H.M Company Strategies

H.M Company Strategies

References

www.coursehero.com

www.usaresearchwriters.com/

www.sfu.ca/

www.search.proquest.com/docview/1674836183?accountid=146103

www.freepestelanalysis.com/pestel-analysis-of-h-m/

P E S T L E

Citation: (Adamkasi,2015)

Environmental

It affects business operation of H&M.

-make sure all products do not lead to environmental hazards.

-awareness of sustainable

1:increase energy effeciency

2:reduce waste in the process of

business operation

Citation: (Adamkasi,2015)

Legal

It influences the international business of H&M.

-has to follow:

legislation of different countries

international laws

standerds

-chalange: some counteies may not have clear and co,prehensive labor legislation

Citation: (Adamkasi,2015)

Technology

It affects business outcomes of H&M

-logistics development: reduce waste and inventories though its global supply chain

-development of communication technologies

-development of the internet promotes online shopping and e-business can increase its sale volum

Citation: (Adamkasi,2015)

Social

It affects the preferences of consumers.

-target: young females and males

-fragmented into more specific niche group

-green issue:

affect the production and sales of the company

Citation: (Adamkasi,2015)

Economic

-It affects the consumption capacities of customers in the market.

-inexpensive clothing store chain store (high quality at low price)

-economic cricis has influenced consumption capacities and spending patters of customer

-important for provide discount and promotion activities to stimulate consumption

Citation: (Adamkasi,2015)

POLITICAL

- Relocation of manufacturing,

- Restrictions on both export and import.

-some countries may set strict regulation on import in garment industry

-contentious issue

-perduce oversea though outsourcing

Introduction

In the past:

Started in 1947, a single womenswear store, in Sweden.

Today:

More than 4200 stores in 64 markets

6 fashion brands through the world

E-commerce trading in 9 countries.

Citation: H&M group (2016)

Outline :

- Introduction & Ansoff Matrix analysis

- SOWT analysis & Porter's five force

- PESTLE analysis & Summary

Porter's Five Forces

Threats of Rivalry

- High Rivalry

Main competitor : Zara,owned by Inditex Corp.

- The industry operates under oligopoly

- Companies are interdependent

Strengths

Threats of new entrants

Threats of substitutes

Bargaining Power of buyers

Bargaining power of suppliers

The threat of new entrants is high.

High because of an overabundance of retailers in the market.

• Low because there are many suppliers with little differentiation available.

- One of the largest global clothing retailer.

- Great locations of the stores

- Cheap, but fashionable

- Low overall delivery time

- Well-developed marketing skills

- Strong brand image

• There is no direct substitutes for apparel, but there are substitutes to retail.

Weaknesses

Opportunities

- Online Shopping

- Emerging market

- They are well positioned to tap the niche organic apparel market

- Teen market

- Low quality clothing

- Lack of control over garment production

- They have put in a lot of capital and maintenance fee for all the different types of machines required to produce clothes for each target segment.

- Dependent on suppliers.

Threats

- Weak competitive situation as the prominence of value retailers and premium luxury brands increases.

- Their newest business line home-ware has not been able to click in Europe and hence is leading to lowering sales.

- Unemployment is also continuously pressurizing their target segment to discretionary spending.

SWOT

analysis

Conclusion

Main strategy : Expansion

Now in 2016:  

To increase the number of stores by 10-15 percent per year

Extended online shopping to 11 new markets, 35 markets in total

Future in 2017:

Continue to further markets

Sales & Profits in 2016

First nine months of the financial year: sales including VAT increased 7% to 162 (the slowest growth in three years)

Profit fell 17% to 127.22 billion dollars

Citation: H&M group (2016)

As one of the largest global clothing retailers, H&M has great locations of stores, inexpensive fashionable products and low overall delivery time. It also faces challenges of low quality products and lacking garment production control.

The development of online shopping, emerging market and teen market provide business opportunities for H&M.

Economic recession and increasing competition threat its business expansion. In the clothing retail industry, the competition is very fierce, the treat of new entrants is high, the bargaining power of suppliers is low, bargaining power of buyers is high.

With the increasing sustainable awareness, H&M is recommended to use renewable resources, increase energy efficiency and reduce waste in the process of business operation.

Ansoff Matrix

A tool used to determine the growth strategy of production and market.

Market penetration

• Selling existing products in existing markets (lowest risk).

Diversification

New Product Development

• New goods in new markets

(highest risk)

• Selling new products to present markets (medium risk).

Market development

• Selling existing products in new markets (medium risk).

Market penetration

• Best Price
• What A “Lady” Acts

Market development

• In 2016, Puerto Rico, Cyprus and New Zealand
• In 2017, Colombia, Kazakhstan, Iceland, Georgia and Vietnam

New product development

• H&M with Kenzo
• New materials, new features

Diversification

Citation: What is Ansoff Matrix? Definition and meaning (2016)

Kenzo (2016) H&M group (2016)