Comprehensive Strategic Analysis of Hennes & Mauritz (H&M) Company

This report provides a comprehensive strategic analysis of Hennes & Mauritz AB (H&M), a global fast-fashion retailer. It begins with background information on H&M, highlighting its market position and mission. The analysis then delves into the external environment using a PESTEL framework, examining political, economic, social, technological, environmental, and legal factors affecting H&M. Following this, Porter's Five Forces analysis evaluates the competitive landscape, assessing the threat of new entrants, the bargaining power of suppliers and buyers, the threat of substitute products, and competitive rivalry. An internal analysis using the VRIO framework assesses the company's resources and capabilities. A SWOT analysis is then presented, detailing H&M's strengths, weaknesses, opportunities, and threats. The report concludes by synthesizing these analyses to provide a holistic view of H&M's strategic position and future direction.

Strategic
management

Introduction
Strategic management is an on-going planning, monitoring, analysis and assessment of
all necessities in an organisation to meet the goals and objectives. Any association which has an
encourage key administration measure causes them in getting the load of the current
circumstance and investigate the adequacy of the executed administration systems. The
conversation spins around on the association Hennes and Mauritz AB or regularly called as
H&M is a swedish worldwide dress retail organization particularly famous for quick design men,
ladies, kids and youngsters.
The company H&M has more than 1710 stores which operate in more than 74 countries
with the employees of more than 126,000 in total. Also, the company has its availability of
online shopping in 33 countries. Globally H&M is the second largest clothing retailer and the
company was founded by Erling Persson and his sons Stefan Persson and Helena Helmersson.
The following discussion includes PESTEL analysis for the external factors of Hennes &
Mauritz AB that affect the organisation in certain ways, SWOT analysis for analysing the
internal factors that affect the organisation. In addition to this, the discussion also includes
strategic tool framework to evaluate the company choices and future strategic direction.
1. H&M - Background Information:
H&M or Hennes & Mauritz AB is a fast fashion brand which is a second largest retailer
in all over the world. It includes some good and latest styles and inspiration followed by many
followers. Customers will find everything including the pieces of fashions, some unique and
sorted design collaborations to affordable wardrobe essentials with accessories and motivational
workout wear are all included in the Hennes & Mauritz AB. The main agenda or goal of the
company is not only just fashion but also to modify with various updation, seasons, styles so that
they give an amazing and lavishing style of wearing clothes to their customers.
One of the major agenda followed by the H&M is to give the dynamic beauty of
sustainable future. It also suggest that creating a more sustainable fashion in future so that
consumers will receive a great amount of satisfaction are all facilitate by the Hennes & Mauritz
AB. The company was founded in 1947 by Erling Persson and it has a headquartered in Sweden.
Hennes & Mauritz AB has an amazing promotional strategy and market campaign because of its
high popularity and market reputation (Back and et. al., 2020).
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The company has been collaborate with number of other marketing trends due to which
they have more than 45 sponsors availability. H&M has expanded its stores and it has almost
4,698 stores opened worldwide and avail the facility of online shopping because due to Covid 19
pandemic, to increase sales and growth of the organisation, company adopted some major
strategies to shift in the online marketing trend. Therefore, the tagline or the mission statement of
H&M is “to drive long-lasting positive change and improve living conditions by investing in
people, communities and innovative ideas”.
2. External: Fast Fashion Industry Analysis:
Political factors: According to the researchers, H&M is an International company which
operated in many countries across the globe and due to this, company has been affected by the
huge government risk. Suppose taking an example, there are some well known unstable
government countries in which H&M has its larger stores available including Turkey, Lebanon
and Egypt. Such factors not only affected the company but also makes a huge impact on
company's stakeholders.
Economic factors: Researchers believed that the company H&M has been affected badly
because of the US dollars and Brexit. Because of the increment in the tax impose, H&M products
become too expensive in the US market. The company has been also suffered from the US
market including interest rate and inflation due to its exposure in many countries.
Social factors: The major function adopted by the consumer is how to manufacture more
type of same goods. The company has its embarked on ensuring of the clear environment
through recycling of the unwanted materials from the industry. H&M has a huge concern with
the media influence on their customers. As a result, company greatly focused on the products to
meet the needs of the customers with new and latest designs availability. The employment policy
adopted by the H&M is suggested that more women then men. It simply means that women
clothing are more than the mens wear. The H&M employment specifically proved to helping the
less developed world to make it a standard practice in the developed world. Also, the company
has been adopted profits in maintaining such policies at its best.
Technological factors: It refers to the technological advancement in the business.
According to the H&M, the main aim and objective followed by the company is to serve the
customers appropriately based on the current shopping trends of the purchasing products without
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physical visiting of the retail stores. At the time of Covid-19 pandemic, company uses its digital
marketing technology to reach at the higher level.
Environmental factors: It refers to some environmental factors which uncertainly
affected the organisation. H&M unwanted materials has contributed greatly in the environmental
pollution. In 2018, company has been also started the recycling and reuse of their old materials
or the things which are unused. The main objective and aim adopted by the company is to use
100% recycled materials so that to make out the best of sustainable use of the products. H&M is
a big and reputable company in the retail industry in all over the world, however if certain things
or policies adopted by them make a huge impact in the society then other companies also try to
adopt the same. It not only helps the countries to become pollution free but also helps them to
make the best out of it. The company should avoid conflicts from the communities and the
government agencies such as environmental protection bodies (Timmins, F., 2020).
Legal factors: It refers to such factors which are very important for the organisation.
H&M has a adoption of various legal policies which they implement on the organisation and the
company should establish the risk management mechanism to avoid the similar disputes. Despite
the legal policies, the company always followed all the legal laws in which the physical store is
located in so that the company will receive the best out of it.
Therefore, it can be said that the PESTLE analysis is one of the most commonly strategic
frameworks used in analysing the market. This can help an organization in identifying potential
opportunities for growth and expansion as well as threats that can influence its overall
performance as well as profitability. Apart from this, the organization also gets a chance to
remain updated about the latest trends in the market.
3. Porter’s Five Forces Analysis
Threat of New Entrants – UK market isn't constantly immersed, there are not
obstructions to section in circulation because of the low capital needed to open another shop.
Nonetheless, underway there are essential limits to get to in view of the scale's economies and to
the high subsidizing capital required. Design items have a high edge. Consequently, this is a
solid power.
Bargaining Power of Suppliers – It isn't exceptionally high on the grounds that there are
a lot of providers in global areas with low work costs. That is to make reference to, shops can
force the upsetting circumstances because of the reality they have additional force than suppliers.
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Bargaining Power of Buyers – One awful issue is the practically non-existent reliability
inside the sensibly estimated style stage. Additionally, the exchanging charges are low. Cost is
an exceptionally fundamental variable for customers. Among the excellent components it's
pivotal to state that the degree of purchase is little, that is to make reference to an unmarried
customer is superfluous for the association.
Threat of Substitute Products – This is a strong force because there are a lot of
competitors that can offer substitute products for H&M. therefore, it is important for the
company to develop effective strategies in order to address the same.
Competitive Rivalry - There are a variety of existing nearby, country wide and global
competition. The opportunities to growth are not very excessive because of the adulthood of the
sector. The charge variable is very influential in consumers whilst thinking about alternatives.
The brief changes in customers’ requirements do no longer allow to develop sturdy scale
economies.
Therefore, from the analysis, it can be said that the fashion retail industry is that there can
be certain threats which can act as barriers for the companies. Thus, effective strategies should
be developed in order to overcome the same.
4. VRIO Analysis
Resources Valuable Rare Inimitable Organized
Products ✓ - - -
Financial Resources ✓ ✓ - -
Employees ✓ ✓ ✓ -
Patents ✓ ✓ ✓ ✓
Valuable
All resources are valuable for the company because they help it in ensuring that the
customers are satisfied. The employees of the company are valuable because they are committed
to helping the company attain its goals and objectives.
Rare
Financial resources are rare because the company has limited sources from which it can
ensure that its operations run smoothly.
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Inimitable
Apart from this, employees and patents are inimitable because the employees who work
for the respective company are specific and they do not work for the competitors. This is same as
in the patents as they are specific for the company.
Organized
Patents come in this category because they have to be organized from time to time.
5. Internal: Strategic Capabilities:
SWOT analysis refers to a strategic planning technique which is useful in helping and
analysing the person and organisation on the basis of strengths, weaknesses, opportunities and
threats. Hennes & Mauritz AB (H&M) is the second largest retailer company in the world
because of its highly reputed strengths and less weaknesses.
Strengths of H&M
 The strategy adopted by H&M is quiet effective: The retail business of fashion trend has
the most sort and effective selling strategies for increasing turnover. The fast fashion
model states that latest fashion trends are designed by the suppliers design tables.
 Global vision: H&M has 5,076 stores in more than 74 markets which spread in across all
the 6 continents. From Europe to Asia, Australia, America helps the company to reduce
risk and enhance sustainability.
 Competitive pricing: It has been suggested that company is seems out to be the most
sustainable fashion retail by exploiting the facility and cost effectiveness.
 The value of brand adopted by consumer centric approach is quiet effective than other
competitors.
 It can be also states that H&M has the most effective and specific supply chain
management.
Weakness of H&M
 The products are quiet controversial: It is very difficult for the H&M in styling and
making of the new products as every human that followed by the fashion brand always
has an eye on H&M products.
 Uninspired fashion: It can be suggest that clothes and accessories adopted by H&M are
drawn to a new and radical designs which are not existing in the modern brands.
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 A complete dependency on outsourcing: Most of the products made by H&M has over
900 independent suppliers.
Opportunities of H&M
 Products diversification: It has been suggested that products have a tremendous
diversification and even they sell varieties of products and services then they likely to
receive more profit because company already have large number of buyers and sellers.
 Focus on markets emerging: From Africa to Asia, the organisation has the increasing and
well developed growing middle class family which presents fashion retailer like H&M
with the great potential.
 Expand acquisition and mergers: The mergers and acquisition helps the organisation to
remove barriers of new entry in the market.
Threats of H&M
 The competition between the competitors is quiet intense: It is a true concept that there
are various competitors of H&M such as Zara, Marks & Spencer and many others which
gives the amazing competition in the market.
 Trade Tariffs: H&M has a large portion of the products availability and its production
especially in Asia which makes a perfect target for tariffs. H&M is highly targeted by the
aftermath of Brexit.
 Global pandemic: The success of the global companies like H&M is highly depends on
the raw materials. There is a need to reduce H&M sales and profits (KHODADADI and
et. al., 2020).
6. Strategic Options:
The strategic management planning tools is useful in determining the organisation in the
next five years and beyond to get there specifically. Ans off is a strategic planning tool which
helps in providing a framework that can help the senior managers, managers, executives and
other marketers for the growth of the organisation in the future. The named Ans off and this
model is given by the Russian American Igor Ans off who was an applied mathematician and a
business manager that created this concept.
The Ans off matrix includes four types of segments including market development,
market penetration, product development and diversification. The Ans off matrix is useful in
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identifying and exploring the growth options. Also, the risk of different market segment is quiet
fluctuated on the basis of market segmentation. The diversification is the most riskiest segment.
However, it can be argued that if in an organisation, the various types of market segmentation
offers multiple and unrelated market structure which suggest that the overall risk portfolio is
quiet low (Alkaraan, 2020).
Market penetration: In the market penetrating strategy, the organisation uses existing products
and services in the existing market. The current market scenario includes increase in the market
share. The market penetration includes existing market segments in the increasing market.
Selling more products and services in the existing market helps in finding the new bunch of
consumers and it can be achieved by selling products and services to establish consumers or
finding new consumers in the existing market. Market penetration includes decrease in the price,
promotion increasing, modest product refinement and so on.
Market development: It refers to the segment where an organisation tries to expand its market
in the new market which is completely new on the basis of geographies and countries. It can be
accomplished by different types of customer segments, new areas or regions of the country,
foreign markets and industrial buyers for a good region. This strategy can be successful only
when the organisation has unique product technology, increases the output, The buyers in the
market are intrinsically profitable.
Product development: It is a strategy in which a company is prominently tries to create new
products and services that targeted in a existing market to achieve maximum growth and
satisfaction. The product development includes investment in the research and development,
buying product behaviour, acquisition of rights to produce someone eles's product are all
included in the product development.
Diversification: This segment in the organisation states that new offerings in the market can be
systematically attain by new market share. Also, the diversification strategy is seems out to be
the most difficult to handle strategy because a new product comes under new market.
7. Strategy Selection and Justification:
Market penetration is one of the strategy which has genuinely been adopted by the H&M
as because H&M has a great and an amazing brand reputation in the market. So it is quiet easy
for them to increase its market value in terms of increasing the brand reputation in the market. In
the market pricing strategy, it has been suggested that the organisation uses various products in
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the existing market and the organisation aims to increase the market share however market
penetration strategy in H&M can be simply adopted in number of ways including prices can be
modified or decreases at the time of festival seasons, distributing efforts should be on the top
priority and increasing promotion is of employees can be also simplify on the basis of marketing
strategy. Also, an acquiring the competitor in the same marketplace is very important to be
describe (Weiser, 2020).
Conclusion and recommendations
The above discussion concludes that H&M strategic management is based on various
facts and theories and the recommendations can be made for the company. Some
recommendation that should be taken into the consideration by H&M are:
 There is a need for the H&M to continually change with the adopted strategies because it
will be flexibly helps the organisation to keep a regular check on growth and strategy.
 Supply chain should be well maintained and must be properly structured, Because supply
chain management is something which simultaneously helps the production process to be
faster and reactive which can easily bring profits.
 Internationalization: The firm or an organisation should invest in the new market, which
is predicted that will constitute in the consumer segmentation. H&M should introduce
some large scale of the products that specifically focus on the consumer segmentation,
with the high spending power and maintenance of the consumer base for the brand, all
manufacturing process will be remain the same.
 The internal improvement: H&M should majorly invest in the market collaborations with
other organisations as well. Although H&M started changing its tendencies by
introducing some new sort of levels.
 The target customers should be risen so that the organisation would attain maximum
growth and satisfaction.
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