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

fierce competition on sales performance of H&M. Here, for primary research, questionnaire
method is used to taken feedback of respondents (stakeholders). While, under secondary
research, various books and articles are used by internet access to conduct literature review.
Therefore, a sample of questionnaire used for gathering primary information is given as below,
where researchers have taken a sample of 20 respondents.
Questionnaire
Name:
Age:
Gender:
Q1) Do you think changing demand of customers can reshape the global market apparel?
a) Yes
b) No
Q2) Does fierce competition impact on sales performance of H&M?
a) Yes
b) No
Q3) Are you satisfied with the quality of products offered by H&M?
a) Yes
b) No
Q4) According to you, what is the main reason behind declination of sales in H&M?
a) Opening 220 new stores
b) Ineffective control on inventory management
c) Focus on increase e-commerce rather than on current fashion trends
Q5) What are the major factors that need to be considered by Board of directors while
developing strategies for improving sales performance?
a) Inventory management
b) Corporate-goals
c) Meet criteria with changing demand of customers
Q6) Which is the most effective business strategy H&M can intake to get rid of $4.3 billion
stock of inventories?
a) Digital expansion of existing brands into emerging marketplace
b) Sale on amazing discounts

c) Optimise existing store portfolio by developing new concepts
Q7) What is the role of corporate-governance and strategies in improving the sales of
H&M?
a) Increase shareholder engagement
b) Managed risk more effectively
c) Effectively managed and measured sale performance
Q8) Do you think H&M is able to compete with fierce competition to reshape its global
market?
a) Yes
b) No
Q9) Provide some effective recommendation to H&M for reducing its unsold inventories
and get sustainability in competitive marketplace?

CHAPTER 4 : CRITICAL REVIEW OF RESULTS
4.1 Critical review on the basis of primary research
Theme 1: Demand of customers reshape the apparel market
Q1) Do you think changing demand of
customers can reshape the global market
apparel?
Frequency
a) Yes 18
b) No 2
Interpretation: Due to increasing globalisation, customer are now become more aware about
new trends. In cloth market, they demand more trendy and fashionable wears which suit their
personality and style. Therefore, in order to analyse whether such demands of people reshape the
global apparel market or not, research team of H&M conduct a survey on 20 respondents. As
shown in above mentioned graph, it has analysed that 18 users of them are agreed with the given
statement. They also thought that changing requirement of customers impact on current
a) Yes b) No
0
2
4
6
8
10
12
14
16
18
Column B

strategies of fashion retailers for selling their commodities. While remaining respondents that are
2, do not agree on the same.
Theme 2: Fierce competition impact on sales of H&M
Q2) Does fierce competition impact on sales
performance of H&M?
Frequency
a) Yes 16
b) No 4
Interpretation: In order to gain profitability and attract customers towards own product, each
retailer concerns on developing strategies. For this purpose, they offer their services on
competitive price rates. In context with retail industry, this would lead to increase high
competition among organisations. According to this given graph, it has interpreted that 16
respondents out of 20, thinks that such competition impact on sales performance on H&M also.
a) Yes b) No
0
2
4
6
8
10
12
14
16
Column C

Therefore, it has to develop more effective strategies to enhance sales by retaining loyal
customers. Other than this, remaining 4 respondents are disagree with same argument.
Theme 3: H&M needs to concern on quality of its products
Q3) Are you satisfied with the quality of
products offered by H&M?
Frequency
a) Yes 9
b) No 11
Interpretation: In retail marketplace, H&M is considered as one the best retailers which offer
best quality of products. It has opened its several stores in international market to enhance
customer base. It has interpreted through this represented graph that among 20 users, only 9 are
satisfied with quality of H&M products. While 11 respondents suggest to this company to
concern on quality of products and match with preference of targeted customers. It would help in
enhancing sales performance as well as build effective image of business also.
a) Yes b) No
0
2
4
6
8
10
12
Column G

Theme 4: Reason behind declination of sales
Q4) According to you, what is the main
reason behind declination of sales in H&M?
Frequency
a) Opening more than 220 new stores 8
b) Ineffective control on inventory
management
7
c) Focus on increase e-commerce rather than
on current fashion trends
5
Interpretation: Currently H&M faces issues related to declination of sales due to various issues.
It includes launching new stores, weak inventory management, failure in developing strategies to
meet customers' demand and more. According feedback of chosen 20 respondents, it has
0
2
4
6
8
Column F

interpreted that 8 thinks opening more than 2700 stores is the main reason behind declination of
sales. As due to this reason, company has to launch more inventories to fill up racks of stores.
This would lead to upraise inventories more than demand at marketplace. Therefore, it would be
taken as main issue for the same. Whereas, 7 users states that ineffective control on inventory
management. Due to loss in control of inventories, effectiveness of operational management of
H&M can be reduced. Other 5 users are stated that focusing on increasing e-commerce instead of
current fashion-trends, also leads to increase inventories.
Theme 5: Factors required for developing strategies
Q5) What are the major factors that need to
be considered by Board of directors while
developing strategies for improving sales
performance?
Frequency
a) Inventory management 7
b) Corporate-goals 5
c) Meet criteria with changing demand of
customers
8

Interpretation: In order to develop strategies to run business smoothly and grab opportunities
for increasing sustainability, it is essential for H&M to concern on some main factors. It includes
managing inventories as per demand and supply ration, corporate goals and match stock as per
latest trends. This would help in reducing occurrence of risks which may impact on business
negatively. It has been interpreted from this graph that 7 respondents out of 20 are suggested to
manage inventories well. While 5 users thinks that concern more on corporate-goals and 8
towards meeting criteria of changing demands.
Theme 6: Strategy to get rid of $4.3 billion stock of inventories
Q6) Which is the most effective business
strategy H&M can intake to get rid of $4.3
billion stock of inventories?
Frequency
a) Digital expansion of existing brands into
emerging marketplace
10
b) Sale on amazing discounts 4
c) Optimise existing store portfolio by 6
0
2
4
6
8
Column J

developing new concepts
Interpretation: In order to get rid from $4.3 billion of unsold inventories, researchers of H&M
have taken feedback of 20 respondents. It has interpreted on the basis of their views that 4 users
are in favour with sale the same on amazing discounts. While 10 respondents have recommended
to sale commodities into emerging marketplace. Other than this, remaining 6 users give their
perception towards optimisation of existing portfolio of stores by developing new concepts.
Theme 7: Role of corporate-governance
Q7) What is the role of corporate-
governance and strategies in improving the
sales of H&M?
Frequency
a) Increase shareholder engagement 6
b) Managed risk more effectively 8
0
2
4
6
8
10
Column B

c) Effectively managed and measured sale
performance
6
Interpretation: Corporate-governance and strategies play a crucial role within a company in
order to run business smoothly. As per feedback of 6 respondents out of 30, it has interpreted
that they are more favour towards increasing shareholder engagement. Through cooperation of
stakeholders, H&M can improve its profitability and resolve issues as well. While 8 users give
support to manage risk and other 6 to monitor sales performance regularly.
Theme 8: H&M gives a tough competition to other retail industries
Q8) Do you think H&M is able to compete
with fierce competition to reshape its global
market?
Frequency
a) Yes 15
b) No 5
0
2
4
6
8
Column E

Interpretation: Accordingly to this mentioned graph, it has interpreted that 15 out of 20
respondents are agreed that H&M gives a tough competition to other retailers in same
marketplace. While remaining 5 respondents are no in favour with the same. They have given
advice this company to should match its stock with latest trends of fashion. This would help in
retaining loyal customers and stay more competitive at marketplace.
4.2 Critical review on the basis of secondary research
Under this part of research, critical review has been done of the information which has
obtained by taking various viewpoint of researchers. In context with present research, where
literature review has been done by taking data from some related articles, is critically analysed in
following manner:-
Concept of fierce competition and changing customer demands for reshaping the global
apparel market:
According to view points of Loebbecke and Picot (2015), it has been evaluated that in
global apparel market, there is a fast-moving nature of fashion. It assists retail industries to jump
on trends in right manner and do not take fast decisions. It will give apparel businesses like
a) Yes b) No
0
2
4
6
8
10
12
14
16
Column I

H&M a unique set of challenges. As today apparel shoppers wants to get high experiences while
purchasing commodities. Therefore, it is necessary for retail industries to concern on increasing
shopping experience. In luxury sector, largest fashion chains like ZARA and H&M, their
businesses are rely on an internationally brand identity. Due to change in demand of customers,
such companies are needed to concern on preparing strategies to compete with other retailers.
Issues behind declination of sales and failure of corporate governance under H&M:
As per perception of DiMartino and Jessen (2016), it has been evaluated that in the world
of fashion sector, apparel consumers demand more stylish and trendy clothes. It has outlined
through literature review that H&M currently faces issues related with a stock of unsold
inventories i.e. near about $4.3 Billion. This unexpected drop in sales is begun when present
company has launched more than 220 new stores in different locations. Therefore, to fill racks of
these stores, it has to product billions of inventories. This would lead to raise stocks and affect
inventory management in negative manner. Henceforth, expanding e-commerce operations rather
than to concern on new trends of fashion, is considered as main reason behind drop in sales.
While critics also blamed that due to poor inventory management as well as underwhelming
product offerings, has prompted loyal customers to spend their money elsewhere.
Effectiveness of Corporate strategy and Governance for H&M in improving sales
performance:
It has been summarised from literature views on effectiveness of corporate strategy and
governance that in order to deal with dynamic challenges, companies are required to think
strategically. By implementing good corporate strategies, such organisations can become more
competitive. In context with current issue under H&M, where it faces problems related to be
mounted with unsold inventories (Pearlson, Saunders and Galletta, 2016). It is essential for
Board of Directors to formulate effective strategies. It consists commitments, decisions as well
as actions required by this company to resolve such issues and earn sustainability in business.
Therefore, in this regard, strategy is considered as set of key decisions which are made to meet
specific objectives. It provides a master plan which states how H&M can attain its objectives
related to get rid from unsold inventories.

CHAPTER 5 : RECOMMENDATION AND ACTION PLAN
5.1 Recommendation
It has been comprehended from this research that in order to gain sustainability in
business, it is essential for retailers dealing in cloth sector, to match their commodities with latest
trends. In order to enhance shopping experience of apparel customers, it is recommended to
managers of H&M to concern on increasing efficiencies of operational processes. By leveraging
warehousing and supply chain management, they can enhance attractiveness as well as
efficiencies of business of stores. Instead of offer unsold products on low rates and discounts,
this company needs to identify areas where they can sold such products on reasonable rates. By
selling commodities on discounted price rates can adversely affect reputation of business.
Perception of people get change when a company sells it products on low rates. They out fingers
on quality of such products which go negatively with brand image of business. Therefore, H&M
needs to discover emerging marketplace where demand of such items are high.
In order to get rid of $4.3 Billions of pile of shirts, dresses and other unsold inventories, it
is recommended to managers of H&M to implement the concept of business cycle. This model
can be defined as cycle of fluctuations in GDP (Gross Domestic Product) around growth rate of
economy. It entails the situation of marketplace related to growth of real GDP which would help
H&M to offer its unsold inventories on desirable price rates.

(Source: Business cycle, 2019)
As shown in above figure, this cycle involves six major stages that are- Expansion; Peak;
Recession; Depression; Trough and Recovery. All these stages tends towards middle line which
reflects steady growth line. Therefore, concerning such stages, managers of H&M can formulate
more effective strategies as per economical situation of marketplace. Concept of these stages can
be explained in following manner:-
 Expansion: It is considered as first stage of business cycle which indicates positive
economical situation of marketplace. It includes per capita income, profits, wages,
employment, high demand and supply of particular goods etc. Therefore, all such
indicators reflect high velocity of money supply. By concerning such points, H&M can
launch its business over such area where economical condition is favourable for
expansion. This would help in selling unsold inventories over such marketplace and earn
high profitability as well.
 Peak: It shows saturation or peak period of economy as well as referred to another stage
of business cycle. Under this period, apparel consumers are going to restructure their
budget plan and seek to purchase more products, for satisfying needs. This stage helps
H&M in attaining its maximum growth by offering unsold inventories in emerging
marketplace on high rates.
 Recession: This stage of business cycle follows peak phase, where demand for particular
products and services is going to start declining more rapidly. Therefore, if retailers like
Illustration 1: Business cycle

H&M do not concern on this stage and go on increasing production, then this may lead to
raise their inventories more than demand. Therefore, excess supply of commodities in
marketplace lead to fall price level and increase chance of declination in sales. Therefore,
concerning on such factor help H&M in formulating corporate strategies accordingly to
prevent business again from such issues (mounting with unsold inventories).
 Depression: At this stage, growth of economy is going to decline continuously as well as
growth of business lie below line. So, it assists H&M to stop producing new commodities
and try to sale existing ones on attractive discounts.
 Trough: It reflects negative growth rate of economy of a particular area. Here, economy
decline continuously till price of factors, demand and supply of particular products etc.
reach at lowest. Therefore, at this stage, H&M needs to stop production and make
strategy to retain loyal customers.
 Recovery: It is considered as boom stage where organisations get chance to recover their
profitability. At this stage, demand starts to pick up again and give a positive indicator of
economical situation. Therefore, by developing strategies to become first retailer, H&M
can meet demand of loyal customers on time. This would help in building effective brand
image and get retention of apparel consumers over long period of time as well.
5.2 Action Plan
This part describes activities need to follow recommendation as per mentioned above. In
order to formulate corporate strategies as per different stages of business cycle for enhancing
sales performance, managers of H&M need to go through below action plan:-
Activities Procedures
Problem identification In order to bring modification in business,
managers of H&M firstly need to identify
problem due to which issues related to
declination of sales have occurred.
Selection of suitable topic After identifying the area of modification, they
have to chose a suitable topic.
Development of aims and objectives Furthermore, formulate aims and objectives as
per related topic so that employees can

understand in what manner, they have to work
on.
Literature review After formulation of aims and objectives,
project-makers of H&M need to conduct
literature review on the basis of some articles
where some researchers have given their view
point on a selected topic. This would help in
grabbing information to develop strategies to
get rid from unsold inventories.
Research Methodologies By taking some methodologies for grabbing
information on chosen topic, researchers can
analyse marketing environment more
effectively. Under this process, they can use
various techniques of primary and secondary
sources.
Collection of suitable data For collecting suitable data, both primary and
secondary research techniques are used. Here,
articles can be reviewed to analyse perception
of other authors and professionals. While,
through questionnaire method, opinion of
selected respondents can be analysed to
organise primary data. After gathering
information from both techniques, data can be
analysed and interpreted for further process.
Conclusion and recommendation After analysing the entire information, under
this step valid conclusion are drawn. On the
basis of that, recommendations are given to
resolve issues mention in formulated aims and
objectives.
Submission of final report This is a last stage of action plan, where finally

strategies are applied for resolving issues.

CONCLUSION
It has been summarised from this mentioned research that corporate strategy governance
plays an important role in running business successfully. In order to make corporate governance
structure, a company must focus on benefits of internal (employees, Board of Directors, etc.) and
external stakeholders (suppliers, customers, vendors and more). As stakeholders place a high
value on abilities of business to offer good quality of products at marketplace. They will also

help organisation in resolving their issues related to enhance performance and run business
profitably.

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