Report on H&M: Business Environment, Structure, and Analysis

This report offers a comprehensive analysis of Hennes & Mauritz AB (H&M), a Swedish multinational fashion retailer. It begins by defining the business environment and its influence on organizational growth, then explores the company's structure, including its legal structure as a large multinational corporation, and its operations within the private sector. The report contrasts H&M with public and voluntary sector organizations like the NHS and Oxfam, highlighting their different purposes, objectives, and service offerings. It examines the size and scope of H&M, its market share, and growth opportunities. The report also investigates the interrelationships between key functions within H&M, such as marketing, finance, human resources, and production. Furthermore, it assesses the external environment using PESTLE analysis, evaluating the positive and negative impacts of political, economic, social, technological, legal, and environmental factors on H&M's business operations. The report provides a thorough understanding of H&M's position in the global market and the factors shaping its success.

Business & the
Business Environment

INTRODUCTION
Business environment can be define as collection or sum of internal as well as external
factors which affect the functioning of organisation (Aithal, 2016). This play a crucial role in
development as well as growth of business. There are various factor such as employees,
customers, suppliers, government, market trends and many more which influences the decision
making as well as have major impact on business. Company chosen for conducting this report is
Hennes & maruritz AB. This company is a Swedish multinational organisation which usually
deals in fashion merchandising sector. H&M company was implanted in 1947 and founding
father of this organisation is Erling Persson. Headquarter of respective company is situated in
Stockholm, Sweden and it is supplying its goods and services to different parts of the world. This
report consist of different sorts of organisation as well as their legal structure. It includes size and
ranges different organisation and relations between various roles of a company. Apart from this
both positive and negative impact of external environment is evaluated and micro and macro
environment of business is identified.
TASK 1
P1
Organisation refers to any business which includes process as well as skilled worker who
are using their full capabilities in order to attain specific goals and objectives. There are various
kinds of organisation and contrary purpose which are working in three different sectors such as
public, private, voluntary company (Apăvăloaie, 2014). Organisations have legal structure on
which it business activities flow and employees work in effective manner to accomplished
desired goals. Different organisation dealing in different sectors are mention below with their
legal structure.
Public sector: This sector comprises of various organisation which are owned as well as
operated by government. In public sector all major decisions are taken by government and they
have authority to control business activities. Public sector company major does not work to earn
profits as they are specially developed for the welfare to citizen. In this sector funds are raised
from various methods such as taxes, fees and so on. For example NHS company which is run
and controlled by government of UK.
1

 Purpose: NHS purpose is to provide improvement in heath services as well as provide
best support care to its patients.
 Objectives: Their objective is to meet with the needs of every client and able to delivery
free and best heath care services to patients. Supply of Services: There are various services provide by NHS hospitals in order to
meet with requirements of each and every patients such as NHS app, Urgent care
facilities, different hospitals with good staff members and emergency care services many
more.
Different types of Public sector company Central public sector: It includes all those companies which are owned and controlled by
government of nations (Belás and et al., 2014). Companies dealing in this sector includes
all those companies in which majority of share is held by central government. State public sector: This refers to those companies which are owned and controlled by
state government. In this all state rules and regulations is applied to business activities.
Companies aims and objective is defined by the state government.
Legal structure: NHS legal structure includes centralised government as it is supplying its goods
and services to all citizens of UK area.
Private sector: Private sector companies includes all those companies that is owned and
controlled by individual or a group of people. In this owner have right to take major decision of
the company. Businesses dealing in this sector aim at earning more and more revenue through
their goods and services to targeted customers (Cai and Yang, 2014). Example of private sector
company is H&M. High quality products are provided by the company in order to earn more
profits.
 Purpose: Purpose of H&M company is to develop high quality products in order to
provide top-quality good and work to its targeted consumer.
 Objectives: H&M objective is to be the top most brand by offering their fashionable and
quality products to customers so that they can satisfy needs and wants of their consumers. Supply of Services: High quality fashionable products are provided to their customers
which includes ready to wear cloths, footwear and accessories.
Different types of Private sector company
2

 Sole proprietorship: This is considered as a simplest from of business in which one
person owns a company. Owner of the company have right to take major decisions as
well as control activities of organisation. In sole proprietorship business, single person is
entitled to run and manage business activities and gain profits. Partnership: In this type of business, two or more person formally arrange and meet with
the business requirements (Erasmus and et.al., 2016). In partnership business, power and
authorise to make decision and control as well as manage activities is divided between all
partners of the company.
 Large multinational company: This refers to all those corporation which is supplying its
products and services to various parts globally. Multinational companies are those
companies which is hiring large numbers of employees and work to meet with the
necessity of customers of different nations.
Legal structure: Legal structure of H&M company is large multinational company. This
company is supplying it's high quality services and good in order to meet with requirements of
different customers.
Voluntary sector: This sector comprise all those organisations which are developed for
providing benefits to the society. Companies dealing in this sector does not aim at gaining more
profits business. These companies are providing products and services which are beneficial for
citizens and society as well as help in solving major issues of society.
 Purpose: Oxfam is developed with the purpose to remove poverty from the society and
help citizens to live better lives as well as enjoy equal right.
 Objectives: Objective of Oxfam organisation is to save life as well as provide better
facilitate to the poor citizen (Gupta, 2013). This company wants to safeguard global food
supplies and enhance living standards. Supply of Services: This company is providing heath care and educational services to
people who are below poverty line.
Different types of voluntary sector company Trust voluntary company: These are non profitable organisation which is working for
benefit of society and getting funds for trustees. Trust based organisation is completely
dependent on funds provided by trustees.
3

 Charity voluntary company: Charitable organisations are those companies which is
collecting funds from charity bases. They are working for society benefits and anyone
who wants to contributes in this can voluntary as well as provide funds to this
organisation.
Legal structure: Oxfam is a charitable voluntary company as in this funds are provided by
people as per their wish and capability. Funds of this organisation is used to for welfare of
society and meet the needs of needy ones.
P2
Each and all organisation have assorted size and scope. It is very important to determine
size as well as future scope of company with the motive of meet with desired aims and objective
of organisation.
Public Limited company: This type of company is completely run and managed by the
government (Harrison, 2013). NHS is a open aspect organisation which is closely-held and
dominated by the authority of government of England.
 Market Share: This company is majorly carrying business activities in all over the
England and providing its services in differ parts of UK.
 Scope: Scope of NHS business is to serve its variety of services such as heath care,
dental care and hospital services to large number of populations.
 Mission: NHS mission is to provide better services and caution to it patients.
 Vision: Their vision is to become the best healthcare service provider of the nation and
meet with the requirements of customers.
Private Limited company: Private limited company comprises of all those companies which is
run to earn revenues through offering high quality good and services to the consumers. H&M is a
private limited organization which is dealing fashion retail sector.
 Market Share: H&M is an international organization which is offering its services and
manufactured goods to different parts of the world. It's market share includes different
parts of the world.
 Scope: H&M is a Swedish company which is one of the leading brand in fashion retail
sector. This company has approx 2600 stores which is located in 43 different countries.
 Growth: There are various growth opportunities for H&M company as they can improve
its products and services as well as grow in different part of the world.
4

 Mission: The mission of H&M is to carry a long lasting positive changes as well as
improvement in living standards of the company.
 Vision: There vision is to lead changes towards the fashion industry as well as become
the leaders of respective industry.
Voluntary Limited company: This type of organisation refers to non profit organisation as they
are not working to earn profits (Hillary, 2017). Voluntary company motive is to do some welfare
of citizens by resolving major issues of society.
 Market Share: This company is operating with different independent charitable
organisation. There market share includes is to provide various benefits to citizens of
organisation by solving issue of poverty.
 Mission: Oxfam mission statement emphasize that they are working to create an
environment where people do not have to deal with poverty.
 Vision: Oxfam company wants to create a world without poverty in which each and
every person is living a healthy lives.
TASK 2
P3
There are various functions of organisation which helps in improve its performance and
helps in earning more and more profits. H&M company is consist of different important function
such as operations, human resource, finance, production and marketing. Various functions of
H&M company with its interrelationships are mention below.
Marketing and Finance department
Marketing function refers to all those activities of organisation which helps in improving
sales of company. Finance department is responsible for managing all assets as well as financial
resources of organisation (Hilton and Platt, 2013). It is very crucial that both of these function
coordinated with each other and work in effective and efficient manner. Marketing department of
H&M company needs funds and financial resources to promote and market its services to
different market area. This department will also identity market trends which could be followed
by financial department of H&M company so that they can work in effective and efficient
manner. Interrelation of marketing and finance department will help in achieving organisational
5

objectives of respective company. For example marketing department can identify new tools an
techniques for economical sector.
Human resource and production department
Production and human resource both of these are essential functions of H&M company.
Human resource department will help in selecting right employees for right place and production
department is responsible for manufacturing and producing high quality of products. Human
resource department have to train employees of production department so that they can work in
effective and efficient manner (Janita and et.al, 2013). For example training employees of
production department to improve their skill regrading lean manufacturing process. This will be
very helpful for achieving desired goals and objectives of H&M company and providing high
quality products to targeted customers.
TASK 3
P4
External environment includes various factors which can not be controlled by
organisation and these factor will have major effect on work and actions of organisation. It
includes all those external factor that are very important for growth and survival of H&M
business as well as it will have positive as well as negative effect on enterprise trading
operations. In order to analyse the impact these factors on business PESTLE analyse could be
evaluated (Kim and et.al., 2013). It includes political, economical, social, technological, legal
and environmental factor. All of these factor with their both positive as well as negative effect
on H&M business is mention below.
Political factor: This factor includes different rules and regulations that is made by government
and political party. Political factor consist of political stability or insatiability, foreign trade,
taxation polices and trade restrictions developed by government. Positive- This factor will have positive impact on H&M company as they UK have very
stable government and they are developing polices for the growth of retail sector. This
will help in growth and development of organisation.
 Negative- There are many strict rule as well as trade restriction set by UK government
which will have negative impact on business. This is directly affect the sales and profits
of H&M company.
6

Economical factor: This will have significant impact on H&M business as it is majorly related
to economic growth, interest rate, exchange rate of a country (Kolk, 2016). It is will both positive
as well as negative effect on company.
 Positive- UK country has growing economic conditions so this will have constructive
impact on H&M business. This will lead to increase sales and profits of H&M company.
 Negative- Negative impact of economical factor on H&M company will be increase in
interest rate. This will lead to increase their price of products manufactured by H&M
company and will have negative impact on sales of H&M company.
Social factor: This section consist of population size, society, attitude, behaviour and so on. This
factor play a crucial role in attracting customers as well as influencing them to purchase products
of H&M company.
 Positive- This company is developing and designing high quality products which is able
to match with aa the of necessity of customers.
 Negative- Customers requirement is ceaselessly ever-changing and change in market
trends can have negative impact on H&M company.
Technological factor: This factor includes new and innovative technology of producing and
manufacturing products. This helps in conducting business activities in more effective and
efficient manner.
 Positive- UK has one of the most advance and innovative technology. This is very
helpful in achieving desired goals.
 Negative- H&M company needs to train its employees so that they can correctly use high
technology. This is very cost consuming for respective company.
Legal factor: Legal factor includes all rule and legislations that is developed with the motive of
keeping safety and security of employees as well as customers.
 Positive- This company have patents and copyrights of its products which will have
affirmative impact on H&M business.
 Negative- Negative impact of legal factor on H&M organisation is increase in wages
rates. This rule will directly affect the profitability of respective organisation.
Environmental factor: It includes all those factors which are linked to the environment such as
climate, weather, pollution, ecology and many more.
7

 Positive – This company is performing it business activities by consider the climate and
weather conditions of targeted market area.
 Negative – Increase in global warming and changing in climate will have major negative
impact on business of H&M.
TASK 4
P5
There are various micro and macro factor of organisation which will helpful in successful
running of organisation (Meiners and et.al, 2014). In order to determine all factors of external
and internal environment of H&M company they need conduct SWOT analysis. Internal factor
includes strengths and weakness where as external environment consist of possibility and threats.
Strengths: H&M is a well known company and it is one of the starring organisation
which is dealing in retail sector. This company is providing high quality products to customer as
well as meeting with their requirements.
Weakness: This company is majorly dependent on their party suppliers which can be
considerer as its major weakness. H&M company have invested in huge maintenance machines
which is very costly.
Opportunities: There are various opportunities for H&M organisation as it can grow and
develop its business in new market area as well as develop strong online market presence.
Threats: Major threats for H&M company is its strong rival company. This company is
dealing in highly competitive environment.
P6.
Strengths and weakness of H&M company is integrated with the macro environment.
There are various aspects of external environment which is affected by companies strength and
weaknesses. H&M strengths and weakness interrelated to external factor in mention below.
Political Factor: This company is following all rules and regulations which is set by
government so this is a strengths of H&M company. Strict policies regarding trade of products
can be considered as weakness.
Economical Factor: H&M company is conducting business activities which have
continuously growing rate so it is a strengths (Quinlan and et.al., 2019). UK market area have
increased interest rate which negatively affect sales of H&M company.
8

Social Factor: Strength of this company is that it is manufacturing products as per need
and wants of customer. Changing in market trends and fashion taste of customers is will have
negative impact on business.
Technological Factor: UK have most advance and updated technology and H&M
company can use it in its business activities in order to work in impressive and economical way.
Fresh and innovative technology is very costly and this will required huge cost.
CONCLUSION
It can be concluded from the above topic that there are different factors of business
environment which is moving its production as well as performance. Hence, to gain more profit
and attract more customers company needs to carefully determine all macro as well as micro
factors. Different types of organization are there which is working in different business sector.
All of these companies will have their own size and scope as well as work with different purpose
and objectives.
9

REFERENCES
Books and Journels
Aithal, P.S., 2016. Study on ABCD analysis technique for business models, business strategies,
operating concepts & business systems.International Journal in Management and Social
Science. 4(1).
Apăvăloaie, E.I., 2014. The impact of the internet on the business environment. Procedia
Economics and finance, 15. pp.951-958.
Belás, J et al. 2014. Significant attributes of the business environment in small and meduim-sized
enterprises.Economics and Sociology.
Cai, S. and Yang, Z., 2014. On the relationship between business environment and competitive
priorities: The role of performance frontiers.International Journal of Production
Economics,151. pp.131-145.
Erasmus, B and et.al., 2016.Introduction to business management. Oxford University Press
Southern Africa.
Gupta, A., 2013. Environment & PEST analysis: an approach to the external business
environment.International Journal of Modern Social Sciences. 2(1). pp.34-43.
Harrison, A., 2013.Business environment in a global context. Oxford University Press.
Hillary,R., 2017.Small and medium-sized enterprises and the environment: business imperatives.
Routledge.
Hilton, R.W. and Platt, D.E., 2013. Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
Janita and et.al2013., The antecedents of client loyalty in business-to-business (B2B) electronic
marketplaces.Industrial Marketing Management. 42(5). pp.814-823.
Kim, M and et.al., 2013. An impact of manufacturing flexibility and technological dimensions of
manufacturing strategy on improving supply chain responsiveness: Business
environment perspective.International Journal of Production Research. 51(18).
pp.5597-5611.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development.Journal of World Business. 51(1).
pp.23-34.
Meiners and et.al 2014.The legal environment of business. Cengage Learning.
Quinlan, C and et.al. 2019., Business research methods. South Western Cengage.
Savrul, M and et.al. 2014., The potential of e-commerce for SMEs in a globalizing business
environment.Procedia-Social and Behavioral Sciences. 150. pp.35-45.
Shenkar, O and et.al 2014.,International business. Routledge.
Tretyak and et.al 2013., The importance of cultural adaptation for the trust development within
business relationships.Journal of Business & Industrial Marketing.
Online
The Future Of Fashion Retailing -- The H&M Approach. 2019. [Online]. Available
through:<https://www.forbes.com/sites/jenniferrooney/2019/10/21/to-regain-power-cmos-must-
earn-it-back-a-qa-with-9th-wonders-jose-lozano/#51aa43ee390c>.
10