The firm deals in fashion wear for children, teenagers, men, and women. The core range of products for this company include jeans, jackets, fashion shirts, jewelry, purses, vests, basic jumpers, sleeved Jersey dresses, and cardigans among others. H&M pursues a long-term strategy with a view that combines the business’ distinctive model of “high fashion at low prices. ” Hennes and Mauritz Company faces stiff competition from Zara of Inditex, UNIQLO, Gap, Boohoo, American Eagle Outfitters, and Abercrombie among others. Strategic capability of an organization is primarily concerned with an organization’s competencies and resources that help the organization to deliver value to their customers (Porter 1998). The bargaining power of consumers is high because the fashion industry has several players such as Zara, Gap, and UNIQLO among others from whom consumers may substitute H&M’s products because of the low switching costs needed when choosing trendy fashions (Song, Wang and Maoran 2018).
Hence, H&M need to ensure that they meet their customers’ needs to maintain them because they are the primary sources of their revenue. The Bargaining Power of Suppliers. The bargaining power of suppliers for H&M is low because the industry comprises of many manufacturers of fashion clothes. Following the liberalization of international trade, H&M have several options from whom they can source their raw materials hence (Song, Hongwei and Maoran 2018). Since its establishment, H&M have remained competitive in the industry except that it lost to Zara in 2009, but currently it is the world’s second-largest fashion retailer. Based on Porter’s description of competitive strategy, H&M’s value chain has also contributed towards the success of the company.
Firm infrastructure. Currently, H&M operates in more than 4553 stores in 62 countries and employed over 120 000 employees globally (Shen 2014). The firm’s headquarters is based in Stockholm, Sweden from where most crucial decisions about the firm are made and disseminated to the rest of the stores across the world. On the contrary, without owning any factory or farm, H&M switches between suppliers easily and settles on cheaper sources, and because of their economies of scale philosophy, the organization can get better prices and quality which gives them a sustainable advantage over their competitors (Shen 2014). Operations. H&M utilizes the in-house designing model with their head operations office located at Stockholm, Sweden. With the 200 design and 100 pattern makers, H&M churns out quickly several fashion designs that are chosen by well-known designers which are also based on the latest market analysis.
In this case, having a direct connection with the production office allows immediate production thus enhancing cost-efficiency. H&M is one of the most trusted apparels in the industry because of their quality yet low prices. The core range of products under H&M brand include cool shirts, jersey dresses, vests, basic jumpers, undergarments, and cardigans among others. Hitesh shows that about 25 percent of the company’s stock is made up of fashion products (Lee et al. Mainly, the products appeal to the young generation who contribute to higher sales. Place. Moreover, the company designed a website that offers catalogs of the products and prices. Currently, by partnering with mobile designers, H&M has developed a mobile application that shows their latest collections, and through which customers can pay and get an SMS which they can cash at any H&M outlets to receive the product (Song, Hongwei and Maoran 2018).
However, the online promotion for H&M has not been successful because of the manner in which the web product is displayed. SWOT Analysis for H&M A SWOT analysis outlines the strengths, weaknesses, opportunities, and threats that an organization may utilize to gain or maintain a competitive advantage over their rivals in the industry (Finster and Michael 2014). Strengths Weaknesses • Well-established brand that specializes in trendy clothes at a low price. Recommendations for H&M to help them remain competitive in the industry H&M focuses mostly on “Economies of Scale” by buying goods in bulky such that they can get better discounts, have long-term experience of monitoring their cost savings, and constantly redefines their production and distribution to attain cost-effectiveness (Elizabeth 2018).
However, although H&M have managed to do all this, there is a need for the company to control the “input cost” because to avoid depending entirely on suppliers for their production needs (Elizabeth 2018). With these regards, it is essential for H&M to adopt a backward integration approach by buying or controlling different manufacturers. With the increased global competition, especially in the fashion industry, firms should lay appropriate strategies which will help them to control the cost input if they were to remain competitive in the industry Song, (Hongwei and Maoran 2018). Hence, it is crucial for H&M to reduce their reliance on suppliers and develop new ways through which they can obtain supplies. 3 Billion in Unsold Clothes. Available at https://www.
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