &
green transformation etc. which has created the positive perception of the H&M customers
towards their fashion & clothing products. Such factors are taken for preventing the environment
at the optimised level, which has raised brand image of H&M. Such factors has increased the
business sustainability by using an ethical practices along with vision and mission (Dodgson, M.,
2018).
Legal: H&M has been tucked in several legal disputes namely infringement by the retail
units. It was noticed that H&M had funds to cover this disputes or issues. The positive response
is the operating of stringent risk management system by H&M which has initiated to avoid the
disputes to protect the reputation of this leading fashion brand. On the other hand, it has given
financial pain to the H&M by reducing the sale and business of the H&M recorded in 2016.
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(b) Industry position
For identifying the industry position, Porter's five forces analysis is useful to determine
the intensity of competition and profitability that can be expected in the fashion retail sector. In
context with H&M, this model is used to find competitive advantage and productivity for this
leading fashion clothing retail along with measures will be taken to impress their buyers and
suppliers. An analysis of Porter's five forces is as follows:
Bargaining power of buyers: Being the leading retail fashion store in UK, H&M has
large base of customers. However, the customer's in fashion retailing industry are price
sensitive. H&M buyer's have high purchasing power along with wide range of clothing products
choices. Moreover, these buyers are price sensitive and visit all shops, looking for lowest price
before making their purchase decision. However, the brand image of H&M is too strong that
buyer's think about the quality and services of H&M and related it to price to be paid.
Bargaining power of suppliers: For a company to be successful in clothing retail sector,
they need to manage the bargaining power of suppliers appropriately. It was noticed that high
supplier's bargaining power has been considered as detrimental to the company success and low
suppliers purchasing power is considered as healthy. However, H&M have wide range of
suppliers, both domestic and globally. This shows that there is no single supplier who possess
sufficient to control the prices of raw material & products. This also means that H&M have wide
choice of suppliers for purchasing the raw material at the low cost to generate maximum profits.
Threats of new entrants: H&M has no control over the new entrants in the market. The
ease of entry has been facilitated by lenient policies led by the David Cameroon government,
which has encouraged free entry and exit. This acts as an incentives for new firms to enter into
the industry. This is fact, why there are number of clothing retail competition.
Compensation intensity: As a big brand, still H&M is facing stiff competition from its
major rivalries named as Marks & Spencer. On the global level, they are competing with Zara,
Lojas Renner etc. This implies that H&M is facing intense competition in the fashion retailing
industry. Nevertheless, its ranking is on world largest fashion company at the global level.
Threat of substitutes: Many consumer usually seek for less costly fashionable clothing.
H&M deals mainly with high ended clothing and also the competitors like Marks & Spencer are
focusing on both high and low ended range of clothings. This shows that H&M products are
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somewhere at risk to be substituted by cheap products by their competitors. As a result, it was
noticed that H&M positioning is so strong that they hold its customer base for future business.
(c) Internal resources and capabilities
The internal resources and potential of any business entity could be identified by SWOT
analysis to know their strategic formulation for the development and enhancing the maximum
productivity. As one of the leading companies in its industry, H&M have several strength along
with potential opportunities that would thrive them into the market place. This helps in getting
the accurate knowledge and information of current and future resources of the H&M for
production of goods & services. The analysis of SWOT for strategic formulation is as follow:
Strength Weaknesses
(a) Continuous growth along with current and
future expansion formulation to several foreign
countries,
(b) Strong brand power and global recognition,
(c) Good response for an initiative of reusing
and recycle of old products to produce the
fresh and new products, and
(d) Strong base of reliable suppliers of raw
material that has enables H&M to overcome an
issue of supply chain destruction.
(a) Limited presence into the online platform
because of maximum priority to traditional
marketing,
(b) H&M actually need more investment in
engaging technology into their core business,
(c) Only presence for fashion segment along
with lack of physical presence on marketing
and promotion and
(d) H&M have put lots of capital and money
on solving their legal disputes and adequate
funds for set other target segments.
Opportunities Threats
(a) To launch new products such as perfumes,
cosmetic & beauty products and other fashion
products etc.,
(b) Strategic formulation for entering into the
online platform for getting more and more
loyal presence to the market-place,
(a) Failure as a result of entering into the new
products segment, which would effect their
existing product & brand image,
(b) Risk of fluctuation in foreign exchange, (c)
As new entrants into the online platforms,
which could effect the brand image of the
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(c) High enrolment of the technology into the
business of H&M to generate to enable the
brand image of this leading clothing entity.
H&M in negative ways, and
(d) Continuous involvement of H&M in high
burdened legal disputes, which would effect
the prestige for the H&M as the brand.
(d) Stakeholder perspectives
Stakeholder is a person, group or organisation which can affect or be affected by
objectives and policies. Their prospective is determine by interest which is came on business
within or outside the organisation (Schlosberg, 2014). Its impact is may be positive or negative
which is leading with variety of personalities.
Employee perspective: Employee perspective is defined as the responsibility of work
which is positively on other employees. H&M employee's prospects in providing proper training
with success. They are leading with improving quality and work balance which is effectively
beneficial for clothing products. Apart from this, employee's are facing an issues of less salaries
and incentives in comparison with competitors of H&M. Organisation is currently paying
according to industry standard, but this would create shift of the employee's to other companies.
Customer: Customer perception is determined by selecting appropriate products which
interprets meaningful picture of the physical brand existence. Customer's can be engaged by
adopting the social media such as Facebook, Instagram etc. H&M customer's are facing an issue
of product quality and after sale service, which can be effect the common interest of stakeholder
of the H&M. Hence, it is necessary to overcome such key issues in context with services and
products.
Government perspective: Government perspective in context with H&M is determined
by legal policies, rules and regulations. Their intervention is reflected on product & services by
creating restriction over the flow of basic raw material and its increased prices (Nankervis,
2016). Their perspective is to make provide quality & effective product into the market which is
beneficial for customers and business both.
Supplier perspective: It was noticed that H&M suppliers are their values & business
partners. Also, company and stakeholders have positive and long term relations with them to
make ensure about the mutual growth. Previously, H&M has certain steps such as full audit
programme along with training module to engage suppliers at the optimized level. However,
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company is facing an issue of maintaining long term relationship along with continuing
order/capacity planning to enhance both productivity and probability (Martin, 2015).
Owner: Owner of the H&M perspective is necessary for the development and expansion
of the business. Their perception is described in order to generate the product formulation and
making attractive for getting wide range of customers (Winata, 2014). H&M owner's are facing
an issues of communication and professional relationship, which could reflect the brand image of
H&M at the global platform. They need to solve such issues by looking at the demands of the
stakeholder to maintain their common & functional interests.
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CONCLUSION
From the above mention report is concluded that, Marks and Spencer can make long term
existence in market with respect to factors of environment. An organisation achieve many of the
positive and negative impact which came on clothing products. Technological factor is
concluded as a strongest tool of marketing in which work is done smoothly. Chosen organisation
has concluded that industry position is only determine by using STP process. Their categorised
resources and capabilities which concluded as strength and important for an organisation.
Stakeholders perspective is necessary for an organisation that conclusion is made for achieving
effective relation between customers and suppliers.
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REFERENCES
Books and Journals
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framework for increased organisational return on investment. The TQM Journal. 26(6).
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management practices, competitive strategies and financial performance: the case of the
Palestinian industrial SMEs. Total Quality Management & Business Excellence. 25(5-
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Jensen, M. C., 2017. Value maximisation, stakeholder theory and the corporate objective
function. In Unfolding stakeholder thinking (pp. 65-84). Routledge.
Martin, G. and et. al., 2015. Potential challenges facing distributed leadership in health care:
evidence from the UK National Health Service. Sociology of health & illness. 37(1).
pp.14-29.
Mia, L. and Winata, L., 2014. Manufacturing strategy and organisational performance: The role
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Nankervis, A. R. And et. al., 2016. Human resource management: strategy and practice.
Cengage AU.
Schlosberg, M. D., 2014. Networks and mobile arrangements: Organisational innovation in the
US environmental justice movement. In Environmental Movements (pp. 128-154).
Routledge.
Online
Organisational Strategy. 2018. Available Through: <https://smallbusiness.chron.com/meaning-
organizational-strategy-59427.html>
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