H&M Company
THE STRATEGIC AUDIT
Tanirbergenova Aigerim 20123458
Anuarbekov Daniyar 20111217
Anuar Abu 20092575
Abdiyev Alibi 20100969
Kim Irina 20112885
Content of the project report
CURRENT SITUATION
Current Performance
Strategic Posture - Mission, Objectives, Strategies, Policies
CORPORATE GOVERNANCE
Board of Directors
Top Management
EXTERNAL ENVIRONMENT
Societal Environment
Task Environment
Industry Analysis
Summary of External Factors
INTERNAL ENVIRONMENT: ORGANIZATIONAL ANALYSIS
Corporate Structure
Corporate Culture
Competencies & Competitive Advantage
Business Model
Value Chain
Functional Area Resources
Summary of Internal Factors
STRATEGIC FACTORS – SWOT
Situational Analysis
Review of Mission and Objectives
ALTERNATIVES & RECOMMENDATIONS
Strategic Alternatives
Recommended Strategy
IMPLEMENTATION
Programs to be developed
Financial feasibility
New operating procedures needed
EVALUATION & CONTROL
Is the information system adequate to provide sufficient feedback?
Are control measures sufficient to support the recommendations?
Introduction/Background Hennes & Mauritz, known better to the world as H&M was established in 1947 in Sweden, offers products in women’s, men’s and children’s clothing as well as cosmetics. H&M’s business is centered on offering “fashion and quality at the best price” for men, women, teenagers and children, and working towards the goal of “giving the customer unbeatable value through the combination of these”.There are a variety of key factors behind H&M’s success, including but not limited to the location of its stores, flexibility of its production and low prices to name a few. H&M hires celebrity designers like Karl Lagerfeld and Stella McCartney to make fashion accessible for everyone and catch consumer’s attention. The firm makes sales through its retail outlets located across 28 countries, also via mail order as well as through its website. The retailer’s parent company is Stockholm, Sweden-based Hennes & Mauritz AB, which comprises five brands: H&M, COS, Monki, Weekday and Cheap Monday. • The H&M group has 2,800 stores all over the world, in 48 markets. • The stores sell clothes, accessories and cosmetics for men, women and children. • The company’s business concept is to give the customer “unbeatable value by offering fashion and quality at the best price,” according to its Web site Current situation H&M is considered as one of the world’s favourite and preferred designer of apparels and clothing for man and women. In addition, H&M is also known not only for their fashion but because of the quality of the clothes designed durability and the funkiness of its clothes (H&M, 2009). The H&M mission, “Fashion and Quality at its best price”. In addition, their handbags, shoes and accessories are also creating big sales and positive reactions from consumers. Through the online stores, H&M provides the US, UK European Market and Asian Market exclusive clothing and even handbag designs. H&M also offers perfumes and watches. The main aim of this company is to provide fast fashion goods (haute couture, ready-to-wear, handbags, perfumery, and cosmetics among others) in different countries all over the world (H&M, 2009). The company has been known because of its strategy of providing fashion designs exclusively for each country’s preferences and needs which was positively accepted and loved by consumers. With this, the main aim of this paper is to evaluate the current brand management strategy of H&M. In addition, this paper also considers the following objectives i.e. to explain the basis on which the brand is to be valued, justify H&M’s brand decisions and demonstrate the role of marketing mix in supporting their development proposals. Policies: Animal Welfare Policy: Our Animal Welfare Policy outlines our responsibility to secure our supply of raw materials from an animal welfare perspective through tough requirements and full traceability.
Chemical Restrictions: Our Chemicals Restrictions are as a minimum always based on the highest legal standard in any of our sales countries as well as on information from authorities, NGOs and scientific reports. Our restriction list is one of the most stringent in the apparel industry. (Available in English only) Code of Conduct: Drawn up in 1997, our Code of Conduct builds the basis of our efforts to make our supply chain more sustainable. Code of Ethics At H&M, we make it a rule to act with integrity at all times. Our Code of Ethics outlines our requirements towards employees and suppliers. (Available in English only) Discrimination and Equality Policy: At H&M all employees are of equal value, and this is clearly stated in this policy. Diversity Policy: All employees at H&M contribute to the company’s success. This is outlined in our group wide Harassment Policy: All of H&M’s employees are entitled to respectful treatment in the workplace. A respectful workplace is about more than compliance with the law. Corporate governance: H&M is a Swedish public limited company that is listed on NASDAQ Stockholm. H&M’s corporate governance – from shareholders, the Board of Directors and the Managing Director to the executive management team and country managers – is based on external laws, regulations and recommendations as well as internal rules. Top management-Karl-Johan Pesson. The executive management team is responsible for the following departments: Finance, Accounts, Buying, Sales & Marketing, Production, Sustainability, Expansion, New Business, Brand, Communications, Investor Relations, Human Resources, IT, Logistics and Security.
Done by Irina Kim
External Environment
Firstly, external environment is conditions, the entities, events and factors surrounding the organization which influence its transactions and a choice, and determine its opportunities and risks. Many factors can influence results and business of H&M Group. It is possible to deal with the majority of them through internal common practices while certain others are affected by more external influences. There are risks and the uncertainty connected with fashion, weather conditions, macroeconomic changes, climate change, trade interventions, external factors in the production countries and foreign currencies but also and in connection with expansion on the new markets, start of new concepts and as manage a brand.
Products of H&M Group are purchased to be sold on the basis of normal meteorological charts. Deviations from normal weather conditions can influence sales. It is especially right upon transition between two seasons, such is as transition from summer to fall.
Macroeconomic changes
There is a risk that negative macroeconomic changes in one or more countries will lead to economic downturn which will change probably a consumer purchasing behavior and thus to influence sales of Group. Therefore it is important to know about such changes which can influence business of Group and have flexible model of purchase which can be corrected to various market conditions.
External factors in the production countries
Uncertainty also exists how external factors, such as staple prices, haul costs and a capability of suppliers will influence purchase costs for products of Group. There are also risks connected with the social intense relations in certain markets of search of sources which can result in instability in suppliers and in production. The group therefore shall observe such changes close and have strategy at the order to deal with fluctuations it is most useful both for the company and for outer concerned parties.
Trade intervention
Purchase of costs can be affected by decisions at the national level on exports/import subsidies, the custom duties, textile quotas, embargo, etc. effects first of all influence clients and the companies in the separate markets. The international companies with transactions in many countries are mentioned to smaller degree, and among global corporations are traded, interventions can be regarded as generally neutral by the competition.
Foreign currencies
A little more than a half of sales of Group is made in euro and the most considerable currencies in which the purchasing Group, US dollar and euro takes place. Fluctuation in US dollar / the European currency rate is the unique biggest operational impact for Group. To hedge product flows in foreign currencies and thus to reduce effects of future exchange rate fluctuations, flows of Group of goods and the majority of the corresponding receipts from the companies on sales to the central company buyer H & M Hennes & Mauritz GBC AB are hedged according to forward contracts on a continuous basis.
In addition to effects of operational impact effects of the translation also influence results of Group owing to changes in the currency rates between local currencies of various companies on foreign sales and Swedish krona in comparison with the same period in previous year. The basic profit / loss in the market can be invariable in local currency, but when it is transformed to SEK can increase if the Swedish krona weakened or reduction if the Swedish krona amplified.
Effects of the translation also arise concerning net assets of Group on consolidation of balances of the companies on foreign sales. No hedging of the currency rate (known as hedging of an equity) is executed for this risk.
Done by Anuar Abu