Business Management Essay

3544 words - 15 pages

H&M had become the global leader in the ‘fast-fashion’ segment with a distinctive business approach that challenged most competitors. The business model, commonly referred to as ‘cheap-and-chic’, emphasised high fashion at prices significantly below those of competitors, with the fundamental principle being ‘Fashion and quality at the best price’. ,H&M已经成为全球领先的“快速时尚”段与独特的业务方法,大多数竞争对手的挑战。商业模式,通常被称为“cheap-and-chic”,强调高级时装的价格明显低于竞争对手,基本原则是“时尚以最好的价格和质量”。
‘In 2010 we stepped up our investments in order to strengthen the brand further and secure future expansion.’ “在2010年,我们加强了我们的投资是为了进一步加强品牌和安全的未来扩张。”
However, Zara, the prime retail brand of Spain’s Inditex, opened 120 new outlets in ...view middle of the document...

we are investing for the future and we always have the customers in focus. Despite increased purchasing costs, we have continued to strengthen our customer offering – for example, by not raising our prices to customers.
H&M relentlessly continued to emphasise the long-term view in its expansion strategy. 
Despite these continuous aggressive expansion plans, analysts had some doubts: There are fears that the product is not good enough, brand appeal is fading or that prices have been undercut by an even cheaper competitor. 
Moreover, fashion, by its very nature, is unpredictable and fickle – trends are prone to sharp and unpredictable changes, which makes competition uncertain. 
The end consumers have an enormous selection of garments to choose from and will quickly adopt new trends. In the ‘fastfashion’ category they are also extremely cost-conscious and will look for bargains.
As international trade liberalises, the number of suppliers globally increases and competition among manufacturers in low wage regions intensifies. Switching from one supplier to another is not a major issue, although it entails the risk that choosing low-cost suppliers may involve a more extended supply chain that may not be able to cope with sudden changes in demand in an industry which is susceptible to changes in fashion. There is also a risk that low-cost suppliers may not be up to quality standards.
Entry to the retail industry does not require a large capital outlay; setting up a single independent retail store is within the means of many entrepreneurs and there are plenty of suppliers to choose from. However, on a global scale, a few large corporations account for a major share of total industry revenues. Their size and economies of scale bring about the ability to build brands in multiple retail outlets, and considerably greater buying power when negotiating with suppliers (see Table 2).
As argued by one of the few journalists that has access to the company: ‘The story of H&M does not really concern clothing, but from the beginning one man’s vision – or rather unbreakable stubbornness, devotion to a goal and knowledge of human nature.’6
Not unlike IKEA in furniture, the H&M philosophy is to make fashion affordable for everyone: ‘Fashion and quality at the best price’.  These are fundamental ingredients of ‘the spirit of...

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