Business Strategy Analysis: H&M's Competitive Advantage Report

This report provides a comprehensive analysis of Hennes & Mauritz (H&M), examining its business strategy, internal and external environments, and competitive landscape. The report utilizes Porter's five forces model to assess the competitive forces impacting H&M, followed by an exploratio...Read More

REPORT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Business strategy..........................................................................................................................3
Products and Services..................................................................................................................4
Porter's five forces analysis..........................................................................................................4
Porter's Value Chain....................................................................................................................6
Porter’s Value Chain Primary Activities................................................................................6
Operations..........................................................................................................................6
Porter’s value Chain support Activities..................................................................................6
Strength and weakness of the H&M............................................................................................7
Role of IT in helping the business to gain a competitive advantage...........................................8
Use innovative ideas to improves business processes and to enhance its competitive
positioning....................................................................................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Managing Information and technology refers to standalone process as the part of
managing needs and priorites of the firm through efficient use of IT resources. It includes
arrangement of hardware, software, data center facilitates and networks. Report is based on the
Hennes & Mauritz (H&M).
The Project Report will analysis the business environment both internal and external of
the chosen enterprise. It will analysis its competitive environment through applying Porter's five
forces model.
Furthermore, report illustrate the primary activities in Porter's Value chain and will
analysis its strengths and weaknesses. Then, report will summarize how the business can deploy
IT and use innovative ideas to improve the company processes. Lastly, report will provide
conclusion.
MAIN BODY
Background of the Company
H&M is the multinational clothing retail company. It is best known for fast fashion
clothing for women, men and teenagers. It is founded in the year 1942 about 72 years back. It is
founded by Erling Persson. Its headquarters are situated in Stockholm in Sweden. Its first shop is
opened in Vasteras in Sweden which named as Hennes that used to sold women clothing but
later on in the year 1968, it acquires the hunting apparel retailer namely, Mauritz Widforsss
which is inclusive of menswear collection. Therefore, it combined name as Hennes & Mauritz. It
is listed on the Stockholm Stock Exchange.
Business strategy
The Business strategy of H&M consists of fast fashion model. They deliverers the large
volume of merchandise from the designers. They resupply the products pipeline with their latest
and fashionable trends. There goal is to have higher merchandise turnover. It offers high
fashionable products in comparably low prices from the competitors such as Zara. The company
is using effective pricing strategy and renowned as ''Cheap chic'' at the marketplace (Laudon and
Laudon, 2015). They also introduce the Pilot program to incentive the fair working conditions in
the organization. This program involves the five year span in which company purchased 100 %
of the factories outputs.

Through routine inspections the Company ensures the safe working conditions for their
employees in order to increase productivity. The company designed the products which fly in
small batches and depends on latest trends (Schwalbe, 2015). It also ensures the timely delivery
of products in order to increase customers retention. They took advantage of fashion trends and
put on their stores shelves faster than its competitors in order to lead the market.
Products and Services
H&M deals in trendy and fashionable clothing both in women and men range. Together
their collaborating brands offers customers wealth and styles (Orna, 2017). Company products
includes beauty, accessories, healthy food products and latest & Modern design oriented
homewares.
Porter's five forces analysis
It is the framework and business tool that helps to analysis competition in the Company.
It determines the five forces which influence the business of H&M.
Threats to new entrants - The new entrants could not achieve the economics of scale in type of
industry which H&M deals. It is weaker force for the Company. The capital requirements is also
high and it is impossible for the new entrants to invest such huge amount in order to cover the
marketplace (Mathooko and Ogutu, 2015). The access to the distribution networks could easily
be achieved by the new entrants but there is government intervention in this industry. There is
various government polices which the new entrants has to follow. They also require licensing
and need to follow legal requirements in order to enter into clothing industry. The H&M takes
the advantage of economics of scale and took the competitive edge.
Bargaining power of suppliers - There is large number of suppliers available in clothing
industry in which H&M operates. Thus, the suppliers has no control over the prices this lead to
make barraging power of suppliers low in this type of industry. Products which these suppliers
provides are less differentiated and have low switching costs. Therefore, this make easier for
H&M to switch their suppliers (Zhao and Zillante, 2016). Even the suppliers are not contended
with other products. Therefore, there are fewer substitutes available for the products which they
supply but they do not provide credible threat for doing forward integration. Thus, the suppliers
have to provide reasonable pricing to the company. H&M purchase the raw materials in
considerably low cost than there competitors and this leads towards increase profitability of the
company.

Bargaining power of buyers - The Bargaining power of buyers is high in H&M as the income
of the buyers is low in this industry which makes buyers more price sensitive. They put pressure
on the company to sale their products at affordable prices. The industry in which H&M operates
there are lots of competitors. Thus, the customers can easily switch to some other firm which
offers reasonable price products. The customers always seeks for quality with affordability
which company is not fulfilling (Eskandari, Gholami and Nia, 2015). They are giving quality
products but not affordability. Thus, the customers asked for various discounting offers. To
overcome this company can bring innovation and differentiation in their products which makes
them differ from there competitors and switching behavior of buyers can easily being reduced.
Threat of substitute products and services - The products in which H&M deals are very less
substitute. Fewer substitutes are available in clothing industry and they are more expensive. The
H&M operates lower price products with adequate quality. The few substitutes which are
available is also produced by low profit earning firms. Thus, the threat to substitute is lower in
H&M. The company provides greater quality products at considerably low price as compared to
substitutes. As a result, buyers were more attracted towards H&M products.
Rivalry among existing firms - The Rivalry is high in the industry in which H&M deals. As
there is very high competitors and most of these are large in the size. They are engaged to gain
market share through doing competitive moves in order to become market leaders. The recent
recession has affected the consumers spending and reduces the demand. Thus, it results in
intense competition (Takata, 2016). The companies are constantly reviewing their market
strategies. The companies are investing in highly in research and design to make their products
superior in order to take competitive edge. The H&M group is also investing in research to take
the competitive advantage. The company can focused to deliver differentiate products to take
market lead.
Conclusion of Porter's five forces analysis
It is concluded from Porter's five forces analysis that the Threat of new entrant is low for
H&M as this industry need high investment and there is government intervention. Bargaining
power of suppliers are also low as there are lots of suppliers are easily available in clothing
industry and company can easily switch. The bargaining power of buyers is high and threat of
substitute products is low.

Porter's Value Chain
Porter value chain is the best model to identify the competitive advantage (Lee, Lanting
and Rojdamrongratana, 2017). It is the value chain which collect the different activities of the
business for example the value chain is determine the cost of the activities and helps to increase
the value of products and create the high value for its customer. These activities performed by a
firm to enhance the quality of product for its customers. Finally, firms add the value in order to
creates a higher profitability for a business.
Porter’s Value Chain Primary Activities
Primary activities are those activities who provide the ideas that how to manage the
different activities of the business, that means how to implement the different strategies in the
business to increase the demand of the product.
Inbound logistic
Under this activity, H&M focus on controlling the inventory by managing the storehouse,
raw materials and receiving of the firm. This activity contains the receiving of raw materials,
storehouse and inventory control of a firm (Jackson and Krieg,2019). Inbound logistic is
described that firms are maintained the good relationship with their suppliers For example, for a
Fashion and quality clothing firm, inbound logistics would be the receiving and storing raw
materials like extile fabrics, fiber raw materials such as yarn and cotton from a supplier for
increase the sale and demand of the product.
Operations
Operations means firm use the best procedure for making the quality of product, H&M
uses the best procedure of manufacturing they convert the raw materiel into the product by using
the best machineries and procedures. This is the process of using the inputs as a raw material and
ready them into the outputs(goods and services). In the above the clothing company example,
firms make the best and branded clothes adding the values in the clothes such as add the label,
code, price tag, brand etc.
Porter’s value Chain support Activities
Support activities are those activities who give support to the primary activities, H&M
improve their primary activities so they further use the best support activities in their business.

The support activities is provides the best opportunity to improving the primary activities. For
example, The human resource department of the H&M plays a crucial role in the business they
provide the best people and also they help to increase the sell of the product by managing the
operation activity of the firm. There are two support activities.
Human resource management
This is the essential resources an every firms need for this management in their business,
human resource management hiring and recruiting the people according to the knowledge and
skills of the people. So managing peoples are important for the primary activities when HR
departments are hire the good people in their business it helps to firm because people are use
their mind to improve the operations and inbound logistic activities.
Technological Development
The technology development is the best tool to enhance the performance of the business
(Bryson, 2017). This tool commonly use during the research and development activities when
firm improve their performance they use the different technology and develop their
manufacturing process. This development contains the machinery, tools and equipment,
hardware and software, computers artificial intelligence and different procedures and technical
knowledge. Ultimately, H&M target that they use the best technology in their fashion and
clothing business also they set their motive to reduce cost of technology. For example, shifting
from a hardware storage system to the cloud, is technological development.
Strength and weakness of the H&M
Strength
 H&M has a huge market share they provide the designer clothes to the customers, firm
operates many stores they open the stores in the new market contains Georgia, Iceland,
Vietnam, Colombia and Kazakhstan. Further, firm also open the new online stores in
2017 in Taiwan, Turkey, Macau, Hong Kong, Malaysia and Singapore (Schwalbe,
2015).
 H&M is one of the largest international clothing retailer.
 H&M operates the 66 stores in market with high digital presence. Thy have 2300 stores
in all over the world also 95000 employees are work under the business.

 H&M also provide the best pricing and quality product to the customers and consumers
are easily afforded the product.
Weakness
 H&M invest huge money in repair and maintenance it increases the cost of production.
 H&M faces the competition disadvantage in recent year because there are many
competitors in clothing industry who provides the best product, Zara is the biggest
competitor of h&m.
Role of IT in helping the business to gain a competitive advantage.
Information technology is provided many opportunities to business. Technology
provides help to increase the performance and enhance the profitability of the firm.
 IT system is one of the best device which provides the best solution of problem in a
new and creative way.
 IT systems can provide the highly and valuable information to the business, it helps
to H&m that IT systems is gives the usable data for better understand the
requirements' and wants of their customers and stakeholders (Laudon and Laudon,
2015).
 Information technology is also gives many opportunities to expand the business in all
over the world by use the online platforms. H&m enhance their business to sell their
product in online websites that means customer easily purchase the product by using
the websites.
Use innovative ideas to improves business processes and to enhance its competitive positioning
On the basis of it, the recommendation will be given in the following manner as-
 H&M should have the use of smart supply chain management so that that they can
improve their relationship with suppliers and this aids to enterprise to produce their
commodities within stiputaed time.
 H&M should have improve their competitive positioning by redesign the overall process
of production such as supply chain, R&D and innovation, manufacturing, and marketing
and sales.
 Enterprise should have bring wide innovation techniques. Therefore, it can gather the
attraction of the customers and they gets infleunce to purchase the commodities.

 Chosen enterprise should have the use of use the different strategies such as promotional
and pricing technique to attract the larger number of customers. In order to gain
competitrive advantage.
 Quoted enterprise should have expand their business functions at online platforms so they
can able to reach more customers. Henceforth, this steps will be helpful to do the things
effectively and efficiently.
 H&m should have develop the customer relationship with help of taking feedback
evaluation on the product and services, served by the enterprise.
CONCLUSION
The above report has summerized that managment information system defined as
computer based system that provides managers the tool to organize, evaluate and efficiently
manage departments. It aids to gather the data from multiple online system. The report has
covered the business activities of H&M. Therefore, this industry deals in clothing comopany for
men, women, teenagers and children.
Furthermore, report has covered various topics as Porters five forces to analyse external
working and its competitive environment, the strength and weakness has been conducted on
operation of H&M with help of SWOT analysis. Lastly, innovative ideas has been given in order
to gain the competitive advantage within the market.

REFERENCES
Books and Journals
Bryson, J. 2017.Effective library and information centre management. Routledge.
Eskandari, M.J., Miri, M., Gholami, S. and Nia, H.R.S., 2015. Factors Affecting The
Competitiveness of The Food Industry by Using Porter's Five Forces Model Case Study
in Hamadan Province, Iran. Journal of Asian Scientific Research.5(4).pp.185-197.
Jackson, D. and Krieg, A. 2019. Between Scylla and Charybdis: Managing Information
Overload.
Laudon, K.C. and Laudon, J.P. 2015.Management Information Systems: Managing the Digital
Firm Plus MyMISLab with Pearson eText--Access Card Package. Prentice Hall Press.
Laudon, K.C. and Laudon, J.P., 2015. Management Information Systems: Managing the Digital
Firm Plus MyMISLab with Pearson eText--Access Card Package. Prentice Hall Press.
Lee, K.W., Lanting, M.C.L. and Rojdamrongratana, M. 2017. Managing customer life cycle
through knowledge management capability: A contextual role of information
technology. Total Quality Management & Business Excellence. 28(13-14). pp.1559-1583.
Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management.29(3).pp.334-354.
Orna, E., 2017. Information strategy in practice. Routledge.
Schwalbe, K. 2015.Information technology project management. Cengage Learning.
Schwalbe, K., 2015. Information technology project management. Cengage Learning.
Takata, H., 2016. Effects of industry forces, market orientation, and marketing capabilities on
business performance: An empirical analysis of Japanese manufacturers from 2009 to
2011. Journal of Business Research.69(12).pp.5611-5619.
Zhao, Z.Y., Zuo, J., Wu, P.H., Yan, H. and Zillante, G., 2016. Competitiveness assessment of the
biomass power generation industry in China: A five forces model study. Renewable
Energy.89.pp.144-153.
Online
Porter’s Five Forces of Competitive Position Analysis. 2015. [Online]. Available through :
<https://www.cgma.org/resources/tools/essential-tools/porters-five-forces.html>.