Competitive environment analysis: H&M

Résumé du document

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.

Extraits

[...] The role of the government The main role of the government is the setting of quotas and tariffs, which we mentioned earlier. This used to have quite important consequences on the industry, but the tendency is now to liberalize as much as possible the industry, and then the role of the government tends to get lower. 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. [...]

[...] By combining those elements, we can conclude that the threat of the new entrants is quite low because the barriers to entry are high. The threat of substitutes Regarding to the kind of clothes provided by that is to say fashionable and casual clothes, we can consider as substitutes luxury clothes, and maybe sportswear like the ones offered by Adidas or Nike. Those kinds of clothes, even if they are more expensive, do offer performance advantages in the case of sportswear clothes (like more adapted to perspiration) and then do generate a threat. [...]

[...] Technological: H&M also sells its products on the internet by an efficient website news is broadcasted on their website (when a new line of clothes is launched for ex everyone is aware of partnerships with famous people like Madonna, Karl Lagerfeld, Stella Mc Cartney ) new technologies used by the firm are a way to make their advertising campaigns more efficient. Textile industry is protected by a lot of patents it assures the authenticity of products and avoids counter fakes. Environmental: takes care of sustainable development and global warming, implemented indices of sustainable development. H&M is an important firm, so it has the responsibility to integrate social and environmental concerns into their business operations. [...]

[...] Not only do young people learn how to become a sewing machinist in a factory, but they are also taught their rights and obligations in a factory, but also safety instructions. - H&M donates clothes to nongovernmental organizations such as Oxfam or Caritas. Instead of throwing away bad quality clothes that don't fit with H&M's demand, they give them to charity but still donate clothes that are dangerous for health. The charities that H&M give clothes to must offer programs that promote health, improve education and help women in need. [...]

[...] That is to say that the products ranges are always evolving and changing, so that there is no effect of boredom. This element tends to lower the bargaining power of the buyers. However, since it is really easy to change from one provider to another because there are so many, we shall assume that the bargaining power of the buyers is rather low. The competitive rivalry In France, in 2005, there were firms entitled commerce de détail d'habillement They made a turnover of 75 billion. [...]