Strategic Management Report: H&M's Internal and External Analysis

This report provides a comprehensive strategic management analysis of H&M, a leading fast-fashion brand. It begins with an introduction to the company, highlighting its global presence and business model. The main body delves into both the external and internal environments, utilizing PESTLE and SWOT analyses to assess political, economic, social, technological, legal, and environmental factors, along with H&M's strengths, weaknesses, opportunities, and threats. The report also incorporates Porter's Five Forces to evaluate the competitive landscape. Furthermore, the report explores strategic options using the Ansoff matrix, including market penetration strategies. Finally, it concludes with recommendations for H&M to enhance its market position and achieve its strategic objectives.

Strategic Managemen

Table of Contents
INTRODUCTION...........................................................................................................................................3
Main Body....................................................................................................................................................3
Background Information of H & M...........................................................................................................3
External Analysis......................................................................................................................................4
Internal Analysis:.....................................................................................................................................6
Strategic Options.....................................................................................................................................6
Strategy Selection and Justification.........................................................................................................7
Recommendation....................................................................................................................................8
Conclusion...................................................................................................................................................8
REFRENCES..................................................................................................................................................9

INTRODUCTION
Organizations are required to prepare appropriate strategies in order to achieve
predefined goals in minimum period of time. Under strategic management objectives are
formulated by analyzing external as well as internal environment to make optimum utilization of
available resources (Venkateswaran and Ojha, 2017). It is a process that contains ample of steps
such as setting goals, implementing as well as evaluating them in regular intervals. H& M has
chosen for the current report. It is renowned fast fashion brand based on has headquarters in
Swedish. It provides a range of designer clothes at consumers segments at global level. There are
ample of strategies are discussed in the report that are currently being applied by organization in
order to increase sales and profit margin. It includes a brief introduction about company in
reference of strategies. Further, SWOT analysis has been carried out to analyze the internal
environment of entity. To monitor the impact of external strategic environment over business
operations PESTLE framework has been included in report. Lastly, it includes some suggestions
in order to undertake necessary improvements to enhance positioning of organization among
customers.
Main Body
Background Information of H & M
Hennis and Mautriz that is known as H & M established in the year of 1947 in Swedish.
It is a leading fast fashion brand which provides a range of designer clothes for men, women, and
teenagers. Majorly, brand targets wide segment of customers at international level(Balaman,
2016.) . This strategy make them differs them from other competitors such as Forever 21, Zara. It
is consider as a fashion brand that provides quality products at reasonable price to make it
affordable for all. Organization owns nearly 4000 outlets worldwide to serve global as well as
domestic audience. Most of its outlets are situated at such a place which is easily accessible by
customers. Company has head office in Sweden that monitors and keeps control over various
functions in order to operate it effectively.
There are ample of strategies that are used by H & M in order to attract more number of
buyers. The fast fashion model of company differentiates it from other rivalries by providing
designer clothes to end users at their nearby place in minimum period of time. Entity owns ample

of stores worldwide to make products available to customers at right time. In addition, efficient
logistic management and chain of retail stores provides sustainable competitive edge to
organization. Main focus of brand is to provide designer clothes to end users at reasonable price
to attract them towards products. With this, it is able to earn higher revenue by attracting more
number of buyers. In addition, managers of entity emphasis to reduce down the intermediaries in
supply chain management that helps them to minimize the unit cost of production thus improve
in profit margin. Further, all its outlets are easily approachable by customers that provide ease to
them to purchase necessary products. Hence, with above stated strategies company is able to
enhance the brand value at market place.
External Analysis
There are several external factors that significantly affect the sales as well as profitability of an
organization in an efficient manner. PESTLES analysis is a tool that is used to monitor how
macro environment put a significant impact on overall business setting (Banihabib, Hashemi-
Madani and Forghani, 2017). H & M is a leading company of fast fashion industry which is
highly influenced with external elements that can not be control by managers. In context of
selected organization various macro factors that are related to external environment are given as
under:
Political-It comprises present political condition, policies, rules and regulation such as
taxation, foreign trade policies and many more. H& M is operating in different countries thus it
is highly affected with the changes in current government policies worldwide. Company is also
working in some countries which are politically unstable such as Turkey, Egypt. In order o
operate business effectively in different nations entity needs to make necessary changes in their
existing strategies. For instance, managers had to adopt franchising practice in United Arab
Emirates, Kuwait and some other nations so that they can operate business in an efficient
manner.
Economic-IT comprises ample of elements like income, demand, supply, cost,
employment opportunities and many more. It is essential for an orgzation to constanly monitor
these elements to prepare effective strategies to operate business successfully. In context of H&
M, it is highly affected with Brexit that brings ample of uncertainties within country still
company manages to earn potential profit. Company provides goods at affordable price range

thus able to maintain higher demand at market place. In addition, change in taxation, import and
export policies in different countries make hamper the current performance of entity.
Social- As per the current market trend customers tends to purchase goods as well as
services that are highly innovative and creative. H & M is working in fast fashion industry where
people are influenced with social media, life style of celebrities and models. Now, the attitude of
customers has been changed as they are more conscious about their fashion statement. Thus give
preference to designer clothes. So, entity needs to analyze current market condition to cater the
needs of target segment (Barca, 2017).
Technological-In current digital era, it is essential for a company to adopt new and
evolve techniques to attain business goals in predefined period of time. Technological evolution
is necessary to create a difference and remain ahead in competition. H & M provides an option to
customers to purchase online through its website. In addition, company undertakes digital
marketing approaches in order to enhance its presence among domestic and global audience.
Further, effective methods to gather data from end user are also used by entity so that it can
provide most suitable products to them.
Legal-There are ample of rules, regulations, compliances that are made by
administrations of various nations to run business smoothly. These laws are essential to abide by
companies to avoid any legal disputes that may arise in future. H & M operates business at
global level thus it needs to follow the rules and regulation to operate business effectively.
Further, company is required to adopt intellectual property laws so that rivals cannot copy their
designs (Koseoglu, Law and Dogan, 2018).
Environmental-It is the moral duty of every organization to protect environment. There
is higher pollution is generated by textile industry through emissions during clothes
manufacturing. Government has been made ample of rules to minimize air and water pollution
and to secure environment. H & M adopts recycled materials in order to manage the waste in an
efficient manner. It also enhances brand image and goodwill of entity among potential buyers.
There are certain external factors that affect performance of H & M significantly thus it is
crucial for managers to analyze these elements and formulate effective strategies to minimize
future uncertainties. From above discussion, it is analyses that above stated factors will help the

company to prepare appreciate strategies in order to achieve desired goals and objectives. For
instance, there are certain policies are formulated by government authorities which is essential
for future growth and success of company. In addition, by analyzing social factor organization
will be able to cater the needs and requirements of customers in an efficient manner. Further,
technological factors will lead organization towards higher growth and success.
Porter's five force analysis:
Bargaining power of buyers: It is analyzed that bargaining power of buyers is high for H
& M as there are several other rival firms that are offering identical products to customers at
relatively lower piece.
Bargaining power of suppliers: Here several suppliers are present at market place from
which company can purchase raw material. Different suppliers are available at different location
who provide necessary resources to organization. Thus bargaining power of suppliers is
relatively lower in context of respective company.
Threat of new entrants: There are higher threat of new entries as business model of H &
M can be copied easily. In addition, there are lower barriers at market place and it is easy for
new organizations to enter and operate business.
Threat of substitute: It is analyzed that H & M focuses to provide quality products to
customers at reasonable price. Thus there are several substitute available for its products at
market place.
Rivalry among existing firms: There are numerous rival firms of H & M are present in market
such as Zara, Forever 21 and more that are giving extensive competition to organization by
providing products at lower price.
Internal Analysis:
In order to make appropriate use of internal resources, it is vital to undertake internal
analysis. SWOT analysis is a tool which considered as a suitable framework to evaluate the
internal capabilities of an organization. With this company get to know their strength which
differs them for competitors along with the weak areas that need to improve. In addition, it also
comprises opportunities available in external market place and threats to organization from

rivalries. In context of H & M, internal strategic analysis of entity with the help of appropriate
framework is mentioned below:
Strength Weakness
 Wide range of products such as
accessories, clothes for all segments are
provided by company that helps it to
meet with the needs of huge segment
globally (Novikov, 2018).
 H & M has strong presence at global
market place. It has expanded business
nearly in 60 countries worldwide
including potential markets that are not
targeted by entity till now such as Asia,
Africa.
 Company possess good brand image
among market. H & M is perceived as
quality products provider in affordable
price that helps to increase its sales and
profitability.
 The most weak point of entity is that it
is depended on third parties to supply
necessary material thus it loss the
control over production. It is increasing
cost of company thus reduce down
profit margin.
 H & m focuses to provide affordable
clothes to customers thus compromise
with quality sometime. So, premium
customers do not give preference to the
brand.
 Sometimes, entity also provides
obsolete designs that put negative
impact on its image among customers.

Opportunities Threats
 There are huge opportunities to make
effective use of unique techniques such
as digital marketing, automation in
order to attract more number of buyers.
 Company can also expand its business
in other countries where entry barriers
are low and it is easy for H & M to
survive at market place for longer run.
 There are ample of rival firms present
at market place that is the biggest threat
for entity. It provides huge competition
to entity.
 Now, market trends are changing
rapidly thus company need to adopt
effective strategies in order to meet
with the preferences of customers in
best possible way.
 Raise in digital technologies are also a

threat for entity as now customers are
shifting towards the online ways of
shopping that may reduce down the
number of visitors within outlets.
Strategic Options
There are ample of strategic tool that can be used by an organization in order to explore
business at wide level. Ansoff matrix is a framework which comprises several strategies for
growth and success of an entity. In context of H & M, different strategies of business expansion
are given as under:
Market Penetration- It refers to provide existing products to existing customers segment.
Under this, company do not undertake any new practice in terms of market and products. For
this, managers offer various discounts, vouchers in order to attract more number of buyers. It is
analyzed that H & M provides ample of discounting offers on its fresh and well as old stock of
designer clothes. In addition, they located outlets at such a place which is easily accessible by
buyers that provides an edge to entity over rivalries. There are ample of small retailers have been
acquired by organization in order to enhance its market share. With this, it is able to sustain at
market place for a longer period of time.
Market Development-Here company launches existing product in new market place to
explore business at wide level (Priem, 2018). It can be done by entering into a new location and
targeting new segment of customers. H & M is a global brand that is working in various
countries worldwide. It can explore business by opening more outlets at various location across
the globe. For this, they need to create awareness among buyers so that they get to know about
the offerings of company. Further, company is using online platforms to market its product at
wide level that will enhance its presence in market place.
Product Development-In this, entity offers new products as well as services to existing
buyers. Mangers of H & M make modification in current products in terms of colour and designs
to attract more number of customers. Further, they take extensive market research to meet with

the needs of consumers effectively. In addition, managers of entity also aim to launch new range
of products to cater the requirements of huge segment at global market place.
Diversification- This is consider as an important strategy to expand business operations.
Under this, a new product is launched among new customers segment in order to enhance sales
and profitability of company. Although, it consider as better way to grow business but on the
another side there is high risk associated with this. In context of H & M, it can explore operations
by entering business by exploring in unrelated fields such as sports equipment, consumers
appliances and many more.
Strategy Selection and Justification
There are high competition is prevailing in market place thus it is crucial for companies
to adopt efficient strategies in order to sustain for a longer period of time. It is analyzed that there
are ample of ways by which entities can promote its product among buyers. From above stated
strategies Diversification seems to best suitable strategy for respective company. With this, H &
M can launch new product category by including some variants in that. In addition, they can
target to new segments of customers reside at differ countries worldwide. For this, organization
will be able to get competitive edge at market place. Further, Diversification is essential to
explore operations at large level as with this organization can open new outlets.
Organization will be able to explore business operations at wide level. In addition, it
helps to make optimum utilization of available resources. In current competitive environment to
sustain in market for a longer period of time, it is crucial to adopt different diversify business. It
is analyzed that, in context of selected company it is the most suitable way to increase in sales
and profitability. Further, to enhance market share at global level. It is crucial for company to
diversify in different segment. In case of H & M, it can expand business in some related as well
as unrelated segment such as sports accessories, many more. Therefore, in context of respective
entity diversification can be understand as most suitable strategy to earn potential profit and get
competitive advantage. It will help to attract more number of buyers by providing them a wide
range of products (Shin, Park and Lee, 2016).
Recommendation
H & M is working at global level but it need to make some necessary improvements in
order to get future benefits that are elaborated below:

It need to invest in another categories such as sports, and other in addition of its present
category in order to expand business operations at wide level. It will help them to meet with the
needs as well as requirements of buyers in an efficient manner.
Further, company need to start their own manufacturing unit rather purchase goods from
suppliers as it increases their operating cost. With this, managers will be able to manage cost at
lower level.
In addition, entity can enter into new markets and expand business functions by
associating with other companies through undertaking joint ventures, mergers with another
organizations. It will assist them to serve wide range of customers worldwide.

CONCLUSION
With above discussion, it is monitored that strategic management are crucial function of
business entity. It is a wide concept in which several strategies are formulated to improve
position of company at market place. In addition there are a tool called Pestle analysis that is
essential to monitor the impact of external environment over business performance. Further,
SWOT analysis is undertake to internal capabilities of entity and make effective strtargies to
strengthen its position among buyers. Ansoff Matrix comprises several strategies to expand
business operations at global level and inflate the sales and profit margin. Recommendation have
been made in order to improve market position of entity

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