Strategic Management Report: Analysis of H&M's Business Strategies

This report provides a comprehensive strategic management analysis of H&M, examining both internal and external factors influencing the company's performance. It begins with an overview of H&M's background, market position, and operational structure, followed by an in-depth analysis of external factors such as political, economic, social, and technological influences, alongside an evaluation using Porter's Five Forces. The report then delves into internal factors, including strengths, weaknesses, opportunities, and threats (SWOT) and utilizes the VRIO framework. Strategic options, including Porter's generic strategies, are discussed, culminating in a strategy selection and recommendations for future actions. The report concludes with a SWOT framework, offering a concise summary of the company's competitive position and strategic considerations.

STRATEGIC
MANAGEMENT

TABLE OF CONTENT
PART 1............................................................................................................................................3
Background of H&M...................................................................................................................3
External Factors...........................................................................................................................3
Internal Factors............................................................................................................................5
Strategic options..........................................................................................................................6
Strategy selection.........................................................................................................................7
CONCLUSION AND FUTURE RECOMMENDATIONS............................................................7
PART 2............................................................................................................................................8
SWOT framework.......................................................................................................................8
REFERENCES..............................................................................................................................11

PART 1
Background of H&M
H&M has always been using the right strategies in the market so that they can gain the
competitive advantage in the market which is a very important factor for the company to have.
H&M is more focused on the external factors so that they can have a smooth functioning. The
company has had a lot of downfalls in the market as well which has been well balanced in the
company making the organization have a stable functioning (Hanson and et.al., 2016). Strategic
management is a very important factor which businesses need to follow so that there is going to
be higher functioning and sense of direction which is going to be present. H&M is operating in
the market since 73 years and is having its headquarters in Stockholm, Sweden. The organization
is serving worldwide and is having more than 5,076 stores and 126,376 employees working in
the company. The report is going to consist of internal and external factors and the strategies
which are going to be suitable for the company to implement in the organization in order to be
able to function effectively and efficiently.
External Factors
The external analysis of companies in the market is very important which is going to be
discussed in the further report.
 Political factors
H&M is following the policies which are present in the market so that they can have smooth
functioning and be able to have a higher reputation for themselves in the market. The company is
following all the laws and regulations for the customers and employees of the company as well
which is good for the brand value and image in the market.
 Economic factors
There is right profitability which the organization is gaining in the market making the
company have higher performance in the market (Hitt, Ireland and Hoskisson, 2016). The

unemployment rates are falling and GDP is increasing in the countries which is a great
opportunity for the company to take advantage of so that there is going to be higher performance.
 Social factors
The trends and standards of the customers is well taken care of by H&M so that there is
going to be higher performance and reputation of the organization in the market. The lifestyle of
customers is changing which H&M is taking care of and making the company have higher
performance.
 Technological factors
There is a lot of technology which has changed in H&M like information technology which
has made the errors in the organization lesser and makes the brand image improve. It is
important for the company to get in these changes so that the productivity level of the company
is also going to be higher (Barney, 2017).
Porter’s five forces
 New entrants (Low)
There is a lot of investment which is going to be required by the company in order to be able to
operate effectively. H&M has a strong base therefore the new entrants will not be able to operate
effectively.
 Bargaining power of suppliers (Low)
The company has strong network in the market therefore they can shift from one supplier to
another so that there is going to be higher functioning.
 Bargaining power of customers (Medium)
The customers are controlling the company’s sales and profit margins therefore it is
important for the company to make the right decisions in the market so that there is going to be
effective working which is going to be present.

 Substitute products (High)
M&S, Zara, etc are having the substitute products for the company which has to be
maintained and H&M will have to get in new products and services from time to time so that
they can maintain the loyalty of the customers.
 Competitive rivals (Medium)
There is a lot of competition which is present in the market already which the company needs
to handle well. There has to be good use of strategies and methods.
Internal Factors
The internal analysis of H&M is going to be discussed and explained in the further report
so that there is going to be effective functioning which is going to be present.
 Strengths
The organization is having a great experience in the market which is a great factor for the
organization to have in the market because they have a better decisions making power with them.
The company will also have to think for the strategies again because the strategies are old which
the company is using but they have been a great strength for the organization from a long run
(Certo and et.al., 2016).
 Weaknesses
The company is not being able to have higher retention level of the employees since the
organization is more focused on the changes and not thinking of the internal factors which can be
a great threat for the future of the organization in the market as well. The rivalry in the market is
also high which the company will have to take care of so that the company will be able to
maintain their standards and reputation in the market.
 Opportunities

The GDP and unemployment rates are improving which the organization can take full
advantage of and also the company can expand themselves in a lot of developing countries as
well which is going to make the company have higher sales and profit margins (Bryce, 2017).
 Threats
The company is having a great threat of the competitors in the market which needs to be well
maintained by the organization so that the company will be able to operate effectively. The
organization has lot their market share as well because of this factor.
VRIO
The company needs to understand the value of all the factors which are present in the
company so that they would be able to operate effectively. Value, rarity, imitability and
organization which are the most important factors for technology, human resource, assets, etc
which are present for the company so that there can be higher profit margins which are going to
be present and that is going to be very good for the reputation and brand value of the company.
Strategic options
There are a lot of strategic options which are present for the companies in the market but
H&M must use Porter’s generic to be able to function effectively and as planned by the
organization which is a very essential factor. Porter’s generic is having four categories which can
be adapted by the company in order to be able to gain competitive advantage in the market which
is going to help the company be able to operate effectively in the market (Alnoukari and Hanano,
2017). The four categories are cost leadership, cost focus; differentiation and differentiation
focus which the company can opt for any in order to be able to lead in the market. The
competitors of H&M are Sainsbury, M&S, etc which are also well experienced in the market
which is why it is important for the organization to be able to get in better strategies with the
changes in the market so that there are going to be higher functioning which would be present.

Differentiation focus is the main strategy which H&M is trying to focus upon so that they
can provide the customers with the best and unique factors in the market which is going to make
the organization have a higher value in the market (Arunruangsirilert and Chonglerttham, 2017).
It is very important for H&M to gain a competitive advantage in the market because the
competition is increasing and without copyrights and patents on the designs and quality of the
product the organization is not being able to compete in the market effectively which is very
important for an experienced organization to have with them to be able to function effectively in
the market.
Strategy selection
Recently the organization has been focusing on the internal factors of the company so
that they can have a better functioning and be able to compete with the competition in the market
which is a very important factor for the company which would also help the company be able to
operate smoothly (Johnsen, 2019). H&M is very good with getting in the changes which are
coming in the company and they have to be well maintained so that the company will be able to
operate effectively and efficiently in the market. The company is using differentiate focus as the
strategy so that they will be able to operate effectively and efficiently in the competitive market
which the company is existing within.
CONCLUSION AND FUTURE RECOMMENDATIONS
From the above report it can be concluded that the businesses need to select the best
method and strategy for themselves in order to be able to make a place for themselves in the
market. The business in the market needs to have a good platform so them since the competition
in the market is increasing and it is important for the company to manage and maintain this
factor so that there is going to be higher functioning which is going to be present. The company
needs to maintain their raw material and resources which they are using effectively so that the
organization will be able to function effectively in the market.

PART 2
INTRODUCTION
To be able to achieve the goals and objectives of a business it is important for the
company to have a strategic management in the company. H&M is belonging from the retailing
industry which was founded in 1947 and is having more than 5,076 stores worldwide as of 2019.
The company is having its headquarters in Stockholm, Sweden and is having more than 126,376
employees working in the organization. The report is going to consist of the internal factors
which an organization must consider so that there are going to be higher performance and
decisions can be made for the future effectively.
SWOT framework
The competition in the market is rising and it is essential for the organization in the
market to be able to have a strong internal factor so that they would be able to compete with the
competitors in the market effectively. H&M is having a strong base in the market or them
therefore it is important for the organization to be able to operate effectively so that there are
going to be higher functioning which is going to be present.
 Strengths
H&M is following the political changes and the strength of the organization is they have
experience in the company in order to be able to operate effectively. After Brexit there are a lot
of changes which have come but the organization has been able to handle them effectively. The
company values the resources and limited renewable resources coming in the company so that
they can sustain their customers in the organization which is a great factor for the company (Hill,
2017). New entrants are low in this industry in which H&M has developed a strong base of
customers which is not going to change because of the quality of products and services which the
organization is providing to the consumers from time to time. The power of suppliers is present
in H&M since they have a strong network and connections in the market which the company has
developed over 73 years in this market and that is going to make the company have cost friendly
productivity and operations as well. The economic control and stability is also present in H&M
which is going to make the company have a higher investment and revenue generations in the
future which is going to be very good for the company and their functioning in the market. The

company has found low costing labour for the production of the products and services making
the company are able to have higher profitability in the market which is a great factor for the
organization’s long run (Dzwigol, 2020).
 Weaknesses
The company has not been able to have a control on their legal aspect which is not good for
the brand value and reputation of the company which is going to make the productivity of the
company get affected. The company needs to take care of the rivalry which are present in the
market and that is going to make the organization have lower market share and will not be able
to develop in the market effectively as well (Agwu, 2018). The employees of the organization
are also low trained and developed since they are not having a high experience of the market and
productivity as well which is why the company has to invest a lot in this aspect in order to be
able to match the standards and brand image in the market. The company is not being able to
find alternatives for the raw material which is being used in the organization to be able to find
environment friendly measures which is going to help the company have higher brand reputation.
The company cannot compromise their portfolio in the market in order to be able to operate
effectively in the market which is having a growth of competitors in the market which is not
good for the reputation of the company (Barros, Hernangómez and Martin-Cruz, 2016).
 Opportunities
The company can take a lot of advantage of the trends and expectations of the customers
which is changing rapidly which is going to be very good for the performance of the organization
in the market. There are a lot of changes which H&M is doing in the market in order to be able to
maintain the reputation and standards of the customers in the company which is going to be a
great factor. The company has also been able to invest a lot in technological aspect which is
helping the company to match the demands and productivity level in the company has increased
making the organization have higher functioning and economic factor. There are a lot of
environmental measures which the company has taken in order to be able to operate effectively
and efficiently (Bagheri, 2016). This is also going to help H&M to increase their standards and
reputation in the market. Zero carbon footprints and well maintained and managed disposal of
waste is present in the company which is a great factor for the organization to have in the market.

Changes coming in H&M is at a higher rate than the competitors which makes the organization
be able to have a good productivity and maintained market share in the market which is going to
impact the organization have higher value of portfolio which is going to be present.
 Threats
The bargaining power of customers is very high in the company therefore the organization is
making a lot of investment in the company which is going to impact the performance level of the
organization in the market. The company is not having a rare and inimitable as their strength but
as a threat for the company because the products and services of the company can be easily
copied by the other organizations in the market which is not a good factor for the organization to
have which needs to be controlled by the company. The competition which already exists in the
market can also not be controlled by H&M and will have to be looked after so that the
organization will be able to compete effectively (Akhtar and et.al., 2016). The company is
having a standard and reputation for themselves in the market which the firm will have to live up
to so that they can maintain the standards and reputation for themselves in the market which is
good for a long run. The company needs to pay their employees well so that the retention level of
the workforce is going to be present which is going to make the productivity of the organization
be improved and the organization will be able to gain a competitive advantage as well. This is
also going to help the organization be able to match the demands and needs of the customers as
well for a long run.
CONCLUSION
From the above report it can be concluded that it is important for the organization to have
a stable functioning and operations therefore analyzing the market is very important for the
organization. Businesses in the market need to have a strong base of internal factors so that they
will be able to match the demands and expectations of the customers which are going to be good
for the brand value of the organization. The company needs to take care of the resources and raw
material which is coming in the organization so that there is going to be effective functioning
which is going to be present with the organization.

REFERENCES
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