H&M Strategic Management: Ansoff Matrix & Porter's Generic Model

This report provides a strategic analysis of H&M, a fast-fashion organization, evaluating its internal and external environments to understand its working capabilities and potential for goal achievement. It includes an organizational overview, external analysis using PESTEL and Porter's Five Forces, ...Read More

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................1

INTRODUCTION
Strategic management is organizational analysis tool which is used to evaluate the
working capability of the company in such a way that working capability of the company is
increase by which chances of goal achievement can also be increased. H&M is a fast fashion
organization which provide fashioned clothing products to its customers in several countries.
Analysis of company's working strategy in done in this report with the analysis on its internal
and external environment. Evaluation of the impact of internal environment on the working
capability of the company is done in this report and the strategic tools used by company to
evaluate the external environment. Development of strategic tool in terms of improving the
working productivity is also done in this report.
MAIN BODY
Organizational overview- H&M
Hennes & Mauritz commonly known as H&M is one of the retail and multinational company of
Sweden. It is one of the biggest and famous clothing company of Sweden who deals with a
variety of clothing items and trendy and fashionable items. It was founded in 1947 by Erling
Persson. Headquarter of H&M is in Stockholm, Sweden. It is basically a well-known clothing
industry of Sweden. H&M operates its business in many countries apart from Sweden. It is a big
clothing industry produces a variety of clothes for men and women of all age group including the
children, teenage, young or old generations. H&M also makes changes in its clothing types from
time to time as per latest fashions and trends.
External analysis for H&M
External analysis:
It is the analysis of the external environment which is very important for every company to
sustain in the competitive market or to win the competition in the market. External environment
is usually not under the control of an individual but by properly analysing the external
environment and its factors the risk related to external environment can be minimized at certain
range. For doing the external analysis H&M can use different tools including:
Pestel analysis:

Pestel analysis is the analysis of whole business environment which could affect the business and
running of H&M, which make it very essential for H&M to analyse and study so that it can
achieve its goal.
Political forces:
Political instability or changes in political factors of the country severely affects the
functioning of H&M. Due to political changes the whole economy affects or due to putting of
restriction on dealing with a particular stream of products the working of H&M or any company
affects (Çitilci and Akbalık, 2020). Hence, it becomes very essential for H&M to study the
political situation of the country before expanding its business in that country.
Economic factors:
This factor could prove to be favourable for H&M if it plans to start its business in that
country which is in developing stage because in developing countries usually the labour cost is
low in comparison to developed countries which become very favourable situation for H&M to
manufacture its products (Yusop, 2018). Also in developing countries the income of the people is
also increasing which will also puts the positive impact on H&M in terms of increase in sale.
Social forces:
Social factors basically deals with the society or the people whose taste and prefernce
always changes. Thus, it becomes very essential for H&M to study this factor and produce
accordingly.
Technological factor:
Changes in technology or different technological advancement in different country also
affects the H&M and its working. Thus, properly analysis and adoption of technological changes
as per the demand is very essential for H&M.
Environmental elements:
While production or manufacturing of clothes H&M have to be very conscious about the
environmental element of Pestel analysis which means it has to consider that its activities or
business may not harm the environment in any way.
Legal forces:
The legal environment or abiding and following the laws and regulations of the country is
very essential for every company including the H&M which means H&M has to closely study
and follow the legal framework of that country in which it is going to start its trade.

Porters five forces:
This is also an essential strategic management tool which H&M can use to analyse the impact of
external environment over its business.
Rivalry among existing company:
There are lots of companies who deals with the same clothing industry like H&M deals
which become a big threat for the running and achieving success or growth by H&M (Lewis,
2017).
Threat of new entry:
Due to less barrier on the entry of new companies in the country may act as a threat for
H&M to run its business because it will increase the intensity of competition for H&M.
Bargaining power of supplier:
Due to existence of many suppliers in the market or due to low labour cost in the country
the bargaining power of supplier lower down which will not affect H&M in a broad and major
way.
Bargaining power of buyer:
Due to the presence of many companies or products it becomes difficult for H&M to hold
the customers because with a small fluctuation in the price the customer will shift to the next best
company and its products (Arshed and Pancholi, 2016).
Threat of substitutes:
Substitutes or similar products is one of the main element which affects the H&M and its
sale but due to its brand image it can be minimized at certain extent.
Internal analysis of H&M
Internal analysis:
Internal analysis is the analysis of the internal working or functioning of the company which
helps the company to know and analyse its own capabilities or strength so that it can achieve its
objective in the form of high sales and high profits. Internal analysis includes various analysis
like:
SWOT analysis:

It is basically the analysis of strength, weakness, opportunities or threats which helps the
companies to analyse its strength and weakness so that they can reduce the future threats and
avail the future opportunities and expand their business with the achievement of success.
Strength:
Good brand image of H&M along with selling of high quality of products at reasonable
price is one of the biggest strength of H&M has in comparison of the other competitors (Teoli
and An, 2019). Apart from that it has global presence in the form of many outlets or offering of
variety of products and strong channel of supply as well as distribution also become an addition
in the strength of H&M.
Weakness:
Apart from strength, high dependence on import than self manufacturing or promoting
and selling of products with some controversial contents and mostly and blindly following of the
same fashion as the other brands follows instead of making changes or taking initiatives are
some major weakness of the H&M which it has to overcome to become more successful (Sarsby,
2016).
Opportunities:
Adopting the latest modes of selling including the e-marketing and e-selling of products
or by doing more diversification in the products or planning the expansion of the business by
merger or acquiring some companies may act as an opportunity for the H&M in the near future.
Threats:
Increase in the rate of tariffs or raw material, or due to any natural or global pandemic or
continuous increase in competition are some threats which H&M usually face like the other
companies.
VRIO analysis:
It is that analysis which helps the H&M to analyse the available resources so that the competitive
advantage can be grabbed and win the competition.
Valuable:
There are various valuable resources H&M can have including its workforce which is
well-trained and efficient, its financial resources which helps it in sustainability and expansion,
its valuable or differentiated good quality products, its patent right over its products and many

more. By using this valuable resources H&M can easily face market competition and bit the
competitors along with achieving its objectives.
Rare:
Like the valuable resources the financial resources of H&M are also rare because no
other company can easily grab such strong financial position. Along with financial resources its
patent rights along with its differentiated products and its distribution channel are also
considered as rare resources of H&M which could not easily be possessed or grabbed by other
companies.
Imitable:
The financial resources, its patent rights, distribution system are considered as not
imitable resources of H&M because it is very difficult for other companies to imitate these
resources due to the difficulty in making of such strong financial background or high cost in
buying the patents (da Costa, Geraldes and Geraldes, 2019). On the other hand its employees or
products can be imitable because any company by providing training can train the employees and
make them efficient. Also, by adopting good technology and methods the similar product can
easily be produced by other companies.
Organization:
The financial resources as well as the distribution system are said to be fully organized by
H&M because of the full and adequate or efficient utilization of these resources by H&M. While,
the patents rights are not said to be fully organized by H&M due to its less utilization or not
effective utilization by H&M in its business operation.
Strategic options for H&M
Following is the strategic direction tool for evaluating H&M future strategic directions.
Ansoff Matrix
Market Penetration-
H&M is having high brand awareness and also is having wide geographic reach because
of which it is able to achieve high sales and therefore organization must develop its working
strategy in such a way that it increased its customer count in the existing market by which
economic growth can be increased because expenditures have to made for advertising
organization (Loredana, 2017).

Product development
This stage arises when company tend to introduce new product in the existing market by
which customer's engagement with the company can be increased because of which customer
loyalty is increased and also at the same time risk associated with it also decreases. This happens
because customer are aware of the type of quality level provided by organization because of
which sales increases.
Market development
Market development is done by the organization when it tend to increase its engagement
in new market with the existing product (Martins, 2020). This is a effective method because
through this activity company tend to enter new market with the existing product because of
which customers are aware of the quality of services provided by organization in its home
location because of which highly effective.
Diversification
When company tend to enter into new market with the new product then it is said as
diversification in which company and customers are completely unaware of the type of products
and response which is achieved because of which company has to pay high attention to increase
high brand awareness (Cleberg, 2019).
Porter's generic model
Porter generic is a strategic framework which is used by organizations to achieve a competitive
edge over market competition by which market share and customer count can be increased.
Following is the porter generic model for H&M.
Cost leadership
In this strategy company tend to establish the lowest possible pricing on its products
because of which profit market is reduced however high brand awareness and high customer
count is achieved because of which company is able to increase its customer count and thus
resulting in improved sales (Su, 2020).
Differentiation Leadership
This is a different method for attracting new customers towards the organization in which
company tend to concentrate its efforts on developing new and rare product rather than on
concentrating on low pricing because of which company is able to achieve high sales and also at
the same time high profit is also achieved.

Focus
In this strategy company concentrate its efforts on providing organizational services to
specific targetted customers rather than on concentrating on new customers by proving new
products or by reducing pricing because of which company can reduce the chances of brand
switching (Voetmann and et.al, 2018).
Differentiation focus
In this strategy company provide high organizational services to specific targetted
customers because of which it is able to achieve high brand awareness but the organizational
activities are limited to a specific targetted audience because of which high sales are achieved
(Paul Kithae, 2020).
Thus H&M must use product development and differentiation leadership as its future
marketing strategy by which company can achieve high sales with high profit margin.
Strategic selection-
H&M must use Product development and differential leadership for developing its future
strategy because due to this company can attract wide range of customer by maintaining high
economical advantage. This is effective in terms of increasing brand awareness but on the other
hand through this strategy organizational expenditures will be increased and also with that
through this strategy company can provide new and rare products to customer on the basis of
their requirements and also at the same time as per changing market trends. This development of
new product will motivate new and trendy customers towards the organization, now since new
products are being provided to customer therefore company can establish premium pricing on its
products by which it can achieve high economical background. This, increased economic growth
will increase the chances of goal achievement because of which company can develop effective
products by which it reach augmented level of customer satisfaction by which high sales can be
achieved.
Justification-
This is important for organization to increase its organizational sales by which it can
achieve high sales due to which it can achieve a strong economic background. This is important
because in the present time of COVID-19 the buying capability of customers is reduced because

of which organizational sales are decreased. Therefore in order to maintain its substantiality and
strong economic growth company has to increase its organizational sales and also has to increase
the customer count because of which company has t implement changes in its organizational
working by which high sales can be achieved. Through this new product development company
can reduce the chances of brand switching for customers and also at the same time implement
market penetration by which new customers are attracted towards the organization. Therefore by
proving new product premium pricing can be taken and due to which strong economic position
can be achieved because of which company can increase its reach in new areas by which new
customers can also be attracted for increasing organizational sales and due to which customer
count will increase. However during the present time of COVID-19 H&M must develop new
products for high sales and high growth.
CONCLUSION
From the analysis in the report it can be concluded that it is important for organizations to
provide products on the basis of customer requirement and also as per the changing market
trends by which it can achieve high organizational sales and also at the same time achieve
efficient economic growth. However company has to evaluate its working capability and changes
in internal as well as in external environment by which it can improvise its working and goal
achieving capabilities, due to which chances of goal achievement can be increased. Due to these
factors strategic analysis is important by which overall requirements can be identified and
effective plan can be developed in such way that company can achieve its goals and customer
experience can be improved.

REFERENCES
Books and journals
Loredana, E.M., 2017. The use of Ansoff matrix in the field of business. Annals-Economy
Series, 2, pp.141-149.
Martins, A.M.A.R.D.L., 2020. Scenarios and Ansoff Matrix(Doctoral dissertation).
Cleberg, C., 2019. Strategic Success: The Ansoff Matrix vs. The Balanced Scorecard.
Su, Y.Z., 2020. The Internationalization Strategies of Fast Fashion Clothing Retailer Brands: A
Cases Study of ZARA, H&M, UNIQLO, and Gap.
Voetmann, E.T. and et.al, 2018. Consumer Profile.
Paul Kithae, P., 2020. SUSTAINABLE BUSINESS PRACTICES AND COMMUNITY
WELLBEING.
Arshed, N. and Pancholi, J., 2016. 9 Porter’s Five Forces. Enterprise and its Business
EnvironmentYusop, Z.B.M., 2018.
Çitilci, T. and Akbalık, M., 2020. The Importance of PESTEL Analysis for Environmental
Scanning Process. In Handbook of Research on Decision-Making Techniques in
Financial Marketing (pp. 336-357). IGI Global.
da Costa, R.L., Geraldes, R. and Geraldes, J., 2019. VRIO: Static or Dynamic?.
Lewis, R., 2017. Porter's Five Forces of competitive advantage.
Sarsby, A., 2016. SWOT analysis. Lulu. Com.
Teoli, D. and An, J., 2019. SWOT analysis.
Yusop, Z.B.M., 2018. PESTEL analysis. COMRAP 2018. p.34.
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