Strategic Management Report: Analysis of H&M's Strategies and Future

This report offers a comprehensive strategic management analysis of Hennes & Mauritz (H&M), a multinational retail clothing company. It begins with background information and then delves into an external analysis of the fast-fashion industry, utilizing SWOT and PESTLE analyses to assess H&M's position. The report then examines H&M's internal capabilities, applying the VRIO framework to evaluate its resources and competencies. Strategic options are explored using Porter's Five Forces model. The report concludes with a strategy selection, justification, and recommendations for future growth, emphasizing the importance of strategic management in a dynamic business environment. The analysis covers H&M's strengths, weaknesses, opportunities, and threats, as well as its political, economic, social, technological, legal, and environmental factors. Core competencies like human resources, technological innovation, efficient inventory management, and e-commerce growth are discussed. The report recommends expansion into sportswear, the older demographic, and the Indian market, along with continuous updates in clothing styles and e-commerce business. The report is designed to help students in their studies, and similar reports and assignments are available on Desklib.

Strategic management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
H&M- background information .................................................................................................1
External: fast fashion industry analysis.......................................................................................1
Internal: Strategic capabilities.....................................................................................................2
Strategic options..........................................................................................................................3
Strategy selection and justification ...........................................................................................4
CONCLUSION AND FUTURE RECOMMENDATION..............................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
The term “Strategic management” is a branch of management which involves
planning,monitoring, analysis and assessment that are required to meet the desired goals and
objectives of the companies. As business environment is changing regularly it is necessary to
analyse the business environment and form strategies to carry the business (Schilling and
Shankar, 2019). The report is based on H&M that is a multinational retail clothing known for its
fast and fashionable clothing wear The report below includes background information, external
analysis, internal capabilities, strategy selection and justification along with recommendation.
MAIN BODY
H&M- background information
Hennes & Mauritz is a Swedish based multinational retail clothing company founded in
1947.It deals fashionable clothing for women,men,teenagers and children. The company is has
grown strong and recognizable brand in the clothing and fashion industry. The company has
around 4000 stores present globally and planning to open more stores. The company considers
themselves as a family of brands, that are driven to make the fashionable designs available to
every customers in a sustainable way.
External: fast fashion industry analysis
H&M SWOT analysis helps to determine its strengths,weaknesses,opportunities and
threats for the company. The SWOT analysis based on the outcomes of the PESTLE,VRIO and
Porter 's five forces model are as follows:
Strengths  The company is providing wide varieties of products to the customers.
 As being a retailer the company is supplying the products and services
of different brands and perform as a unique identity for the brands in
the market.
 H&M has a strong and diversified presence across the global world.
 The company has its strong financial position in the market.
 H&M have the strong workforce as all the employees and workers of
the company are highly trained and skilled.
 There is high level of customer satisfaction towards the company.
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Weaknesses  The company depends on the third party suppliers that are different
brands for its merchandising.
 The different products in H&M are of affordable prices which
sometimes affect the quality of the products.
 The organisation structure of the company is only capable with present
business model.
 Sometimes the company lacks in having the financial planning.
 The company needs more investments in using more technologies.
Opportunities  The company can improve the profitability for the e4xpansion of the
business.
 H&M can use the mode of e commerce for the expansion of the
business and profitability of the company.
 The company can start up their business in more emerging markets to
capitalise on creating the new demand.
 When the inflation rate is low, the company can bring out its stability in
the market.
 New technology can be in the company.
 The taxation policy can help the company to increase its profitability in
the market.
Threats  H&M is facing the intense competition in the business market.
 The company is facing risk in the foreign exchange fluctuations from
the developed economies in the market.
 There is a increase in the rise of the labour costs.
 In carrying e commerce business, the company is facing threat as a new
entrants in the market.
 Constant change in the fashion trends in the markets and changes in the
customer 's choice and preferences.
 The company can face different lawsuits in the different present
markets.
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H&M PESTLE Analysis the various external factors political, economic, social,
technological, legal and environmental behaviours that impacts the business operations of the
company (Ginter, Duncan and Swayne, 2018). The analysis can help the company to analyse
and determine market dynamics and improve its business regularly.
Political  H&M 's franchised outlets are politically unstable due to increased risk in
political region.
 The company has collaborated with other franchising partners to operate
their business in other countries because of regulatory norms and rules.
 The company has surged de-globalisation across the world
 H&M is facing unstable conditions due trade restrictions in North
America.
 The company is constantly changing their in USA,Europe and Asia.
Economic  H&M is facing the changes in the tax systems in the Asian markets.
 The company is facing issues due to changes in labour laws.
 The disposable income has increased in the modern emerging markets.
 The economies of scale continues to change in various countries.
Socio
cultural
 Customer 's taste and preferences are changing.
 For fashion retailers social media is now emerging more.
 Customers are demanding more transparency from the company towards
their work and business (Moutinho and Vargas-Sanchez, 2018).
Technolog
ical
 The company is using innovating technologies like artificial intelligence
and data analytics for having more efficiency in the management.
 There is a increase in the importance of online channels.
 Customers are now preferring to shop online from the official application
of the company rather than purchasing offline.
 To track all the logistics operations for having a network and good supply
chain technology H&M provides third party logistics in UK.
Legal  H&M is facing the more stricter regulations and norms for foreign
companies in different countries.
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 The company is facing legal disputes regarding infringement by clothing
retailers.
Environm
ental
 There is a demand of eco- friendly clothing material and products in the
markets.
 Customers choices are changing regularly due to climatic conditions and
affecting the apparel choices
Internal: Strategic capabilities
H&M VRIO analysis performs and shows the business framework that forms larger
strategic scheme. It is framework of value, rarity,imitability and organisation (Teece, 2019). This
model is basically is used to uncover sustained competitive advantage. It is explained as:
Resources and capability Value Rarity Imitable Organised
Organisational functions yes no no no
Brand image yes yes no no
Employees yes yes yes no
Financial resources yes yes yes yes
Value: The brand image of H&M is valuable in the market,financial resources of the
company provides values and growth range in the market. Employees of H&M are proved to be
their valuable assets for their company by having good and systematic functions.
Rarity: Financial resources are found to be rare in the company. Employees of H&M are
considered as rare resource as they are highly trained and skilled (Siegel and Leih, 2018). The
brand image of the company is considers are the rare part as it is earned by serving quality
products to the customers. The organisational function are rare as they following their strategy.
Imitable: H&M is highly imitable in employees and financial resources. The
organisational functions are less imitable to the company in comparison to employees and brand
image. The brand image of the company is imitable as it changes with the change in the mindset
of the customers.
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Organised: H&M 's is less organised with employees, organisational functions and brand
image as they changes regularly with change in strategies and choices of the customers.
Financial resources of the company is always organised to face sudden and dynamic situations of
the company.
The different core competencies basis on the internal capabilities of H&M according to
VRIO analysis are as follows: Human resource: The company has grown its investment in the human resource
management department to increase the brand image of the company by having highly
skilled and trained workforce. Technological innovation: H&M is using is now adapting new different technologies for
the expansion of the business in the market. Efficient inventory management: In recent times the company has started managing its
inventory by having good supply chain management.
 E commerce growth: The company has now adapting the criteria of having e commerce
business to gain more revenue and competitive advantage.
Strategic options
Porter 's five forces model is used by H&M to identify and evaluates their competitors in
the market and helps the company to build new strategies for the growth (Makadok, Burton and
Barney,2018). In context to H&M the model can be explained as:
Rivalry among
the competitors
 H&M operates with oligopoly business style.
 The company is facing high number of competitors.
 H&M is differentiating themselves by providing good quality
products to the customers.
 The other competitor companies are independent and each company
has to take account of others.
 The company is providing their products at affordable prices to beat
competition.
Threats of new
entrants
 There is a less threat of new entrants competitors in the markets.
 It is difficult for the new entrants to cut off the new fast and
fashionable innovative clothing style brands.
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 The company is performing cost effective strategy by taking
advantage of low risk of new entrants.
 H&M has main focus on the customer retention.
Purchasing
Power of
buyers
 Bargaining power of the buyers are generally low.
 The company is providing innovative,unique and good quality
products to the customers (Dzwigol, 2020).
 By having less selling costs H&M is attracting more customers
towards their brand.
Bargaining
power of
suppliers
 H&M is reliant to the sellers of the countries like India and China
where the labour rate is low.
 Company is having multiple numbers of sellers according to the
geographic locations .
 H&M is focusing on strengthen its supply chain management with
cost effective strategy.
Threat of
substitutes
 By cost conscious and customer centric strategy H&M is dealing with
the competitors.
 Many alternatives are available for the customers as of spending
money on opportunity cost.
 There is no product substitute offered to other companies.
Strategy selection and justification
The strategies that can be more beneficial and the strategies that the company is using for
having growth and expansion are:
 The company can minimize the intense competition with in the industry by using the
suitable cost effective strategies (Sullivan, Thomas and Rosano, 2018).
 H&M can influence the young generation segments by introducing more quality and
fashionable products to the customers for gaining brand image.
 The company can use different growth and expansion strategies for covering the
uncovered sectors of the markets in clothing industry.
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 By using online sales services H&M is growing more in the clothing industry. By
providing online shopping platform through official application the company is growing
more.
CONCLUSION AND FUTURE RECOMMENDATION
It has been concluded from above report that strategic management is an essential
function that is required to be processed all the working condition and function of the business
in systematic manner. In this working performance and productivity of the business both get
advanced as with this success ratio also get developed. As H&M is the innovative and fast and
fashionable retail clothing industry. There main focus is to provide high and improved quality of
clothing in a sustainable way. The company is trying constantly to improve the quality and to
cover the remaining segments in clothing industry
The recommendation that can be given on the basis of the analysis are:
 H&M can grab an opportunity to cover the segments with increase of sportswear.
 The company can try to cover the population range of 60 years so that the older segment
generation can also be covered.
 H&M can try to enter in Indian market for more success and growth with joint venture.
 The company can make regular changes in the clothing styles in different variants.
 H&M can use e commerce business for the expansion of the company's business and the
profitability.
 The taxation policy of different countries can be used to gain competitive advantage for
the company.
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REFERENCES
Books and Journals
Bianchi, C., Mingo, S. and Fernandez, V., 2019. Strategic management in Latin America:
Challenges in a changing world.Journal of Business Research.105. pp.306-309.
Cescon, F., Costantini, A. and Grassetti, L., 2019. Strategic choices and strategic management
accounting in large manufacturing firms. Journal of Management and Governance .23
(3). pp.605-636.
Dzwigol, H., 2020. Methodological and Empirical Platform of Triangulation in Strategic
Management. Academy of Strategic Management Journal.19 (4). pp.1-8.
Ginter, P.M., Duncan, W.J. and Swayne, L.E., 2018. The strategic management of health care
organizations. John Wiley & Sons.
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.
Meyer, K.E. and Xin, K.R., 2018. Managing talent in emerging economy multinationals:
Integrating strategic management and human resource management. The International
Journal of Human Resource Management .29 (11). pp.1827-1855.
Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI
Tourism Texts. Cabi.
Schilling, M.A. and Shankar, R., 2019. Strategic management of technological innovation.
McGraw-Hill Education.
Siegel, D.S. and Leih, S., 2018. Strategic management theory and universities: An overview of
the Special Issue. Strategic Organization .16 (1). pp.6-11.
Sullivan, K., Thomas, S. and Rosano, M., 2018. Using industrial ecology and strategic
management concepts to pursue the Sustainable Development Goals. Journal of
Cleaner Production .174. pp.237-246.
Teece, D.J., 2019. A capability theory of the firm: an economics and (strategic) management
perspective. New Zealand Economic Papers .53 (1). pp.1-43.
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