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Hennes & Mauritz is one of the worlds' largest fashion companies, creating on-trend clothing for women, men, teenagers and children each year across 64 markets in Europe, North America, North Africa, Asia and the Middle East. '
H&M' for short (in addition to H&M's brand, it consists of 5 individual brands with separate concepts: COS, & Other Stories, Weekday, Monki, Cheap Monday (now closed), Arkat and FaBric Scandinavien AB). They're a 100 billion SEK company generating over 100,000 jobs and 4,000 stores globally (Statista, 2019).
The H&M group states on their website that their vision and strategy is to create and supply easily accessible fashionable designs for everyone.
Aiming to 'democratise fashion' meaning in today's' business climate, turning towards sustainability. In their own words, 'it is the only way (they) will keep making great fashion and design available to many people for many years to come.'
The H&M group vision is to focus on 'changing towards a circular and renewable fashion industry while being a fair and equal company.' H&M wishes to pave the way towards an entire new systemic change in their own business running, value chain as well as the whole fashion industry.
This strategy applies to all H&M's brand names while also preserving their authenticity.
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H&M believes their mission is possible due to the companies' large size and scale, making them well equipped to set out for a positive change. (H&M Group, 2019)
H&M started off pursuing vertical integration, already owning its distribution chain.
(Petro, 2012) H&M doesn't manufacture their products in-house.
However, they outsource their products to more than 900 independent suppliers across the globe, mostly in Europe and Asia, supervised by 30 strategically planned administration offices. 80% of H&M's' products are at stockists throughout the year, the other 20% of goods are created and held in smaller quantities, determined by upcoming trends. (Thiha Tun, 2019)
H&M employs 160 in-house designers working with pattern makers and print designers to create H&M products, attempting to find a balance between fashion, quality, best price and consciousness in sustainability. Despite being centrally planned, H&M doesn't own any factories, instead of outsourcing from 800 independent suppliers, approximately 40% in Europe and 60% in Asia (Petro, 2012).
H&M has 21 production offices outside Sweden, 50% of which in Asia and 50% in Europe (Tokatli, 2008). Consequently, due to geographic and lead time concerns, H&M continues Europe as its main production countries in preference of China. (Goransson, et al., 2007)
H&M creates long-lasting alliances and works closely with suppliers ensuring product excellence. Suppliers are biannually inspected and assessed, continuing performance and successful communication to quickly react to demand (Siegle, 2013).
Conjointly, H&M requisites all suppliers, subcontractor and business partners to sign the Code of Conduct that is ought to be executed in all features of the corporation. Full engagement with the Code must be implemented throughout the supply chain.
H&M partners with middlemen rarely. They engage tactically with its production offices that are located close to suppliers, performing as a second information flow centre. By determining suppliers, managing production processes, auditing samples and analysing product value, H&M can amplify its ability to quickly react to demand.
H&M sends forth two seasonal collections per annum, inventing roughly 2000-4000 different pieces (Tokatli, 2008). Sub-collections have been made available within each season to constantly update the catalogue collection.
The main collection would be long-lead time items whereas the sub-collection would be short-lead time items (Petro, 2012). H&M will create 80% of its out-put in ahead of time (Cha, 2013) and the lead time of manufacturing the other 20% may differ, roughly from two weeks to six months (Saini, 2007).
Furthermore, H&M anticipates developing production plans six to twelve months before collection launch, collaborating with purchasing procedures. This preparation accomplishes the companies' doctrine in surpassing customer expectations and reinforcing sustainable engagement within their supply chain. The course of sketching the designs to retailing the actual products takes only 20 days to finalise (Saminather, 2007).
H&M built an IT system which is joined up to each store with corporate logistics, acquirement systems and the main warehouse (Petro, 2012). This infrastructure enables the transparency of the entire operations from every single participating department. As a result, more attainable and productive management can be carried out throughout all channels of the supply chain.
Under H&M's mergers and acquisitions, Cheap Monday was bought in 2008, owned by FaBric Scandinvaien AB. This was H&M's first acquisition but closed due to major online shifts in the fashion industry, which came into effect in June 2019. H&M also owns Weekday and Monki. Since acquiring FaBric Scandinvavien, H&M launched COS, & Other Stories to expand their market.
H&M took the majority stake in the re-commerce company, Selpy to makeshift in their overseas expansion policy, which coincides with their goal to become 'fully circular' in respect Afound. Afound feeds into customers recent interest in second-hand clothing, attempting to sell surplus stock from older trends in H&M brand stores. These pieces are upcycled or left as they are and sold at cheaper prices to reduce wastage. (Wright, 2019)
Sustainable competitive advantage is the attributes, assets and abilities allowing an organisation to outperform competitors. This is due to the difficulty in duplicating or exceeding their specific business structure. Competitive advantage is sustained only if it continues to exist after all efforts to imitate have ceased.
Competitive advantage includes all efforts made by existing and potential competitors. H&M pursues strategy focusing on the long-term, combined with the distinctive business model 'high fashion at low prices,' providing H&M with a sustained market position.
Focusing on economies of scale, low wage and high-volume production, H&M maintains low input cost and has the latest trends in stores within a month of the initial design.
The strategic capability is concerned with the resources and competitors that a company with the resources and competencies a business can employ to provide value to its customers. (Johnson, et al., 2006)
According to Porter, property identification and configured resources and competencies form a base for competitive advantage. He argues that competitive strategy is about being different implying that a different set of activities should be selected to develop unique value. (Porter, 1998)
For H&M, possession of a strong brand name and trust with their customers gives H&M a competitive edge. Here customers associate the company with conducting ethical practices, improving working conditions for employees (i.e. Bangladesh) and placing emphasis on using natural resources (H&M Conscious Actions).
H&M is unique regarding its large scale of human capital. They have a non-hierarchical approach in their managerial style. This speeds up decision-making and lowers administration costs by removing managers. This is reflected in their ability to produce and release new clothes to stores within 20 days. H&M's participative culture, a delegation of responsibilities and high level of identification within their corporate culture distinguishes them from other businesses on the market.
The financial and other physical assets possessed by H&M is that they lease their store premises rather than permanently buying plots of land for their stores. This gives flexibility and good access to central locations in urban centres. H&M is said to be worth $15.9 Billion U.S Dollars in 2018, employing over an average of 123,283 people. (O'Connell, 2019)
This is an exceptionally high turnover when considering the number of employees is only in the thousands. As a result, fewer wages will have to be paid for creating fewer costs for the company.
For H&M's strategic capabilities, their design, supply chain management and marketing all aid to its success. The group uses centralised locations for design and supply chain locations. Their designs are created quickly in response to new trends with minimal time to launch to the market. Their supply chain management is highly innovative with great infrastructure.
They have purchasing flexibility and have a turnaround speed of 20 days. Marking helps raise H&M's image with frequent collaborations with famous designers and dressing celebrities for haute couture events i.e. the Met Gala. This gives them a strong young social media following, allowing for further exposure along with their already existing long-term advertising campaigns seen in big cities.
Given the effective configured resources, capabilities and strong corporate culture developed through decades on which the new H&M's leader aims to capitalise, there is every indication that H&M can sustain competitive advantage and keep up with competitors like Zara.
The above evaluates H&M corporate strategy as a textile company. They have utilised some marketing strategies to allow them to stay competitive in their industry. Since H&M's main goal is providing apparel for everyone at appropriate prices, it's recommended that they create clothing that'd distinguish them in the market, locally and internationally.
To become known worldwide, H&M must include in their strategy the acquisition and merges, to properly utilise branding strategy. By acquiring other famous fashion companies, H&M also acquires its market share. Since H&M wants to expand its global market, the company should utilise a strategic marketing move, including a strategic plan making them known in the marketing environment.
They should connect to their target market through use of e-marketing. This market entry should be effective since the group has included all factors to be assessed to make the business prolong its competitiveness and survive possible threats.
Strategic Insights into H&M's Global Fashion Empire. (2019, Nov 28). Retrieved from https://studymoose.com/h-m-corporate-strategy-example-essay
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