Strategic Management Report: Analyzing H&M in the Fast Fashion Sector

This report provides a comprehensive strategic analysis of H&M within the fast fashion industry. It begins with an introduction to strategic management and an overview of H&M's background. The main body delves into the external environment, utilizing PESTLE and Porter's Five Forces analyses to assess industry dynamics and competitive forces. The internal environment is examined through VRIO and SWOT analyses, evaluating H&M's resources, capabilities, strengths, and weaknesses. The report then explores strategic options for H&M, evaluating its strategic choices and potential future directions. Finally, a specific strategy is selected and justified, providing a critical evaluation and rationale for the chosen path. The report concludes with a summary of findings and references supporting the analysis.

Strategic management

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
H&M - Background Information.................................................................................................3
Focus on information relevant to strategy...................................................................................4
External: Fast Fashion Industry Analysis: Using relevant strategic tools to analyze the external
environment.................................................................................................................................4
Internal: Strategic Capabilities: Using relevant strategic tools to analyze the internal
environment.................................................................................................................................7
Strategic Options: Using strategic direction tools to evaluate H&M’s strategic choices and
future strategic direction..............................................................................................................9
5. Strategy Selection and Justification: A critical evaluation on the selected future strategy for
H&M. A justification to your selection is to be provided..........................................................11
CONCLUSION .............................................................................................................................11
REFERENCES .............................................................................................................................12
Books and journals ....................................................................................................................12

INTRODUCTION
Strategic management can be defined as a formulation which is used by the organization
in order to implement strategies. These strategies are directly related to the goals and initiatives
which are taken by the organization in order to manage the organizational objectives as well as
perform the function in an appropriate way (Amason and Ward, 2020). This is also identified
that it is based on the consideration of resources and assessment of internal and external
environment which help in operating the organizational functions. In context of the current report
it is based on study of H&M. It is a global organization which is performing its function and the
retail industry. Organization is providing clothes and fashion products. In context of the current
report there is discussion about HRM its function focus on relevant strategies which can be
adopted by the organization external environment of organization internal environment of
organization as strategic options which can be adopted by the organization in order to improve
its functions and achieving its business objectives. Along with this there is also discussion about
justification and reason to choose the strategy.
MAIN BODY
H&M - Background Information
H&M is a global performing organization which is operating its function in clothing
industry where it is a Swedish multinational clothing retail Organization all staff organization is
also operating as a name of fast fashion clothing firm which provide garments for men's women's
and children's and teenagers. According to the current data provided by Organization on its
website it is operating within more than 74 countries with 5000 stores which provide various
brand rage (Baumgartner and Rauter, 2017). 100026 full-time workers as well as act as a part of
second largest global clothing retailer. Organization is operating and the market of UK as well as
a global world where company is main competitor is Zara. Organization is operated and run by
the two owners where the company also used to sell its products and services at different online
channels in more than 33 countries. It was founded in 1947 as a shop of retail clothes full stop
continuously growth is the main process of organization where company was listed in Stockholm
stock exchange in 1974.

Focus on information relevant to strategy
H&M is a global performing organization which provides number of services two
different individuals and order to satisfy their needs and requirement of current brand in clothing.
In order to meet these requirements organization use appropriate strategies which are relevant to
the organization for performance as well as matching the needs and requirements of customers
for stop this is also identified that organization is using appropriate system which help in
maintaining functions which will help according to the needs and requirements. in order to meet
these requirements it is essential for the organization to use appropriate function as well as
manage professionals in accordance with the requirements. H&M can use its internal and
external analysis in order to meet the requirements and formulate effective strategy. For the
discussion on this are mentioned below is this report (Bindra, Parameswar and Dhir, 2019).
External: Fast Fashion Industry Analysis: Using relevant strategic tools to analyze the external
environment
External factors are those which are related to H&M is known as one of the leading and
most successful retail company dealing in merchandising and groceries. It is primarily based in
United Kingdom. The business of H&M is scattered all around the world through chains of
supermarkets. Expansion of business is one of the major strategies adopted by H&M to acquire
target market.
Pestle Analysis
Pestle Model can be defined as a systematic method to analyze and interpret all those
factors and forces such as Political, Economic, Social, Technological, Legal and Environmental
that are external to a business organization and may affect the functioning of the organization in
the long run (Bryce, 2017).
Political Factors: H&M is a multinational organization that carries out its business
operations in various countries across the world. Every country has its own political structure
and regulations to which the organization needs to adapt to. In order to carry out smooth
functioning of its operations, the company needs to keep an eye on the political environment as
well as the political stability of the country it operates in.

Economic Factors: The organization needs to focus on the economic stability of a
country it invests and operates in. H&M needs to be aware about the economic reforms as these
reforms will have major impact on the revenue and profit generation of the company. In order to
grow, develop and expand the business for a long run, it is very essential for an organization to
identify the economic changes in the market and respond to them effectively and efficiently.
Social Factors: The buying behavior of consumers largely depend on their social class
and preference. Every consumer comes from a different social status and cultural background
and it effects their choices of products and services. In order to satisfy the customers, H&M
gives emphasis to the taste, choices and preferences of consumers (Carayannis, 2018).
Technological Factors: In today's world, the market is changing every minute. In order
to stay relevant, the company needs to keep up with the changing trends in the technology and
should be updated with the advanced technology available in the market so that the company can
carry out effective utilization of the resources. Advanced technology also helps to reduce the
time duration and errors of the employees while performing a given task.
Legal Factors: Legal environment can have a very major impact on the operations of the
company. A legal action can completely change the current scenario of a company. H&M needs
to be updated with the legal policies and procedure of the government within the country as well
as outside the country. The company needs to follow these legal regulations sincerely so that
they can set an example in the market and increase their goodwill and brand value.
Environment Factors: H&M has provided its helping hands in order to protect and
preserve the environment. It has been indulged in various initiatives to conserve the environment
across the world. It has been working to reduce the use of plastic in order to minimize the waste
generation of the company (Demir, Wennberg and McKelvie, 2017).
Porter's fiver forces
In order to scan business environment, it is essential for firm to scan internal
environment. This is helpful in meeting needs and performing task in effective way. This also
helps in analyzing function and taking effective decision in order to meet needs. In order to
achieve these needs and analyses market H&M can use different function Porter's fiver forces. It
can be defies as that framework which can be use by firm in order scan industrial environment

and formulate polices according to it. There are different factor in this framework which have to
be use by firm in order to achieve business performance. All the are discussed below:
Competitive Rivalry: This can be define that factor in this model which is related
existing competitor of business firm within market. Under this factor, there are different
competitor of H&M in business environment which are impacting on performance of firm and
acting as threat to firm in market. This include ZARA as a prime competitor of firm. This is
because ZARA hold good position in market as well as using better techniques of marketing
such as use of digital marketing. These all are impacting on performance of H&M. This factor
act as an competitive disadvantage to H&M.
Supplier Power: This factor is related to power of supplier in market which are used by
firm in order to meet needs. In case of H&M, firm is working in global market where it require
lager number of supplier to meet global demands. Here, H&M highly dependent of suppliers
form India and China because of cheap labor. This impacting firm in negative way as low level
and high dependence of supplier will increase power of supplier. This also impact on firm ability
to barraging from supplier on terms of contract.
Power of buyers: This factor of model states power of buyers in the market where firm
is trading. Under this, there are different factor such as product of firm, availability of products
and different other will be included. H&M selling its products in global market where there are
large number of customer to the product of firm. Here, H&M has strong hold on its customers.
This is because firm is supplying quality products to customer which helps in developing loyal
customer base. This factor is acting as an competitive advantage to firm.
Threat of Substitution: This is also an factor which have to be consider by firm in order
to meet needs and perform task in effective way. This is related to Threats of Substitution in
market were firm is trading. This can be seen that H&M has low level of treat from the
competitors in market. This is because there is no close substitute to products and services
offered by firm to its customer. This is also helpful in choosing effective price polices and
performing business function according to needs of present scenario.
Threat of New Entry: under this factor all those function and included which are related to
power of new entreats in market. This states that, it there are large number of new entry in

market, power of firm will be lower and vise- versa. Here, H&M is operating with better
investment and high level of market development. This helps firm in minimizing impact of this
factor. As,it is difficult form new firm to achieve goodwill like H&M as well as firms standards
in market.
This can be seen from above that there are different factor which have to be covered by
firm in order to meet needs and perform task in effective way. These are related to use of model
and manage function according to different factor in this. Here, H&M can use effective policy
changes which will manage needs and help in performing function in effective way.
Internal: Strategic Capabilities: Using relevant strategic tools to analyze the internal environment
VRIO analysis
This can be define as framework which is used by firm in order to identify those resources
which are used to chive comparative advances in market. These are related to used of different
factor which are related to changes in business firm. In relation to H&M, VRIO analysis of firm
is discussed below:
This can be seen from the above table that business model and brand image are the two
factor which act as highly competitive advantages for H&M. This also help in achieving better

results and performing task in effective way. On the other side, sustainable fashion is that factor
which impact on performance of firm and leads to changes in business function and act as partial
advantage to firm
SWOT
STRENGTH WEAKNESS
 Global presence: - H&M is a global
organization. It is a popular name in the
hotel industry. It is scattered in 122
countries across the world. This can be
seen from the above mentioned analysis
that firm has global presence which
help it in different aspects of market.
 Focus on Innovation: - H&M biggest
strength lies in its innovation strategies.
Innovation boosts the market position
of the organization and also helps to
reduce waste and cost Innovation is one
of the elements through which an
organization can achieve its goals
effectively and efficiently.
 Excessive focus on Expansion: - One
of the weaknesses of H&M is that it
aggressively focuses on expansion
which in turn affects the service quality
and standards of the organization in the
long run. Where firm follow constant
level of products which impact
negatively ion revenues because of
changes in trends.
 Image Concerns: - In the recent past,
H&M has been indulged in a lot of
issues and controversies. These
controversies have had adverse effects
on the image and goodwill of the
organization (Drnevich, Mahoney and
Schendel, 2020).
OPPORTUNITIES THREATS
 Extensive focus on Consumer
Behavior: - H&M can capitalize on
Consumer behavior by satisfying the
needs of the consumers. Nowadays
consumers prefer rich and luxurious
experience and if the organization is
able to provide them with the same, it
may increase organizations profit and
also lead to growth and development of
the organization in the future (Grant
and Baden-Fuller, 2018)
.
 Customization and personalized: -
Through customization and
personalized H&M can attract more
customers. In today's scenario
customers are ready to pay more if the
services are customized and
personalized as per their choice.
 Competition: - There is a huge
competition within hotel industry.
Every organization is trying to deliver
its best services in order to attract more
and more customers. H&M needs to
identify its competitors and should try
to gain a competitive advantage over
them. Here, company can use brand
image as an factor to achieve business
results and perform task in effective
way to achieve business objectives.
 Impact of COVID -19: - Covid-19 has
majorly impacted hospitality business
all across the world. Many big
organizations have been shut due to
prevailing increase in the Covid cases.
H&M has also missed out on huge
revenues due to Covid- 19.

Strategic Options: Using strategic direction tools to evaluate H&M’s strategic choices and future
strategic direction.
Segmenting STP (Segmenting, Marketing, Positioning)
It is a technique through which a company can establish itself in the market and gain the
right consumers for their offerings in the market environment. STP is almost used by every
organisation in order to capture the market effectively and efficiently.
Segmenting:- Segmenting basically involves dividing the market into various parts or segment
which is alike so that a company can easily identify which segment it particularly wants to cater
to. Segmenting is the first and foremost function in this approach as the further ones cannot be
performed without effectively performing the former one. H&M usually prefers two types of
segmentation i.e. Psycho-graphic and demographic. Psycho graphic involves the segmentation of
the market according to the choices, preferences, values and beliefs (Kliuchnikova and
Pobegaylov, 2016). Demographic involves the segmentation of the market according to the
gender and age of the target consumers. The company can utilize both these segments as they
have customers from all around the world with different choices, preferences and also from
different genders and ages. These two are best suitable to the company as it helps the company to
divide their market areas. Since H&M is a global organisation, it is catering it services to people
all across the globe that's why its important that the company effectively segment the market.
Segmentation also helps the H&M to design their offering so that the company
capitalizes on the information regarding the target segment. It also helps the company in
selection of the appropriate media channel in order to promote the company within the target
segment. In order to utilize the resources effectively and efficiently it’s very essential that a
company segment the market so that the company can save their time and resources.
Targeting: Targeting basically involves choosing the appropriate segment the company wants to
target or cater to. Targeting is a very prominent function in this approach as it involves
identifying and selecting the customers that the company wants to target in order to achieve good
results. H&M main target consumers are women as they are the ones who engages with the
company the most. Women reach out for products and services more in the company and

company also consider them while placing the targets so that they can enjoy the benefit of
targeting approach. One of the major benefit that is derived by the company is that when they
target women segment they are able to generate higher revenues as women sometimes shop for
their children and partners as well. So the company is able to target multiple customers by
targeting only one segment (Koseoglu, 2016).
Positioning: Positioning is a strategy in which the respective company effectively and
strategically places its products and services in the target market in order to create a specific
position for the products in the market. H&M is one company that positions its products very
statistically and it also provides wide range of variety such as kids clothing, men's clothing,
Women's clothing, accessories and forswear. This variety has also widened the scope for the
company as now the company is able to reach the large number of customers. H&M is also
focusing on its current supply chains and this is really helping the company to ease its complex
positioning strategies.
In order to position the product in the market, the company is also utilizing its social
media resources so that it can position the product more successfully in the market. Social media
also helps the company to make the products and services more popular among the consumers. It
also helps increase the desirability of the products and services in the eyes of the consumers
(McKiernan, 2017).
Overall, it can be concluded that H&M is using the STP approach in its favor very
accordingly and this approach is also enhancing the current market image and goodwill of the
organisation. The company is capitalizing on the three basic strategies to enhance its current
position in the market. The company's management is also focusing on carrying out the STP
approach in a way that it can lead to more profitability and productivity in the business and the
company can further its optic aim for higher revenues in the future so that they can expand their
business (Sullivan, Thomas and Rosano, 2018).
5. Strategy Selection and Justification: A critical evaluation on the selected future strategy for
H&M. A justification to your selection is to be provided
It can be analyzed that using STP approaches useful to the organization in order to
maintain the function as well as achieving better results to implement its strategies and perform
the function according to the needs and requirements of the current business year is also

identified that organization is using appropriate system which help it in managing the function
according to the requirements as well as developing appropriate function which lead the
organization toward better results of development (Pederzini, 2016). This is also identified that
there are a number of functions which has to be performed in order to meet the requirements of
the current approaches for stop organization is going to target the customer within the market
where it is trading and it is essential for the phone to use these functions in an appropriate
manner. There are a number of strategies which are essential for the organization in order to
meet the targeted and segmented market organization can easily use the functions which help in
managing appropriate system and achieving better results. This is also realized that there are
various functions which can be performed in order to meet the requirements of the strategies and
tactics which are followed by H&M to target the customer and position its product according to
the needs and requirements.
CONCLUSION
It can be concluded from the above mentioned information that there are various
functions which can be used by the organization in order to manage the functions and achieve its
objectives. These are directly related to the organizational performance and help in managing the
function according to the needs and requirements. it is also identified that these functions are
related to the organizations performance and help in managing functions according to the needs
and requirements for staff along with this it can also concluded that there are various internal and
external factors which will help the form in forming its function and managing them in
accordance with the needs and requirements.

REFERENCES
Books and journals
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