Strategic Management Report: Analysis of H&M in Fast Fashion

This report provides a comprehensive strategic analysis of H&M within the fast fashion industry. It begins with background information on H&M, followed by an external environmental analysis using the PESTEL framework, examining political, economic, social, technological, environmental, and legal...Read More

STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION................................................................................................................................3
MAIN BODY.......................................................................................................................................4
H & M- Background information....................................................................................................4
External environment- fast fashion industry analysis......................................................................4
Internal strategic capabilities- .........................................................................................................6
Strategic options..............................................................................................................................8
Strategic selection & justification .................................................................................................8
Recommendations ...........................................................................................................................9
CONCLUSION..................................................................................................................................10
REFERENCES ..................................................................................................................................11
Books & Journal:...........................................................................................................................11

INTRODUCTION
Business sector is wider and broader & is widening at rapid scale. Strategic management
is defined as process of setting objectives and goals & carrying out strategy across organisation to
achieve within period of time (Certo, 2020). Main aim of this report is to critically understand the
impact of strategic management. H & M , a clothing retailing firm headquartered in Sweden. It
operates at global level and has wide range of competitors such as Zara, Macy's, Uniqlo, Gap etc.
This report comprises of overview of firm, external analysis, internal strategic capabilities,
strategic options, strategy selection and recommendations.
MAIN BODY
H & M- Background information
Hennes and Mauritz, an international firm of clothing industry headquartered in Sweden. It
operates at wider scale & has been expanding their business at global level. It is mostly engaged in
selling of clothes, accessories, footwear, home textiles etc. They are being in trends and in eye of
customers because of following their market trends (Foschi, 2017). Their supply chain has long
distribution network on basis of which it is easy for them to target and access to customers easily.
Also, they did not manufacture their products in house but production to more than 900 independent
countries. They have strong goodwill in market and due to following market trends continuously.
The firm also uses different marketing strategy on basis of which they market their
products as well as services.

External environment- fast fashion industry analysis
Fashion industry has been evolving with period of time & it is necessary to scan
environment so that market situations are determined properly. External environment are those
which affects the overall organisational structure externally. So, in relevance of selected H & M
they use PESTEL Analysis which is further discussed below-
PESTEL Analysis
It is type of framework which is utilised by entity to determine external factors which affect
on overall organisational functions and operations. It comprises of several elements which are
described as follows-
Political factors
It is factor which focuses on intervention of economy. It
comprises of environmental law, global law, foreign trade
policies etc. In context of selected firm, they have been also
affected by this factor their production is carried out mostly
in Egypt, Lebanon in which these are to be considered as
politically unstable. Also, due to trade war between China,
workers are demanding higher wages (Hesamamiri, 2016).
Economic factors
This is another factor which focuses impact on business &
how profitable they can be to organisation. It includes
several factors which are exchange rates, economic growth,
inflation & deflation rate etc. (Islam, 2017). They have been
also impacting upon enterprise at larger scale. In reference of
chosen entity, in many countries the cost of labour is low &
which is profitable for business. Moreover, with development
of economy, disposable income of people is also increases.
Social factors In this element, it includes factors like habits, attitude,
perception of customers etc. In context of selected firm they
have been also impacted by these because clothes are often
influenced by social media & taste of customers. In
viewpoint of H & M, they too changes their design of clothes
relying on customers mind, taste, behaviour & attitude.
Technological factors Use of technology is increasing & widening at rapid scale. In
retailing & fashion industry, they also uses technology like
management information system, logistic tools & software
etc. H & M, also need to be aware about these technological

advancements so that they are able to cope up with new
challenges easily.
Environmental factors In this factor, it focuses on green agenda, climate change,
pollution etc. In business, it is crucial to be integrating
organisational activities with environment which increases
goodwill. So, in reference of chosen they provide
biodegradable bags to customers & avoid usage of plastics.
(Karnani, 2016).
Legal factors
It involves factors like legal laws, rules, regulations etc.
which are needed to be followed by company. In context of H
& M, they carry out their activities with proper consideration
so of laws and legal procedures.
Therefore, from above discussed matter it shows that external environment is needed to be
properly understood so that decisions making b& strategies are carried out in most effective
manner. It is type of framework which is utilised by entity to determine external factors which
affect on overall organisational functions and operations.
Internal strategic capabilities-
Internal environment refers to factors which impact on entities internally. To determine
internal strategic capabilities, H & M uses two frameworks which are SWOT Analysis & VRIO
Analysis. These are described as follows-
SWOT Analysis
It is type of framework which is utilised by entity to access to internal capabilities through
examining of strength, weakness, opportunity and threat. In viewpoint of Chosen Corporation, they
too use this tool to examine internal factors & are mentioned below-
Strength
 Main strength of H & M is that it has
strong financial resources on basis of
which they are able to expand their
business easily (LI, 2018).
 Further, have goodwill in market because
of which their customer base is large.
 They have large distribution channels in
Weakness
 As in many countries such as Lebanon,
Egypt they are operating which have
unstable politics situations due to which
it is difficult for them, to operate
appropriately.
 Another weakness is that due to frequent
changes of clothes taste in market, they

market & which assists them in
accessing to customers easily.
have to change their strategies
accordingly.
Opportunity
 H & M has opportunity of merging up
with other brands to share risk as well as
profit. It will help them in accessing to
market at wider level.
 Another opportunity is that they can
through adopting technology
advancements in company; they are able
to complete their work on time (LIU,
2017).
Threat
 The threat to company is that with
frequent changes of technology as well
as clothes in apparel and fashion industry
is changing at continuous level and it is
essential to for firm to follow and adapt
these changes or it can negatively affects
their operations & functions.
VRIO Analysis
In this internal framework, it is defined as framework adopted by organisations to
determine and examine their resources & capabilities which can be used to gain competitive benefit.
(Meyer, 2018). It is critical framework which is needed to be adopted with proper considerations. It
comprises of four components which are discussed as follows-
Valuable-
It is first component in which it reflects about resources which are valuable for firm. It is
necessary to be aware about these valuable resources so that they are used for achieving benefits.
For example- in relevance of H & M employees are to be considered as valuable resource as they
have highly skilled and trained staff members.
Rare-
It is another element of VRIO in which it shows about rare resources & capabilities in that
are to be used as rarely by enterprise. For example- in context of chosen entity, financial resources
are to be considered as rare as because only few enterprises has access to financial resources.
(Morden, 2016).
Imitable-
Imitable refers to extent up to which resources or capabilities can be copied. So, it is
necessary to focus on these imitable resources. So, chosen entity patent resources are difficult to
imitate. Furthermore, to copy these resources huge amount of capital is also involved.
Organised-

It is defined as extent up to which entity has organised structure & workflow. So, in
reference of chosen firm, they their financial resources are organised that capture value. Also, being
organised help in time saving of management. Also, their distribution network is too well organised
which are used by them to access to customers.
Factors Valuable Rare Imitable Organised
Employees Yes Yes Yes Yes
Distribution
network
Yes No Yes Higher level
Patents
Yes Yes Moderate level No
Financial
resources
Yes Yes No Yes
The above discussed paragraph shows that it is crucial to be aware about internal capabilities
so that it is easier for enterprise to make decisions about management & use strategies
appropriately. Furthermore, analysis is to be done internally on basis of which it is easier to gain
reliable information about organisational, resources & capabilities. So, with use of both SWOT &
VRIO analysis appropriate strategies are likely to be adopted (Omsa, 2017).
Strategic options
H&M Porter's five force model
As in the developing market competition organisation need to work smart with the analysis
of all the required and impacting factors. There is the tool or analytical model aid to analysis the
competitive force of the external environment for the organisation, that is known as Porter's five
force model, which is comprise of five factors such as suppliers bargaining power, Customer's
bargaining power, threat of new entry, threat of substitute, present competition. H&M is the clothe
retailer company and due to the developing fashion trades it create the huge competition in between
clothing brand and retailers, The brief explanation of H&M competition force is given below.

Rivalry with in the industry: This part of the model involves the analysis of competitors
and their strength at the market. Along with the understanding of their weakness at market. H&M is
the leader of the competitor at market, there are multiple competitors of the company who are
offering the same products but H&M is one of the best.
Threat of new entrants: This part is about analysing the capability of others to copy the
business plan and come at the same position of the present organisation. In order to update and
make some unique plane which can not be copied by other and so the new entry of the similar
competitor can be prevented. In case of H&M there is low force of new entry because, customer
loyalty con not be easy acquired and they can switch any time.
Treat of substitutes: At the present market competition there is the chances of product and
services substitution. This involves the analysis of the substitute of the services with aid of different
process, for example if the company serving sport dress service by the small retail store and the
other company is proving it by the online services then it can be a substitute of the business. By the
analysis of substitution company can take the well defined and updated business plane with the
multiple substitute by same organisation. H&M is having the higher risk of substitution due to the
developing online services of fashion clothings and styling. They need to develop their own online
services site along with the collaboration between the online distributors and sealers.
Customer's bargaining power: It involves the measurement of customer's price denying
power, that how much amount of the product price they can decreases to by it. And analysis of the
customers bargaining power for other competitors in order to apply best pricing strategies. H&M is
facing the higher bargaining power of their customers. And in order to meet their profit and
customers demand they need to choose the effective pricing strategies. With development of brand
value in order to justify their product pricing.
Suppliers bargaining power: It involves the analysis of suppliers bargaining power, that
how much price they can increase, along with this it involves the management of numbers of
suppliers with strong relationships management. In order to get the cost effective row material and
Whole seal products. H&M suppliers are having low bargaining power because for the profit have
to mange long term relationship.
From the basis of above given information, it is assess that there is the tool or analytical
model aid to analysis the competitive force of the external environment for the organisation, that is
known as Porter's five force model, which is comprise of five factors such as suppliers bargaining
power, Customer's bargaining power, threat of new entry, threat of substitute, present competition.
H&M is the clothe retailer company and due to the developing fashion trades it create the huge
competition in between clothing brand and retailers,

Ansoff Matrix
Ansoff Matrix is defined as tool adopted by entity to examine risk & opportunities related
with products & services. It comprise of four strategies which are described below-
Market development-
In this, existing products are used within new market. In context of H & M, they mostly
operates through their stores but in many countries, they developing their online marketing of
selling products (Polfuß, 2020).
Market penetration
It reflects that existing products are used within existing market. For example selected
entity is acquiring suppliers with large quantity to dominate the competition in existing market at
various locations. In this, risk associated with this strategy is low.
Product development-
It depicts about introducing of products into new markets. For example- selected
organisation has their own designers who launch new products & improvement is done on those
products then they are launched in new markets.
Diversification-
It is a strategy in which risk associated with this is relatively higher. It is because new
products are launched within market. In relevance of chosen firm, they too are entering into
diversify business as stepping into related industries like sports clothing, textile mills etc. Moreover,
risk linked with this strategy because market and response to new products is unfamiliar.
Strategic selection & justification
As mentioned above about Ansoff matrix, it is seen that market development is to be viewed
as most effective strategy which can be adopted by H & M. Justification for using of this strategy is
described below through SWOT Analysis-
Market development- SWOT
Strength
 Main strength of this strategy is that new
customers are accessed by firm (Steidle,
2016).
Weakness
 H & M finds it is difficult to target their
potential market when using this strategy
(Sukma, 2019).
Opportunity
 Through adopting of this strategy leads
to opportunity as company can improve
their sales and profit ratio.
Threat
 Due to unfamiliar with market situations,
they might loose their value of resources.

Recommendations
From examining of above matter, it is seen that strategies are needed at all aspects of
business. In reference of H & M, to survive in market for longer period it is essential for them to
make improvement on some areas of firm so that sustainability period increases. Moreover, future
recommendations are given as follows-
It is recommended to H & M that they should update their technology so that it is easy for
them to deal with new challenges or issue which can arise in future market of retailing industry.
Another recommendation is that chosen company has to adopt strategies in such a way that
they are able to achieve competitive advantage at larger scale.
To examine consumer behaviour and attitude, proper market analysis is needed to be carried
out so that consumer behaviour and trends are tracked accordingly.

CONCLUSION
After a brief analysis of above report, it has been concluded that strategic management is
essential concept which is required to be adopted by organisations to achieve objectives within
period of time. So, discussions have been made about internal & external environment, PESTEL,
SWOT analysis, justification for selected strategic and future recommendations. Thus, it has been
evaluated that it is essential to focus on effective strategies which are beneficial for business so that
positive results are achieved. Moreover, it is duty of manager to maker assure that appropriate
strategies are being used on basis of which organisation is able to access advantages.

REFERENCES
Books & Journal:
Carayannis, E., 2018. Strategic management of technological learning. CRC Press.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function.
Macmillan International Higher Education.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2016. Strategic management: Concepts and cases:
Competitiveness and globalization. Cengage Learning.
McKiernan, P. ed., 2017. Historical Evolution of Strategic Management, Volumes I and II (Vol. 1).
Taylor & Francis.
Michael, S., Storey, D. and Thomas, H., 2017. Discovery and coordination in strategic management
and entrepreneurship. Strategic entrepreneurship: Creating a new mindset, pp.45-65.
Morden, T., 2016. Principles of strategic management. Routledge.
Rosenberg Hansen, J. and Ferlie, E., 2016. Applying strategic management theories in public sector
organizations: Developing a Typology. Public Management Review, 18(1), pp.1-19.
Vitolla, F., Rubino, M. and Garzoni, A., 2017. The integration of CSR into strategic management: a
dynamic approach based on social management philosophy. Corporate Governance: The
International Journal of Business in Society.