Competitive Assessment using Porter's Five Forces for H&M

The assignment provides a comprehensive analysis of H&M's business strategies through multiple lenses. Using the PESTEL framework, it examines how political, economic, social, technological, environmental, and legal factors impact H&M's strategic decisions. SWOT analysis is applied to understand internal strengths, weaknesses, opportunities, and threats facing the company. Porter’s Five Forces model is used to assess the competitive environment in which H&M operates, analyzing industry rivalry, threat of new entrants, bargaining power of suppliers and customers, and the threat of substitute products. VRIO framework further evaluates H&M's internal resources, determining how these contribute to sustained competitive advantage. The study concludes with insights into strategic planning processes at H&M and suggests potential improvements in addressing external challenges and leveraging internal strengths.

Strategic Management.
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
External environment analysis PESTEL.....................................................................................3
Industry sector Porter five force..................................................................................................4
Resources and capabilities VRIO................................................................................................5
Internal analysis SWOT analysis.................................................................................................6
CONCLUSION...............................................................................................................................7
REFERENCES................................................................................................................................8
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INTRODUCTION
Strategic management is the ongoing process of planning, monitoring, analyzing and
assessing all the necessities an organization which have need to meet its goals and objectives in
effective manner. The present report is based on the “H&M” company which deals in clothing
Fashion industry. This report will present a SWOT framework based on the PESTEL analysis,
Porter five force analysis and VRIO model analysis.
MAIN BODY
External environment analysis PESTEL.
PESTEL analysis is help to H&M for examine the various external factors like political,
economical, social, technological, environmental and legal factor which is impact its business.
The explanation of those are as follows:
Political factor:
Company product system is set up in the various country which can affect to business in
negative and in positive manner. The tax rate of country is not stable which increases day by day
then H&M affect because through that price of product is also increase and loss the interest of
customer from company products (Sun and Dang, 2016). On the other side, if tax rate decrease
then product price also decreases then it is attracted interest of customer towards product.
Economical factor:
Economical factors is consisted with the economic condition of country. Economic
condition of company is sets and perfect then customers have ability to purchase products
because through that their income sources are run effectively. On the other side, if economic
condition of country is not well then it can affect to the H&M company and their growth because
through that customer income is affected then they are not ready to purchase products from
company.
Social factor:
Clothing field where people are directly influenced by the social media. They relate more
with the brand which their favorite stars are promoted to business. Thus, the promoting through
the social media in that channel is important. In that attitude of customers is changed then
products are highly affected by company (H&M PESTLE Analysis, 2019). For example: attitude
of customer towards product is changed then H&M affected in negative manner. In respect to
that management need to produce different kinds and designs product is help to attract more
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customers towards company. On the other side, if company not respect to customer then they are
not purchase product from company.
Technological factor:
Technological factor is refers with higher level technology used by various companies at
market place. Technology is updated day to day in that management need to use updated
technology for work in better manner. For example: presently customer like to purchase products
from online stores but H&M not have that kind of facilities then customers not attracted then it is
affect to company and decrease profit margin. This technology is provided better facility to
customer for order from workplace, home and from anywhere. This creates more advantage for
business and company. On the other side, if company follow the same facility then customers
attracted more and their purchase ratio is increased day by day.
Environmental factor:
Textile industry as a whole is the second most pulling the industry after the oil and
petroleum industry. In this the high amount of water waste which is generated pollutes the water
bodies. The population living the nearby to those water bodies suffers from the various deadly
diseases (Fanny, 2019). Through that air gets polluted which manufacturing the clothes. The
government norms for regulations emissions into the air but still the damage can never be
controlled. In respect to that H&M need to make goal is to be use completely recycled clothes
material for its production in effective manner.
Legal factors:
Every country have own legal factor and regulatory policies. Rules and regulations are
help to successfully operate the business. For example: H&M has collaborated with franchising
partner when franchising was not the part of expansion strategy of H&M. The intellectual
property rights is the major concerns. Like if company is product innovative design of product
and it id not legally secured they can be stolen by the competitors and within no time innovative
affect to business in negative manner (Barman and Petersson, 2020).
Industry sector Porter five force.
This is the business model which is implied on the strategic business management. With
the help of this, company able to evaluate their competitive market.
Threats of new entrants:
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New entrants are come with new and innovative product at market place. In that H&M
need make focuses innovative product development and unique market strategy is help to make
complete focus on customer retention.
Bargaining power of suppliers:
There are various suppliers at the market place and at different location. Company have
strong supply chain management with effective business strategy which is creates more effective
and valuable for business in effective manner (Youell, 2016).
Bargaining power of customer:
By innovative, unique and good quality product as well as with well-established
marketing strategy, H&M focuses on building loyalty of brand along with larger customer base.
With the lower cost of production is attracted low income customers too leading in order to
attract higher customer base.
Threat of substitute products:
There are various substitute products are affect to the H&M company in negative
manner. In that H&M have their complete focus on providing good quality and variety of
products to its customers at lowest selling price in the market place (Jamshidi, 2019). By the cost
customer centrist business strategy H&M outperforms competitors.
Competitive rivalry:
There various competitors of H&M which are Zara and M&S. In that company have
complete focus on selling good quality of products at the affordable price for everyone.
Resources and capabilities VRIO.
Through that VRIO model H&M look at each internal resources one by one to assess
whether these provide sustained competitive advantage.
Valuable:
H&M have great culture and leadership qualities which are valuable for company. Also,
have great HRM practices, brand market position, design of product purchasing, store
operations, supply chain management and finance (Allred and Simpson, 2018).
Rare:
Rare qualities are brand market, culture and leadership, store operations and design of
products. Supply chain management and finance are not rare.
Imitate:
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There culture and leadership, HRM and replications and internationalization are imitative
products. There supply chain management, finance, purchasing not imitative products.
Organization:
Supply chain management and finance are competitive parity which has not by any
competitors (VRIO analysis of H&M, 2019). Culture and leadership, HRM and brand market
position is sustained competitive advantage provided to customers.
Internal analysis SWOT analysis.
SWOT analysis is an important tool for evaluating the competitive position of company
and to determine its business strategy in effective manner.
Strength:
 Company have variety of product like clothes, shoes, apparels, blankets and many more.
Company target to wide range of products.
 Company have the best technology to sales product and services at market place (Krig
and Sandra, 2017).
Weakness:
 Focus on the low cost may sometimes affect the quality and brand image.
 There finance factor is not organized which create weakness.
Opportunity:
 Innovative idea in existing product is the opportunity for company.
 Use updated technology (Giertz-Mårtenson, 2018).
 Have focus on expanding business.
Threat:
 Increase tax rate.
 Not organized supply chain management.
 Various competitors at market place.
 Threat from substitute products.
Those are the strength, weakness, opportunity and threats of company which can effectively
analyzed here.
CONCLUSION
From the above study it had been concluded that the strategic management has ongoing
process of planning, organizing the things in effective manner. With the help of PESTEL
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analysis company able to know about those factor which affect to company from outside. Porter
five force reflected about competitors and VRIO reflect about internal capabilities. SWOT
represented that strength, weakness, opportunity and threat of company.
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REFERENCES
Books and journals.
Sun, Y. and Dang, S., 2016, November. UK-based external business environment analysis of
outdoor adventure clothing using the PESTEL tool and its future outlook. In 2014
International Conference on Information Technology Systems and Innovation (ICITSI)
(pp. 306-309). IEEE.
Fanny, D., 2019. H&M: Hennes & Mauritz. Publications Études & Analyses.
Youell, M., 2016. An Analysis of the Growth and Success of H&M. How They Could Impact the
Largest Swiss Watch Company, Swatch Group, p.108.
Jamshidi, M., 2019. Keeping Relationship in Physical Store in a Digital Era: a Study in H&M
and Åhlens.
Allred, A. and Simpson, K., 2018. M&M Case Study.
Krig, M.L. and Sandra, L., 2017. Business Value Enhancing Factors of Aligning IP Strategy with
Corporate Strategy.
Giertz-Mårtenson, I., 2018. H&M–documenting the story of one of the world's largest fashion
retailers. Business history. 54(1). pp.108-115.
Barman, A. and Petersson, V., 2020. Strategy Formation and Flexibility: A case study of H&M
and KappAhl.
ONLINE
VRIO analysis of H&M. 2019. [Online]. Available through: <https://www.case48.com/vrio-
analysis/13666-H-M>
H&M PESTLE Analysis. 2019. [Online]. Available through: <https://www.mbaskool.com/pestle-
analysis/companies/17954-h-and-m.html>
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