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Swot Analyses Essay

4139 words - 17 pages

12/02/2011
Strategy Analysis of H&M | Maissaa BEN TAHRA |
Strategy: Dr Darrell Jaya-Ratnam | Knowledge, Strategy and Business Analysis |

Strategy: Dr Darrell Jaya-Ratnam | Knowledge, Strategy and Business Analysis |

REPORT OF STRATEGIC ENVIRONMENT ANALYSIS

| There are many external factors affecting the fast fashion industry most importantly in H&M’s case is the transportation cost and price of oil |
External factors change in the markets of production. Raw material prices have increased; cotton prices for example almost doubled in 2010. ...view middle of the document...

hm.com/us/corporateresponsibility/environment/hmsenvironmentalobjectivesandsustainabilitypolicy__envworkar

ticle2.nhtml [Accessed: February 2, 2011].
ˡ (2011), H&M’s environmental objectives and sustainability policy. Available from: H&M, Web site: http://www.hm.com/us/corporateresponsibility/environment/hmsenvironmentalobjectivesandsustainabilitypolicy__envworkar

ticle2.nhtml [Accessed: February 2, 2011].

External shocks

External shocks
|
| Most of H&M’s suppliers are based in Asia and the rest in Europe, therefore H&M is facing different regulations as well as high transportation cost. H&M market segmentation is psychographics |
H&M own designers interpret fashion trends and create fashions that are accessible to all. The stores are revitalized weekly with new items. | Economics of demand:
-Market segment: market segmentation for H&M is psychographics, including social class, lifestyle and personality variables.
-Product differentiability is high in the fast fashion industry. Products are differentiated in terms of style, quality of raw materials and users according to gender and age.
-Rate of growth: H&M is expanding rapidly (H&M is worldwide now). Fast fashion is growing very fast. Underlying growth rate: 5% in the last three years. Growth rate declined in recent years due to job losses, which was a result of the market slowdown.
-Volatility: H&M brings new lines every week with big amount
-Availability of substitutes: There are many retailers offering same products at either same price or lower
Economics of supply
-Concentration & diversity of producers: H&M sources clothes and other products from about 700 suppliers who in turn use subcontractors.
-Cost structure: low cost. 60% of H&M’s suppliers are based in Asia where labor cost is cheap.
-Supply curve: supply curve is greater than the demand curve H&M is supplied by a high number of items
-Entry barriers: The industry has a high level of entry barrier (in medium and high scale business). The direct sales market also has high entry barrier (require huge amount and expertise to procure the quality garments).

Economics of demand:
-Market segment: market segmentation for H&M is psychographics, including social class, lifestyle and personality variables.
-Product differentiability is high in the fast fashion industry. Products are differentiated in terms of style, quality of raw materials and users according to gender and age.
-Rate of growth: H&M is expanding rapidly (H&M is worldwide now). Fast fashion is growing very fast. Underlying growth rate: 5% in the last three years. Growth rate declined in recent years due to job losses, which was a result of the market slowdown.
-Volatility: H&M brings new lines every week with big amount
-Availability of substitutes: There are many retailers offering same products at either same price or lower
Economics of supply
-Concentration & diversity of producers: H&M sources clothes and other products from about...

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