H&M company analysis Essay

H&M were established in Vasteras, Sweden in 1947 by Erling Persson. World events and trends of monumental significance start out occurred, since the little Swedish ready-to- come apart range unquestionable into a multinational concern with stores in 18 different countries. When their store undefended in Stockholms kungsgatan, there was a queue one kilometer dogged and the traffic law of nature were forced to overwhelmvene. H&M stands for Hennes and Mauritz, it is a Public Limited telephoner, whereby all the stores be owned and completely run by H&M. agate line forms such as joint ventures and franchising atomic number 18 therefore non possible. H&M atomic number 18 regarded as a high street fashion retailer, aimed at anybody and endlessly with the outgo prices. They atomic number 18 recognised for inexpensive moreover trendy costume. They currently w be 901 stores located in 18 countries, employing 39,000 employees. The focusing on conflicting grocery store s began with a store in Nor focussing in 1964, and due to this inter? national status they currently occupy market per centum allover the ball.By 1961 H&M opened a store in Norway and by 1964 in Denmark, they were quick to keep up with changing trends. In 1974 H&M was listed on the stock ex shift, and they opened stores in Europe. By the 1980s H&M began focusing on internationalization with a brisk managing director Stefan Persson. Stores were opened in Germany and the Netherlands and the share prices rose. H&M got their setoff in house chassisers with pupils hand-picked from the fashion and tailoring colleges in Stockholm to dress in Norrlandsgatan, where there was as well a major drive on jewelry and accessories. In 1983, H&M sayed their customers a new and convenient way of brand? ping, by interchange clothes by mail sound out, in order to keep up with competition, which was becoming more and more intense. By the 90s H&M were greatly worried by the impact of e-comme rce, more companies were starting to throw away web pages, and by 1995, companies began providing the service of Internet obtain.In 1992 H&M opened in Belgium, 1994 in Austria, and by 1996 in Luxembourg. A dramatic change came about for H&M in 1998 when they began sell on the Internet. It was apparent to directors, which they had to do this, as competition was becoming fierce, and profits were lighting. Today H&M has received global recognition for its designer collaborations, including Karl Lagerfeld, Stella McCartney, Viktor & Rolf, Roberto Cavalli, Rei Kawakubo of Comme des Garons, Matthew Williamson, Jimmy Choo, Sonia Rykiel and Lanvin. Every H&M store is unique our One New Change store is H&Ms first in the City of London and carries ar operatements and accessories for women and men, including tailoring and suiting and a selection of swimwear.H&M Company ProfileProductionH&M does non own any factories. Instead, clothes and other products are commissioned from around 800 in dependent suppliers, primarily in Asia andEurope. The H&M buying department plans the range. afterward that, all practical aspects are dealt with by our production offices. These production offices, where near of the employees are drawn from the local anesthetic state, are in uninterrupted contact with the suppliers. The production offices are responsible for placing the order with the remediate supplier and for items being produced at the right price, making sure that they are of good quality and delivered at the right clock. They exchangeablewise audit that production takes place under good working conditions. The production offices coiffure commodious safety and quality testing, including checks for shrinkage, twisting and colour closeness, as well as ensuring that the chemical requirements have been met. A products lead-time can vary from a couple of weeks to six months. For high-volume fashion basics and children wear it is advantageous to place orders far in advanc e. Trend-led garments produced in smaller volumes require considerably pitifuler lead times. H&M strives to order each piece at its optimal moment, finding the right balance surrounded by price, time and quality.St yardgy- Global expanding uponH&M stores should always be located in the infract(p) business locations, whether in a big city or a small-town shopping centre. This has been a unanimous principle of H&Ms since the very first women wear shop opened in 1947, and it is let off true today. We always look for the best business location combined with the most af debauchedative market terms. That applies to H&M as well as & Other Stories, Cheap Monday, COS, Monki and Weekday. H&M does not own any store premises, which makes way for flexibility and alineability. By renting space, we can remind at the same pace as our markets. Long-term quality lies at the heart of the expansion schema. out front H&M moves into a new coun pick up or city an assessment is made of the mark ets potence. Factors such as demographic structure, purchasing power, economic growth, infrastructure and political risk are analyzed.A extensiveside expansion, existing stores are renovated, fling customers all over the world exciting new shopping experiences. H&M is as well as working actively to make all stores sustainable in the long term, for example through energy-saving initiatives and environmentally adapted materials. H&M re of imports positive towards future expansion and new business opport social unities. The growth targetis to increase the number of stores by 1015 percent per year with anticipated high profitability and at the same time increase sales in comparable units. The strong pace of expansion is continuing in 2013 with a planned 350 new stores net. This instrument that we ordain effectively be opening a new store every day. In 2013 the highest rate of expansion will again be in China and in the US. Investments will also continue within online sales. H&M plan s to launch online sales in the US, the worlds largest market for e-commerce. sight and MissionH&M s vision is to always provide the customers with better tosss than before and to perpetually exceed their customers expectations. At the same time, H&M also arduous to be most commonplace fashion brand in the world and H&M took many years of efforts to realize it. 2010 was a very good year for H&M with a sales increase of 15 percent. return after financial items increased to SEK 25 jillion. During the year we improved our market position further with a strengthened customer offering by giving the customers even more fashion and quality at the best price. The economy improved from 2009 moreover in several countries the economic situation was still chatoyant and difficult.-Karl-Johan Persson, CEO From the comments of CEO Persson, we can see that the mission for H&M is to strengthen customer offering by giving more fashion and quality at the best price.H&M strategic PlanningEstab lishment & EffectivenessTo execute that vision and mission, H&M strive to make the costumers the best offering about the design and fashion. for example, the British fashion designer weed a capsule womens collection got a fantastic sales when it was launched in around 200 H&M stores on 23 April, 2009.Its bright colors and lively patterns attracted customers. And only a month later, a more comprehensive summer collection which was typical Matthew Williamson wonderful colors and patterns arrived in the stores. The pieces also worked genuinely well with H&Ms own summer collections. H&M expanded substantially during 2009 and 2010, opening stores in many exciting new markets. For example, Lebanon in October 2009,Russia in March 2009, Beijing in April 2009,South Korea, Israel and Turkey in 2010 and Croatia, Romania, Jordan,and Morocco in 2011.With the strong expansion all over the world, H&M is gradually becoming stronger and have a firm position in this indus effort.At the same tim e, H&M are still trying to expand the online and catalogue sales, because the stores are not the only place customers can enjoy shopping with H&M. At the beginning of 2011, they have been launching the new H&M Shop Online in the markets where they offer online and catalogue sales before, easy and fun as visiting a store, regardless of whether customers shop by tablet or smartphone, via apps or directly at hm.com. H&Ms interactive shop online offers easy navigation and is much appreciated by customers in all eight countries where H&M and H&M Home offer online shopping Sweden, Norway, Denmark, Finland, Germany, the Netherlands, Austria and the UK. Since January 2013 H&M shop online is completely mobile-adapted. In the US, the worlds largest retail market, H&M plans to offer online shopping from summer 2013. Distance selling is a vital and growing complement to stores. COS, Monki and Weekday offer online shopping in 18 European countries.The new H&M brand & Other Stories, which is laun ching in spring 2013, will be obtainable both in stores and online. & Other Stories will offer shopping online at stories.com in ten European countries. H&Ms communication is global and hm.com is one of the worlds most commonplace fashion websites. Fashion enthusiasts all over the world interact with H&M via social media and apps. H&M is also one of the leading fashion companies on Facebook, Twitter, Instagram, Google+ and YouTube, as well as on Chinas social networks Youku and Sina Weibo and Russias VKontakte. Social media spreads the news further about H&M when the brand expands into new, exciting markets. Naturally, it will help H&M to achieve its vision in the future. Furthermore, destination of H&M is to increase the number of stores by 10 15 percent per year chthonian the goal, in 2009, H&M was expanding rapidly. We can see from annual report 2009-2012, during 2012 H&M opened 304 new stores net. Achieve goal that 10 15% new stores net per year.External AnalysisOpportunit ies in that location are several opportunities for H&M to develop its business. As the online market is more and more developed and H&M should start to sell itsproduct online. At the start of 2011, H&M are launching the new H&M Shop Online in the markets where they offer online and catalogue sales already. obtain experience and functionality have been improved. Around the end of 2010 they plan to start online sales in USA where should be the worlds largest online market. In conveyition, the economic crisis was really strong and it may increase the interest of the population for cheap and voguish clothes. Finally the development of some Asian countries such as Vietnam can harbor the opportunities to H&M to found new suppliers cheaper and more preferment in terms of quality and time of production. both(prenominal) supplier markets with high purchasing power and plenty of customers are with an interest in fashion, just similar in our Asian markets, China and Japan. H&Ms expansion is rapid and running parallel of latitude on four continents. Many potential projects are running simultaneously and competing with each other. There are considerably more opportunities for new openings than the stores that we actually door open, says Stefan Larsson. During the establishment work we decide against some potential stores. Only the best business opportunities remain. The aim is to create the best H&M stores through a combination of best location and best possible business conditions, wherever they are in the world. ThreatsThe major threat is that this market is full of competitors that are constantly growing and that are generally aggressive. Thats why H&M should keep its effort in preeminence in order to face this competition. In addition, there are other risks and uncertainties they cannot avoid and predict. It related to fashion, weather situations, climate changes, trade interventions and exchange order, but also in connection with expansion into new markets, t he launch of new concepts, changes in consumer behavior and use of the brand. The year was also full of challenges. The global financial crisis and recession, with more consumer restraint and discount driven markets, course affected. However, H&M recognized that there were things they could have done better too. Self-criticism and striving to make constant improvements are part of H&Ms corporate culture and they work firmly to require more efficient in all areas. Increased efficiency also means that they can confide in giving the customers an even more attractive offering.Internal AnalysisStrengthsH&Ms strengths include a good brand image and cheap price. H&M has established a strong brand which motivates employees creating unity and attracts skilled work force. The association benefits from a good image from the customers and they have a strong fame everywhere in the world thanks to its huge number of outlets. Also the prices that H&M offer to its customers are really competit ive thanks to the cost saving management way of the company. Cheap price is known by everybody. Their other strength is that they have a good range and many different concepts. The entire concept of low priced set has brought loyal customers for H&M for years. The versatile departments for women, men, teenagers and children are their foundation. They can work with them in different types of buildings, street locations and shopping centers with very different characters. WeaknessesAs the company wants to save money everywhere its possible, the distribution system is really slow and it takes a lot of time to deliver a product to the outlet. It may be really bad for the response time if the company to the competitors offer. Also the low quality of the product could give to the customers the need to go to the competitors. H&M has amount of suppliers. This is a good thing. However, as H&Ms production units add up to 2700, the control of all these demand great resources and management . If H&M cannot maintain its effective organisational structure, the situation may lead to the failure of control.SWOT AnalyzeStrengthsQualitative and high fashion items for a extremely low price. A wide range of collection of products which are permanently renewed most lines products in store are created by guest designersThis company is very reactive and has very fast delivery times Well-known brand with powerful financial resources.WeaknessProduction at one time of a wide volume of product with no guarantee of any sale. A wide range of targeted customers and so a wide range of differentstyle without any real focus on a particular type of customer or tendency. Not innovative fashion products but copy of the luxury or high fashion brands. OpportunitiesFashion plays an increasingly important role in society. For both men and women. Growing market and so at a worldwide level.Economic crisis battalion try to find solutions to buy the cloth which is economical and practical.ThreatsMa ny competitors present on this market.Fashioning products change very frequently and quickly.Other risks and uncertainties they cannot avoid and predict. It related to fashion, weather situations, climate changes, trade interventions and exchange rates BenchmarkingBenchmarking is an analytical tool which is often used to determine whether a companys competency of economic protect chain activities are strongly competitive compared to other rivals so that it can be confident to gentle in the marketplace. Benchmarking includes measuring costs of value chain activities in an industry to formulate best invest among competitive firms with the views of learning or improving on those best practices. Benchmarking can make a firm to take action to improve its competitiveness and win a good position by identifying value chain activities where rival firms have comparative strengths in cost, service, operation and reputation. It can be typically measured by quality, time and cost. Through le arning the benchmark company, we can make improvements which help to do things better, faster, and cheaper.The most important part of benchmarking is to gain access to other companys value chain activities with associated costs. Benchmarking ask to compare the process of management or results with the best firm in this industry, think about how they perform it, how to compete with them. Organizations evaluate various aspects of their processes in relation to best practice companies processes, usually within a peer group defined for the purposes of comparison. As an organization, benchmarking allows to develop plans inorder to make improvements or adapt specialised best practices, usually with the aim of increasing some aspect of performance.In this theme, the rival of H&M, Zara has been selected as the benchmarking target. They have something in common which is easy to compare with. Both of them are successful apparel company and have a huge popularity in the same industry. Howev er, they own difference business strategy to conduct the business performance. The aim of benchmark in here is to evaluate H&Ms strategic management and learn some experiences to improve their strategy and performance better.Zara is a subsidiary company of the Spanish Inditex Group. It is a famous apparel brand, and also the exclusive brand of apparel retail chain of Zara brand. It was established in 1975 in Spain. As a part of Inditex Group, Zara is ranked to the third around the world and the first brand in Spain. Among 56 countries, it has owned the establishment of more than two thousand clothing chains. Zara is always favored by the young people who love the fashion. It stands out by the excellent design and cheap price. In short, everyone can embrace high fashion in Zara.Now Zara has established 2200 womens apparel chain shops in 27 countries in Europe and the 55 countries in the world. In 2004 its revenues ups to 4.6 billion Euros, profits of 440 million Euros. This performan ce is even better than GAP and H&M which is the largest brand in U.S.The main point of the H&M strategy is to achieve lower costs combined with differentiation. The differentiation is mainly based on more fashionable limited collections. For Zara its completely different because they try to be more fashionable for reasonable prices. Not the cheapest prices in general, but cheap prices comparing to competitors who offer similar products.Hierarchy of strategy1. Corporate strategyThe first hierarchy is corporate strategy. It describes the set of businesses, markets, or industries in which the organization competes and the distribution of resources among those business. The direction an organization takes with the objective of achieving business success in the long term. H&M have a constant corporate strategy based on really fast market coverage by opening constantly new stores every week. The company has plans to biramous its number of outlets by 2013 that implies that they plan to h ave about 3000 stores around the world. It means that they open every long time a new store. They want to be present everywhere in the world and in every activity areas. They are also always flavor for occupying markets share from the competitors and increasing the amount of sales, the popularity and the profit2. Business strategyThe second hierarchy is business strategy. Business strategy usually happens at the business unit or product level and it emphasizes improvement of the competitiveness, positions of a corporate products or services in the specific field or market segment served by that business unit. There are two main categories in business strategy low-cost and differentiation strategies.The strategy of H&M is both lower costs and differentiation They are constantly looking for reduce cost in every pervert of the business in order to offer to the customers the best prices. First they have a simply render chain management that is based on a just in time management syst em. delivery times vary from 2-3 weeks to six months, depending on the type of product. It is therefore important to be able to order each item at the right time for stores in order to have it on time. The short delivery times is not always wanted because they must consider the compromise between price, time and quality. They also save cost in producing in Asia and they have partnership with cheap suppliers that produce fast and cheap.In the same time they really want to be different than the competitors in order to have a competitive advantage. This sector is really competitive and H&M need to be different to attract the customers and increase the marketshares. To achieve this differentiation, they regularly offer special limited collections designed by famous artist or designers such as Roberto Cavalli, Madonna, Karl Lagerfeld and so on.3. Functional strategyThe third hierarchy is functional strategy. It is the approach taken by a functional area in order to achieve corporate and business unit objectives and strategies by means of optimizing resource productivity. For example, an IT company such as Samsung will surely have a functional strategy based on research and development in order to create new IT materials and be more competitive.The H&M functional strategy is also based on the research and development area of its organization as they are constantly looking for new models in order to be different from the competitors. They use more than one hundred designers to create the new model in order to create fashion and not following what the competitors did. In addition, as we previously seen, they also work sometimes with famous designers to make special collections.These strategies must complete and invariable with each other in order to have an efficient global strategy. But we must also say that these strategies must be in accordance with the goals and the image that the company wants to share with customers. In this case H&M has a goal that is really different to the strategy is that the company wants to offer products that are good in term of quality, nevertheless at the same time they use cheap suppliers in order to be competitive and offer the best price to the customers.BCG MATRIXIn order to cause the BCG matrix of H&M, first we need to identify the SBU-Strategic Business Unit. According to H&Ms annual report, there are 4 main SBUs are currently been run by this firm, namely, women, men, teenagers and children.Recommendations for H&MThe paper has analyzed various aspects of H&Ms strategic management and its implementation. ground on these facts and theories, recommendations can be made for the company. Generally speaking, my recommendations are simple. 1. As the most competitive rival, Zara is not so dangerous yet, but H&M should keep an eye on their growth and strategy, and try to change the strategy flexibly all the time. 2. Lacking own supply chain is one of promiscuous point of H&M. If H&M develop own supply chain man agement, the production process will be faster and reactive which can bring more profits. 3. H&M has already had a big market share in the world. For the present, maintaining the development efforts and getting the market penetrations are better strategy. 4. H&M should take more efforts on the fashion design and product more fashionable clothes with cheaper price to attract own specialized customers.Most importantly, I think that H&M doesnt need to reduce the expansion. Because of this speed of expanding, many people doubt that H&M raise the cost and loosed the control due to the amount of suppliers. In my opinion, it has the ability to control and monitor the suppliers. I also recommend that it can focus on some emerging markets, like China, Malaysia, SingaporeAs a Chinese, I think China had indeed embraced globalization, but of a sort. For example, traveling through Shanghai, it would be hard to distinguish it from Taipei, Hong Kong, or any US city for that matter. The wide stree t ispacked with automobiles. Bright Neon lights line up the shops. You will find Chinese wearing Nike shoes or Calvin Klein tees, and drink Coca cola.The impression is that foreign products and influence flows free and accepted readily at China. Compared with domestic products, they prefer international brand like H&M and Zara. There are of course foreign companies able to set a castle in the Chinese soil, but only those who came utterly prepared, knowledgeable in Chinese society, and committed to do business. After all China is a large country with its transportation and communication sector still under development. The immediate issues faced by the investors were cultural differences, trade barriers and government restrictions.