Strategic Evaluation of H&M: Course BMP6002 Report

This report provides a comprehensive strategic evaluation of H&M, a Swedish international retailing company. It begins with an introduction to strategic evaluation and outlines H&M's mission, vision, objectives, and values. The main body of the report delves into the value of clear purpose, vision, mission, and objectives in setting the strategic direction of organizations. The report then assesses H&M's competitive advantage using the VRIO framework, analyzes its external environment with the PESTEL framework, and applies Porter's Five Forces model. Finally, it reviews the organization's strategy, offering insights into its strengths, weaknesses, opportunities, and threats. The report concludes with a summary of the findings and a list of references.

Strategic Evaluation

TABLE OF CONTENT
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
1. Critically evaluate the value of clear Purpose, Vision, Mission and Objectives, values in
setting the strategic direction of selected organizations.........................................................3
2. For assessing a competitive advantage, this can be evaluated using four attributes under
the acronym VRIO of selected organization..........................................................................4
3. Using PESTEL framework analyze the external environment of the business you
selected...................................................................................................................................6
4. Apply the Porter’s Five Forces Model for the organization selected.................................7
5. Based on your analysis, review the organization’s strategy..............................................8
CONCLSUION........................................................................................................................10
REFERENCES.........................................................................................................................11
Books and Journals..............................................................................................................11

INTRODUCTION
Strategic Evaluation is described as an assessment process which offer useful
information related to performance, program and project for accomplishing goal as well as
objective in stipulated period of time. This report is carried upon the company which is
named as H and M. It is the Swedish international retailing company which is located in
Stockholm, Sweden. This company was founded by Erling Persson in the year of 1947. They
start their business as ladies wear store which is the thought of bring fashion offer at
affordable cost to its customer in order to satisfy them. Apart from this, they use
transformation work in order to satisfy the ever-changing need of customer in the market.
They deal with wide variety of products such as clothing, accessories and so on provided to
customer in order to satisfy them. In addition to this, they focus on digital expansion in order
to attract large number of customer at marketplace. The objective of H and M is to create
climatic positive value chain by the year of 2040.In this report, VRIO Analysis is used for
assessing internal capabilities of business organization. In addition to this, PESTEL Analysis
is adopted for identifying external environment which imposes direct impact on success and
growth of company. Apart from this, Porter five force model as well as Ansoff matrix is
adopted for strategic growth in future period of time that helps in achieving competitive
advantage over rival firm at marketplace (Das, 2016).
MAIN BODY
1. Critically evaluate the value of clear Purpose, Vision, Mission and Objectives, values in
setting the strategic direction of selected organizations.
H and M has set clear objective, purpose, vision as well as values for achieving it in
given period of time which is going to be mentioned below:
MISSION: “The mission of H and M is to provide superior quality products such as
clothing and accessories in order to attract large number of customer at affordable cost for
satisfying them”.
VISION:” The vision of H and M is to achieve leading position across world. And
bring the change in respect of renewable fashion for bring fair organisation”

OBJECTIVES: There are different objectives of organisation which must be
accomplished in stipulated period of time for achieving success and growth in future period
of time. The SMART objective which is going to be mentioned below:
Specific: The objective of organisation must be clear and specific for achieving
favourable outcomes. It helps in accomplishing goal as well as objective in future period of
time which will be advantageous for taking appropriate decision for organisation in upcoming
time period.
Measurable: The objective must be measurable for accomplishing objective in future
period of time.
Achievable: The objective should be achieved by providing its current resources as
well as introducing new products.
Realistic: It is important to set goal that is realistic as well as they cooperate it in
different section for achieving objective in future period of time.
Timely: The goal as well as objective must be accomplished in timely manner in
upcoming time period (Dawes, 2018).
Objective of H and M
 The main objective of H and M is to focus on physical stores as well as online
marketing for increasing growth in future period of time.
 To boost net sale by 9% in fourth quarter of 2019.As per local currencies, the sales is
enhanced by 5% in comparison of previous year. Thus, the main objective is to boost
sales.
 And furthermore they want to start their innovative online market in the mid of 2020.
 H and M wants to introduce their ecommerce platform in the country named as South
Korea by 2020.
 The other objective is to become new franchise partner in the America by the end of
2020.
 The objective of H and M is to create climatic positive value chain by the year of
2040
VALUES

Organisational value is considered as ethics as well as principles which are followed
by different company in various manners. The value provides direction to company how to
act and behave during period of time. They follow cultural value, and provide products as per
the different need of customer that helps in achieving objective of company in future period
of time. Apart from this, they also follow ethical responsibility towards society that increases
brand image and reputation of company in front of customer at marketplace. And also they
offer high quality products and services to its user for increasing standard of living of society.
2. For assessing a competitive advantage, this can be evaluated using four attributes under the
acronym VRIO of selected organization.
The VRIO analysis is adopted by H and M for assessing internal capabilities of
organisation in order to gain competitive advantage over rival firm at marketplace
(Eitenmiller, Landen and Ye, 2016). There are four resources such as valuable, rare,
inimitable as well as organised of H and M which is going to be mentioned below:
Resources
and
capabilities
Valuable Rare Costly to
imitate
Organised Performance
implication
Brand
image
Yes Yes Yes Yes Competitive
advantage
Product
innovation
Yes Yes Yes Yes Partially
competitive
Technology Yes No No Yes Sustainable
advantage
Supply
Chain
Yes No No Yes Temporary
Competitive
advantage
Valuable: The valuable resources are those which provide value to business organisation. In
context of H and M, there are four types of valuable resources which include brand image,
innovative products and latest technology as well as supply chain that helps in gaining
competitive advantage over rival firm at marketplace.

Brand image: Herein, the brand image of H and M is considered as valuable
resources of firm. They achieve leading position across the world.
Product Innovation: They focus on provide innovative products and services to its
customer at affordable cost for retaining them for longer period of time is valuable resource
for entity
Technology: In reference of H and M, they implements advanced technology in
order to offer unique products and services to its customer in order to satisfy them.
Supply chain: The supply chain of H and M is strong so that it is valuable for firm, it
increases experience level of customer during the period of time.
Rare: Rare are considered those resources which are unique and specific and not copied by its
rival firm. There are some rare resources of H and M that is mentioned below:
Product innovation: Herein, the company focuses on proving innovative and unique
products and services to its customer which is not copied by its rival firm considered as rare
resources of firm (Kharub and Sharma, 2017).
Technology: Due to implementation of advanced technology, they provide goods and
services as per the need of customer. It helps in retaining them for longer period of time.
Supply Chain: Due to strong supply chain network, it is not duplicated by its
competitive firm is determined as rare for company.
Inimitable: Inimitable are those resources which is not copied by its rival firm that helps in
gaining competitive advantage over rival firm at marketplace. They offer cost effective
products and services to its customer in order to satisfy them.
Technology: The implementation of advanced technology is very costly, so it is not
easy for every firm to execute within organisation. Therefore, it is not duplicated by its rival
firm.
Supply chain: The strong supply chain provide delivery to its customer in convenient
manner that is inimitable by its rival firm (Moreno-Izquierdo, Ramón-Rodríguez and Perles-
Ribes, 2016).

Organised: The organised resources of firm are supply chain network which will be
advantageous for success and growth of organisation in future period of time.
Supply chain: The supply chain network of H and M is too strong that is considered
as organised resources for firm. It increases experience level that helps in gaining competitive
advantage over rival firm at marketplace.
3. Using PESTEL framework analyze the external environment of the business you selected.
PESTEL Analysis is adopted by H and M for assessing external environment which
imposes direct impact on productivity as well as profitability of organisation that is going to
be mentioned below:
Political factor: It includes government regulations, laws as well as political
condition and many more. Due to political instability, it is not easy for firm to operate their
business at global level which imposes negative impact on profitability of organisation. On
the other hand, they follow government regulation thus H and M company collaborating their
business with franchising partners to run brand in countries such as Kuwait, Indonesia as well
as Thailand for expanding their business across world (Schawel and Billing, 2018).
Economic factor: Economic factor involves exchange rate, interest rate, inflation rate
and many more. Due to Brexit, the sales of H and M Company are raised by 7% on local
currency in 2017 compared to June 2016 which enforces positive influence on profit of
company. Whereas, due to decrease in income of individual person, they do not spend too
much money on purchasing quality products at high cost, thus, it negatively affect growth of
firm.
Social factor: Social factor involves age, taste, preferences as well as market trends
and may more. Due to frequently change in taste and preferences of customer, it is not easy
for firm to provide products and services as per their needs, it downward sales of company
during the period of time. Whereas, the customer prefers designer good, thus the organisation
focus on satisfying their need, it increases profit in future period of time.
Technological factor: Due to improve the use of mobile app, it provides allowance to
its customer to gather reward points which increase experience level of H and M company.
Whereas, the implementation of advanced technology is add extra cost to the product of
company which decreases profit margin of organization.

Environmental factor: It includes climatic and weather condition as well as so on.
The main purpose of H and M is to recycle old products as well as all new products is
generated form old one which will be advantageous for growth of company. In addition to
this, they implement advanced technology for providing innovative products and services to
its r in order to satisfy them. On the other hand, sometime the product of company affect
environment which enforces negative effect on business firm (Shenoy and Aithal, 2017).
Legal factor: Legal factor involves laws, legislation, consumer protection law and
many more. From 2 years, the H and M Company involved in legal disputes in respect of
infringement through retailer of clothes which affect the brand image and reputation of
company in negative manner. On the other hand, the company follow laws and legislation
which affect the firm in positive manner.
There are various external factor which is considered by H and M Company which
imposes direct impact on success and growth of business organisation in future period of time
4. Apply the Porter’s Five Forces Model for the organization selected.
Porter’s five force model is adopted by H and M for taking strategic decision in order
to gain competitive advantage over rival firm at marketplace. There are various factors in
relation to H and M which is going to be mentioned below:
Threat of Barrier to Entry: The threat of barrier to take entrance in retail industry is
very low. In context of H and M, they operate their business at global level, thus, it is not
easy for business firm to take entrance in retail sector at that level. In addition to this, they
offer innovative products and services to its customer in order to gain competitive advantage
over rival firm at marketplace.
Bargaining power of supplier: The bargaining power of supplier is low in retail
sector. There are various suppliers who sold similar kind of products and services at
affordable cost. Therefore, the customer has wide variety of choices related to switch the
brand of products as well as services Thus, it has been stated that, they design their products
and services as per the of customer for increasing sales as well as profit in future period of
time.
Bargaining power of buyer: The consumer prefers only those products which
possess well-known brand at marketplace. The H and M Company go towards the changing

need of customer and providing them fashionable item as per their taste and preferences. It
increases profit of company in future period of time (Sun, Miao and Yang, 2017).
Threat of substitute: There are various competitive firm selling similar kinds of
products and services to its customer at affordable cost. Therefore the H and M Company
adopt promotional strategy for attracting large number of customer in order to increase sales
as well as level of profit in future period of time.
Competitive Rivalry: There are different competitor of H and M such as Zara,
Uniqlo as well as ASOS and many more. Therefore, it is necessary for firm to adopt different
social media technique such as advertisement, sales promotion, publicity as well as
sponsorship for attracting ample of customer towards products and services of firm during the
period of time. In addition to this, they offer innovative goods at affordable cost for gaining
competitive advantage over rival firm at marketplace.
From the above mentioned strategies, it has been analysed that H and M adopt
strategy related to competitive rivalry. They offer innovative products and services to its
customer at relatively less price in order to gain competitive advantage over rival firm at
marketplace.
5. Based on your analysis, review the organization’s strategy.
On the basis of above mentioned analysis, the H and M adopt Ansoff matrix as a
strategy for assessing direction which is followed by firm. There are four types of elements
which are mentioned below:
Market penetration: In this strategy, the company emphasised on selling existing
products in present market. They provide superior quality clothing and accessories to its
customer at affordable cost for increasing sales and profitability level in future period of time.
In addition to this, their main aim is to retain customer for longer period of time by providing
products as per their needs in existing market (Vargas-Hernández, Quijano and Benítez,
2020).
Product development: This strategy specifies improving new product in existing
market. The manager of H and M focuses on launching innovative products for attracting
large number of customer in present market. In addition to this, the offer unique products in

order to satisfy the changing need of customer. It increases sales as well as profitability level
in future period of time. In addition to this, it is difficult for firm to sold innovative product in
existing market. They influence the customer towards their product in order to increase sales
in future period of time.
Market development: In this approach, the marketer of company emphasised on
selling existing product to its customer in new market. They want to catch the attention of
user in new market for gaining more and more revenue in future period of time. It increases
brand image and reputation of company in front of customer at marketplace. Apart from this,
the main purpose of H and M is to sell existing product to its user in new market that boost
sales and profit in future time period.
Diversification: In this strategy, the H and M Company sold innovative product in
new market. It is very risky stage and provides high rate of return in future period of time. In
addition to this, it is difficult for organisation to introduce innovative products and services to
its customer in new market. They adopt various types of promotional tools such as
advertising, publicity, sales promotion for attracting large number of customer towards
innovative product which is provided by company in new market. It boosts productivity as
well as profitability level in future period of time.
Therefore, the H and M adopts diversification strategy by introducing innovative
products in new market. It increases sales and profit in future period of time. In addition to
this, it boosts brand image and reputation of company in front of customer at marketplace
(Zaslavskyi. And Pasichna, 2018)
CONCLSUION
On the basis of above mentioned report, it has been analysed that Strategic Evaluation
is s an assessment process which offer useful information related to performance, program
and project for accomplishing goal as well as objective in stipulated period of time. In
addition to this, the company adopts VRIO Analysis for assessing internal capabilities of
organization. And also PESTLE Analysis is used to identify external environmental factor
which enforces direct impact on success and growth of organization. Beside from this, the H
and M adopts porter five force models for gaining competitive advantage over rival firm at
marketplace. There are various objectives, vision, mission of H and M is mentioned in this

report. At last, Ansoff matrix is used for providing strategic direction for success and growth
in future period of time.

REFERENCES
Books and Journals
Das, R., 2016. United Bank of India: A Strategic Analysis Using the VRIO Method. IUP
Journal of Bank Management, 15(2).
Dawes, J., 2018. The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems. But
with Two Logical Problems (February 27, 2018).
Eitenmiller, R.R., Landen Jr, W.O. and Ye, L., 2016. Vitamin analysis for the health and food
sciences. CRC press.
Kharub, M. and Sharma, R., 2017. Comparative analyses of competitive advantage using
Porter diamond model (the case of MSMEs in Himachal Pradesh). Competitiveness Review:
An International Business Journal.
Moreno-Izquierdo, L., Ramón-Rodríguez, A.B. and Perles-Ribes, J.F., 2016. Pricing
strategies of the European low-cost carriers explained using Porter's Five Forces
Model. Tourism Economics, 22(2), pp.293-310.
Schawel, C. and Billing, F., 2018. Ansoff-Matrix. In Top 100 Management Tools (pp. 31-33).
Springer Gabler, Wiesbaden.
Shenoy, V. and Aithal, P.S., 2017. Quantitative ABCD Analysis of IEDRA Model of
Placement Determination. International Journal of Case Studies in Business, IT and
Education (IJCSBE), 1(2), pp.103-113.
Sun, L.Y., Miao, C.L. and Yang, L., 2017. Ecological-economic efficiency evaluation of
green technology innovation in strategic emerging industries based on entropy weighted
TOPSIS method. Ecological Indicators, 73, pp.554-558.
Vargas-Hernández, Quijano, E.P.O. and Benítez, K.T.W., 2020. Analysis Based on the Hotel
Industry, the Lodging Market in Mexico: The Posadas Case. In Strategic Innovative
Marketing and Tourism (pp. 853-860). Springer, Cham.
Zaslavskyi, V. and Pasichna, M., 2018, May. Strategic evaluation of electricity generation
structure in the European union and Ukraine: Geographical focus. In 2018 IEEE 9th
International Conference on Dependable Systems, Services and Technologies
(DESSERT) (pp. 555-560). IEEE.