Strategic Management Report: H&M's Market and Financial Analysis

This report presents a comprehensive strategic analysis of Hennes & Mauritz (H&M), a global fashion retail company. It begins with a situation analysis, examining H&M's market size, trends, and financial performance, including sales figures, gross profit, and market share. A detailed SWOT analysis highlights the company's strengths, such as its wide product range and online presence, as well as weaknesses, like product design and shipping costs. The report also identifies opportunities, such as sustainability initiatives, and threats, including competition from Zara and online portals. Competitive advantages, such as unique designs and online presence, are discussed. Strategic options, like expanding into new markets and forming alliances, are presented, followed by specific recommendations, including improved customer service, expanded online presence, and increased marketing efforts. The report concludes by emphasizing the importance of adapting to changing market trends and maintaining a strong competitive position in the fashion retail industry.

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Table of Contents
Part A...............................................................................................................................................3
Situation Analysis............................................................................................................................3
Part B...............................................................................................................................................4
Situation Analysis Report................................................................................................................4
Executive Summary.........................................................................................................................4
Market size and trends.....................................................................................................................4
Market trends...................................................................................................................................5
Financial and Corporate performance.............................................................................................5
SWOT Analysis...............................................................................................................................6
Competitive advantage....................................................................................................................7
Strategic options..............................................................................................................................7
Possible Recommendations.............................................................................................................8
References........................................................................................................................................9

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Part A
Situation Analysis
Hennes & Mauritz is a Swedish company that operates in the industry of fashion
retailing, currently the brand is operational worldwide, they have 4,500 stores all around the
word and they are operational in 62 countries. The total number of employees in H&M is
132,000. The company is ranked second largest company in the field of fashion retailing after
Inditex, owned by Zara. The brand has online stores as well and it is further planning to expand
its online stores. The global presence of the company makes it a very popular and well-known
brand. The company currently is in a very good position. There are certain threats that are faced
by the country though that is affecting the business of the company. The company is forced to
sell its product at low cost because the shipping cost is very low, that indicates there is too much
of stocks for which the company is forced to put its garments in sale (Hansson, Wrangmo &
Solberg Søilen, 2013).
A very high cost is involved in the distribution of the garments. The report below will
show all the details of the market situation of H&M. According to the CEO Karl-Johan, the year
was very significant in terms of financial performance and it was eventful too (Thompson &
McLarney, 2017). In the same year, there was a shift in the industry, online market was in the
trend and many companies were choosing digital marketing. The digital marketing and online
marketing proved profitable to the firm as well because they have to target many customers at a
very less cost (Hammoudeh, 2014). However, there are lot of competition in this industry as
there are many companies in the fashion retail industry like Zara and Inc. The online market of

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H&M is one of the factors that makes the company strong, a lot of customers prefer the online
retail because it is convenient for the customers. The present situation of the company is very
favorable and the retail chain has a very good position in the market with a very good market
share. The future expansion of the organization ensures that the company will have a sound
growth and will continue to hold the position in future as well (Regnér & Yildiz, 2014).
Part B
Situation Analysis Report
Executive Summary
The following report is a Situational analysis report on the company H&M that is a Swedish
multinational brand operational all around the world. The company is operational in 62 countries
and has 4,500 stores. The report focuses on the situation of the market in which the company.
The topics of the report include Market size and trends, SWOT analysis, financial performance,
strategic options and recommendations are given for the company in the end of the report. The
CEO of the company is Karl-Johan.
Market size and trends
Four big global companies that are Zara, H&M, GAP, Inc dominate the market in the
field of fashion retailing. H&M is operational in 62 countries with their 4,500 stores. The brand
offers its fashion garment for men, women and children. In august 2017 H&M opened online
stores in 18 European markets that included Copenhagen, Brussels, London and Munich ("H&M
group | About", 2017). The company ensures that its store portfolio is right so they have closed

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around 100 stores and opened 400 new stores. They are further planning to open its Online
Market in India, Uruguay and Ukraine. Australia is one of the most profitable market segment
for the company their sales is surging around 50 percent even in the highly competitive market
(Regnér & Yildiz, 2014).
Market trends
The market has changed a lot in the field of fashion retailing; the shift in the patter of
buying behavior of people has changed in the last three for years. The change in trend is mainly
because of digitalization, in the last few years the concept of online markets has emerged. Online
stores are very convenient for the people they do not have to walk down to the stores to buy
things. This particular trend is very popular in fashion retailing. The customers prefer to buy
apparels from the online stores, because they get items at cheaper rates because often the
shipping cost is not involved, but that is not the only reason, in order to save their time people
prefer to buy products from the online markets (Hansson, Wrangmo & Solberg Søilen, 2013).
Financial and Corporate performance
From December 2015 to November 30 2016 the sales of the retail inclusive of vat has
increased by percent in the local currency of financial year. The gross profit was SEK 106,177 m
which is equivalent to gross margin of 55.2 percent. After including the financial item the profit
amounts to SEK 24,039 m. The profit after the tax was around 18,363 m which amounted to
11.26 SEK per share. The profit in that financial year was shown adversely affected by the mark
downs and the increased purchasing due to the strong dollar rates. In that year 427 new stores
were opened and 11 new online markets were also opened. In total there were 35 online markets
and stores that summing up to 4,351 in overall 64 markets. In the year 2016 H&M created new

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employment opportunities, around 13,000 new jobs. The total number of employees recorded in
that year was 161,000 (Regnér & Yildiz, 2014).
SWOT Analysis
Strengths
H&M is on the leading fashion retail store in Australia they have a huge market size
because there are many customers of the retail store H&M across Australia. The customer
service of the fashion retail is very efficient that attracts the customers to purchase from the
store. The retail store has a wide range of fashion clothing, apparels, footwear, accessories and
jewelries. They have expanded their online stores, which will help in increasing the customer
base. Celebrity endorsement is also one of the strengths of the fashion retail. The brand organizes
many runway shows that display the latest designs from new and young designers. They post
their events and fashion runaways shows in you tube and other social networking sites like
facebook and twitter.
Weakness
There is weakness in the consumer standpoint of the company. They treat all the
customers similar, they offer high fashion clothes even in the areas where the customers do not
like it. The shipping time that means that they have huge stock of clothing, if not all of the
stocks are not sold in the premiere season they will have to sell some of the high fashion
expensive clothes in sale, this will be big disadvantage for the organization. Some of the product
ranges are so high that is very difficult for the customers to afford it, therefore making selective

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premium clients of the company. The research and development of the company is not very good
this is evident from the the same designs available all around the world, the brand is not much
innovative in this context.
Opportunities
They are becoming sustainable, so they have an opportunity to become responsible and care
about the animal welfare. They also have chance to become health conscious brand and represent
themselves to its customers (Diallo, 2013).
Threats
H&M is facing huge competition from the customers from brands like Zara and Inc.
Other online portals also pose a huge threat on the fashion retail (Gremme, 2014).
Competitive advantage
The unique designs and the latest fashion trends that are sold by the brand help them in
gaining competitive advantage over other brands in the market. Their online website is helping
the organization increasing the customer base thus creating a competitive advantage. Their
expansion strategies to serve globally have helped a lot in beating the competition and gaining
advantage over the local players (Ancona, 2016).
Strategic options
The brand has great opportunity in opening their stores in the countries they have not yet
covered. They have options to make alliances with big fashion houses so that they can offer good
high fashion garments for their customers. They can include a wide range of clothes that are

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made of fabrics that are most used by the customers and are comfortable. The company has a
very bright opportunity to expand its online presence by opening more online markets. In
countries like France they can offer high fashion garments to the premium clients apart from that
they can organize more fashion events (Borja de Mozota, Valentine & Nelson, 2016).
Possible Recommendations
The company should collaborate with the fashion designers and offer latest fashion
garments for its customers. The company needs to expand more in the Asian countries and
African countries. They should improve their online website so that it attracts more customers
and is user friendly. H&M should improve their customer service. They can expand their target
market and enter the market of high fashion by offering fashion garments for the premium clients
as well. There needs to be improvement in the way the brand communicates its values to its
customers, the advertising and promotional activities needs to be more aggressive. They should
use both print and digital media for advertising, billboards and newspapers should be used more.
More promotional activities needs to be done. For promotions, they can launch their own fashion
channel (Wong & Yazdanifard, 2014).

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References
Ancona, A. (2016). Sizable Subject: The Plus Side of Fashion.
Borja de Mozota, B., Valentine, L., & Nelson, J. (2016). The Value of Design Research.
Diallo, I. A. (2013). The application of Marketing within a company-case study of H&M.
Gremme, M. (2014). Zara. Global Fashion at Local Prices.
H&M group | About. (2017). About.hm.com. Retrieved 25 August 2017, from
https://about.hm.com/en/about-us.html
Hammoudeh, R. (2014). Zara, from Spain to the big wide world. Company analysis, markets and
competition.
Hansson, L., Wrangmo, A., & Solberg Søilen, K. (2013). Optimal ways for companies to use
Facebook as a marketing channel. Journal of Information, Communication and Ethics in
Society, 11(2), 112-126.
Regnér, P., & Yildiz, H. E. (2014). H&M in Fast Fashion: continued success?.
Thompson, J., & McLarney, C. (2017). What Effects will the Strategy Changes Undertaken by
Next Plc Have on themselves and their Competition in the UK Clothing Retail
Market?. Journal of Commerce and Management Thought, 8(2), 234.
Wong, K., & Yazdanifard, R. (2014). How Fast-Fashion Apparel Stores are able to Operate
Sustainably in New Global Economy. Journal of Research in Marketing, 3(2), 274-278