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Competitive environment analysis: H&M

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  1. Introduction
  2. Presentation of the brand
  3. Environment
    1. PESTEL analysis
    2. Porter's Five Forces analysis
    3. The threat of substitutes
  4. The power of suppliers
  5. The power of buyers
  6. Strategic options
    1. Generic strategy
    2. Value chain
    3. Competitive advantages
    4. CSR: Corporate Social Responsibility
    5. Clothing manufacturer strategic groups
  7. SWOT
  8. Conclusion
  9. Sources

We chose to write our report about H&M for many different reasons. First of all, even if we focus on the French market, the fact that H&M is a global brand, operating from nearly everywhere in the world, both made us sure that we would have to analyze a very strong and efficient strategy, and to face some difficulties, deeply linked with the industry (such as problems of relocations or competition from Chinese textile) that would help us understand a strategy better.

Besides fashion is an unavoidable factor of our daily life. It always seemed interesting to analyze what stands behind the doors of a store in which we shop.

H&M is a Sweden based company. It was funded in 1947 by two Swede Hennes and Mauritz, which gave the brand their name. The firm designs, produces and retails clothing items and accessories (including cosmetic products). Its range of product includes clothing (innerwear and sportswear) for men, women and children.

Presently, H&M operates in 28 countries. Its largest/major markets are in Germany, Sweden and the UK. The company also allows its customers to buy on the Internet through their online shop (not available in all countries.)

H&M reflects international trends through different concepts and ranges of clothes that cover different ?style? with above all classics, basics and a line depending on international trends.

[...] Competitive advantages Its stores are located in very frequented areas; The marketing campaign benefits from famous people's fame; Strong mass media in its communication; Some products are manufactured in advance and others are conceived at the last minute; It still improves quality of its products. CSR: Corporate Social Responsibility H&M highlights its CSR by putting a link on the first page of its website. It really wants to promote its program for CSR as a part of the psychology and plans of the company. [...]

[...] H&M offers its consumers fashion and quality at best prices. In 2007, H&M has also created a new chain of stores: COS (collection of style, it is a new concept with higher prices for people earning high wages. That ability of adaptation shows that H&M can diversify its production and targets specific consumers: its factories make sportswear, masculine and feminine clothes, as well as accessories or lingerie. The role of advertisement is extremely important in H&M's strategy. The firm uses different ways to sell its products (stores, internet, catalogues): a huge budget is used for communication and advertisement. [...]

[...] The firm has several agreements with providers which must sign H&M's ?behavior code? for ex in 2006 implementation of an agreement with Procter and Gamble (one on its providers) stipules that H&M can control P&G activities and all its fabrication process. Besides, H&M assures to every consumer, the security of personal data on its Website (rule of confidentiality) that the firm wants to trust and needs its consumers to be faithful. Porter's Five Forces analysis The threat of entry Until 2005, the European Union was setting quotas on the importations of Chinese textile. [...]

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