In this report, an inside look will be taken on Hennes & Mauritz AB (H&M). We will analyse on it using PESTEL, Porter’s Five Forces and SWOT to get a clear concept of what H&M is today and where it can go. This positioning will be helpful in strategy designing.
H&M was established in Västerås, Sweden in 1947 by Erling Persson. We now sell clothes and cosmeticsin around 2.200 stores around the world.
* H&M offers fashion and quality at the best price
* H&M offers fashion for women, men,teenagers and children.
* H&M also sells own-brand cosmetics, accessories and footwear
* H&M doesn't own any factories, but instead buys its goods from around 700 independent suppliers, primarily in Asia and Europe.
* H&M employs about 87000people
* The turnover in 2010 was 126.966 million
It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macro-environmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential anddirection for operations.
Being a Swedish based company, H&M follows the Swedish legislation and the Swedish Company Act.
Because of the economic crisis in 2008, people are still in recovery. Most of them intend to buy products with better price. Since H&M provides fashion and quality at the best price, it will attract customers.
The fashion trendnowadays tends to be more environment-concerned. H&M has done quite well in sustainable improvements. (Activities about sustainable improvements are shown in the appendix.)
Media technology and printing machines are two types of technology that will affect the business. The improvement of printing machines can make sure the quality of their products. The development of mediatechnology will aid H&M to be updated to attract customers to their brand and propagate their new events, therefore increase their exposure of their brand to the community.
People are taking more and more considerations on environmental stuff. H&M has done quite well in achieving sustainable improvements. For example, H&M has signed the CEO Water Mandate. (More activities are shown inthe appendix.)
Due to H&M is a franchise, if one problem happened in Sweden, this brings down the whole brand image, even though it only apply to a certain region.
Porter’s Five Forces
It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market.
Competitive rivalry withinthe industry: high
The rivalry within the industry is high because there are other clothing companies competing with H&M when trying to sell fashionable apparel for a good price.
Bargaining power of suppliers: low
Because H&M is a huge retailer and takes mass quantities of stuff from the suppliers, they have a lot of power and can put pressure on the suppliers
Bargaining power of customers:high
H&M sells so much to customers that if the customers are not happy with the price, they have many other competitor companies that they can go to, to shop at.
Threat of new entrants: high
The threat of new entrants is high for H&M because there are so many other clothing stores, that don’t have a problem getting into the market that H&M has to compete with.
Threat of substitute products: lowThe threat of substitute products would be very low because everyone needs clothes to wear and there is nothing that can be substituted for clothes.
It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective.
1. Cost advantage