International Business: H&M Corporate Strategy Analysis Report

This report provides an analysis of H&M's corporate strategy within the context of international business. It identifies three key strategic issues: competition, globalization, and technological advancements. The report examines the competitive landscape, highlighting H&M's main rival, Zara, and the strategies they employ. It also discusses the impact of globalization on H&M's operations, including the need for strategic development in new international markets. Furthermore, the report addresses the role of technology, particularly social media, in H&M's business practices. A SWOT analysis is presented to evaluate H&M's strengths, weaknesses, opportunities, and threats. The analysis covers both internal factors, such as H&M's market position and product range, and external factors, such as market trends and competition. The report concludes by summarizing the strategic issues and their impact on H&M's business environment.

Corporate Strategy
International Business
Corporate Strategy
Abdul Qadoos

Contents
Introduction..........................................................................................................................3
Three key strategic issues....................................................................................................3
Competitive strategy............................................................................................................5
Evaluation/Improvement...................................................................................................10
Conclusion.........................................................................................................................12
References..........................................................................................................................13

Introduction
International business refers to the transactions and practices executed between two
business entities of different regions, with an objective of a transfer of goods.
The business transactions under this approach are conducted on a global basis; meaning
at least two different nations are involved (Huyer and Trouille, 2017). These transactions
include a transfer of goods and services technology, managerial knowledge to the
employees and capital to other economies. International business plays an empirical role
in the organizational and economic development of a country. Furthermore, this concept
aids business entities in expanding the market through global transactions, which in turn
opens up doors and a varied range of mediums to extend the reach in terms of trade and
business. Subsequently, international business is not only these practices, but rather also
includes the various strategies a company employs in order to do its operations
internationally.
In this assignment, the business strategies taken in order to deal with common hurdles a
business may face. A justification for strategic implementation, resources and
competitive strategies will also be elaborated on. This report focuses on the clothing
retailer H&M (Hennes and Mauritz), with a specific focus on the strategies employed to
enhance its business practices. Moreover, the report is focused on the below mentioned
strategic issues such as globalization, technological up-gradations and competition. The
business entity is dealing and operating on global grounds and hence the business entity
is facing number of strategic issues and the same are discussed below.
Strategic issues are the barriers that are developed or faced by the business corporations
while developing the strategies and plans. These are the issues that are held liable in
stimulating the business environment of the Cognitive Software Group. For dealing and
tackling these issues the entity is required to develop strategies and plans. There are two
types of strategic issues, internal and external are the two major types.
Three key strategic issues
Strategies are core functional tools companies utilize to initiate business, in order to reach
set goals and standards. Hence, the strategies employed by a retailer such as H&M
influence its’ success in the market. Furthermore, there are many associated strategies,

which boost the operation of an organization (Castellani et al., 2018). Among these are
major core strategies, which are essential for H&M. Whilst managing long term and large
operations, companies needs to develop consistently new framework to deal with
constant change. It is well known that the business world is dynamic and a business entity
has to work hand in hand with the changes. Subsequently, H&M faces several internal
and external problems due to the rise in factors such as competition, globalization and
technological up-gradation (Dangi et al., 2017). From the very large number of strategies
H&M employs, its’ team is working on 3 key strategic issues. The strategies and
implications have been listed as follows:
 Competition
Competition and rivalry in the marketplace are very obvious threats for any business. In
order to counteract the effects of such factors, business plans are written and adhered to.
These plans will usually factor in the risk of losing the customer base due to similar
products or better substitutes flooding the market, usually for a competitive price.
Therefore, appropriate strategies in order to deal with such scenarios have to be
actualized. The clothing retailer, ZARA, is one of H&M’s biggest competitors. ZARA,
one of the world’s largest international fashion retailers, is part of the distribution group
Intidex, which is subsequently the largest clothing manufacturer in the world. Zara has
been considered as one of the leading fashion brand and is operating all over the globe
through more than 2000 stores and sis also one of the integral and biggest parts of the
Spanish retailers industry. Moreover, the business entity is having minimum expenses in
terms of supply chain management system and all these aspects re aiding the business
entity to develop a position as a fierce competitor. Vertical integration and rapid product
replacement are the two strategies that are used by Zara in the process of supply chain
management. Under vertical integration the business entity is controlling several steps in
the process of production and distribution for increasing power and hold in the market
and thus this strategy will also enable the business corporation in maintain sustainable
position in the market region for longer run. Rapid product replacement is another
strategy that has been adopted by Zara for managing the product distribution operations.
Under this strategy the entity has maintained the procedures and systems in such a
manner that they are able of launching the new products and can also make distribution

of same in retail outlets within 4 to 6 weeks. And by this it has been observed that the
lead time at the firm is comparatively less than that of competing brands. This is another
point through which the business entity will be enjoying a sustainable competitive
advantage.
In relation to these operational strategies of H&M has been affected as well as changed
the way it was operating before. To have a specific path in relation for development of
business which might get lost over competitors strategies it also have to be very secure
and preserved so as to deal with situations which are long lasting and could impact the
profit statement of business. Hence, this is a strategic issue which has a direct relation
with strategies of H&M and has to be modified according to time.
 Globalization
Going global is a trend which has been followed for decades. Each and every company
wants to globalize its operations. This clearly states the significance of being a part of a
world in terms of business. To stand in a recognizable position by earning revenues on a
very large scale H&M has to go global with its products. International setup of the entity
requires a lot of strategic development. This is need of today's scenario which can't be
ignored or changed (Puck et al., 2017). Hence, H&M has set up its outlets worldwide in
many countries which are clearly a huge strategic issue. As settlement in a new nation
requires several kinds of plans, for instance, need to change policies according to legal
statements, prices, products etc. Each factor plays the important role which is being
changed for settlement in a new nation.
 Technology
Social media is one of the contemporary mechanisms and tools of the technological
advancements that aids the business organizations on large basis. And this tool has gained
more significance in the past years due to the excessive use of internet and online trends
and fashion. The business entity find easy to promote and distribute the products by
making use of online platforms. Moreover, the business entity can also aid the customer
by replying them on the feedbacks of the customers and the clients. Social media will be
proven a better and beneficial option for interacting with the customers as it provides ease
of access and usability.

As it is known that how virtual world has taken over people, resources, and business and
so on. Everything is available on internet which states the urge of business to go online.
As all the other business competitors of H&M is going online with their operations so it
was clearly assign to develop it's as well. Recently a change in this section has been
actualized which has made the firm to go online with its website as the main rival ZARA
has gone virtual in almost every part of the world. This show the strategic issue which
arose and a change in strategies according to it has come up. Change has been bought as
it was the demand of the market and to sustain with dynamic trends a company like H&M
has to develop new and vulnerable ideas (Pedersen et al., 2017). So, it does make changes
in strategies which further leads to development and growth of clothing giant all over the
world.
These are 3 key strategic issues which directly impacts the strategies of H&M so as to
have a hold over the market for a long period of time. Sustainable development is also
necessary for a company so as to have a recognizable position in the market with a proper
satisfaction of customers.
After analyzing the above-presented issues it has been concluded that H&M has been
facing the number of strategies issues that will stimulate the business environment. The
issues have been segmented as per the mentioned categories such as the issues due to
globalization will be counted under the PESTEL area, competition will be considered
under the 5 forces area and the last is the technical issue that will be considered under the
SWOT (Zlatev, 2018). All of the three mentioned issues play a significant role in the
influencing the business practices within H&M.
Competitive strategy
I have re-written the paragraph below and condensed it significantly!! Read!
SWOT model can be used for analyzing the relative strengths, weaknesses, opportunities
and threats pertaining to H&M’s corporate strategies. This analysis takes direct internal
factors which impact operations and well as crucial external factors which are indirectly
related to the business
The framework that can be adopted for identification and analyzing the internal and
external factors of that are held liable in stimulating the viability of the product or service

of a business organization. A SWOT analysis is best used by the business corporation
while they are planning for launching a new business idea or can also be considered as a
part of the strategic planning practice. Strength, Weakness, Opportunities and Threats are
the main elements on which the business entity will be focusing while executing the
operations related to this framework. The below analyzed is the SWOT analysis of H&M:
Strength
 H&M is operating on a very big
scale and has a recognizable
position in the market.The products
range of the entity includes
apparels, cosmetics, shoes and
accessories for wide range of
customers and this can be counted
as one of the biggest strength of the
firm.
 The quality of the products offered
is high and premium and hence the
customers are fully satisfied with
the value of money they devote to
buying a product.
 The company has a hold over a
large number of nations.
 Moreover, the business entity has
developed unique identity for al the
products as the entity is selling its
product portfolio by making use of
various brands such as H&M, COS,
weekday and monkey.
 Technological up gradation is used
which the usage of latest equipment
for operations.
Weaknesses
 Competitive strategies in order to
have an edge over rivalry have to be
ascertained in a better way.
 Stress and focus should be given on
the implementation of strategies
concerning to supply chain
management so as to advance the
distribution process.
 The business entity has a high
dependency on the suppliers and the
third parties for its merchandises.
The firm is outsourcing product
manufacturing to about 800
suppliers and hence has a very less
control over manufacturing process.

Opportunities
 There is an availability of a huge
market which can be captured by
some attractive strategies.
 The company can launch it's more
outlet as well as it has been dealing
online which is a good strategy to
reach the big number of customers
in a single go (Sullivan and
Robinson, 2017).
 H&M can add up to more sections
in the product line with adjoining
the accessories, etc. segments.
 The business entity should develop
diversification in the products range
such as multi-ethnic wear and
should also indulge themselves in
producing different products line
such as Fashionable handbags for
women and accessories.
Threats
 A major threat is of competition
which is very big (de Carvalho and
Kluka, 2017).
 Zara is the biggest competitor of
H&M which is threat full.
 Changes in trends are also a very
major threat which has to be
encountered from time to time. (Do
you mean keeping up with the
changing trends in the fashion
world, which are affected by high
end fashion retailers/ shows/
celebrities)
 E-commerce is one of the biggest
advantage but is also considered as
a threat as it is allowing new
entrants and mark their presence on
the same platform.
Therefore, the above justification clearly states the internal and external factors such as
key capabilities of H&M. Moreover, there are other approaches that can be used by the
business firm for presenting the strategic resources of the firm. One of the best
approaches that can be used by the business firm is the Grant;’s Framework and this can
be adopted by H&M for analyzing the suitability of the resources and capabilities that are
available with the firm (Wild, Wild, and Han, 2014). According to this framework, the
resources and capabilities of the business enterprise are required to be managed in such a
manner that they aid in attaining competitive advantage or the firm.

Figure 1Grant's Framework
(Source: Grants framework for analyzing resources and capabilities, 2018)
Further, a justification to have a complete knowledge in regards to a company and its
strength for competition (Shenkar, Luo and Chi, 2014). Resources that are most
significant for H&M are illustrated as follows:
 Financial Resources
These resources are a backbone for each and every operation which has to be initiated in
a company. This is just like a heart of an organization which circulates blood to each and
every part of a company so as to operate properly (Morschett, Schramm-Klein and
Zentes, 2015). H&M’s most important requirement is this resource which will further
initiate the process of a company. In the listed requirements for the company, this is the
first and foremost need which has to be actualized by various sources. Budgets to have

various other divisions so as to bring new segments in the company’s business are also
made after ascertainment of finances available with the company.
 Human Resources
People are the most valuable resources for an organization which is operating on a very
big scale. Right people at the right job leads to a company to heights of its field. Hence, it
is very significant to appoint appropriate personnel at various positions in the company.
The operations of H&M are through retail and online according to which vacancies in the
company keeps on coming (Buckley, Burton and Mirza, 2016). An appropriate person at
a post according to its qualification and experience has to be appointed in order to fulfill
the segments with people who can grow with the organization's development.
 Inventory
As clothing giant H&M has to maintain the proper stock of the clothes which it is selling
in a market. Hence, this is also one of major resources which have to be on the store's
slabs from time to time to properly satisfy the customers in a proper manner (Temiz, and
Gökmen, 2014). Availability of the products according to demand is a major task for
which the company has to make strategies as it operates worldwide for which various
channels of distribution has to be followed.
 Fixed assets
For launching new stores in a market there are several requirements of resources and
things which are essential for a successful opening (Luthans and Doh, 2018). Likewise in
fixed resources such as land, building etc. is also a requirement for a retailing store at
various locations other than the home country.
Further includes the discussion regarding competitive advantage which H&M has chosen
over to deal with the competition in a market. As it is known that quality is precisely
chosen over everything by customers and when they get this quality at a reasonable price
it makes a very good impact. Hence, satisfying the consumers in the value they are
paying for the product is a major need and goal of a company together with earning the
profit. In terms of being different from the competition, H&M tries to maintain its legacy
by having the proper quality of product at low prices (Piekkari, Welch and Welch, 2014).
Hence this is the major strategy which makes it stand out of the category of fashion
industries which are already there in the market. no matter many companies are trying to

reach the same quality so as to have an edge over the market by taking over the share of
customers which H&M has but the quality of H&M's products are non-defeat-able and no
other company can take this advantage over it (Boddewyn, 2016).
Launching products over and over again in various nations and markets is a major task
and competing for the domestic as well as international brands plays a very important
role in the change of the strategy which is being already captured by the company. This
factor can also be considered under the list of critical success factors. As having wide
range of unique products and services is a biggest benefit and it will assist the business
corporation on number of aspects such aids in dealing competitive environment, distinct
image on global grounds, So, H&M has to be at the top so as to have best outcome of the
stores it has been operating worldwide (Burton, Yamin and Young, 2016). Hence, this
sums up all the key factors in relation to strategies, capabilities and competitive
advantage of the company which it has made to sustain in the market for a long period of
time with usage of resources in most optimum manner.
Further, the business entity is required to make analysis over the unique strategic
capabilities by making use of value chain analysis (Chidlow, Plakoyiannaki and Welch,
2014). The main objective of this approach is to get aware of the business practices that
will be aiding the business entity in enhancing the value of its products. Under this
process, H&M will be identifying the primary and the supportive activities that add value
to their products and services. This method is a business tool adopted for analyzing the
internal activities of the firm. Recognizing the business practices that are most valuable
for the firm is the main objective of this approach. Porter’s value chain model is the best
tool for analyzing and determining the activities in which the business entity can be made
involved for attaining best outcomes. And the below presented is the diagram for the
same:

Figure 2Value Chain Analysis
(Source: Value chain analysis, 2018)
Evaluation/Improvement
Strategic evaluation is one of the major processes that is required to be executed by the
business entity for throwing light over the efficiency and effectiveness of the plans for
attaining desired goals (Kolk, 2015). And for this various approaches can be adopted or
the entity can also develop specific criteria. SAFe criteria that can be used by H&M for
evaluating the strategies and the same have been presented as follows:
Suitability: This one of the significant factor of SAF strategy model and under this
evaluation is done of the suitability of the strategy, whether the strategy is suitable in
attaining desired targets (Eicher, 2016).
Acceptability: Measuring the returns, reactions of the stakeholders and the risk of a
particular strategy are the major components considered under this factor.
Feasibility: Under this factor, the evaluation is done over the availability of the resources
and capabilities of the firm for managing the strategy adopted.