Describe about the PESTEL Analysis of HRM for Global Fashion.
H&M is one of the very well known global fashion brand and a retail clothing company. The company provides fashion clothes for the men, children and the women. The company carries on its operations currently in more than 30 countries that includes Norway, United Kingdom, Germany, , Greece, France and is further considering to expand its business in various other countries that are mostly the Asian countries. There are up to date fashion products offered by H&M to its customers that includes the footwear, cosmetics and accessories (Bruno 2007) There are no manufacturing factories owned by the company. The company outsources its manufacturing processes to the various independent suppliers who are also long time strategic partners of the company. The various factors contributing to the quality of the H&M are no middlemen, in-house design, efficient logistics and the purchase of right products from the appropriate markets. The company has kept on improving its expansion speed from time to time and in more effective way in the Asian market. The company is further planning to expand its operations in the china market as according to the company China is the exciting and the strategic market that has good awareness of the fashion and spending power. So there is vast potential for the expansion in the Chinese market (Businessweek. 2007).
The main purpose of the paper is evaluating the main reasons for driving H&M to expand in China in the year 2007 and how that expansion led to change in the strategy of the H&M by the use of PESTLE analysis.
Political Factors
There are many chances of Central marketing philosophy in the Chinese market. There are various changes in the policies of Chinese government for attracting the foreign investment. The Chinese market cancelled the distribution system in the year 2001 and joined WTO due to which various commodities could be exported to the Chinese market (China.com. 2004)The Chinese market is a real free market that reflects the real needs. Due to this movement there was a good improvement not in the living standards of the much of the population of the china. There is great importance given by the government of China to the foreign investment and welcomes the foreign investment in China. The company has a very good chance to enter in to the Chinese market because the preferential policies can be used by H&M that are given by the Chinese government so that the profit can be maximized. There is not much tax collected by the Chinese government on the foreign enterprises and further many preferential policies are offered that encourages the investment. Hence the political factors of the China are in favor of the H&M expansion.
After the Chinese reforms in 1979 Chinese economy has become one of the fastest growing economies. There is a stable increase in the GDP of China at an average rate of 9%. There have been various predictions by the economist from time to time that if the reforms of China will continue to deepen and the banking system efficiency is improved then China will become the largest economic country in the coming years all over the world. It has been observed that there has been increase in the total value of the exports and imports from $20.4 billion in the year 1978 to about 2.173 trillion in 2007. The trade booms of the china are largely due to the large inflows of the foreign investment. The global economy of the china is growing slowly and steadily. The company like H&M will need to use various discounts and promotions for attracting the customers (EMCC. 2004). There is a strong momentum kept by the Chinese government by the opening of and creation of the steady economic environment for the foreign investment. The company took this occasion in its strategy and further changed its strategy. The company offers quality and fashion products to its customers at best price which is their marketing strategy but the best price has different meaning in the Chinese market.
It is very well known fact that China is the fourth largest country in the world and its economy will keep on growing in the future. The Chinese people are of social nature which makes the foreign people believe that the Chinese people can get themselves influenced by the various new products (H&M. 2007). There are many Chinese who still keep their traditional methods and thinking customs. Before being accepted by the Chinese market it is required that the foreign enterprise should research the local culture. The company like the H&M should try and research weather the Chinese people will accept them or not. It should decide whether there products will be attractive for the Chinese people or not by considering various customs and religions (H&M 2007). It has been observed that the H&M was very well accepted by the Chinese market because the Chinese market is becoming western and globalized day by day. The important fact about the H&M is that it is very consistent with the psychology of the Chinese consumer.
There has been great advancement in the telecommunication since 1990. There is high subscriber rate of China in the media like the internet and the TV. Though China is already very advanced in the terms of technology this factor cannot be a big problem for the country like China. H&M has various positive vibes for entering in the country like the China (Lisa 2008).
The main issue in China is Environment. There is a green trade barrier in China that causes terrible effects on the trade and export import in China (Raphael 2008). Though there are various measures taken by the Chinese government from time to time to manage the issue of the pollution. i are good at learning in the advanced technology of various countries like US and Europe along with that they easily learn the environmental standards of such countries. In this aspect there is a great example set by H&M for many of the Chinese enterprises. Various environmental awareness is promoted by the H&M between there e employees and suppliers. The new technologies have been adopted for the use of the resources so that the waste could be minimized as much as possible. The decisions that are made by the nature are very well respected by the H&M.
As it is a very well aware fact that the H&M is a Swedish company that is much familiar with the Europe laws and Swedish Laws that are very much different from the Chinese laws, so when the H&M planned to entered the Chinese market it was expected to adopt the Chinese laws so that they could get their license for selling in the Chinese market (Rupert 2010). The confirmation about H&M following the Chinese law would be made on regular basis by the Chinese government. If the company is found to be not following the Chinese laws than their licenses would be taken away that further means that the company had to take few differences from the other countries on their operation methods and strategies in China.
In the above report the method for understanding the current situation of the H&M Company for entering in to the Chinese market was PESTLE analysis. This method has proved out to be very beneficial for various companies to understand the market of a country before considering the expansion as various important elements that are not to be ignored by the companies are covered in the above analysis.
It can be recommended from the above report that H&M is a very good brand ad it shall keep on innovating in the cloth making process so that they can become very well known company all over the world. The company shall concentrate on the improvement of their brand level. They shall concentrate on changing their brand image in the mind of the people so that they can obtain real best prices. There is a high subscriber’s rate of internet in China so H&M could plan to open an online shop in China.
Conclusion
Through the above PESTLE analysis it can be concluded that there is a great attraction of the various factors to the H&M for entering the Chinese market and they shall change few of their strategies to some extent. There is a chance with H&M to enhance there brand level in the Chinese market. It can at last be concluded that Chinese market entry is a very good chance for H&M.
Bruno, Z 2007, ‘Critical Success Factors for International Fashion Retailers Entering Foreign Markets.’, FIBRES&TEXTILES in Eastern Europe October, vol 15.
Businessweek. 2007, Sweden’s H&M Lands in China, viewed 3 December 2016, <https://www.businessweek.com/globalbiz/content/may2007/gb20070508_735792.htm?chan=top+news_top+news+index_global+business.>.
China.com. 2004, hat are the preferential policies offered to enterprises with foreign investment? , viewed 3 December 2016, <https://english.china.com/zh_cn/business/faq/11024764/20041015/11917364.html>.
EMCC. 2004, ‘Industrial change in the textiles and leather sector’, Hennes & Mauritz. European Foundation for the Improvement of Living and Working Conditions 2004., 2004.
H&M 2007, H&M’s environmental objectives and sustainability policy. , viewed 3 December 2016, <https://www.hm.com/us/corporateresponsibility/environment__environment.nhtml>.
H&M. 2007, H&M OPENS FIRST STORE IN EAST ASIA. , viewed 3 December 2016, <https://www.hm.com/us/press/pressreleases/__prfinance.nhtml?pressreleaseid=263905>.
Lisa, B 2008, H&M’s Magnus Olsson: Swede success., viewed 3 December 2016, <https://www.retail-week.com/hms-magnus-olsson-swede-success/1911483.article>.
Raphael, M 2008, ‘H&M and INDITEX’S global expansion strategy.’, in THE RETAIL DIGEST.
Rupert, W 2010, New Look aims to replicate H&M success abroad, viewed 3 December 2016, <https://uk.reuters.com/article/idUKTRE6142TX20100205>.
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