Strategic Analysis of H&M: External, Industry, and Internal Factors

This report presents a comprehensive strategic analysis of Hennes & Mauritz (H&M), a multinational clothing-retail company. The analysis begins with an introduction to strategic management and its application to H&M, emphasizing the importance of understanding both internal and external factors. Task 1 involves a PESTLE analysis, examining the political, economic, social, technological, legal, and environmental factors influencing H&M's operations, including political instability, economic trends, changing consumer behaviors, technological advancements, legal regulations, and environmental concerns. Task 2 applies Porter's five forces framework to assess the industry's competitive landscape, focusing on the threat of new entrants, the bargaining power of suppliers and buyers, the threat of substitute products, and competitive rivalry. Task 3 utilizes the VRIO framework to evaluate H&M's internal resources and capabilities, determining their value, rarity, imitability, and organizational structure to assess its sustainable competitive advantage. Finally, a SWOT analysis synthesizes the findings, identifying H&M's strengths, weaknesses, opportunities, and threats. The report concludes by summarizing the key insights and their implications for H&M's strategic direction, referencing relevant academic sources to support the analysis.

Strategic Management

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1 ...........................................................................................................................................3
PESTLE analyse of H&M ..........................................................................................................3
TASK 2............................................................................................................................................5
Porter's five forces ......................................................................................................................5
TASK 3............................................................................................................................................6
VRIO analyse of H&M :.............................................................................................................6
SWOT analyse of the H&M ......................................................................................................7
REFERENCES................................................................................................................................8
Books and Journals.....................................................................................................................8

INTRODUCTION
Strategic management is used to provide directions. It is used to achieve goals and setting
objectives and analysing the competitive environment of the company. Strategic management is
also used for finding the way that how can we gain lead from the competitor. Hennes & Mauritz
is a multinational company of clothing- retail .H&M company is knowing for its fast fashion of
the men , women, kids and for teenager(Barca, 2017). H&M organization was listed on
Stockholm in 1974. H&M used strategic management for deep analysing of the strategies and
how to implement it and gain more profit and to gain more lead by their competitor. This report
shows about the internal and external factors of the company and their weakness ,
opportunities ,threats and strength and about the values and rarity , and how much it is inimitable
or not and the company is organized or not.
TASK 1
PESTLE analyse of H&M
PESTLE analyse of the company is used to examine various external factors such as
political ,environmental, social,technological, legal and economical. PESTLE analyse is
structure that is used for to identify the barriers , problems related to the external factors.
Political factors
Most of the production of H&M is in Turkey, Egypt, and Lebanon. Lebanon has been
very unstable in political factors that is cause for the changes in laws and price and impact on the
company. US vs China is also a very major concern for the industry because of this its impact on
the textile products . The employees demands has been increased. They demand good and safe
working conditions and place. The developing nation with stable government create a changes in
laws such as labour law ,minimum wages that is affect the production cost so the overall impact
is good manufactured become costly (Bell, Filatotchev and Krause, 2018).
Economic Factors
In spite of Brexit trading is rose by 7% and this is good sign for the company and it
doesn't impact on the profit making rate. In the globe the economy is improved so the people
personnel income is also increasing . They want to spend on expensive and good things such as

clothing , footwear etc. In the different countries tax norms changes with the time so its create
impact on the economy stability of the firm so H&M has to line up their business accordingly.
Social Factors
Clothing is something that a person is directly influenced by someone or by their
favourite celebrity so they can relate with the brands directly. Promoting the products by social
media is create a huge impact on peoples because now a days customers attitude is changing.
Their priority is going for branding and for designer clothes So, changing in taste of the customer
and and their attitude has to be clear that no social group is unfocused (Dmitrieva, Ilinova and
Kraslawski, 2017).
Technological Factors
The era of technologies and artificial intelligence the customers want more leniency.
They are not so much interested in offline shopping they are much interested in online shopping
by their applications or website . H&M is also tied up with another company that is Hermes.
Hermes is very advance in technology of logistics so its also beneficial for them to improve their
technologies and increase the customer base.
Legal Factors
H&M is a multinational brand and its dealing with many countries, each country has
different norms , rules and regulation. H&M has to be more aware by new norms and rules of the
each country suppose a very luxurious and innovative design is introduce by H&M but it is
legally not secured and so it is possible that it can be stolen by their competitor and its create a
huge problem for them .
Environmental Factors
Textile industry is the very polluted industry after oil and petroleum. In this industries
high amount of wastage of water and by the manufacturing of the clothes air gets polluted so its
affect on environment. There are so many rules and norms for this condition but still damage can
not be controlled. So H&M create a goals for the environment safety is recycle clothes material.

TASK 2
Porter's five forces
Porter's five forces is framework of business model. Through business we can easily identify the
current position and the strategies of the company.
Threat of new entrants
H&M company is focused on cost effective strategies and perform better then their
competitor. They produce more unique and innovative products and more focused on customers
needs and demands.
Bargaining power of suppliers
H&M is multinational company so they have many different location of suppliers so they
purchase a raw material at very low price and builds its supply chain with its cost effective
strategies(Heath, 2018).
Bargaining power of buyers
H&M produce a innovative and unique product for their customers at very cheap price.
They are more focused on the brand loyalty and with large base of customers . They produce
low price product and low selling cost so its attract more low income customers as well as
because of brand quality and loyalty its attract high income customers also.
Threat of substitute products
H&M industry always taking care of their quality of the product and produce more
variety according to customer demands at very low price . By following all theses strategies
H&M perform better than their competitor.
Competitive rivalry
H&M focused on the competitor weakness and strength and working on them and taking
more advantage of their weaknesses . They have to be more aware b y their competitors and keep
up to date always because of dynamic changes in fashion and trends .

TASK 3
VRIO analyse of H&M :
The VRIO analysis of H&M is look at the internal factors of the company that it is
sustained competitive advantage or not. VRIO analysis also mention that each point of the
resources is could be improved or not to provide better improvement and advantages.
Valuable
 Financial resources is the very valuable for the industry because it will help them to
investing in to external opportunities of the company.
 VRIO analysis show that employees are very valuable for the company because they are
highly trained for their work in the company and this will lead to more outcomes and
more productive for the firm.
 According to VRIO patents are very valuable because through patents they can sell their
product without any interruption of their competitors (Trigeorgis, Reuer, 2017) . Research and development is not very valuable for the firm because its taking too much
cost and provide less benefits to the firm.
Rare
 Financial resources are rare because it is controlled and manage by few companies.
 The employees are rare. These employees are much trained and they have better
environment and compensation.
 Patents are rare because it can not be influenced by anyone and can not be available
easily.
Imitable
 Financial resources is very costly to be imitated for other company because its take too
much profit and long term time to accumulated theses resources.
 Employees can be imitated because other organisation can also trained their employees
and provide better environment. Patents cannot be imitable because it is legally not allowed.
Organisation
 Financial resources are well organised because its take strategies to invest in right place.

SWOT analyse of the H&M
Strength
H&M produce variety of products such as clothes , blanket, shoes etc. They always
taking care of the customer needs and demands and target huge range of customer. They sell
their product with different and reputed brands such as COS, Weekday , Monki or different
brands to target different customers .
Weaknesses
They are more focused on low price strategies so its affects the quality of the product and
brand image. Their design are easy to copy and their mall strategy is failing in US. They are
depended on third party because of product manufacture so sometimes its affect on image
because of the inconvenience that are not avoidable (Wenzel, Stanske and Lieberman, 2020) .
Opportunities
H&M are using more technologies such as online selling etc so its increase the popularity
of the company and increase their purchasing power of the customer. H&M is expanding their
business world wide . They are currently set their business in many countries around more than
400 stores so its create best opportunities for the industry to create more base of the customers .
Threats
H&M is retail company that produce clothes and shoes and many other products so they
need more innovation according to trend so , they have to be more aware by their competitor and
changes in market trends and keep updating themselves .
CONCLUSION
It can be concluded from above information is that all the frameworks that are used in
this report helps H&M to improve and achieve their goals and objectives .

REFERENCES
Books and Journals
Barca, M., 2017.Economic foundations of strategic management. Routledge.
Bell, R.G., Filatotchev, I., Krause, R. and Hitt, M., 2018. From the guest editors: Opportunities
and challenges for advancing strategic management education.
Dmitrieva, D., Ilinova, A. and Kraslawski, A., 2017. Strategic management of the potash
industry in Russia.Resources Policy,52, pp.81-89.
Heath, R.L., 2018. Issues management.The International Encyclopedia of Strategic
Communication, pp.1-15.
Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management.Strategic
Management Journal,38(1), pp.42-63.
Wenzel, M., Stanske, S. and Lieberman, M.B., 2020. Strategic responses to crisis.Strategic
Management Journal.