The Global Apparel Market: A Case Study on H&M's Strategic Response

This report provides a comprehensive analysis of H&M's corporate strategy and governance within the context of the global apparel market. It investigates the influence of fierce competition and evolving consumer demands, using H&M as a case study. The report examines the concept of corporate governance, the significance of corporate strategy, and the challenges H&M faces, including declining sales and unsold inventory. It reviews the literature on market dynamics, competition, and customer behavior, followed by a description of the research methodology employed, including primary and secondary research methods. The critical review of results synthesizes findings from both research approaches. Finally, the report offers recommendations and an action plan for H&M, aimed at improving sales performance and adapting to the changing landscape of the apparel market.

CORPORATE STRATEGY
AND GOVERNANCE

Table of Contents
Title: To ascertain the influence of fierce competition and changing demands of consumers in
reshaping the global apparel market. A case study on H&M. .......................................................3
CHAPTER 1- INTRODUCTION....................................................................................................3
1.1 Background of research.........................................................................................................3
1.2 Significance of research........................................................................................................3
1.3 Research aims, objectives and questions..............................................................................4
1.4 Research questions................................................................................................................5
1.5 Structure of report.................................................................................................................5
CHAPTER 2 - LITERATURE REVIEW........................................................................................7
2.1 Concept of fierce competition and changing customer demands for reshaping the global
apparel market.............................................................................................................................7
2.2 Issues behind declination of sales and failure of corporate governance under H&M.........8
2.3 Effectiveness of Corporate strategy and Governance for H&M in improving sales
performance................................................................................................................................9
CHAPTER 3 - RESEARCH METHODOLOGY..........................................................................11
3.1 Primary method...................................................................................................................11
3.2 Secondary method...............................................................................................................12
3.3 Resources............................................................................................................................12
CHAPTER 4 : CRITICAL REVIEW OF RESULTS....................................................................15
4.1 Critical review on the basis of primary research.................................................................15
4.2 Critical review on the basis of secondary research.............................................................23
CHAPTER 5 : RECOMMENDATION AND ACTION PLAN....................................................25
5.1 Recommendation................................................................................................................25
5.2 Action Plan..........................................................................................................................27
CONCLUSION..............................................................................................................................30
REFERENCES..............................................................................................................................31
.......................................................................................................................................................32

Title: To ascertain the influence of fierce competition and changing demands
of consumers in reshaping the global apparel market. A case study on
H&M.
CHAPTER 1- INTRODUCTION
1.1 Background of research
In business management, concept of corporate governance is considered as a process to
develop strategic plan for conducting operations. It includes systems and procedures which are
designed to structure the organisational authority and responsibilities (Du,and et. al., 2013). It
also provides accountability to employees, customers and all stakeholders at each level. In other
words, under corporate governance, companies deal with issues of giving best results for their
stakeholders. They also promote interest of other stakeholders in the same time like lenders,
consumers and employees etc.
H&M is considered as the second largest company of UK in retail sector. This company
operates its business in more than 62 countries. Currently, near about 148,000 employees are
working in this organisation. It offers a wide range of trendy clothes and accessories on
competitive rates. For this firm, corporate governance and strategy is about balancing
performance of business with sustainability. But recently, it has faced issues related to keep
inventories matched with sales. This company is found struggling with a rising stock of unsold
inventories.
1.2 Significance of research
Corporate strategy is considered as main aspect or hierarchical strategic plan in an
organisation (Upadhyaya and et. al., 2014). It entails main goals of corporations as well as
different ways to achieve the same, within a specified period of time. But it creates various
difficulties in achievement of the same due to rigorous code of corporate governance, which a
company have to implement at domestic and international level. In the world of fashion retailing
like H&M, where shopping is moving fast through online and stores. It assists retailers to keep

their inventories closely matched with latest trends. In this regard, any stack of unsold items
reflects a bad sign on declining sales performance. The present company i.e. H&M faces same
issues related to $4.3 billion pile of shirts, accessories and dresses. Therefore, this research is
going to critically analyse whether H&M is able for adapting the fierce competition as well as
reshaping global apparel market as per consumer demands or not (Backaler, 2016). For this
purpose, its owners are required to understand concept of corporate strategy and governance, in
order to gain support of stakeholders for resolving such as issue. The present research is going to
reveal how corporate strategy and governance helps in struggling with stack of unsold
inventories.
Through present research, management of H&M can analyse how to meet requirement of
customers, by matching inventories with latest trends. Through developing proper corporate
strategy, its managers can get an appropriate framework for implementation of corporate
strategies in optimum manner.
1.3 Research aims, objectives and questions
Aims: It defines the overall purpose of study therefore, it is essential for researchers to
describe aim in clear and concise manner. This would help in conducting research and obtain
information related to particular issue more appropriately (Mishra, Pundir and Ganapathy, 2017).
Therefore, main aim of present research is - “To ascertain the influence of fierce competition
and changing demands of consumers in reshaping the global apparel market. A case study
on H&M.”
Objectives: After establishment of specific aim further, researchers are required to
formulate proper objectives. It provide ways to obtain information and way to accomplish the
given aim.
 To evaluate the concept of fierce competition and changing customer demands for
reshaping the global apparel market.
 To determine the issues related to declination of sales and failure of corporate governance
under H&M.
 To identify the effectiveness of Corporate strategy and Governance for H&M in
improving sales performance.

1.4 Research questions
 What is the concept of fierce competition and changing customer demands for reshaping
the global apparel market?
 What are the main issues behind declination of sales and failure of corporate governance
under H&M?
 How to identify the effectiveness of Corporate strategy and Governance for H&M in
improving sales performance ?
1.5 Structure of report
It is considered as a blueprint of a research which entails activities required for
completing the same (Sekakela, 2016). In context with present research proposals, to ascertain
the role of corporate-governance in business expansion of H&M, project is divided into five
main chapters, as explained in brief below:
CHAPTER 1 : INTRODUCTION – This section of project depicts an understanding of
related research topic. It covers an overview, background and rationale of research for carrying
out an investigation. In addition to this, it also specifies research aim, objectives and relatable
questions on the basis on chosen topic. These objectives further provides a basis to make entire
report for addressing the main issues of research.
CHAPTER 2 : LITERATURE REVIEW – It surveys scholarly articles, books and
other sources for providing a description related to particular issue. It critically analyse the
research problems according to perception of different authors and experts, who already made
investigation on same topic. Therefore, present research issues based on corporate-governance of
H&M for business expansion, are identified by using secondary sources.
CHAPTER 3 : RESEARCH METHODOLOGY – This section covers sources
required for gathering, organising and analysing information, related to particular research topic.
It includes scholar books and journals, articles and journals, interviews and questionnaire etc. to
collect a specific data (Chang, 2016). These sources are mainly classified into primary and
secondary research for critically reviewing research questions. With respect to present project,
both sources are used to analyse concept of corporate-governance for business expansion of
H&M.

CHAPTER 4 : CRITICAL REVIEW OF RESULTS – Here, entire information
collected under primary and secondary research are critically analysed. This would help in
drawing valid conclusion which covers main issues of present topic.
CHAPTER 5 : RECOMMENDATION AND ACTION PLAN – Under this segment
of research, on the basis of critical evaluation, recommendations are given to H&M for resolving
its issues. These suggestions will help this company in improving its sales performance by
developing effective corporate strategies and governance (Payne, 2016). Further, an action plan
is also made which provide stages for achievement of corporate goals and objectives.

CHAPTER 2 - LITERATURE REVIEW
In the present research, investigation is done to identify best solutions of problems that
are related with declination of sales. For this process, main focus is given on conducting
literature review where opinion of different professionals have evaluated. Under this process,
views and opinion of different authors are evaluated to analyse the concept of corporate strategy
and governance.
2.1 Concept of fierce competition and changing customer demands for reshaping the global
apparel market
As per article given by Carsten Keller and et. al. (2019), it has ascertained that dynamics
of apparel industries are considered as dramatically changes. Therefore, to gain success related to
shifting tides, companies dealing in cloth sector are needed to build up their competencies as per
new trends. Apparel customers are not seeking only to get a level of freshness in products, but
also wants to enhance their shopping experiences. The certain signs which shows changes in
global apparel market are- moving targets, sustainability, digitization, channel convergence,
deluge of data and urbanisation (Succeeding in tomorrow's global fashion market, 2019). In this
regard, companies like H&M seems to be reshaped its global apparel market, by interplay of
external influences. It includes emergence of new models and channels, changing demand and
expectations of customers, social and technological development etc. Apart from these, due to
fierce competition where many organizations like M&S, Zara, PRIMARK and Crew Clothing,
run their businesses in same sector. Among these companies, M&S is considered as the biggest
rival of M&S which generates high revenue. This company offers much trendy clothes on
reasonable price and discounts to customers. So, it leads to arise problems for H&M related to
decreasing sales performance.
Apart from this, it has also evaluated that there is large impact of digitalisation and
software on international retail industries. Therefore, such an interplay between changing in
customer demand and technologies, has created both challenges and opportunities for retail
industries. H&M always remains committed for providing insights which enable customers to
navigate such emerging trends. As today people expected to get products on time and hate to
face delay in payment modes (Du and et. al., 2013). Therefore, it has shifted behaviour of
customers which is driven by digitisation. With emergence of social media, new digital channels

and business models as well as access to global information, all have changed customer
expectations. They now seek to get best trendy clothes, having best qualities on reasonable rates
for trenching their needs. People are spending more time on discovering the new trend in fashion
industries to stay updated with modernisation. Therefore, companies like H&M tackle such
situations as head-on and its business has fallen out of fashion.
2.2 Issues behind declination of sales and failure of corporate governance under H&M
As per article given by Elizabeth Paton, it has been evaluated that in fashion world,
shopping is going to move more faster from offline stores to online. It has been also analysed
that matching sales with inventories is not an H&M problem only. It is considered as fast-fashion
issue for entire retail industries which deals in clothing sector. The reason behind this is changing
demand of consumers. They concern more on kind of quality before purchasing any product.
Fashion brand and styles refer to as particular demand of today's customers, that leads them to
spent time on online-purchasing. Therefore, due to increase in demand of people, H&M has been
fallen out of fashion (Loebbecke and Picot, 2015). In addition to this, it has also evaluated that
now the most difficult situation in front of managers of present company is how fast they can
ramp online operations. It has evaluated that H&M has run near about 4,700 stores in many
countries and primarily focuses on women's wear. Therefore, it fill the racks, it has produced
hundred of millions of clothes and other accessories each year. This would increases the level of
inventories and seems to be a major cause related to unsold stock (H&M, a Fashion-Giant, Has a
Problem: $4.3 Billion in Unsold Clothes, 2019). In addition to this, poor inventory management
as well as under-performing product offerings, has taken loyal customers away from shopping at
H&M's stores.
For boosting sales performance and to get rid of $4.3 billion stock of inventories, this
company also needs to concern on corporate strategy and governance. According to Benn,
Edwards and Williams (2014), it has evaluated that Corporate Strategy and governance can be
defined as a hierarchical strategical plan of a business. It provides information about corporate
goals and objectives with various ways to accomplish them. In context with H&M, it is founded
by Erling Persson and owned by Stefan Persson therefore, being a sole proprietorship, owner
managers the concern related to maximize profitability. Thus, there is no clash of interest among
persons. But in corporate section, there is a separation of ownership from management-
shareholders form Board of Directors and managers who conduct business as well as take major

decisions. So, it leads to create clashes of interest among stakeholders. The Board of Directors of
this company manages all affairs and issues on the behalf of its shareholders. They set a certain
Code of Ethics which includes continuous improvement, common sense, cost consciousness and
more (Chang, 2016). It provides a certain guidelines to managers and provides which also gives
a basis for ethical and strong values of H&M. In this regard, some major issues and problems
related to corporate strategy is explained as below:
Putting pressure on employees: In order to get rid of unsold stock, company sometimes
put pressure on employees and managers. Therefore, it creates issues and barriers in
implementation of corporate strategy and governance (Monczka and et. al., 2015). For example:
Modifications in organisational system and existing technologies, create difficulties for
employees in giving their best performance for achievement of objectives. In context with H&M,
any change create problems like employee resistivity because workers will refuse to work on
new technologies. But pressurise them to adopt changes and work according, leads to decrease
their morale and level of performance as well.
Governance Standards: H&M has given authority to its Board of Directors to set
specific rule and policies as per business objectives. These corporate strategies are amendable for
employees to be followed to get rid of declination of sales. But if they do not propagate with
such standards than it creates various problems like legal penalties for this company. Therefore,
it creates barriers in front of this company for selling unsold stock on low rates. Along with this,
by allowance of slash price on some particular stock which targeted customers have turned up
their noses already, H&M has reduced its image at marketplace.
2.3 Effectiveness of Corporate strategy and Governance for H&M in improving sales
performance
According to perception of Aebi, Sabato and Schmid (2012), it has been analyzed that
under corporate-governance, the main objective is to maximize shareholders value by protecting
interest of other stakeholders. To achieve this objective, H&M requires to conduct some
practices of effective corporate-governance. It includes transparency in transactions of business
with stakeholders, keeping of accounts as well as fairness in treatment, take accountability and
responsibility for major decisions etc. Here, accountability ensures that management of H&M
should be accountable to Board of Directors. Further, BOD is accountable to shareholders as
well (Venkatesh, Dubey and Bhattacharya, 2015). Similarly, fairness states to protect rights of

stakeholders and shareholders as well as treat them equitably also. Moreover, the practices of
good corporate-governance are also expressed as certain ethical code of conduct. These are self-
regulated as well as not imposed by laws or legislation.
In context with H&M, as this company wants to improve its sales performance.
Therefore, corporate-governance provides a detailed disclosure of information related to
financial situation, performance, relationship with shareholders and more. With this assistance,
Board of Directors of can make proper rules and policies for selling unsold products into
emerging marketplace. They are focused more on implementing values of fairness,
accountability, transparency and responsibility for both stakeholders and shareholders. It
contributes to business growth and financial stability under H&M by reinforcement of market
confidence, integrity and economic efficiencies (Barnett and Salomon, 2012). In addition to this,
corporate-governance also specifies rights and responsibilities of different participants in
appropriate manner. It includes board of directors, shareholders, managers, employees and other
stakeholders. Furthermore, it also entails rules and procedures also in order to make decisions
related to corporate affairs.

CHAPTER 3 - RESEARCH METHODOLOGY
Research methodology can be defined as systematic and theoretical analysis of various
methods, which are applied for investigation. It outlines the way by which researchers can
address particular issues and underpins proper analysis. Therefore, this part of research can be
defined as process to collect data by using various methodologies. It consists various
methodologies like research design which can be defined as a combination of various methods. It
includes qualitative and quantitative by which researchers can gather relevant data for a specific
project (Barnett and Salomon, 2012). Using such methods, they can identify solutions of research
questions that describe in their project in proper manner. Similarly, research methodologies
include data collection, which refers to a process of gathering a specific data about a particular
topic for proper investigation. Under this procedure, project makers can use two kinds of source
of data collection viz. primary and secondary source.
3.1 Primary method
Under this data, researchers are required to collect data directly by itself through
conducting an appropriate survey. Under this procedure, they can use various techniques like
questionnaire, observations, online/offline interviews and so on. Through these techniques, they
can get original and reliable data which further helps in finding out solutions of research
problems as per desired manner. Therefore, as compared to other sources like secondary
research, primary one helps in obtaining more reliable data. It tailors the specific needs as well as
can be customised to suit. Basically, a primary research can be conducted into four ways-
Observation, Interview, Survey/Questionnaire and Focus Groups, as described below:- Observation: Under this method, without any type of interaction, buying behaviour of
customers are watched. By observing their behaviour, researchers can judge effectiveness
of products or services of a company accordingly. In general, such type of method is used
when business of an organisation caters to customers only, not with other corporations. Interview:Here, researchers can make direct interaction with respondents in order to take
their feedback. For this purpose, interview can be conducted either by face-to-face and
telephonic. But only one participant can be taken at a single time, therefore, it consumes
much time when there is a large sample size.

 Survey/Questionnaire: This method includes specific questions on a particular topic
which are presented to respondents, in order to get their responses. So, it provides quick
result as compared to other primary techniques.
 Focus Group: It enables project-makers to make a discussion on a specific topic with
selected group. This type of group generally includes a team of experts. They give
viewpoints and make discussion for gathering more reliable and valuable information.
3.2 Secondary method
In this kind of data collection, relevant information related to a specific topic is gathered
by reading reviews and opinion of some professionals or writers. Therefore, it provides
information as per prospectus of other investigators who have published their data on various
sources (De Grosbois, 2012). It includes journals, books, articles, newspapers and more.
Therefore, if talking about relevancy, as compared to primary one, secondary method provides
unreliable information usually. Some methods to collect such kinds of data under secondary
research are- Internet:Through this source, a research gets opportunity to access internet anytime for
collecting a data. It provides various websites where number of experts give their opinion
and response on a same topic.
 Government agencies: This source helps in obtaining authenticate and reliable
information on a particular topic. But for this purpose, researchers are required to take
permission from regulatory bodies.
3.3 Resources
Data access and equipment: In the present research, investigation is done to resolve to
identify best solutions of problems that are related to implementation of corporate strategy and
governance (Aebi, Sabato and Schmid, 2012). For this process, main focus is given on
conducting literature review where opinion of different professionals have evaluated.
Time: For conducting the entire research as per desired manner, near about 4 to 5 months
have been taken by research team of H&M. In this process, they have used proper techniques to
complete each activity in predetermined period so that optimum utilization of time and resource
can be obtained.
For present research, project-makers have used both primary and secondary methods to
collect data. This would help in analysing the impact of changing demand of customers and