Strategic Analysis of H&M: Challenges and Solutions Report

This report provides a detailed analysis of the strategic issues facing H&M, a major player in the fashion industry. It identifies key challenges such as the shift in consumer shopping trends towards online platforms, declining sales due to ineffective marketing and expansion strategies, and the impact of discounting on profitability. The report explores these issues through evidence from financial reports, news articles, and relevant business models like PESTLE analysis and the Ansoff Matrix. It proposes solutions, including developing a dedicated online presence, improving marketing strategies, and optimizing pricing techniques to address these challenges. Furthermore, the report outlines the practical implementation of one solution – developing online selling and marketing techniques, including a timeline and evaluation methods. The conclusion summarizes the discussed issues, recommendations, and the impact of the suggested strategies, supported by references to books, journals, and online resources.

UNDERGRADUATE
MAJOR PROJECT 2

Table of Contents
MAIN BODY...................................................................................................................................3
Q1. Strategic Issues......................................................................................................................3
Q2. Three Challenges facing the company..................................................................................4
Q3. Three solutions for addressing the challenges......................................................................5
Q4. Practical Implementation of one solution.............................................................................7

Strategic Issues
Po
int
Strategic Issues Evidence (financial, report
news etc.)
Model
(s)/
Theor
y(ies)
1, Change in the shopping trends is
one of the major issue for H&M.
The shoppers today prefer online
shopping over the traditional
shopping methods of brick and
mortar. In this context the H&M
company has not been adept
where they have failed to match
pace with the quickly shaping
online markets. The market
development strategy of the
company did not give adequate
support to this online industry
thus leading to a major strategic
challenge for the company.
GradesFixer. 2019. H&M:
Challenges Adapting to New
Business Trends., viewed 1
February 2020,
<https://gradesfixer.com/free-
essay-examples/hm-challenges-
adapting-to-new-business-
trends/>
PESTLE
Analysis
tool
2, Inadequate leadership in the
H&M Company was a prominent
cause in its decline where the
members failed to foresee how
the market is evolving whether it
was the shift in fashion
preferences or the shift in pricing
culture of the fashion industry.
They were slow to identify the
causes behind the decreasing
sales and this has emerged as a
major issue in strategic planning.
H&M is caught in a 'vicious
cycle' of discounting, and now
it's found itself with a mountain
of unsold clothes - here's how it
got there. 2018. [ONLINE]
Available
through :
<https://www.businessinsider.in/
hm-is-caught-in-a-vicious-cycle-
of-discounting-and-now-its-
found-itself-with-a-mountain-of-
unsold-clothes-heres-how-it-got-
there/articleshow/
63586939.cms>
Situationa
l
Leadershi
p,
PESTLE
Analysis
3, The flawed expansion strategy
of the company was another issue
that has contributed in the
What Went Wrong with H&M?
2018. [ONLINE] Accessed
through:<https://omnilytics.co/bl
McKinsey
Growth
Pyramid,

declining revenue of H&M. They
continuously opened stores at a
very fast pace without a proper
strategy. This led to the company
developing a pile of unsold stock
that was rapidly going out of
fashion.
og/what-went-wrong-with-hm> Ansoff
Matrix
Three Challenges
Po
int
Strategic Issues Evidence (financial, report news
etc.)
Model(s)/
Theory(ie
s)
1, Online competition is one of the
major challenges that the company
will face because it has been slow
in making themselves adept to the
shift of traditional shopping
mechanisms to the online
mediums. The traditional brick
and mortar stores are no longer a
preference for the people and
H&M ventured very late on the
online trading platforms. This has
posed a major challenge for the
company because their sales and
customer base has been affected
heavily.
Hennes & Mauritz faces up to
challenge of online competitors.
2019. [ONLINE] Available
through:<https://www.ft.com/co
ntent/1ff300c6-f4da-11e6-8758-
6876151821a6>
Pestle
Analysis,
Environm
ental
Scanning
2, The declining sales in the
company is another major issue
that the company is facing.
Although the number of stores
that operate under H&M have
increased steadily, yet the
company failed to develop a
proper marketing strategy to tap
the market in which they
expanded and this led to the
increased number of unsold
material.
H&M faces up to a new reality.
2019. [ONLINE] Available
through:<https://www.ft.com/co
ntent/9a942bc0-0cd5-11e8-8eb7-
42f857ea9f09>
Product
life cycle
model,
marketing
strategies,
expansion
model
3, The frequent and constant
discount strategies act as another
major challenge for the H&M.
Company because in order to
compete with companies with
Is H&M Losing Its Shine? 2019.
[ONLINE] Available through:
<https://www.forbes.com/sites/c
allyrussell/2019/01/31/is-hm-
losing-its-shine/
Finance
and
profitabili
ty model

frequent turnovers, they have not
been able to manage their stock
levels. This has led to the problem
of a large quantity of unsold
stocks where inadequate strategies
and insight on part of leaders have
led to the company facing major
challenge.
#7560b8a164db>
Q3. Three solutions for addressing the challenges
Po
int
Solutions Evidence (financial, reports,
news, best practice guidance,
etc)
Model(s)/
Theory(ie
s)
1, In order to bridge up to the
challenge of rising online
shopping, the best strategy for the
company would be to develop a
separate team that is dedicated to
building up the online websites
and other trading mechanisms so
that the problem of online dealing
can be adequately met.
Additionally, monitoring of the
market trends and mechanisms is
another solution where the
organization should identify how
the market preferences of the
consumers are shifting as quickly
as possible so that they are able to
tap the market quickly.
Takamitsu, H.T. and Junior,
J.A.G., 2017, April. News
Approaches (Insights) to NPD
on the Fashion Segment: The
Power of Social Networks and
the System See Now Buy Now.
In Workshop on Business
Models and ICT Technologies
for the Fashion Supply
Chain (pp. 3-14). Springer,
Cham.
Artificial
Intelligen
ce and
team
building
2, The second challenge of the
declining sales can be met by
developing proper marketing
strategies for the stores before
simply setting them up. When the
managers will identify the
different aspects that are
associated with the consumer's
Oishi, A.H.A., 2018. Analysis
of H&M home supply chain and
implementing such in
Bangladeshi market of same
arena.
Market
Analysis
tools and
strategies

taste they will be able to clearly
formulate which segment of the
market is to be targeted and
whether they should set up the
store in the area that has been
selected or not.
3, There are different solutions that
are available to H&M and in order
to address the problem of
increasing discounts, the best
solution that can be adopted is to
launch products in lieu with the
fashion trends and ultimately,
identify the correct pricing strategy
that is to be adopted in the
company while marketing their
products. This will help in
minimising the quantity of stock
that is unsold.
Schwartz, H.M., 2019. What’s
wealth got to do with it? Global
balance sheets and US geo-
economic power. Review of
International Political Economy.
26(5). pp.963-986.
Pricing
technique
s and
market
penetratio
n, STP
analysis
Implementation of Solution
Specific
objectiv
e
Approach
(marketing,
HRM,
Operations,
Practice etc.)
Stage1:
Inputs,
financial,
technological
, material,
human.
Stage2: Actions
and timeline
Stage3:
Delivery and
Evaluation
Model(s)
Develop
ing
online
selling
and
marketi
ng
techniq
ues
The strategy of
developing the
market online
in a more
proficient
manner can be
used here. For
this a separate
department
regulating the
online trends
in fashion
industry needs
to be set up
that will be
well integrated
with the
marketing,
There will be
a
requirement
of a separate
team that is
proficient in
handling
online
trading and a
social media
manager
needs to be
hired so that
they can
promote the
company on
other social
media
The
development of
a separate
department and
finding the right
personnel is a
time-consuming
process but
after this, a
proper software
or website
needs to be
developed and
maintained or
updated
regularly.
After the
software is
After the
website is
developed and
updated
regularly and
the presence
of the brand
on social
media
platforms is
increased,
then the
company
needs to
evaluate the
performance
of such online
activities. The
AI Power
content
creation,
Social
Media
Marketing
, SPSS,
MS-
Excel,
Profitabili
ty
Analysis
tools etc.

HR,
Operations and
R&D
Department.
platforms. developed, the
social media
manager will
also post
regular updates
regarding the
activities of the
company and
the online
advertisements
and other
promotional
activities and
strategies
should be
restructured.
SPSS tools
and
techniques
where the
number of
viewers of
such online
advertisement
s are
compared
with the
number of
actual buyers.
This helps in
measuring the
profitability
of the
company.
CONCLUSION
In the report, the different strategic issues related to the H&M were discussed and the
different recommendations based on the issues identified were discussed and evaluated. Based
on the recommendations, the strategies that can be implemented by H&M were discussed and the
impact of their implementation was also illustrated.

REFERENCES
Books and Journals
Takamitsu, H.T. and Junior, J.A.G., 2017, April. News Approaches (Insights) to NPD on the
Fashion Segment: The Power of Social Networks and the System See Now Buy Now.
In Workshop on Business Models and ICT Technologies for the Fashion Supply Chain (pp.
3-14). Springer, Cham.
Oishi, A.H.A., 2018. Analysis of H&M home supply chain and implementing such in
Bangladeshi market of same arena.
Schwartz, H.M., 2019. What’s wealth got to do with it? Global balance sheets and US geo-
economic power. Review of International Political Economy. 26(5). pp.963-986.
Online
GradesFixer. 2019. H&M: Challenges Adapting to New Business Trends., viewed 1 February
2020, <https://gradesfixer.com/free-essay-examples/hm-challenges-adapting-to-new-
business-trends/>
H&M is caught in a 'vicious cycle' of discounting, and now it's found itself with a mountain of
unsold clothes - here's how it got there. 2018. [ONLINE] Available
through :<https://www.businessinsider.in/hm-is-caught-in-a-vicious-cycle-of-discounting-
and-now-its-found-itself-with-a-mountain-of-unsold-clothes-heres-how-it-got-there/
articleshow/63586939.cms>
What Went Wrong with H&M? 2018. [ONLINE] Accessed
through:<https://omnilytics.co/blog/what-went-wrong-with-hm>
Hennes & Mauritz faces up to challenge of online competitors. 2019. [ONLINE] Available
through:<https://www.ft.com/content/1ff300c6-f4da-11e6-8758-6876151821a6>
H&M faces up to a new reality. 2019. [ONLINE] Available
through:<https://www.ft.com/content/9a942bc0-0cd5-11e8-8eb7-42f857ea9f09>
Is H&M Losing Its Shine? 2019. [ONLINE] Available through:
<https://www.forbes.com/sites/callyrussell/2019/01/31/is-hm-losing-its-shine/
#7560b8a164db>