MGT6800: Strategic Analysis of H&M using PESTLE, Five Forces, VRIO

This report conducts a strategic analysis of H&M, a global fast-fashion retailer. It begins with an introduction to strategic management and its application to H&M. The main body of the report examines H&M's external environment using a PESTLE analysis, considering political, economic, social, technological, legal, and environmental factors. The industry sector is then analyzed using Porter's Five Forces, assessing the threats of new entrants, the bargaining power of suppliers and buyers, the threat of substitute products, and competitive rivalry. The report then evaluates H&M's resources and capabilities using the VRIO framework, assessing their value, rarity, imitability, and organization. The report concludes by summarizing the key findings and emphasizing the importance of strategic management for organizational success. The analysis is based on the provided assignment brief and relevant literature, offering a comprehensive overview of H&M's strategic position and recommendations for future strategies.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
External environment..................................................................................................................3
Industry sector.............................................................................................................................4
Resources and capabilities..........................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Strategic management depict the effective development of prominent objectives for the
competitive business environment. It also identify the internal features of an organisation which
is useful in developing prominent strategies by ensuring that management execute these
strategies for the growth (Hitt and Duane Ireland, 2017). To carry forward this report, H&M is
considered which is a Swedish multinational clothing retailers and also known for the fast
fashion clothing for men, women, children and also founded in 1947 by Erling Persson. The
report tends to evaluate the internal and external audit with the help of prominent frameworks
and models.
MAIN BODY
External environment
PESTLE Analysis: Political: Considering the global brand operations for the number of stores across the
globe it depict the effective monitoring of political risk for H&M. For this, company
tends to have franchised outlets in market which become its strengths and also tends to
expand its functioning considering Egypt, Turkey and so forth (Certo and et. al., 2016).
For this, company tends to closely monitor the political conditions which is feasible for
the stakeholders of company. Economical: Despite form the negative impact of Brexit it tends to brought the
currencies and respective company tends to report for its enhanced sales which is
increased by 7% for the local currency based and in 2016 it tends to grew around 10%
which is converted into Swedish currency. Social: Here, customers are impacted by media and celebrities in terms of opting the
materialistic lifestyle and new trends in terms of for the new designs for the fashion
products. For this H&M announces its latest designs that helps in meeting effective sales
and revenues. Technological: H&M tends to develop their app for the mobile devices in terms of
unveiling the usage of H&M and its functioning that tends to allow customers in terms of
collecting the reward points from their manual and online store to purchase products with
the help of apps on the mobile devices.

 Legal: H&M prominently involved in various legal disputes considering the
infringements for the clothing retailer (Trigeorgis and Reuer, 2017). For this, retailers lost
their patent dispute against the UK manufactures for infringing the coveted technology
that leads to damage the image of company.
 Environmental: The objective of H&M is the 100% renewable products by 2030 which
depict the meaning of the products that tends to generate from the old product and it
become strength for company considering the CSR activities which are durable and
recycled.
Industry sector
Porter's Five forces: It is an appliance to check competencies and ability to stand in the
competitive market of an industry which ensures its strength and level of high expectancy
growth. These appliances are used to check influence of all the forces which affects the industry
by its market share and try to acquire available resources to its full potential. There are 5 ways to
evaluate the problems an industry can face. Threats of new entrance: The problem of competition arises by facing new entrances in
the market who can be a barrier for the existing industry working on adequate level, by
challenging them through price discrimination, size of the venture, differentiation of
products at low price strategy, better quality product (Aguinis, Edwards and Bradley,
2017). Threat of new entrance is adequate for H&M as it has its own speciality with high
quality clothes. Bargaining power of suppliers: The suppliers of raw materials, semi-furnished goods,
inventories of renowned industry can set its bargaining powers by charging their own
price rather then market price and enjoy immense level of profit but it could not happen
with the H&M as it has not only one supplier but many of them are there who is ready to
join hands with them so the threat of bargaining power of suppliers is quite less or nil the
key of their success are in hands of its dealing company. Bargaining power of buyers: Consumer wants money worth satisfaction. Their utility
power is based on products which gives low price and more consumption. For a product
one is charging high price as compare to the one charging minimum market price at the
same market, consumer will shift its demand for less price product. The risk of
bargaining power of buyers Is quite high for H&M as some consumers are not quality

settled rather they prefer low price satisfaction until and unless consumer wants its
quality and the same flavour they used to get which will not shift their demand at any
cost. Threat of substitute products or services: Consumer is demanding and has enormous
needs. They can rise their demand as well as fall at some point where they could find
their substitute product at less price. In relation with H&M there is high possibility for
substitute products as many competitors came up in the global market like M&S, ZARA
for which H&M needs to focus on product oriented rather than service oriented, aid on
benefits, customer cost satisfaction.
 Competitive rivalry: when there is high competition in the market, an industry should
maintain its uniqueness in their product so that an industry itself enjoy its competition.
every huge firms has its competitors which are ready to take market forces into their
hands by providing relative product substitutes in the international market (Meyer, Neck
and Meeks, 2017). H&M has high competitive rivalry as it has some unique products
which can only be sell by H&M and maintains its brand image in the global market.
Resources and capabilities
VRIO Analysis:
Resources Valuable Rare Imitable Organised
Products and
services
Yes - - -
Employees Yes Yes - -
Distribution
network
Yes Yes Yes -
Financial
Resources
Yes Yes Yes Yes
 Valuable: It tends to depict the valuable factors which are essential for company in terms
of opening doors by showing up the importance in market and also helpful for company
in terms of joining the dangers outside the market area. It undertake effective factors
which are valuable for company including financial resources, products and services,
employees and distribution network.

 Rare: It depict those resources which are rare for the company including the assets for
the effective investigation on the basis of effectively developed the significant ability for
the representatives (Baumgartner and Rauter, 2017). It also offer prominent deal for the
speculation for the future to arrange the effective factors. It tends to undertake various
resources including employees, financial resources and distribution network. Imitable: It include those resources which are copied and imitated by other individuals
and organisations and for this, company tends to use various techniques that need to be
follow to use the prominent assets for company. It leads to undertake financial resources
and distribution network.
 Organised: It tends to undertake those resources which are composed and effective
recognised for the effective examination of company on the basis of suitable sources. It
also leads to open doors for the market in terms of offering effective information and
include financial resources.
CONCLUSION
With the help of above discussion, it is identified that strategic management is essential
to identify the prominent condition of company by offering suitable direction considering the
development and growth. For this, prominent strategies and frameworks are identified for having
effective direction to an organisation. Moreover, it is also identified that current vision and
mission of company align with the demand of market and also tends to develop prominent
strategies for the core business.

REFERENCES
Books and Journals
Aguinis, H., Edwards, J.R. and Bradley, K.J., 2017. Improving our understanding of moderation
and mediation in strategic management research. Organizational Research
Methods, 20(4), pp.665-685.
Baumgartner, R.J. and Rauter, R., 2017. Strategic perspectives of corporate sustainability
management to develop a sustainable organization. Journal of Cleaner Production, 140,
pp.81-92.
Certo, S.T and et. al., 2016. Sample selection bias and Heckman models in strategic management
research. Strategic Management Journal, 37(13), pp.2639-2657.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Meyer, G.D., Neck, H.M. and Meeks, M.D., 2017. The entrepreneurship‐strategic management
interface. Strategic entrepreneurship: Creating a new mindset, pp.17-44.
Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic
Management Journal, 38(1), pp.42-63.