Identify and analyze three strategic issues facing the overall sector of H&M Hennes & Mauritz UK Ltd.
H&M Hennes & Mauritz UK Ltd. The company offers a variety of goods and services to its customers that include men, women, and children’s clothing and also provides cosmetics, accessories, and footwear. They serve different products and facilities to potential clients in a large market place. With the help of using SWOT analysis, business can easily analyze the strength, weakness, opportunities, and threats of H&M Hennes & Mauritz UK Ltd which they are faced by them. SWOT analysis is the high-level model that is mainly used at the time of identifying the organizational strategic issues that create a negative influence on business operations and its functions(Andersson, et. al., 2015). It assists an organization to identify where they perform its functions well and in which areas they need to improve so they are work towards manage and fix such areas.
On the other hand, PEST analysis is another model which is also used by H&M Company to identify the issues that may create a negative impact on the business operations and its functions effectively, this model stands for Political economic, social and technological. Each of such factors is used to look at the industry and its business environment and also evaluate what type of aspects affects their organizational growth and development. Along with this, PEST theory is often used in conjunction along with analyzing the external factors of SWOT analysis. With the assistance of both the models, H&M effectively recognizing strategic issues which are faced by a company that is described as under:
Competitors – It is the major strategic issue which is faced by H&M Hennes & Mauritz UK Ltd. And they are dealing with their competitors at the time of operating business functions. Various similar types of store are sellingthe same form of clothes for men, women, and children all over the world(Baumgartner, et. al., 2017). This is being capable to stand out to create and generate potential customers by offering them unique and attractive services that are required for the organization. While facing the rivals, the company needs to focus on its strategic plan as per this they can make a change in their operations by which they can gain the attention of a large number of people towards their products or services. There are different competitors of H&M that include ZARA, ASOS, Walmart, Nike, Forever 21, Sears and so more. Along with this, it is required for H&M is to know and understand their customers’ choice and preference according to this they need to produce their products. This will reduce strategic issues when the buyers get their required goods and it increases the reputation of firm in the market area. An organization also examinesitscompetitors’ actions and further activities through which they are tried to create issues for the company. H&M offersa high rate of products as compared to their rivals as they are only purchasing the high-quality baked goods. This will increasereducing the customer base and directly affect business operations and its growth level.
Expansion strategy –The Rigorous expansion strategy also followed by H&M Hennes & Mauritz UK Ltdwhich can take a toll on the organizational brand image. As the corporation increases and grows, there can be trends that are mainly focused on enhancing the results and locations and less focus on the product quality and brand image as well. H&M requires staying with their values and ideas that help in providing success and development to the company in a better manner(Campbell, et. al., 2017). This is important for an organization is to develop accurate plans and policies through which they can easily expand their business operations in another country where they are working on attaining profit and revenue. In addition to this, this strategy needs to be successfullyimplemented so that they can effectively operate and regulate their business in the other nation along with all the necessary resources. Also, they should focus on dealing with the arising risk that may generate issues and problems for the H&M firm in market place.
Inadequate marketing strategy–It is analyzed that H&M Hennes & Mauritz UK Ltd. Face strategic problems related to the incorrect adoption of marketing strategy. This will create major issues in front of business activities. The inadequate marketing strategy for advertising is the hindrance to business success and growth opportunities. It is significant for an organisation is to examine market place as per this need to develop accurate tactics that assist them in gaining profitability and income(Gürel, et. al., 2017). H&M tries to develop and build the brand by promoting clothes among all ages of people with the use of social media platforms. Such sites are helpful in reach with desired buyers whether they are national and international. This issue ariseswhen the company does not develop an effective marketing strategy that assists in promoting their different types of goods and facilities in the market area. In addition to this, it is required for a firm is to concentrate on the use of social media and other digital platforms where they can promote and build relationships with their potential clients properly.
All the above strategic issues are analyzed and evaluated with the use of two models that are PEST and SWOT analysis. Thishelps manage and maintain business operations and attract potential customers towards their services or products.
Identify and analyze three challenges facing H&M Hennes & Mauritz UK Ltd
The Hennes & Mauritz UK Ltd is a multinational clothing marketing business that is famous for men, women, teenagers, and children’s clothing. It is a very old clothing company which serves a great range of consumers all over the world. Different kinds of challenges are faced by the H&M in the world of globalization of the clothing stores. According to porter’s five forces, the company’s competitive environment is analyzed. The five forces of the porter are competitive rivals, new market entrants, suppliers, customers, and substitute products(Heath, 2018). Porter’s five forces are the outline that influences the profit rate of the firm. Just like the porter’s five forces, there is another model which impacts the benefits of the company. The SWOT 7s model has the following elements which are: strategy, structure, systems, shared values, style, staff, and skills which effectively allow the company to achieve its objectives.
There are various challenges which Hennes & Mauritz UK Ltd is facing are as follows:
Growing consumerism: Consumers in today’s world have a large number of options to choose from thousands of brands available. There are also multiple options for the distribution channels which can be the retail store, e-commerce websites, or mobile commerce. The H&M is facing the growing consumerism which is affecting its trade and profits. The consumers demand the variety and novelty in the products. It is a challenge for the H&M as a style business to deliver the new gatherings and product range in a small time. This challenge creates complications for the product development, supply chain, planning, production, and fulfilment of the wishes of the customers in the company. This challenge regards of the porter’s five forces which are the customer(Heath, 2018). The customers’ changing preferences and increasing demand because of the multiple options availability is creating a challenge for the Hennes and Mauritz. This will impact on the competitive strategies of the company which is made using the porter’s five forces theory to improve the potential profit of the company.
Creating a unique experience: H&M hardly focusonattain the customer’s attention and gaining a unique experience. The customers don’t feel attracted to the company because of the positive experience for them in the store and also the availability of different other stores in the neighbor. This challenge is concerning the porter’s five forces model in which the company is facing a challenge because of the competitive rivals in the neighbor and the new market entrants in the fashion industry. The SWOT 7s model also regards this challenge of H&M in which there is a lack in the strategy for attracting customers, which effectively influences the objectives of the company which is to improve profit shares.
Discounting: The H&M facing the discounting challenge, every competitor is driving sales with heavy discounts to attract consumers. The H&M cannot maintain a healthy margin between the profits and beneficiaries for the customers. According to porter’s five forces model, this challenge can analyze the company’s competitive environment. This will help the company to analyze the different aspects of the challenge faced and resolving the matter using various approaches(Jansson, et. al., 2017). The SWOT 7s model also helps in the identification of the challenge in the company and making strategies for the improvement in the sales and profit of the company. The Hennes and Mauritz are facing a decrease in the profit ratio because of the challenge of heavy discounted sales in the market. It is influencing the environment of the company.
Identify and analyze the three solutions to address the challenges facing H&M Hennes & Mauritz UK Ltd.
The Hennes and Mauritz UK ltd Company’s challenges can be solved by different kinds of solutions available for the company. The solutions need to address the base problem which the company is facing to successfully resolve the issue. In the process of resolving the challenge faced by H&M, the Kolb learning cycle can be used as a model. There are four different stages through which it helps the company in learning the processes of the business. The four stages are concrete learning, reflective observation, abstract conceptualization, and active experimentation(Lasserre, 2017). These four stages help the company in learning about the various aspects of the business world and hence resolving the challenges faced by the company. Just like the Kolb learning cycle, there is another model that can be helpful for Hennes and Mauritz in solving the challenges they are facing. The porter’s generic business strategies are the strategies that help the business in making strategies for improving the profit and beneficiaries of the company. There are four generic strategies in the porter’s business strategies which are cost leadership, differentiation, cost focus, and differentiation focus. These strategies consist of their meaning in strategizing for the growth and welfare of the company. There are three solutions which address the challenges faced by Hennes and Mauritz, which are as follows:
E-commerce platform: The solution for the growing consumerism is the establishment of an e-commerce platform for the Hennes & Mauritz UK Ltd. E-commerce provides a platform where both the new trends and old trends can be placed. The changing needs of consumers can be addressed. Brand royalty and novelty can be established. The porter’s generic business strategies can prove to be helpful. The cost leadership strategy will help in engaging a broad range of consumers with H&M(Meskhia, et. al., 2015). Under this business strategy, the H&M can offer the lowest possible price and target the large demand of the consumers. This will help in the increment of the sales and benefits of the company. The consumers always get attracted to the low price which will help the company in gaining profits. This solution will help in the growing consumerism challenge that H&M is facing. The porter’s generic business strategies will play an important role in resolving the challenge by implementing its strategies.
Provide unique products: To generate a exclusive knowledge for the clients, the H&M can provide unique products for the consumers at reasonable prices. This will build anexceptionalexperience for the clients who are a fan of the fashion of Hennes and Mauritz. The Kolb learning cycle can help in the solution to the challenge of attracting consumers. According to the Kolb learning cycle, first, the company needs to learn about the requirements and necessities of the business which is important for growth and development. The next step is the reflective observation of the company, in which the different processes and other aspects are observed. The next step is to make abstract conceptualization about the processes and the demands of the consumers about the products of the company. The last step is the experimentation in which the company can experiment with different measures to check which is most appropriate for business growth(Perera, 2017). The Hennes and Mauritz is the clothing company so it is important to focus on the request and trending likings of customers. These willassistance in the collection of the stock according to the demand which will assist in providing the unique experience to the consumers. This will also increase the profit percent of the firm, the market share, and the sales of the company. Thus providing the unique clothing products will help in the solution of the challenge of attracting consumers.
Low cost and specific features: This is the solution for the discounting by the competition in the market. The competitors need to be tackled in such a way that the consumers drift away from them and come to our company. The H&M can offer low prices for the unique products which will affect the heavy discounting of the competitive companies of Hennes and Mauritz. The offering of low prices for the unique features products is the strategy under the porter’s generic commercialapproaches. This strategy helps in dealing with the heavy discounting by the competitors of the Hennes and Mauritz. The porter’s generic business strategies help in the resolving of the challenges that are faced by the H&M. These strategies are very helpful in dealing with the challenges. The Kolb learning cycle can also be used as a solution to the challenges faced by the H&M Company(Piercy, 2016). The clothing products which are of special qualities should be provided to the consumers at low prices for increasing the demand and profit comes under the cost leadership strategies of Porter’s generic business strategies. These models are very helpful in preparing the company for dealing with the challenges that may occur in the coming future and also for the recent challenges. These models improve the sales, profit percent, and help in the growth and development of the company in the UK. The discounting of the competitors of H&M Company will face the backfire when the company offers unique clothing with low prices for their consumer. Hence the company will solve the challenge with the given models.
Explain how H&M Hennes & Mauritz UK Ltd could practically implement one solution from the above question
The solutions mentioned for the facing of the challenges of the company can be used by the Hennes and Mauritz UK Ltd. Three solutions were mentioned for the challenges from which the company can implement the solution of establishing the e-commerce platform for the company. The H&M Company can establish the e-commerce platform which is practically possible and also benefits in the business of the company. The corporation needs to hire a web designer who can create a website for the company. This website should be made according to the requirements and demands of both the company’s administration and the consumers. The consumers are the prime focus of the company who will benefit the business. The website will provide a broad range for the business facilities for the Hennes and Mauritz Company(Racz, et. al., 2018). The latest trending clothes for all women, men, teenagers, and children can be made available for the consumers easily. The consumers do not need to come to the store for shopping but they can purchase any item from their home by using a computer, mobile phones, or laptops. This creates a major attraction to the consumers which will enhance the sales of the company.
The company can broaden its range over the geographical limitations of the traditional stores of the company. This will enhance the sales and profits of firm. In the age of technology, more clients can join the H&M Company through search engines. The consumers will be attracted to the company because of the lower costs of products availablefor e-commerce websites(Rastogi, et. al., 2016). The traditional shopping trends will decrease and the company can reach the consumers on a global level which will help them in growth and increase their revenue. The company needs to train the staff for the handling of the business in an electronic way. They need to be trained for the skills and strategies that need to be followed in the company. All these arrangements need to be done by the administration of the company who is authorized to prepare for the upcoming challenges in the electronic business form.
The company needs to prepare for the employees need to work on computers for collecting the data of the customers who ordered products online from the company. The Hennes and Mauritz will benefit a lot from the establishment of the e-commerce website for the company. The revenue, sales, profits will go up in the sky. The benefits will be mesmerizing. The practical results will be seen on the ground level. The stores of Hennes & Mauritz of Sweden will be famous all over the world. The consumer chain will be created on the global level where the company’s name will be on the top.
The other solution is not practical for implementation in H&M Company as it is providing unique products in the store(SHTAL, et. al., 2018). This will not help in the solution of the challenges as much as the establishment of the e-commerce platform will do.
The other solutions for the challenges cannot be implemented as they are not practical for the company(Shatskaya, et. al., 2016). They will impact the development of the company. The solution which states the lowering of prices with quality products is not practically possible because the company will not gain any profit if this is implemented. On the other side, the establishment of an e-commerce platform provides various chances for the company to grow and develop at a global level.
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