Strategic Management Essay: HI6006 Competitive Strategy Tools Analysis

This essay, prepared for the HI6006 Competitive Strategy course, delves into three crucial strategic management tools: SWOT analysis, PESTEL analysis, and Porter's Five Forces model. The essay begins with an introduction to strategic management, emphasizing the importance of these tools in understanding the business environment and mitigating risks. The SWOT analysis examines a company's internal strengths and weaknesses, alongside external opportunities and threats, with H&M as a practical example. The PESTEL analysis investigates macro-environmental factors, including political, economic, social, technological, environmental, and legal aspects, providing insights into H&M's external environment. Finally, the essay applies Porter's Five Forces model to assess industry competitiveness, evaluating the bargaining power of buyers and suppliers, threats of new entrants and substitutes, and competitive rivalry, again using H&M as a case study. The conclusion summarizes the importance of these tools in achieving and maintaining a competitive advantage, emphasizing the need for adaptability in the dynamic global economy.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author note

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Introduction
With the assistance of tools for strategic management, it increases the awareness of the
business environment, issues related to strategic aspects, threats and opportunities which helps
in reducing the risks which are included in managing the different decisions which are important,
prioritization of complex companies along with providing framework for the assessment of
relative importance of the different changes which are needed for adopting to changes
successfully. The different environmental changes are among the most important type of
concepts in the recent years which will be helpful for managing the required changes
(Vishnevskiy, Karasev and Meissner 2018). As the business environment is multifaceted, there
are various ranges of strategic management techniques that are being utilized for managing the
different activities successfully and it implements the activities such as PESTEL, SWOT,
Porter’s Model as well as the core competencies that will be creating a strategic effectiveness
on the implementation of the approaches that will be creating efficiency in the productivity
(Rosenberg Hansen and Ferlie 2016). In order to overcome the different internal and external
issues, there are tools which have been discussed and it can b implemented and applied
creatively. The strategic management techniques provides more emphasis on helping the
different managers in different areas of strategic management from strategic analysis to
strategic choice successfully.

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SWOT Analysis
The main point of conducting the SWOT analysis is to develop the strong business
strategy through making sure that there is consideration of the various strengths, weaknesses,
opportunities and threats of the company which is faced by them in the marketplace. As
commented by Peppard and Ward (2016), the strengths and weaknesses are considered to be
the internal portion that is inclusive of location of business, patents and reputation of business
firm. It can be changed over time with the efforts provided in it and gain high and successful
results. In case of threats and opportunities, there are competitors as well as suppliers which
are happening in the marketplace and it cannot be changed as it is regarding the aspects which
are present in the external environment. The different existing businesses can use the SWOT
analysis for assessing changes in environment and respond effectively (Hm.com 2019).
The SWOT of H&M analyzes the brand with internal strengths and weaknesses and
external threats and opportunities.
Strengths- It is one of the largest global clothing retailers which help them in offering
trendy yet quality clothing to the different customers. The company tries to keep the prices
affordable that can be used by the different individuals and there has been an endorsement of
celebrities in the company which makes them effective. They are moreover present in different
complementary businesses that help them in offering flexibility and better control.
Weaknesses- There is high fee related to maintenance as well as lot of investment in
capital that affects the company’s growth and impact the efficiency inefficiently. The buying of
the different clothing and other items in large volumes can be leading to lowering of affordable
pricing strategies (Hm.com 2019).
Opportunities- The company can implement and focus mainly on the online channel of
selling the different goods and services which is the current trend in the market. The different
emerging economies will be helpful in supporting the expansion plans of H&M which will be
enhancing the growth of the firm successfully (Karadag 2015).
Threats-The weak competitive position of H&M can be proving to be threat for them and
impact positive aspects for other competitors. The unemployment is other factor which is rising
to great extent.

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PESTEL Analysis
It is the technique which is utilized by the various marketers for monitoring as well as
analyzing macro-environmental factors which have huge impact on the company and the other
stakeholders involved in process. The result of PESTEL analysis is used for identifying
weaknesses and threats that is used in SWOT analysis. Political factors include government
intervenes in economy, economic factors is inclusive of economic growth and the GDP rate of
the economy (Jenkins and Williamson 2015). The social factors include the factors which
includes career related attitudes, health consciousness among the different individuals which
can create impact on the firm. Technological factors include the new techniques for producing
the different goods and services and communicating with the target markets effectively. Lastly,
the environmental and the legal factors mainly rely on the equal opportunities and the
environment laws and legislations which need to be followed in an efficient manner.
PESTEL Analysis of H&M helps in understanding the external environment in which the
company is running their business and the different approaches which can be implemented by
them to become ethical.
Political- There is political instability in various regions of the country where the
company is situated and it impacts the business.
Economic- The labor laws are impacting effectiveness of firm negatively which impacts
the growth of H&M. The norms of tax keep changing with time and it impacts economic stability
of firm (Holloway 2018).
Social- The changing trends of the preferences of the customers can influence
efficiency of H&M and impacts the growth of firm negatively (Gallus and Frey 2016).
Technological- There should be technological advancements that is implemented for
matching with the changing behavior of the customers as it can impact the efficiency of the firm.
Legal- There are different regulatory policies of each and every country that can be
negative influence on H&M and it will be ineffective approach for H&M and advantage for
competitors (Gans and Ryall 2017).
Environmental- There are various norms and legislations of the environment that is
needed to be followed which needs to be implemented by H&M for gaining competitiveness.

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Porter’s Five Forces Model Analysis
It is the business model which is advantageous in understanding the viability and
sustainability of firms which makes them sustain in different levels in the markets. As per the
framework, the respective model is used with the concern of understanding the bargaining
power of buyers and suppliers, threat of new entrants and the existing ones along with
competitive rivalry that can impact the competitiveness of firm. It provides scope for the
companies to utilize their resources to compete and gain their respective position in the
economy as compared to other companies which are considered to be competitors and can
take over the place of the particular company (Daspit et al. 2017). The knowing of the strengths
of the five forces help in developing strategies which helps business to be more profitable and
competitive and looking for the different opportunities, it will strengthen position of company
compared to other players in the market (Chen, Delmas and Lieberman 2015).
Five Forces Analysis of H&M will be able to make audiences understand and know the
prospects of the five forces in managing the competitive position and strengthening the same
successfully as well.
Bargaining power of buyers- It is moderate as the buyers prefer to change their
perceptions based on the different discounts which is achieved and change their decisions
instantly.
Bargaining power of Suppliers- It is low as the brands are producing he final products
with help of suppliers and they do not have much choice left with them.
Threat of New Entrants- It is low as there is difficulty in differentiation of products and
services and H&M have been able to set up standards for themselves which cannot be imitated
by others (Bromiley, Rau and McShane 2016).
Threat of Substitute Products- It is low as for the clothing industry or sector, the
substitutes are low and no perfect substitutes are available. The brand loyalty and low cost are
the two other approaches that needs to be implemented for creating distinction between the
products.
Competitive Rivalry- It is low as the designs are evolved quickly that can be
advantageous for the firm. However, there is imitation of products done by other competitors
such as ZARA that can impact the fashion trends of the company.

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Conclusion
SWOT, PESTEL and Porter’s Five Forces Model are the three most important strategic
management techniques that have been discussed with the help of example of H&M. From the
respective instance of H&M, it has been made clear that the strategic techniques are important
for understanding the current situation of the company and other issues which have been
handled by them sustainably and suitably. The world economy is changing rapidly in the current
scenario wherein the review of external as well as internal environment is needed to be done
along with evaluation and control are implemented for maintaining the competitive advantage
approaches. The various companies should require to become more flexible in which they can
find more power as to compete that will be making the issues disappear in long-term
successfully. Through the implementation of the SWOT analysis, it was found that H&M was
facing high competition compared to ZARA or other brands and the strengths can be
implemented by them to reduce the threats and it will be suitable for them in competing
successfully. PESTEL Analysis helped in understanding the political instability or the instability
in GDP that affects the purchasing power of customers, in such scenario, H&M can create
different legal laws and legislations which can be implemented for the success and it will be
suitable for the companies to compete against one another. Five Forces Model Analysis
analyzed that there is high competitive rivalry that needs to be withdrawn through innovation
and capabilities.

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