Strategic Analysis of H&M's Business in the United Kingdom

This report provides a comprehensive analysis of H&M's business strategy, focusing on its operations within the United Kingdom market. The introduction outlines H&M's focus on providing low-cost, trendy clothing to the lower-middle class demographic. The report then delves into H&M's strategic position, highlighting its expansion strategies, emphasis on physical stores, and target customer base. It examines external drivers impacting H&M's growth, including political instability (Brexit), economic factors, social trends, technological advancements, environmental concerns, and legal regulations. The report further explores how H&M adds value to its strategic position through affordable fashion, eco-friendly practices, and customer loyalty programs. Finally, it discusses the sustainability of H&M's strategy, emphasizing the importance of understanding consumer behavior, effective marketing, and the implementation of recycle, reduce, and reuse initiatives. The report concludes by summarizing the key findings and emphasizing the role of business strategy in achieving market success.

Business strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Strategic Position of H&M..........................................................................................................3
External driver that affect growth of firm....................................................................................4
Adding value of strategic position...............................................................................................6
Sustainable of strategic position..................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business strategy refers to plans or processes that are use by the firm in order to increase
profit in changing business and also increase profit share. Hennes & Mauritz (HM) well known
Sweden clothing brand that has multiple shops around the world. Firm emphasizes on providing
low cost trendy product to young lower middle class section of the society of United Kingdom in
physical stores. Report highlights strategic position of organisation in British market. It also
explain various kind of external factors that impact on growth of the firm as well as way in
which firm adding value to it. In the end describe methods by which organisation able to
maintain sustainability in business.
TASK
Strategic Position of H&M
H&M is one of rising brand in United Kingdom, it offers variety of product & services at
cheap rate. Organisation highly focused on providing latest trend clothes to British customer at
cheaper price and hence large number of people attracted towards it (Giertz-Mårtenson, 2020).
Strategy of the firm is to establish itself in different part of globe so that sovereign risk cannot
become barrier in growth of it. Many of company in the world failed because of limited to home
country only and changing policy & procedures such as custom duties increase on import and
hence H&M learn a lesson from it. Organisation product and services are offer to 65 countries
people and hence focusing on expansion of market which increase its market share. Another
strategy of firm is to increase number of physical stores in different area of globe and as large
number of people didn’t find right quality product on online store and it also support shopping
habit of people especially of women. In Britain most of people are remain busy in 5 days of
week and in 2 holidays are spend in shopping and outing and H&B use this position firm’s
strategic. Firm provides goods & services to all classes’ people but most focused group of the
firm is lower middle class with age group of 15-40 years as they follow changing taste and trend.
It helps company in providing different trending styles of clothes and hence it gain higher marker
compare to its competitor. Most of the products of firm are available at cheap prices but it also
gives festival and occasional discount to customer in the country and hence able to gain their
loyalty and trust (Chen and Fang, 2019). As the taste and trend keep changes people want to try
new one but high cost not allowed them and hence H&M take it as opportunity to expand
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business and increase market share. Promotes its product online as well as on offline and hence
nobody can remain untouched with it.
External driver that affect growth of firm
There are number of external factors that can effect on growth of the firm such as
instability in political situation. Technological changes etc. H&M also faces various kinds of
challenges because of external drivers. Organisation business strategy might become ineffective
in such kind of situations.
Political
BREXIT has effected on political stability of the country as three times government
changes in the country and each time new policy and guidelines introduce for various kind of
industries. No fixed rules and regulation for clothing industry affected on their growth and hence
decreasing their profit share in the world. H&M facing various kinds of problems become of
instability in politics of the country. Organisation export most of raw material from European
countries but Britain’s exit from UNION increase its cost because of custom duties and taxes and
hence decreasing revenue of the firm (Wenny, 2020). BREXIT and COVID high affected on
tourism sector of the country as one of profit generative for firm belong to this group of customer
and hence reducing it. Lockdown in the country again decline financial stability because
organisation mainly focused on providing product in stores.
Economical
United Kingdom is one of the most powerful economical countries in the world but
because of Britain’s exit from European Union and Corona virus decrease its growth rate. After
BREXIT, government highly focused on framing policy and procedure for home land industry
and new entrepreneur. Economical reform has effected on growth of H&M as organisation
belongs to America and hence getting less chances in expansion of business. However, British
Government determined to decrease tax related to corporate which can help in increasing profit
share of the firm. Organisation target most of lower middle class family but pandemic taken their
jobs and decrease purchasing power which effected on growth of the firm. Inflation rate in the
country continuously rise because of COVID and BREXIT which leads to decline in customer
percentage of H&M. Tariff of export again increase a major challenge for organisation as most
of its supplier belong to Europe.
Social
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Taste and Trend of British consumer’s changes time to time which gives opportunity to
different types of firms to expand business and increase profit in globalization. H&M known for
making and providing trendy clothes in Britain and hence able to control and monitor position
among British customer. Marketing team of the firm take online as well as offline opinion,
suggestion, feedback from customer and also check competitor’s product according to it, report
is created by them and handover to Research and development team. R&D team of the firm
make quick changes in product and also able to increase quality, efficiency and productivity.
Organisation provides different variety of product and hence able to support one stop shopping
habit of British customers. However, company manufacture goods in bulk but continuously
changing taste and trend of people effect on it and hence decrease revenue of the firm.
Technological
In Britain technology quickly changes which help various types of industry in the country
to increase quality, efficiency and productivity of work. H&M make repeatedly updating system
which help in gaining competitive advantage in changes and rise output with quality. However,
there are various kinds of problems associated with it such as cost of technology increase
financial expenses of the firm and decrease its capacity to meet future challenges. Training and
development programs are also needed for employees and it become cost-effective and time
consuming. Workforces in the firm feel pressurized by continuous technological development
and hence decrease revenue of firm. Supply chain management of H&M is ineffective which
decrease customer satisfaction customer satisfaction level. Firm only focused on physical stores
whereas competitor of it expanding business online as offline and hence decreasing profit share
of the firm. Organisation highly effected from after pandemic as most of customer in the country
avoiding going out for shopping and shifted their focus towards online shopping which need
proper supply chain system.
Environmental
H&M focus on sustainable environment development and hence ban plastic polythene
and related unnecessary items in the firm (Bojonca, 2019). Rising pollution in the country from
industry divert mind of government and hence various types of policy and guidelines are
introduce by the government which has to follow by companies in UK. However, it increases
expenditure of the firm which can be utilising for future market expansion in different part of
world. H&M has implemented and introduce various kind of policy in the firm so that can
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support in conserving environment. Manufacturing units are improved by the company in order
to reduce pollution by the firm and hence good will of it improves in the country. Technological
changes and adoption of modern system that has very less effected on environment are purchased
by the firm. Company follow Recycle, Reduce and reuse strategy which is highly beneficial in
changing business and increase image of the firm in front of stakeholder. It also provides various
kind of fund in corporate social responsibility such as plantation at different side by voluntary
organics which maintain biodiversity of the country.
Legal
In order to protect rights of employees and customer British government added various
kind clauses and if any organisation unable to meet such criteria then will be punish and has to
pay high price for it. H&M has adopted all legislation regarding workforce and consumers which
improves good-will of the firm (Jamshidi, 2019). However, such kind legislation increase
revenue of the firm and can be miss use because of many loopholes in it. There are different
kinds of laws relating to it such as Employment Act, Equal wages, Anti discrimination etc. It
improves efficiency productivity, efficiency and loyalty of workers and they feel part of
organisation. Globalization need diverse workforce and it can only be possible by proper rules
and regulation regarding it. Isolation and discrimination impact on efficiency of workers and
reduce profit share of the firm which become barrier in growth of firm.
Adding value of strategic position
H&M sells latest fashion to customers at cheapest rate which help firm in increasing
market share and generating revenue. Firm is highly focused for lower middle class and student
section which comes under age group of 15-40 years and hence this particular group gets various
types of advantages by purchasing firm’s product. Organisation has shifted focus towards eco-
friendly shopping habit of customers for example buyers will get product that recyclable or
durable hence decrease their expenditure. This support present purchasing mindset of British
customers as after COVID large number of lower middle class section unemployed and hence
emphasizes on clothes that they can wear for long time. Increasing Inflation rate is another
reason behind supplying such kind of product (Lanzolla and Markides, 2020). Organization also
trying to build a new system in which customer’s can exchange products for example buyer’s
will get discount by firm when they give old product and hence it supply three R (Recycle,
reduce, Reuse) system of the firm. Most important thing that firm repeatedly changes in design
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of product as per the trend and hence customer wears fashion at cheap prices (Arrigo, 2018).
Organisation also provides different types of discount to loyal buyer’s during festival season and
also on their birthday and hence able to gain their loyalty and increase revenue of the firm.
Organisation product available diverse population of the country and hence able add value to
strategic position. It provides Wi-Fi and various other facilities in showroom which help in
attracting customers.
Sustainable of strategic position
H&M is able to maintain its position because of multiple reason firms able to understand
customers and provides various kind of product. Marketing team has setup for it and try to
analyse behaviour consumers, likes dislikes etc. and it can help organisation changing in design
and hence right product can be delivered. Firm highly focused becomes common’s brand and
hence multiple effort can be done for it such as people must know vision of organisation and it
can only be possible by reaching them. Promotion channels must be effective of the firm so that
maximum customers can be targeted for example celebrities and you tube stars will be the best
way to reach large number of people in the country (Slávik and Hanák, 2017). It helps firm in
showing what actually they are trying to do such as firm is committed to make trendy clothes for
lower section of young society. You Tube, Facebook, Instagram can be best platform for
reaching to customers and increasing market share of the firm. Recycle, reduce and reuse
strategy can only be successfully implemented when product are of such quality and hence firm
must improves quality so that they can be use for long time and can be recycled. Reduction in
wastage of raw material and reusing it for making new clothes can be highly beneficial for
growth of the firm and expansion of business.
CONCLUSION
It can be understand from the report that business strategy plays important role in gaining
market. H&M sets various types of strategy in order to increase its market share in Britain for
example: it provides cheap product at lower cost which support changing taste and trend of
customers. Report also emphasizes on external drivers that impact on growth of firm such as
technological advancement increase financial burden on the firm. Company add value to
strategic position by promoting eco-friendly shopping habit of customers. Organisation can make
sustainability by delivering quality product that can use for longer times by the customers.
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REFERENCES
Books and Journals
Giertz-Mårtenson, I., 2020. H&M: How Swedish entrepreneurial culture and social
values created fashion for everyone. In European fashion. Manchester
University Press.
Chen, X.J. and Fang, G., 2019, May. Analysis on green marketing strategy of clothing
firm: take H&M for example. In Proceedings of the 2019 International
Conference on Management Science and Industrial Engineering (.pp. 146-150).
Wenny, W., 2020. The influence of using social media marketing towards customer
loyalty at H&M, Medan (Doctoral dissertation, Universitas Pelita Harapan).
Bojonca, D., 2019. Corporate sustainability in the fast fashion industry: the case of
H&M.
Jamshidi, M., 2019. Keeping Relationship in Physical Store in a Digital Era: a Study in
H&M and Åhlens.
Lanzolla, G. and Markides, C., 2020. A business model view of strategy. Journal of
Management Studies.
Arrigo, E., 2018. The key role of retail stores in fast fashion companies: The H&M case
study. In Contemporary Case Studies on Fashion Production, Marketing and
Operations (.pp. 121-137). Springer, Singapore.
Slávik, Š. and Hanák, R., 2017. Identification of relation between Business Model and
Business Strategy and measurement of its tightness. Problems of Management
in the 21st Century.12.(1).p.54.
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