Strategic Management of H&M: Industry Analysis and Recommendations

This report provides a comprehensive strategic analysis of H&M, a prominent player in the fast-fashion industry. The introduction outlines the company's background, including its founding and global presence. The main body delves into the external environment using PESTEL analysis to assess p...Read More

Strategic management
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Table of content
INTRODUCTION.........................................................................................................................3
MAIN BODY..................................................................................................................................3
H &M Background and information............................................................................................3
External fast fashion industry analysis........................................................................................4
Internal: Strategic capabilities:....................................................................................................6
Strategic options..........................................................................................................................6
Strategic selection and Justification.............................................................................................6
Recommendation.........................................................................................................................6
CONCLUSION..............................................................................................................................6
REFERENCES..............................................................................................................................7
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INTRODUCTION
Strategic administration includes goal as well as objective assessing competitive
atmosphere, assessing internal company as a strategy that help in making sure that management
focuses on carrying out in different organisation. It offers improvement plan as well as policy
that help in achieving objectives in timely manner and needed resources to execute plan. It also
assists in achieving competitive advantage of over rivalries at marketplace. In this report, the
company is undertaken named as H & M. This was given in the year of 1947 by Erlingpersson
when he started his first shop in country named as Sweden. This is determined as well-known
organisations that provide cloth of men and women as well as children. The chosen organisation
focuses on operating their business in 74 countries over 5,000 outlets of different brand of
organisation. This assignment provides information regarding background of organisation,
external assessment of fashion industry, different tools that help in assessing internal atmosphere
of company. Moreover, this report involves evaluation of chosen strategy for chosen company.
Lastly, it involved justification related to strategy of organisation(Busch and Shrivastava, 2017).
MAIN BODY
H &M Background and information
The Organisation was listed its business on Stockholm stock exchange in year of 1974
and this company was given by Erlingperssonin year of 1947. Their main focus is to provide
different quality of product in order to satisfy its customers during particular phase of time
period. They focus on launching their home furnishing in year of 2018 as per need of its
customer. The focus is on distributing its offerings by using a catalogue of organisation and
operate store of H&M in global level. In Year 2014, there are various kinds of outlet that was
selected by organisation in order to provide different kind of product to its customer. In addition
to this, clothes are provided to company according to needs and wants of its customers and their
main focus is to satisfy them during particular phase of time period. Moreover, in year of 2019,
the organisation focuses on providing clothing to its man and children according to marketing
trends. Therefore, the H and M is considered as the popular company that focuses on increasing
its customer base in order to achieve competitive advantage over rivalries at Marketplace.
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External fast fashion industry analysis
Herein, the focus is on assessing external atmosphere of organisation as well as industry.
It is determined as a goal that focuses on analysing changing atmosphere in which the
organisation focuses on operating their business during particular phase of time period. External
analysis helps in analysing the trends of organisation. In this assignment, the PESTEL analysis
conducted in order to assess external atmosphere related to fashion brand organisation.
Therefore, the PESTEL analyses which are necessary for analysing market trend during
particular phase of time period.
PESTEL Analysis of H&M
PESTEL Analysisis used to assess different external environmental factors which impose
direct effect on performance level of organisation. This assessment is used for analysing external
atmosphere of organisation during particular phase of time period(Giannopoulos, 2017).
Therefore it is necessary to understand dynamics in market and increases organisation in
continuous manner. Hence, there are various external environmental factors which impose direct
impact on organisation that is given below:
Political factors it signifies the extent in which government as well as policy of
government imposes direct effect on organisation. The company globally operated their business
in various countries around globe. There is the probability for organisation to have a different
kind of political instability and many more. In reference of UK, the political atmosphere of
nation is determined as unstable due to BREXIT condition that is determined as a threat for
company but the organisation focuses on dealing with threat because it possess international
online platform which assist in increasing revenue and profit margin for business organisation
during particular phase of time period.
Positive impact: The Company globally operated their business in various countries
around globe is helpful in increasing sales of company.
Negative impact: In reference of UK, the political atmosphere of nation is determined as
unstable due to BREXIT condition that is determined as a threat for company
Economic factor: these elements impose direct effect on performance level of economy
during particular phase of time period. It imposes negative effect of Brexiton UK country that
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increase sales by 7%in comparison to other years. The organisation is affected by economic
crisis internationally due to the situation of covid-19. Moreover, the business organisation
focuses on increasing customer base around world during particular phase of time period.
Positive impact: The organisation provides superior quality products and services to its
customer in order to satisfy them.
Negative impact: Due to increase in unemployment rate, it imposes negative effect on
company.
Social factors impose a direct impact on emerging trend at marketplace. The company
focuses on analysing need and want of its user. In context of H and M, the brand is related to
fashion sector where individual person directly affected by social media as well as celebrities.
They focus is on brand if the celebrity focuses on promoting it. Therefore, the product related to
chosen organisation increase profit margin in UK.
Positive impact: In context of H and M, the brand is related to fashion sector where
individual person directly affected by social media as well as celebrities that increase profit of
company
Negative impact: Due to change in taste of customer, it imposes negative impact on
company.
Technological factors these are determined as a technology innovation that imposes a
direct effect on environment of company. In context of organisation, there are various customers
who focus on online shopping that increases profit margin of the company. Therefore, the
company provide opportunity to its customer to online access product around the world.
Positive impact: Due to implementation of latest technology, it provides unique products
to its user for satisfying them.
Negative impact: The latest technology increases cost for company that impose negative
impact on success
Environmental factor these factor impose a direct effect on environment or atmosphere
of business organisation and also its performance. There are different kind of rules of
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government imposes direct effect on clothing industry due to increase in pollution. The H and M
focus is on achieving goal and objective in timely manner.
Positive impact: There are different kind of rules of government imposes direct effect on
clothing industry due to increase in pollution. The H and M focus is on achieving goal and
objective in timely manner.
Negative impact: Due to increase in pollution, it imposes negative effect on company.
Legal factor these are related or connected to rules of government which imposes direct
effect on performance level of company. In context of UK, there are various kinds of rules which
are followed by fashion industry. But the company named as H and M does not impose a direct
effect on performance just because of legal factors the organisation that is already operated
business is not affect by its performance (Panteleeva and Unosheva, 2016).
Positive impact: In context of UK, there are various kinds of rules which are followed by
fashion industry that is useful for company in future time period.
Negative impact: Due to frequently change on laws it imposes negative impact on
company.
Therefore, the PESTEL Analysisis used to assess different external environmental factors
which impose direct effect on performance level of organisation. This assessment is used for
analysing external atmosphere of organisation during particular phase of time period.
Internal: Strategic capabilities:
VRIO Analysis
In business sector it is important to be aware about internal strategic so that decisions are
made in most effective manner. To examine internal analysis and strategic directions select
organisation uses VRIO analysis. This model is used by H and M so that they are able to achieve
competitive advantage within a business sector. It is a type of a framework which is used by
enterprise to determine the internal capabilities of a company. It comprises of following
components which are discussed below-
Resources Valuable Rare Imitable Organisable Competitive
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advantage
Brand
goodwill
Yes - - - Flexible
gaining
competitive
benefit.
Products Yes Yes Moderate Yes Yes
Technology
advancements Yes Yes No Yes
Higher
achieving
competitive
advantage
Valuable resource-it is first component of framework in which it states that resources which are
most important for enterprise are used in efficient manner(Percy and Rosenbaum-Elliott,
2016).For example- in context of selected entity their valuable resource is there brand goodwill
they manage in effective way.It is necessary to focus on valuable resources so that competitive
advantages achieved in appropriate as well as larger level. Manager of enterprise shoes that the
important resources which increase the profitability are to be used efficiently and at optimum
level.
Rare- it is an element of this framework in which it reflects the resources which are rare
in nature and through focusing on the valuable resource they are able to achieve temporary
competitive advantage as because of their brand goodwill is higher in market. Moreover
technology advancement and use of high and security system is also being considered by them as
a valuable source which they used in appropriate way. In relevance of H and M also have rare
resources such as their services are rare as they provide after sale service to their consumers and
with the biodegradable shopping bags.
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Inimitable resources-these are those resources which cannot be copied within the
market. It is essential to focus on search type of resources. With the use of advanced software
and detailing tools as well as applications they are being considered as resources which cannot
be copied by anyone.Moreover by using high end security system within their management it is
easier for selected entity to be ahead from their competitors. Also they ensure that no duplicate
software or applications which are used by enterprise is being copied by any third party(Putz,
2019).
Organisable resources- It is last stage of framework in which it states that resources
cannot be used properly if they are not well organised within an enterprise. So it is important to
organise resources inappropriate way such as H and M organise their resources true properly
carrying out financial statements which helps them to monitor and control the use of resources.
So, it is necessary to organised everything within a business with proper planning and structure
so that problems or issue doesn't arise at the time of emergency.
After examining of above matter it has been seen that it is important to carry out the
internal analysis within a business environment so that strength and weakness of functions and
operations are analysed properly. Moreover through this explained framework it will be
beneficial for enterprise to make decisions and improve their business area in proper manner. All
the components of VRIO analysis is it to me properly analysed so that it is easier to carry out the
internal analysis in most effective manner.
Strategic options
Strategies options are essential to be analysed so that they are used and competitive
advantages achieved by enterprise in effective manner. So to determine the strategic options and
SWOT analysis is being used by H &M.
SWOT Analysis
Strength
 Main benefit of using this
diversification strategy is that it
makes it possible for enterprise to
access to foreign countries with a new
Weakness
 Due to uncertainties of event of new
market and new product it is difficult
for corporation to use this strategy
effectively as because it might lead to
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idea which increase their Goodwill at
larger scale.
 Strength of diversification strategy is
that it improves business sense of
entrepreneur and also helps
employees to understand the new
work culture environment and sector
at a rapid scale.
impacting negative upon their
financial resources.
Opportunity
 It is a great opportunity for selected
enterprise to use this strategy as they
can merge with other brand at a new
marketplace.
Threat
 As market it is flexible and retailing
industry and changeable H and M
have a threat of local brands which
can impact on their profitability scale.
After SWOT analysis of diversification strategy it is analysed that it is important for
given enterprise to focus and use this strategy which will improve their business expansion level
and allow them to enlarge their customer base and product portfolio at wider scale. Moreover
this is also examined that study selection is an important part of business which is needed to be
carried out in proper manner.
Strategy selection & justification
Strategies options are essential to be analysed so that they are used and competitive
advantages achieved by enterprise in effective manner. So to determine the strategic options and
Ansoff matrix is being used by H &M.
ANSOFF matrix- It is a tool in which different types of strategies are presented and used
for strategy implementation. It is commonly used framework which is adopted by most of the
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organisations and it is useful to carry on this within a business as it help in achieving competitive
as well as strategic benefit with in a competitive market. It is further explained below-
Market penetration- It is first strategy of matrix in which existing products are being
introduced in an existing market. It is considered as a most safe strategy which can be adopted by
H and M company as they have all information regarding market and consumers. Through using
this strategy help them in developing business operations as well as activities in most effective
way with the minimum risk possibility which also leads to using of resources without any fear or
loss.
Market development- This is also a type of a strategy in which it states that existing
products are produced in a new segment of market. This is mostly used by large enterprises with
purpose of expanding business activities at larger scale. In relevance of selected enterprise, this
can be also used by them as they have a larger portfolio product. It is beneficial for them to use
this strategy as it helps them to increase your brand name and goodwill as well as enlarge their
customer base
Product development- Then comes the product development strategy in which it states
that new product is being introduced in a pre-existing market. This is mostly used with purpose
of gaining attention of both new and old customers. In context of chosen enterprise, this can be
also used as a strategic direction because through using of this, will help them to keep engaged
customers with their brand and product which is beneficial for higher growth and development.
Diversification- It is different strategy and is the most risky part of Ansoff matrix as
because in this tactic within in new market new products are introduced. It is highly advised to
enterprise to use this strategy only when they are financially capable and have a large number of
financial resources in business. In context of selected enterprise, they can opt for this strategy by
properly carrying out market research analysis and gaining deep information about a specific
target market. Also, using of this strategy will help them to reflect their unique position in an
industry rivalry(Tjemkes, Vos and Burgers, 2017).
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CONCLUSION
The H and M focuses on providing training to its employees for increasing skill during
particular phase of time period. On given report, it has been analysed that Strategic
administration includes goal as well as objective assessing competitive atmosphere, assessing
internal company as a strategy that help in making sure that management focuses on carrying out
in different organisation. It offers improvement plan as well as policy that help in achieving
objectives in timely manner and needed resources to execute plan. It also assists in achieving
competitive advantage of over rivalries at marketplace.This assignment provides information
regarding background of organisation, external assessment of fashion industry, different tools
that help in assessing internal atmosphere of company. Moreover, this report involves evaluation
of chosen strategy for chosen company. Lastly, it involved justification related to strategy of
organisation.
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REFERENCES
Books and Journals
Busch, T. and Shrivastava, P., 2017. The global carbon crisis: Emerging carbon constraints and
strategic management options. Routledge.
Giannopoulos, G.A., 2017. Strategic management and promotion issues in international research
cooperation. Case studies on transport policy, 5(1), pp.9-21.
Panteleeva, M.S. and Unosheva, A.V., 2016. BIM-technology and peculiarities of strategic
management construction enterprise.In Science, technology and higher education (pp. 52-56).
Percy, L. and Rosenbaum-Elliott, R., 2016. Strategic advertising management.Oxford University
Press.
Putz, M.V., 2019. The Cube of Strategic Management: The Distinctive Advantage of
Organizations. CRC Press.
Tjemkes, B., Vos, P. and Burgers, K., 2017. Strategic alliance management.Routledge.
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