Competitive environment analysis: H&M

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Competitive environment analysis: H&M

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Abstract

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.

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

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[...] 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 power of buyers First of all, H&M and its competitors are positioning on a very broad segment: it targets both men and women, who are grown-ups, teenagers or children. Besides, we can assume that there is no budget restriction, since H&M goods belong to the cheapest ones on the market. Then, we could say that the customers in the French market almost consist in the whole population. Nevertheless, we should subtract old people, that do not so much care about fashion and whose clothes share in the spending is negligible. [...]

[...] - H&M is a member of the Global Compact, a charter of the United Nations that defines 10 principles for corporate responsibility in the areas of human rights, labor, environment and anti-corruption. These principles are already present in H&M's environmental policy and Code of conduct. - H&M participates to the UN's Millennium Goals by improving its water treatment, by imposing restrictions on chemicals, by improving its environmental work. - H&M dialogs with other companies through the Amnesty Business Group to improve their work on human rights. [...]

[...] Here is a synthesis of the Five Forces Analysis: Strategic options Generic strategy The H&M Company follows a cost leadership strategy. It offers almost the same products as its main competitors (Jules, Celio etc.) and at lower costs. The proof is that its first aim is to offer customers the best quality at the lowest price. Its business concept is “Fashion and quality at the best price”. In order to have lower production prices, the company has no plants at all. [...]

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