Market Analysis H&M

2088 words - 9 pages

MG 2033: Quality Control

Assignment 1 : H&M

Group 20: Dominik Flum Thies Fingerhut

Introduction Hennes & Mauritz (H&M) is a 100 billion SEK company. It´s engaged in designing and retailing of fashion apparel and accessories. The company offers a range of apparel, cosmetics, footwear and accessories for men, women, children and teenagers. H&M primarily operates in Europe, North America and Asia, and has a presence in over 38 countries. The company is headquartered in Stockholm, Sweden. Approximately 87,000 people on a full-time basis are employed at H&M. Strategy According Michael E. Porter (1996), the strategy of a company, per definition is selecting the set of activities in which ...view middle of the document...

Besides the environmental aspect of sustainability there is a social issue. H&M’s social objectives are closely related to the Code of Conduct. This policy has been developed by H&M in order to maintain control among its many suppliers. All suppliers have to agree on the Code of Conduct, before becoming a supplier for H&M. As a consequence, one of H&M’s social objectives is to have full compliance with the Code of Conduct. Probably the key aspect of H&M´s strategy is the price. In the consumer's perception, H&M has been associated with affordable fashion. So this shapes the image of H&M. “To increase the number of stores by 10 – 15 percent per year” (H&M 2011a). Today H&M has around 2,500 stores and a presence on four continents. According to Karl-Johan Persson, CEO of H&M, the objective is to expand by 10–15 percent new stores per year. In 2011 H&M opened 266 stores. China, the US, the UK and Germany were the largest expansion markets. There were also store openings in five new countries: Romania, Croatia, Singapore, Morocco and Jordan. In 2012 H&M wants around 275 new stores. These facts show another part of H&M´s strategy: Global expansion. “Our global growth strategy is for each individual store to strengthen the H&M brand

while also contributing to increased sales and profitability,” says Head of Expansion Stefan Larsson. Due to continuous expansion it´s possible to search for promising markets, cost-efficient production and reduction of lead times. (e-Business Watch) The ruse at this, is to treat the entire world as one market. The plans and operations are same in all countries. Even H&M does not favor a specific country from any of its market areas, it implements its strategy similarly in all of them. (Czinkota et al. 1999, 473.) With the fast expansion all over the world, H&M is gradually becoming stronger and have a firm position in this industry. (H&M 2010b.) Other aspects of global expansion are the online and catalogue sales. In 2011, H&M has launched the new H&M online shop in the USA, the world’s largest retail market. Therefore it´s possible, that people can buy the products of H&M just by clicking the mouse. Reasons for success As stated by Porter (p. 61-78, 1996), “Trade-offs are essential to strategy. They create the need for choice and purposefully limit what a company offers.”According to this “Tactical choices” are the company’s individual definition of which activities should be executed and which not. The company uses various tactical choices to finally fulfill their main strategy. The strategy of H&M is both lower costs and differentiation: The main goal of H&M is to reduce cost in every step of the business in order to offer to the customers the best prices. Their management system is based on “continuous flow” principles that are performed by the supply chain management department. Because of that they are able to order each item at the right time for stores in order to have it just in time. In order to have a...

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