Strategic Management and Corporate Responsibility at H&M: Analysis

This essay provides a comprehensive analysis of H&M's corporate social responsibility (CSR) policies and strategic management, focusing on the potential move of production facilities to emerging markets. The essay begins with an introduction to H&M and its current CSR practices, highlighting its commitment to sustainability and ethical business conduct. It then delves into how CSR contributes to the company's success, examining the perspectives of various stakeholders, including customers, employees, suppliers, competitors, and the government. The analysis further explores the advantages and challenges associated with relocating manufacturing to emerging markets, referencing relevant theories such as the triple bottom line (3BL). Finally, the essay concludes with a recommendation on whether H&M should pursue this strategy, considering the interplay of CSR, stakeholder interests, and the complexities of operating in emerging economies, using Tesla as a case study.

Running Head: MANAGEMENT 0
STRATEGIC MANAGEMENT
AND CORPORATE
RESPONSIBILITY

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Table of Contents
Introduction................................................................................................................................2
CSR Contribution to Success of the company from perspectives of different stakeholder
groups.........................................................................................................................................3
Advantages and Challenges of moving manufacturing into emerging markets........................5
Recommendation and Strategy..................................................................................................7
References................................................................................................................................10

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Introduction
Hennes & Mauritz (H&M) is one of the leading multinational clothing retail company
incorporated in 1947 and presently having network of around 5076 stores (statista.com,
2019). In 2018, Gartner also ranked the company as 4th considering the best performing firm
and supply chain leader in Europe (gartner.com, 2018). In relation with human resources, the
company have around 1, 20, 200 employees worldwide and the business model of H&M is
highly associated with quality and fashion at the best price and the group also have 8
evidently defined brands presenting products and accessories for both women’s and men’s.
The company believes in long term approach and their sustainable work is highly integrated
into their values and culture.
In relation with H&M current CSR policies and practices, the company share a
transparent account of their sustainable positive steps to make the difference while
encouraging others to help each other to attain the objectives. As a part of their sustainable
strategy, the vision of H&M is to lead the change in the direction of circular and renewable
fashion while being an equal and rational organisation and this put on to all their eight brands
while enabling all of them to uphold their individual brand distinctiveness. Anna Gedda, the
executive of Sustainability of H&M also stated as that great transformation needs bold
actions and the daring to target high. To make a real change and eliminate the threats our
planet is confronting, it is important to push the boundaries while not be scared to receive
failure (hmgroup.com, 2018). In addition, H&M also measured sustainability performance of
their tier 1 and tier 2 supplier manufacturing works with steering 884 desktop confirmations
and 1, 430 onsite confirmations. Ultimately, it can be said that H&M ideals and guidelines
are vital to attaining their sustainability goals and visions and whereas applicable, the
company base these standards and policies on international norms and effectively
documented initiatives.

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CSR Contribution to Success of the company from
perspectives of different stakeholder groups
Organisations and business firms are no longer be isolated economic actors operating
in disinterestedness from societal practices and operating solely for the investors as with
globalisation, there is a significant transition enabling many companies to gain success with
improvement in their social and environmental practices (Clarysse et al, 2014). The
approaches towards corporate social responsibility embrace multiple perspectives of different
stakeholder groups (employees, suppliers, society, government, local authorities and others)
in addition to investors and other stakeholders. It is also progressively evident that CSR is
now becoming an agenda for many business enterprises and leaders to gain a competitive
advantage in the respective sector. Hence, these successes for any company is to manage the
time of turbulence and accelerate changes while being consensus about the market trends and
forces challenging company traditional perspective of competitiveness.
As a part of the study, the key stakeholder groups for H&M could be – customer,
employees, suppliers, competitors and the government. All these stakeholders hold different
perspectives regards to the success and it can effectively be measured in terms of their
interest and gains may or may not result conflicts to certain groups of stakeholders. Taking
example of customers of H&M, their key interest maybe asks for the company to offer them
latest trends products at economical prices with superior quality and it may automatically
reflect through their purchase patterns and behaviour for a specific time period. However, this
scenario will also be different from the other stakeholders' groups and required company to
emphasis and consider each stakeholder perspectives to gain success in the marketplace.
From the perspectives of customers, there are becoming well aware and more
informed while keeping businesses liable for their acts. According to Butler (2018), 88% of
consumers will be more trustworthy towards the brand that aid in social and environmental
concerns. It is the responsibility of the company to push more efforts towards social and
environmental cause in align with offering quality products to the customers. The next key
stakeholder includes employee and CSR efforts do not just boost profits and improve
customer relations, they are good for employee relations too. For instance, H&M can
embrace CSR policies effectively to enhanced employee identification within and outside the
organisation and according to the research by Double the Donation, closely 60 per cent of

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personnel who are proud of their organisation social responsibility are engaged in their jobs
(Cheeseman, 2017).
In relation with H&M suppliers, 100% of its suppliers have signed their sustainability
commitment that was launched by the company in 2016. The company have nearly 800
independent suppliers and they evidently believe on H&M in association with good terms and
conditions due to such big multinational organisation (career.hm.com, 2019). Competitors are
another significant stakeholders who keep constant eye on key business practices of an
organisation and their CSR efforts so that to search for an area where the company lack and
therefore, gain competitive advantage. Talking about H&M, the company signifies the way
for sustainable fast fashion and try every possible effort to lead the industry and against major
players such as Zara. According to Biondi (2018), H&M Group is seeing to increase the
industry use of recycled clothing material with the help of a new hydrothermal recycling
machine. From government perspectives, many success stories have ascended from
collaboration of company and the regulatory bodies specifically in the development to control
environment emission, employee firm relationship and ultimately encouraging companies to
improve their performance.
The impact of CSR on business firms relies on the stakeholder perception of the
coordination of the interests between themselves and the organisation. However, CSR
policies of a company may enhance or diminish certain stakeholders groups and conflicting
stands of them associating to environmental, social or economic issue that are pertinent to the
company signifies a challenge that required to be addressed. For example, some researchers
contend that even “green” products when over consumed will lead to increase of existing
environmental issues; thus considering overconsumption should be vital to companies
sustainability-oriented marketing (Taran & Betts, 2015).

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Advantages and Challenges of moving manufacturing
into emerging markets
Emerging nations have economies that are noticing evident development and growth
over past few years. These nations have also revealed high potential to flourish and sustain
production and manufacturing facilities so as to transit the business together with the growing
market around the globe (Cerutti et al, 2019). In addition, business environments in
developing and emerging nation’s marks an upper sign of intricacy and ambiguity as they are
more turbulent than the business surroundings come across in advanced nations. With regards
to this, the companies moving manufacturing into emerging markets also require to manage
their global supply chains and respond to pressure by customers and regulatory bodies in
developing countries for better environmental and labour practices. The new challenge in the
corporate environment results in recommendations of ways by the industry leaders’ to aware
about various approaches in international management of the operations. One of the key
approaches is triple bottom line (3BL) articulated by John Elkington. For better
understanding and explicit research, Tesla is being used as an organisation to move its
Fremont, California production facility to India.
In many emerging markets, companies often can depend on inexpensive labour and
rich resources as these allow companies to offer mass customization or speciality products
vended at modest values. The idea of 3BL emerged from the perspectives that financial
sustainability is not a sufficient condition to business sustainability and that the organisational
responsibilities include more than profitable goods and services (Shnayder et al, 2016). In
addition, various researches have indicated that increased focus to the triple bottom line can
have direct and indirect benefits on efficient, productivity and brand image. With evaluation
and improving the triple bottom line, companies can gain higher operational efficiency in the
emerging markets and improved relations with various groups of stakeholders and other
opportunities.
In relation to Triple bottom line framework, the first bottom line is the profit and
when Tesla moves in India with its new production facility, it can be said that outsourcing
material inputs have a straight and optimistic influence on the plants' profitability and this
impact rises with increase in the size of the plant. Hence, with expansion in the emerging
markets such as India, the company requires to continue spending at an increasing rate to

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develop parts internally and gain profits at cutting edge. However, there are certain
challenges also negatively impact company profitability in India. Elon Musk had initially
looked outwards to outsource parts of his production of battery, however, with seeing an
increasing cost, time delays and specifically bad experience in Thailand, he is worry and so
shifted a lot of the production and designing in-house (Kolodny, 2019). It can be further
evidenced by the Gigafactory constructed in Nevada and therefore, it may happen that rather
moving its production facility in India, the company seeks to keep production firmly placed
within the States. However, despite the challenges, the company can push forward as success
of failure could set a example, however, it could also evidence once and for all that
globalisation is required for financial achievement in manufacturing of product.
The next bottom line in the framework is People and it measures how socially
accountable an organisation has been throughout its operations. People consider employees,
the labour involved in an organisation work and the wide community where an enterprise
does business. With expanding to India, there is a benefit for both i.e. the company and
community in India. For instance, the absolute wage levels in India are low, which is a big
cost advantage to overseas firms like Tesla and other companies who seek to locate
production outside their nation of origin (Sengupta, 2014). On the other hand, the company
can also help India and the community to take part in decreasing employment rate of the
country dwindling amid 7.5% to 7.7% due to recent big economic changes in the country
such as demonetisation of large banknotes and applying GDP taxation system. However,
Tesla may also confront various challenges in India while moving its production capacity.
For instance, India has a highly different cultural context and background in comparison with
most of the developed and western nations and this required Tesla to highly change its
employee and community related policies to a great extent in order to survive in this new
emerging markets.
The “planet” piece of the triple bottom line indicates that an organisation tries to
reduce its environmental footprints as much as possible. In the emerging market of India,
Tesla can be highly benefitted if moving its production facility in India as country Budget
2020 proposes a hike in EV imports duty to encourage domestic manufacturing and the
government is also helping companies while being promoting manufacturing and use of
electric vehicles to diminish India carbon footprint (Ghosh, 2020). Private companies can be
the key players in helping to curb India GHG emissions and in turn, will gain full support
from the government in running their operations successfully being way to advance their

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goals. However, there will also be some significant challenges that Tesla may face. Emerging
nations often have less evolved ethical and legal protections and in India, stealing business
transactions are very common as of high level of corruption. In addition, the government also
openly supports more of domestic firms in relation to international and this may cause a
barrier to expansion of production capacity of Tesla. Ultimately, it’s the decision of the top
level management committing to achieve sustainable operations while following the
commitment towards green innovation steering performance of triple bottom line.
From the emerging economies’ perception, manufacturing businesses in developing
nations have newly started to pay greater focus to green concepts in their supply chain
management activities as they have confronted tighter environmental restrictions from their
governments and intense analysis from a progressively cultured society and rivals. It has also
become strategically crucial for enterprises to work with supply chain partners
collaboratively to curtail carbon emission while building value and competitive advantage via
sustainable business practices. Sustainable supply chain management can help in
incorporating a holistic sustainable approach with moving its production capacity to an
emerging economy whereby all supply chain operations function to save resources, minimise
wastes and improve productivity (Ugarte et al, 2016). Ultimately, H&M needs to outweigh
the benefits and challenges with moving its manufacturing into an emerging marketing as
many organisations seek to benefit from an emerging markets sourcing, however, often
neglect to develop integrated business processes to manage the added complexity in the CSR
areas and further fail to link many corporate functions in managing the business needs of both
long and short term.
Recommendation and Strategy
Ultimately, CSR is about a business being accountable for its practices and actions that
directly or indirectly impacts the community, environment and society in general. Fashion
giant H&M has a strong CSR program that they invest in the growth of sustainable practices
and communicate the progress to every stakeholder groups. Based on the above research, it
can be said that creating long term and sustainable CSR initiatives will definitely promote the
business while meeting increasing demand by consumers and learn from everyone ideas and
innovation.

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In relation to H&M current policies and practices, the company needs to respects its
signatory’s values by coalescing them in the effort to take action so as to curb emissions
together with harnessing the industry world-wide reach. After oil industry, the fashion
industry is the second largest polluter globally where 20% of industrial water pollution stems
from textile development and also the sector emits 1.2 billion tonnes of greenhouse gas
emission annually (Cotton, 2018). From decreasing carbon emissions and alleviating the
environmental impact of textile production to firming rational labour practices and
confronting employee rights, H&M needs to consider corporate social responsibility as a
broader mission. H&M can also weave CSR into their organisational and operations decision
making so as to ensure that its clear objective has been achieved. Considering an example,
the company can include CSR objectives in job description of employee and yearly
performance reviews. To support their CSR initiatives and practices, H&M can put efforts on
cause marketing as well as social media to gather support and bring various aspects of social
issues from forefront such as employee abuse, women empowerment and health in the
emerging nations. Hence, regardless of its size, H&M can possibly see a positive reaction
from customers when it executes a robust CSR policy.
Being a leading firm in fast-fashion industry, H&M also required to meet the expectations
of different stakeholders groups i.e. customers, employees, suppliers, competitors and the
government. Previously, stakeholder engagement a lot realised as secondary, even non-
essential, to the CSR agenda however, in this information age, stakeholder engagement is
about embracing opportunities and managing risks (Galbreath, 2017). Hence, it is
recommended to H&M that they must engage with the stakeholder transparently,
authentically and more frequently as they are centred upon the business enterprise entity by
virtue of their stake. For each category of stakeholders, there should be dyadic link between
the company and the stakeholder group. For instance, H&M as an employee-oriented
organisation should commit resources to promote employee welfare and similarly, a higher
CSR for the consumers sometimes act in relation with organisation capability to offer quality
products and services and at viable prices. Furthermore, H&M should develop long term
relationship with the suppliers with ensuring honest procurement of raw materials and take
public responsibility audit of all the suppliers. Hence, using the syncretic CSR model, H&M
can effectively balance the different interest of stakeholders together with ensuring positive
environment and social effects. Though, H&M with any CSR initiative need to also

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undertake due diligence else its efforts for a good cause can end up being more detrimental
than good.
With assessing the practices and acts of moving manufacturing into emerging markets, it
can be well discovered with weighting of advantages and challenges with presenting an upper
mark of uncertainty and complex in the business environment. Considering H&M, the key
benefits to moving to emerging markets includes fresh resources, elimination of competition,
growth and sustainability and higher recognition. Specifically, H&M with moving in
emerging countries can leverage on fresh talent and new outputs with also having access to
the emerging countries resources. Once H&M expanded, it can become a significant product
in the newer markets allowing the company to achieve greater level of economies of scale
while driving rise in profits and revenues and ultimately, higher returns for the investors and
other significant stakeholders. There are diverse opportunities for businesses when they
invest in emerging nations and the benefits can be felt long term. However, on the
contradictory side, H&M also needs to look for the likely drawbacks and challenges that may
negative mark on moving company business into emerging markets. For example, H&M may
confront to risks and challenges including uncertainty in the political environment, lack of
liquidity, lax insider trading restrictions and incompatible corporate governance. These
aforementioned risks are some of the most prevalent and it is necessary for the company to
assess prior to expanding as premiums link with these risks can often only be projected,
rather than determined on a concrete basis. In relation with assessing these benefits and
challenges, it can be said that H&M can move its production facility into an emerging market
so as to outcompete its rivals and achieve its CSR goals at a broader scale.

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