Strategic Management Report: Comprehensive Analysis of H&M's Strategy

This report provides a comprehensive strategic analysis of H&M, a global fashion retailer. It begins with an introduction to strategic management and an overview of H&M's background, including its history, operations, and market position. The main body of the report delves into external and industry analyses using the PESTEL model and Porter's Five Forces, examining political, economic, social, technological, environmental, legal factors, and competitive forces within the industry. An internal analysis is conducted using the VRIO framework to assess H&M's resources and capabilities. Furthermore, the report explores strategic options for H&M through the Ansoff Matrix, including market penetration, market development, product development, and diversification. The report concludes with a strategic selection and justification, offering recommendations for H&M's future strategic direction. This detailed analysis is designed to provide insights into H&M's strategic choices and performance within the fashion industry.

STRATEGIC
MANAGEMENT.

INTRODUCTION
Strategic management is the ongoing process of planning, organizing, controlling and
directing. This will help to assess the organization necessities which company have needs for
meet their goals and objectives of company in effective manner. The make some changes into the
business environment which will requires organization to constantly assess their strategies for the
success of company in effective manner. The present study is based on the “H&M” which is the
fashion retailer company. The report will include the complete background of company. The
report will cover the external analysis as well as industry analysis of company. This will reflects
the internal capabilities of strategic capabilities as well as strategic options. At the end of report
will highlight the strategic selection and justification for selected strategy for company in
effective manner.
MAIN BODY
Background information of H&M.
H&M is the Swedish multinational fashion clothing company which is known as the
fashion clothing for women, men, teenagers as well as children. In the November 2019, company
operates 74 countries with 5000 stores under the various company brand with the 126000 full
time equivalent position. It is the second largest global retailer company behind Spain based
Inditex. The company have their online shopping facilities in 33 countries. The company is
founded by the Erling Persson in 1947, when the company opened his first shop in Sweden. At
their company is offers only women clothings. The store was opened Norway in 1964. presently
company have 126376 number of employees with 2.106 billion net income. The company offers
clothing and accessories at world wide area (Background of H&M, 2020). The company have
5075 numbers of locations. At their company offers the products and services in effective
manner. This creates more effectiveness for business and company to reach out their aims and
objectives of company in effective manner. The company is follows the hierarchical structure of
sets their business objectives as well as autocratic leadership style where employer take view and
ideas of employees in their decision making process. Through that employees are able to work
with motivation and able to learn various thinks in effective manner.

External and industry analysis.
In order to analysis external environment of company here is select PESTEL model
which is helpful for analyse all those factors which can affect to the business from outside the
business and from market place. This include the 6 elements which are political, social,
economical, technological, environmental and legal factors. This framework is imperative for the
companies such as the H&M, as it is help to realize market dynamic as well as improve its
business continuously. Explanation of those are as follows:
Political factor:
H&M is the international company where company is operates in several countries across
the globe. This highlight the profitability for company in order to come across the various
political risk as exhibited by the different level of laws at the several area of their operations in
effective manner. This consist with the political stability and tax rate. For example: if the tax rate
on textile product is increases then it is increase product rate and affect the purchasing power of
customers because of rate of product of increase (PESTEL analysis, 2019). like if rate of tax is
decrease when price of product is lower then customers are effective for purchase products from
H&M and give positive impact on company in effective manner.
Economical factor:
H&M business operation have been threatened by the constant strengthening of US
dollar. Besides the US dollar H&M was greatly affected by the Brexit. At the time of Brexit
company is affected because at that time price of US dollar is lower and customers is affected
because at that time products are too expensive. In that manner customer affected with their
purchasing power and this affect company in negative manner because customer not purchase
product form company.
Social factor:
Clothing field is best field at there people direct influenced by the social media and the
celebrities. In that management need to the develop their promotion strategy as per the
requirement of customers. Produce product as per customer requirement is help to maintain trust
of customers in effective manner (Durand, Grant and Madsen, 2017). For example if company is
not produce products as per customer needs then customer are not purchase products from
company give negative impact on the business in effective manner.
Technological factor:

Now days technology is more updated day to day upgrade. Most of the companies are
used new and updated technology for advancement of business in effective manner. For
example: company need to follows best technology for maintain the unique design of products
and services. If company not use that then competitors have benefits because company not
follow this and competitors attract more unique design for clothes in effective manner. In respect
to that management need to follow updated technology for sustain their business in effective
manner.
Environmental factors:
Textile industry is the more contaminate industry after the oil and gas industry. In that
management need to provide and produce each weather products like woollens for winter, cotton
for summers for all people (Dzwigol, 2020). This help to make the best effective effect on the
H&M because through that customers easily purchase products and services from company in
effective manner.
Legal factor:
There are various law and regulations which can affect to the business in negative and in
positive manner. Firms operating in those firm have rules to be successfully able to operates the
business. The intellectual property right is the major concerns. For example: suppose company
done some innovative into the product but if it is not the legally secured then can be stolen by
their competitors.
Those are external factors which can affect to the company from outside the business. In
order to analysis industry analyse here is select porter five force analysis model which is help to
understand those factors affect within the industry as well as competitors.
Bargaining power of customers:
bargaining power of customer is the high impacted factor which is affect to H&M in
negative manner because customer have higher switching cost in the market place. The main
negative aspects is most non-existent loyalty in the cheap fashion segment. This creates the
negative impact on H&M because if company is not produce the best quality of products and
services to its customers (Ethiraj, Gambardella and Helfat, 2016).
Threats of new entrants:
New comers are always come with unique and new design of products which can affect
to the business. This factor have the lower impact on the H&M because company have best to

best quality of products as well as unique design of products in effective manner. As per that
company have effective benefits from this factors.
Bargaining power of suppliers:
This give higher impact on the H&M because suppliers have bargaining power in the
industry. That is very because there are various supplier who are working in industry (Porter five
force analysis, 2020). Also, company have effective and strong relations with suppliers which
very old in industry through that company is not affected with this factors.
Threats of substitute products and services:
The threats of substitute product and services can give higher impact on H&M because
company have various substitute product in the industry (Velikorossov and et.al., 2020). This
creates the negative impact on the business because through that customers are able to switch
from products to another product an company as well as brand. In the H&M entirely reliant
suppliers which is located within the countries like the china where labour on the way to create
cheap garments.
Competitive rivalry:
This give higher impact on the business because company have various competitors at the
market place who have their great strategy to develop their product selling in effective manner.
This creates more effectiveness for business (Hitt and Duane Ireland, 2017). Company have their
competitors which are ZARA, M&S and Next. They are competitors of H&M who affect the
business strategy of company in negative manner.
Those are the factor which can affect to the business within the industry. This create
problems and issues for H&M. In that management need to provide better quality of product and
services on lower price is help to build the trust of customers in effective manner.
Internal: strategic capabilities.
In order to analysis the internal capabilities of company. For that here is need to select
VRIO analysis model which is help look at the every internal resources one by one in order to
assess whether these provide sustained competitive advantage for company in effective manner.
Explanation of those are as follows:
Valuable resources:
The financial resources of H&M are highly effective and valuable for company because
their finance is help to invest into the external resources of company (VRIO analysis, 2018). As

per the analysis employees are the valuable resources because through that company have a
portion of workplace is highly trained and this leads the more productive outputs for the
company in effective manner. There distribution network is also valuable for company.
Rare resources:
Their financial resources are rare resources are only possessed by the few competitors in
the industry. Employees are rare resources because they are highly trained and skilled employees
who are ready to give their hard contribution for achieve goals and objective of company in
effective manner.
Imitable resources:
Financial resources are the imitable resources because that have been acquired by
company through prolonged profit over the years. Employees imitable because their
effectiveness are better from another companies (Makadok, Burton and Barney, 2018). Patents
are very difficult to imitable as identified.
Organisation resources:
Financial resources are organized which is used by completely organized format. The
distribution network is organized because that is help to reach out the customers by ensuring
products are available on all of the outlets.
Basis Valuable Rare Imitable Organisation
Financial
resources
Yes Yes Yes Yes
Employees Yes Yes Yes
Distribution
network
Yes Yes Yes
Patent Yes
Strategic options.
In order to analysis the strategic option for company here is select the Ansoff matrix
which is helpful for analysis the best option for company in effective manner. This also called as
the product and market expansion grid which is the tool used by companies to analyse and plan
their strategies for growth of companies. Her is select this tool for H&M company.

Market penetrations:
This factor have complete focus on increasing sales of products in which company
already deals within the existing market in effective manner (Pfarrer and et.al., 2019). Through
that business and company have advantage to increase sales as well as achieved customer of
competitors as well as encouraging them for acquiring more company products in effective
manner. H&M market penetrations offering the fashionable clothes on very cheapest price.
Market development:
This is the strategy where company think about entered into the new market. This is
helpful for business to achieve and target new customers segments. That is help target new
customer and products as well as for entering new international markets (Ansoff Matrix, 2019).
This help to company to become more standardization products of H&M.
Product development:
This strategy is help to develop new product at market place. With the help of this
company have advantage to analysis need of customer and make product as per their demand.
Through that more customers are attracted towards the company.
Diversification:
This strategy have their complete focus on entering into the new market with the
introduction of new products which is help to attract more customers towards business. With the
help of this business have great advantage to offers new designer products at the new and
existing market help to gathered new and old customers towards company in effective manner
(Teece, 2019). This is helpful and more effective for company to use their strategy in their
business for achieve more growth.
Those are the effective and valuable aspects where company have need to work on their
growth factors in effective manner. Those are more effective option which are available for
company to plan out the increasing sales and profit margin by attracting new customers. Here is
select the best option which is market development. This help to target with existing products
and services of the company in effective manner.
Strategy selection and justification.
The future strategy for H&M is market development. That is help to company for entered
into new market with existing products. With the help of this company have advantage to attract
new customer segment towards company in effective manner. With the help of this, management

have great chance to increase sales and increase customers base towards company in effective
manner. On the other side, if company select this then company face issue which is for entering
into the new market. There company have need to follow some of the entry modes in order to
entering into the workplace (Trigeorgis and Reuer, 2017). This help to make come of the
conflicts for business as well as for H&M. This give positive and negative impact on the
business in effective manner by controlling the business aspects in effective manner.
The market development is the best and effective aspects where business have need to
follows some of entry modes which are help to company in order to entered into the new market
segment in effective manner. With the help of this. H&M is able to gathered new customers base
towards company. This creates various advantage for business which is increasing in sales of
existing products as well as new customers base in effective manner. This is more effective and
valuable for business to gathered effectiveness.
CONCLUSION
The above study has been summarized here strategic management has important
document which helped to make proper planning for achieve goals as well as objectives of
company. With the help of PESTEL analysis company gathered the information about political,
economical, social, technological, environmental and legal factor affect to business from outside
the business. On the other side, porter five force analysis helped to analyse the power of
customers and suppliers, threats of new entrants as well as substitute products as well as
competitive rivalry of company. VRIO framework helped to analyse the internal capabilities of
company where company have need some improvement. Ansoff model helpful for analysing
better strategic option for company which has the market development has important and
effective option for company.
RECOMMENDATION
As per the above analysis, here is mentioned some recommendations for company to use
for achieve goals and objectives of company in effective manner. This have been more
advantage which is come through by using updated technology. For the social business need to
develop products as per the need for customers. In order to entered into the new market company
need to use entry modes helpful for H&M to successfully entered into new market in effective
manner.

REFERENCES
Books and journals
Durand, R., Grant, R. M. and Madsen, T. L., 2017. The expanding domain of strategic
management research and the quest for integration. Strategic Management Journal.
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Dzwigol, H., 2020. Methodological and Empirical Platform of Triangulation in Strategic
Management. Academy of Strategic Management Journal. 19(4). pp.1-8.
Ethiraj, S. K., Gambardella, A. and Helfat, C. E., 2016. Replication in strategic management.
Strategic Management Journal. 37(11). pp.2191-2192.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Makadok, R., Burton, R. and Barney, J., 2018. A practical guide for making theory contributions
in strategic management. Strategic Management Journal. 39(6). pp.1530-1545.
Pfarrer, M. D. and et.al., 2019. Sociocognitive perspectives in strategic management. Academy of
Management Review. 44(4). pp.767-774.
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perspective. New Zealand Economic Papers. 53(1). pp.1-43.
Trigeorgis, L. and Reuer, J. J., 2017. Real options theory in strategic management. Strategic
Management Journal. 38(1). pp.42-63.
Velikorossov, V. V. and et.al., 2020. Strategic management.
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