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H & M - business analysis

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Isi Buri

on 26 November 2012

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Transcript of H & M - business analysis

Annemarie Nussbaumer - Carolin Eichler - Christina Bareuther - Isabell Burian - Sarah Hanisch I. BUSINESS MODEL

1. Evaluation of H&M's business model

2. PESTLE - Macroenvironmental analysis

3. Critique of H&M's governance structure AGENDA DCU - Business School Business Strategy 12th October 2012 PESTLE macroeconomic analysis Globally active company
Rising prices of raw materials
Weak economic conditions
Growing Asia markets
Highly competitive market sector Fast moving fashion trends
Changing demographic
Increasing going green conscious
Price-sensitive consumer Development towards more sustainability
Development of new recyclable fibers Working conditions and wages at supplier factories
Legal regulations for chemicals in clothing
Environmental regulations Weather (short term)
Climate change (long term)
Long-term availability of natural resources (cotton, water, etc.)
Chemical pollution (production & shipment)
Use of recyclable fibers political economic social technological legal environmental ViSiON, MiSSiON
& OBjECTiVE H&M in figures Net sales increase but decrease in profit 1947 Foundation of Hennes womenswear by Erling Persson
1968 Acquisition of Mauritz Widforss

Todays portfolio:
Apparel, cosmetics, footwear, accessories for men, women, children and teenagers
H&M’s home textile range – offered for sale through internet and catalogues

More than 94,000 employees
Around 2,500 stores in 43 countries
Headquarter in Stockholm
Quoted on NASDAQ OMX Stockholm Evolution to world's second largest clothing retailer by sales Foreign exchange fluctuation
Taxes and quotas for non-European companies
Strict regulations where the production is located (in producing countries & sales market) Minimum wage from which workers cannot live: from a €5 shirt a worker in production factory usually earns €Cent 0.13
No workplace safety
Child labour (especially in cotton production)
H&M’s code of conduct does apply for its suppliers but not for the suppliers of its suppliers → H&M does not control working conditions especially in sub suppliers Bad working conditions in production plants Advertise a lot for clothes made out of organic cotton
But status quo 2012: only 7.6% of its cotton is organic
Aim: by 2020 H&M wants to convert to the “Better Cotton Initiative” (BCI) Working conditions Sustainable cotton Controversial creation of ideals of beauty Campaign with models who all have same body, but different faces on body were photoshopped Swimwear campaign 2012:
unnaturally tanned skin models “The clothing giant is creating, not least among young people, a beauty ideal that is deadly" (the cancer society in Sweden) Thank you for your attention.. Sources (1/4) Any questions? Sources (2/4) Sources (3/4) Sources (4/4) Focus on latest fashion trends and best prices Vision:
"[T]o give the customer unbeatable value by offering fashion and quality at the best price"
(H&M Hennes & Mauritz AB 2012a)

"[O]ffer new fashion concepts and good quality at exceptional prices"
(H&M Hennes & Mauritz AB 2006)

"H&M's growth target is to increase the number of stores by 10-15 percent per year, and at the same time increase sales in comparable units."
(H&M Hennes & Mauritz AB 2012a)
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