In this case, strategic capabilities and strategic issues are discussed within the company H&M policies for building the sustainable competitive advantages and business attainment. The company H&M is a leading retail chain in the apparel and fashion market segment as the company has adopted some unique strategic disciplines and frameworks (Johnson et al., 2014). The company has created a sustainable and affordable business model with the price attenuation with respect to the competitors. But the competition is increasing and thus the competitive advantages are also needed to be upgraded with the strategic capabilities. In this case, the various functions and models of the strategic framework is discussed and stated about the H&M Company for understanding their various approach and endeavours (H&M. 2014).
From the case study, the various aspects of the H&M business can be seen and it is also established about the company’s business models and business framework. The company may be intrigued with various issues amid the business like maintaining the reliable and value network with the suppliers and the manufacturers who are being appointed for the outsourced products in the Southeast and African continents (Butcher, 2009). The major suppliers in that region are consolidated with the increasing the competitors and the demand for resources for the fashion and apparel market. There are also issues regarding the strategic policies which are questioned by the stakeholders about the environmental sustainable strategic capability and decisions taken for the company H&M. The strategic compatibility with the business process may also help to establish the future sustainable business environment and this is also a strategic issue for the company H&M (Johnson et al., 2014).
The strategic position of the H&M with the help of strategic drivers can be examined with the PESTEL analysis and Porte’s five force model. The PESTEL analysis id done for the Asian and new developing economy in which the company has great potential in the future (Arora et al., 2004). The PESTEL analysis is based on different external factors within the selected region and these features consist of political, economical, social, technological and legal frameworks.
In the south Asian and developing countries, the political factors are very important as the political frameworks or policies may sometimes depict the way or interpretation of the business to be done in that region. Like in China, the manufacturing and marketing units are to be well developed and established within the country, as well as the social media usage will be also different from the other countries (H&M. 2014). The economic reservation and the policies are very important as the current recession and the economic turmoil has affected the apparel and fashion industry also. The price and the costing of the products will also help to retain the loyal and satisfied customer within the vicinity. Social factors are very important for the customers as fashion is based on the social and cultural aspect and the fashion is changed with the different geographical region and time (Butcher, 2009). H&M successfully tried to bind the different social and cultural aspects with the demand of the consumers an affordable price. The technological features are also important as the company also incorporated technological advancements like IT and MIS within the systems to understand and upgrade them for the employee and consumer satisfaction. The legal aspects are also important as the legal policies with employability and the taxation helps to understand the business models within the company H&M (Barratt, 2004).
In the south Asian countries, the value chain network is well established and thus the company H&M may also consider those areas as their production and resources centres. The company has 50 research and development units throughout the globe who are aligned the supply chain dealers for confronting the right time and right attainment of the business (Butcher, 2009). There are many dealers and resources situated within the region and the company is definitely with god terms and great distribution and operational frameworks which are helpful for the business requirements.
The stakeholders and the people who are concerned with the business processes of the H&M are also analysed by the strategic frameworks within the apparel market. The market forces and the competitor analysis will help the company H&M to understand the definite way or process for the same (H&M. 2014). The five forces model is established as there are many competitors within the fashion and apparel market like Zara, Gap, Uniqlo etc. The bargaining power of the supplier is low as there are many suppliers within the market. The bargaining power of the buyers are high as there are many companies present in the market so the companies have to take different pathways to integrate the competitive advantages (Butcher, 2009). The threat of new entry is also high in both domestic and international market and the threat of substitutes are medium as H&M offers some unique design and fashionable products but the competitors are also coming up with new products. So the market rivalry is intense and there are threats from the other competitors for H&M.
With the strategic view point of resources, the company H&M mainly adopted to the input output or I/O strategy. In this scenario, the company H&M mainly concentrates on the resources and then the production to control over the output materials. The company H&M here is also intrigued with the strategy as it mainly select the dealers or the resources with the best practices but with lesser prices (H&M. 2014). The company also don’t have any direct manufacturing unit and it manufactures its products from eth Asian and African continental countries for saving the cost and prices. Also the suppliers and the resources who work with the H&M are well attended and sustained for understanding and developing the business and business framework.
According to Johnson et al., (2014), in order to outrun the competitors and to develop the sustainable competitive edge, the company H&M has also adopted few strategies and polices to understand and implemented within the business framework. The reliable supplier and distribution channel partners are the key competitive advantages within the company H&M. The company is expanding in the international regions and there are different companies who are also expanding within the apparel and fashion market (H&M. 2014). The tested partnership management is the main source of the competitive advantages in the H&M’s business operations. Another competitive advantage is the quick integration and implementation of the fashion trends within the products of H&M. the company can introduce he fashionable and new apparels within one month from the time of development. The company just not follow the fashion blindly but it also helps to infuse with the new and old attainments within the products. The perfect operational and distributional system of the H&M helps to maintain the competitive edge in the market (Johnson et al., 2014). The last feature which helps the company to gain the market share and the over expected returns are based on the low price infused products with high quality and high fashion adjustments.
The company H&M has attained different strategic implementations and processes to intervene with the business operations and competitive edges. The supplier and the retailers of the resources are well nurtured and well apprehended by the company H&M. There are different supplier dealer relationship processes which will help to strengthen the bond within the company. The suppliers are also taken within the internal MIS or integrated system to incorporate and develop the lean production concept for the company. As the company is focused with the cost reduction strategy, it has taken few steps to improvise and adopt the strategy perfectly within the business framework. The suppliers can monitor the stocks and they can replenish as per the demand (Johnson et al., 2014). This system is integrated within the other regional stores also so that the unused stocks can be easily transferred to the other stores and thus the warehousing cost and the inventory cost is minimal. The distribution and the supply chain is also conglomerated and thus the cost savings will be done more with that fine business framework. After the perfectly implemented business framework, the research and development part is also important for the competitive advantages (Barratt, 2004). The company has a central research and development centre which also operate the subdivisions of 50 branches throughout the world. There are 200 designers and 100 developers who work constantly on new fashion and trends. The company is also associated with big celebrities and big events for gaining the experience and the exposure in the fashion market. After recognizing or developing the ideas within the company, the production units are informed quickly and so with the dealers or the suppliers (Johnson et al., 2014). So the products can come out in the market within one month. This helps the company to gain the desired market share and the competitive advantages (Johnson et al., 2014). And the company has a vision of producing low priced products with the highest quality and fashion trends infused. To minimize the cost, there are several steps or frameworks been followed by the company in different aspects like operations, marketing, and supply chain and business strategies. The company H&M also have a serious framework for choosing the low cost suppliers and resources (Aastrup et al., 2007). There are 50 subdivisions of the research and development wing which are mainly focused with the product up gradation and these units also find the suppliers and the dealers with the best price and practices. The resource cost is minimized and the product’s quality is enhanced to attract more consumers with big branding. But the cost is also minimized with the other frameworks like operations and human resources. The operational excellence as the bundled supply chain and the transportation endeavours are also considered by the company H&M. This also helps the company to minimize the cost by saving the extra funding required for the operations to be completed separately. Apart from this, the company also saves within the store locations and store operations also. H&M sometimes rent or liaison the store instead of buying the place. This also helps to consider and recover some opportunity cost for the company (Johnson et al., 2014). So, it is clear that the company has taken various frameworks and processes to minimize the cost and to carry on the business operations with objectives to give the highest quality products with low prices.
As said in Johnson et al., (2014), the company H&M has also considered and involved within the amazing focus on employee involvement within the company. The company has a history of different cultural adaptation and thus the H&M has the core organizational culture and leadership style intact within it. The culture and the leadership are based on the thrift, responsibility delegation and perfect decision making within the company. These values are the “Spirit of H&M” and it also triggers different strategic decisions and attainment within the company to adopt the employee retention and job satisfaction (Aastrup et al., 2007). The company H&M has adopted the participatory management styles and thus the employees are accepted with experimentation, trial and error learning, initiatives taken for new ideas and fast decision making. The key ingredient in the corporate culture of the H&M is done to emphasize on the active encouragement of the basic principles and company values within all levels.
The culture as the spirit of the H&M helps to understand and evaluate the company’s specific needs and endeavours to attain the business goals and objectives. To address the strategic issues, first the human resources are attended within the company (Arora et al., 2004). The people and the employee within the company are highly regarded with experience, loyalty and continuity (Johnson et al., 2014). The growth and encouragement within the employment policies are well established and thus the employees are more attained towards the opportunities for taking on new challenges and developments in different stores, departments or other regions. The company also has adopted the open door policy which helps the employees to get the right for discussion for work related issues with management at any point of time (Johnson et al., 2014). The company emphasizes on the first driven and capable persons for their attitudes and quality. The company tends to recruit the local people also at the time of opening new stores.
From the above discussion, it is seen and discussed that the culture and the corporate policies are the integrated and important features within the company H&M for accepting the company’s objectives and business strategy. The store managers and the people concerned within the H&M can accept and allocate the different interpretation of business framework as per the requirements. The people can take the decisions as per the business endeavours and the decisions are supported by the higher management. This helps to consider the allocation of resources and suppliers with the goal of lowest cost attached. The business also grows with the expansion of the new stores in the South Asia and other continents. The independent and decentralised decision making also helps within the allocation of resources and to carry on the store operations more efficiently (Johnson et al., 2014). The store’s outlet is also maintained by the employees and they can change the design or showcasing as per the requirement and the consumer demand. It is also taken as the business objective that the increasing competitions and the business pressure from the stakeholders can be adopted and synchronized with the spirit of H&M. In that aspect, the value network of the company is also considered to be the most intrinsic and the people can be the main carrier and adaptor to the bushiness objectives with the required changes. The organizational issues are not present as such but the only concern with the lenient management and the open organizational policies are that there are chances to do more mistakes than the open system (Johnson et al., 2014). Though the employee nourishment is done beautifully, the company may not notice the growth as per the expectation.
Conclusion
H&M is a market leader in the fashion and apparel sector. The company has more brand identity and brand value than the other competitors in the same sector. The company has successfully adopted the strategic implementation within the business framework and the core “Spirit” of the company is the basic value within the culture and the organizational integration. There are different aspects and issues within the market and the regions in which the H&M is operating but with the correct and perfect framework, the issues can be resolved easily (Johnson et al., 2014). There are also different values and features attached with the H&M’s business relevance and competition and from the strategies, the company can accept the frameworks to overcome those and to maintain its’ market leader path easily.
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