Strategic Analysis H&M Sample Assignment
Hennes & Mauritz AB (H&M) is a Swedish company that deals with the design and retail of clothing and other accessories. H&M is one of the market leaders in the clothing and accessories market with operation in over 60 countries as well as a well-established online market. H&M targets customers of all age groups and both male and female gender with a philosophy to provide the bet fashion and quality at the best price. For this strategic analysis the topics covered are….
H&M is made up of a group of nine brands which are H&M, Monki, Weekday, COS, & Other Stories, , H&M Home, Cheap Monday, ARKET and Afound. Each of the nine brands is treated as an individual company but they all share some core policies and guidelines that keep them under one company. The nine brands have an appointed leader or manager who reports back to the parent company. H&M Group is led by one chief executive officer who is gets to the position by appointment by the board of directors. The CEO on top of running the day to day duties and responsibilities also appoint the members of the executive management team of 10 members. The executive management team at H&M is responsible for the management of the company’s production, finance, sustainability, communication, expansion, human resources, business development and other logistics. H&M corporate culture and operation in its international status focus of treating the entire world as one market. The company has several branches in the areas targeted but it keeps them operating under similar plans and strategies. The financial and resource strength of the company allows it to operate on a broad selection of markets and also have products for multiple segments.
H&M enjoys strengths such as having a strong and well-known brand image built over years of good service that allows their customers to identify and purchase their products from anywhere. The good brand image also attracts and motivates its workforce making it an attractive place to work. The company has the strength of having a wide range of products that include cosmetics, clothes, shoes, and other products that attract a wide range of customers. The company has a strong financial performance that serves to boost investor’s confidence in it and provide opportunities to venture in and grow further. The main weaknesses of the company include a high dependence on third party suppliers to provide merchandises which means that the company has little control over production and a higher risk of affecting operations. H&M’s focus on providing affordable prices has a negative effect on the quality of the products as the producers try to balance the cost of production and the potential profits. The available opportunities for H&M include the opportunity of expansion to increase profits, increasing its online store platform to make more sales and investing in emerging markets to take advantage of the demand. H&M faces threats such as the constantly changing fashion trends which it has to keep up with. The company is also threatened by new entrants in the market and high competition from rival firms.
H&M enjoys an advantage in that the products that it provides to the market do not have substitute products that customers can go to reducing the market strength. The products however have many alternatives to perform the same function where some are available for a lower price than those offered by H&M. The many alternatives means that the company has to work hard to keep the customers satisfied with the products and remain loyal for repeat purchases. The clothing and accessories market has many companies also offering a wide range of products that present a high threat to H&M. The market is also affected by other outside factors such as the cost of labor or distribution of products which affects the prices set on the products. It is difficult of new entrants to enter and establish firmly in the market by using the traditional physical store as they are costly to set up and run. The development of online stores has however provided a cheaper and easier alternative to enter and establish in the fashion and accessory market.