H&M Corporate Level Strategies - Case Study Example

H&M Corporate Level Strategies Name: Tutor: Course: Date: Table of contents Table of contents 1 List of Figures 3 List of Tables 4 1.0 Introduction 5 1.1 Strategy and culture analysis 5 Figure 1: Cultural web 6 Figure 2(a): Value chain of H&M 8 Figure 2(b): Value chain of the entire H&M value system 8 1.3 Porter’s five forces analysis 9 Figure 3: H&M Porter’s five force framework 10 1.4 PEST Analysis 11 1.5 Strategic capabilities 13 1.5.1 Current strategy and core competencies analysis 13 Table 1: H&M financial performance 2011-2013 13 Table 2 (a): H&M core competencies 14 Table 2(b): H&M competencies 15 1.5.2 Resources 15 Figure 4: Generic strategy options for H&M 17 Figure 5: H&M global presence 18 Table 3: ‘SWOT analysis of H&M strategic options 20 Table 4: Suitability of all the strategic options 21 2.1 H&M remote and operating environment 21 2.2 H&M capabilities 23 2.3 Stakeholder expectations 25 3.0 Conclusion 26 References 27 List of Figures Table of contents 1 List of Figures 3 List of Tables 5 1.0 Introduction 6 1.1 Strategy and culture analysis 6 Figure 1: Cultural web 7 Figure 2(a): Value chain of H&M 9 Figure 2(b): Value chain of the entire H&M value system 9 1.3 Porter’s five forces analysis 10 Figure 3: H&M Porter’s five force framework 11 1.4 PEST Analysis 12 1.5 Strategic capabilities 14 1.5.1 Current strategy and core competencies analysis 14 Table 1: H&M financial performance 2011-2013 14 Table 2 (a): H&M core competencies 15 Table 2(b): H&M competencies 16 1.5.2 Resources 16 Figure 4: Generic strategy options for H&M 18 Figure 5: H&M global presence 19 Table 3: ‘SWOT analysis of H&M strategic options 21 Table 4: Suitability of all the strategic options 22 2.1 H&M remote and operating environment 22 2.2 H&M capabilities 24 2.3 Stakeholder expectations 26 3.0 Conclusion 27 References 28 List of Tables Table of contents 1 List of Figures 3 List of Tables 5 1.0 Introduction 7 1.1 Strategy and culture analysis 7 Figure 1: Cultural web 8 Figure 2(a): Value chain of H&M 10 Figure 2(b): Value chain of the entire H&M value system 10 1.3 Porter’s five forces analysis 11 Figure 3: H&M Porter’s five force framework 12 1.4 PEST Analysis 13 1.5 Strategic capabilities 15 1.5.1 Current strategy and core competencies analysis 15 Table 1: H&M financial performance 2011-2013 15 Table 2 (a): H&M core competencies 16 Table 2(b): H&M competencies 17 1.5.2 Resources 17 Figure 4: Generic strategy options for H&M 19 Figure 5: H&M global presence 20 Table 3: ‘SWOT analysis of H&M strategic options 22 Table 4: Suitability of all the strategic options 23 2.1 H&M remote and operating environment 23 2.2 H&M capabilities 25 2.3 Stakeholder expectations 27 3.0 Conclusion 28 References 29 1.0 Introduction Corporate level strategies involve strategic decisions that cut across the organization. Some of these strategies include allocation of resources, human resource management, mergers and acquisitions and financial performance. To gain competitive advantage, a firm specifies some actions to select and manage different products that compete in the diverse product markets. H&M has developed corporate strategies to help it earn above average returns. Moreover, its strategic value will be based on the degree at which the business portfolio as managed by the company and not any other ownership. The corporate strategies also involve mode of entry of new businesses that capture synergies and define the scope of industries and markets under the competition of the firm. This report analyzes the corporate level strategies of H&M Company using some of the strategic tools. In addition, it evaluates the strategies with regard to their suitability using tools such as PEST analysis, value chain, cultural web mapping, core competence analysis, Porters five forces framework and market segmentation analysis. 1.1 Strategy and culture analysis Every organization and its sub-units have a culture in the form of basic assumptions developed to cope with internal integration and external adaptation. H&M, a Swedish multinational, is one of the leading fashion brands globally that offer quality and fashion to its customers at best prices. With a defined organizational culture, H&M when faced with internal resource constraints will respond in a different way (H&M, 2015). H&M has a core value on believing in people. This strong culture ensures that employees while undertaking their roles internalize the values. More importantly, it recruits the best people and develops their learning and development needs (H&M, 2014). For example, internal promotion and job rotation are prominent human resource policies under H&M. Indeed, employees are regarded highly for their loyalty, continuity and experience. A cultural web (see figure 1 below) is used to examine the current organizational culture, expected culture and the differences between the current and the expected. Figure 1: Cultural web From the figure 1 above, stories involve the reputation, beliefs and what people tell about the organization. H&M is focused on retaining customers and economic climate. For example, the company CEO happily comments; “…we have not raised product prices despite the increases in purchasing costs”. On rituals and routines, H&M constantly tries new things with trial and error learning. Depending on sales and customer preferences, servicescape is always under experiment. Regarding the organizational culture, H&M has ‘democratized fashion’ by embracing the Swedish national values of using non-hierarchical, informal and humble management style. Besides, the control systems of H&M are effective and efficient (Marketline, 2009). For example, the integrated logistics function generates economies of scale and supports cost-efficient supply of goods. As a result, H&M stores receive new shipments and controls over demand and supply shifts. Power structure within H&M lies in the Persson’s family which has 70 percent of the shareholder voting rights (H&M, 2014). Moreover, the CEO delegate responsibility, and makes no-nonsense decisions and is thrifty. According to Yarger (2014), the company expects more straight lines, team work, simplicity, entrepreneurship and down-to-earth approach. While H&M is willing to take initiatives and fast in decision making, trying new things can be catastrophic. Companies like Zara and Gap Corporation could easily take advantage of errors resulting from trial and error methods (Fletcher, 2008). This means that H&M should constantly review its beliefs and behavior and re-mould values to match with the changing times. 1.2 Value chain analysis Competitive possibilities are undertaken by organizations to assess strategic capabilities (Hunger & Wheelen, 2011). By looking at the internal nature of the organization, a value chain as portrayed by Michael Porter shows a chain of activities that relate to organizations products (Porter, 1985). The customer shows willingness to buy products where the flow of activities is modeled to add value. In both increasing and decreasing levels of detail, customers and products are defined. The value chain of H&M is as shown in the figure 2 below. Figure 2(a): Value chain of H&M Figure 2(b): Value chain of the entire H&M value system As shown in the figure above, activities of the organization are modeled to distinguish the primary and support activities. While primary activities are involved in production of services and goods, secondary activities support the primary activities (Yarger, 2014). In this model, H&M is able to assess the degree of resource utilization in the value chain in terms of effectiveness and efficiency. Efficiency measures the yield gained from capacity use and profitability. On the other hand, effectiveness assesses resource allocation with the value chain by monitoring research and development (R&D), goodwill, people and capital (Kotler, 2009). The intention is to generate links between activities to demonstrate competitive threats or opportunities and weaknesses or strengths. Primary to support linkages involves operations, technology development, outbound and inbound logistics (Kotler, 2009). In H&M, warehousing and distribution, suppliers and buyers and production offices are related. The latter ensures that independent suppliers manufacture goods for H&M and deliver directly to their warehouses around the world. After that, goods are distributed to the local stores. Moreover, the company carries out audits to ensure that suppliers adhere to certain social responsibilities expected of them (Alatalo, 2011). H&M’s IT system supports a number of processes using stock tracking and online systems. This maintains customer order placement, customer’s needs and check store’s availability. Human resource and sales and marketing demonstrate the primary to secondary linkages. With strong company culture in terms of selection and recruitment, H&M focuses on employing people with passion for sales and fashion (H&M, 2014). Internal promotion and job rotation are key HR management policies at H&M. The company is a world leader in logistics and IT. For example, H&M is a unique supply chain innovator after having a logistics turnaround within 20 days (H&M, 2015). With centralized warehouse and logistics system, procurement staff coordination and intelligent ICT use improves logistics and reduces lead time. 1.3 Porter’s five forces analysis The current strategic mission of H&M is to increase the number of annual stores by 10-15 percent globally. Recognizing that its global online strategy is underdeveloped, the company is pursuing high profitability, sustainability and quality (Porter, 1985). Being part of the fast fashion retailing industry, H&M is facing competition from new entrants and threats of substitutes. The five forces framework analyzes new entrants, bargaining power of suppliers and buyers, threat of new substitutes and industry rivalry. As shown in the figure 3 below, threat of new entrants is low while all the impact of the other forces is high. Figure 3: H&M Porter’s five force framework From the figure above, the threat of new entrants is low. The sector not only faces a huge competition from Zara and Gap Corporation but also requires huge capital requirements (Marketline, 2009). Moreover, H&M’s brand is very hard to match due to great product range, reputation and brand image. Yet, the bargaining power of suppliers is high. The reason is that H&M has quick lead times and excessive dependence on third party vendors. Also, the 750 H&M suppliers desire to be part of the sustainable fashion. The bargaining power of buyers is very high given their ability to negotiate and demand better service and quality. Besides, the level of competition is very high with no switching costs and price-sensitive customers. The threat of substitutes is also high given the huge number of online retailers and generic goods (Alatalo, 2011). This includes ‘buy in other stores’, shoes, lingerie, makeup and clothes. On the other hand, the industry rivalry is quite high due to ease of global reach and intense competition. The fashion industry, owing to online systems and e-commerce, has quick lead times and mature distribution channels (Fred, 2011). However, it not only lacks strong brand loyalty but also faces turbulence in fashion trends that are rapidly changing. This means that the fashion industry is not attractive given the high stakes in trust, large investment, brand reputation and trust. Although its value chain is efficient and tailored, H&M is not yet an industry leader. 1.4 PEST Analysis PEST analysis for H&M has implications of achieving value proposition and ensuring sustainability. The company is expanding to the globally economy and currently faces low trade barriers in Europe. However, labor legislations and increased legal fees in mergers and acquisitions are likely to influence its cost and financial performance. The company is exploring a range of online platforms to sell and buy merchandize. In addition, the ‘going green’ agenda and the Better Cotton Initiative (BCI) are revolutionalizing the apparel sector (Bhardwaj & Fairhurst, 2010). Political/legal aspects: H&M has expanded globally and is subject to different political and legal pressures. This influences its profitability and human resource management issues owing to local labor legislations and taxation laws. For example, in different countries, the custom duty of shipments is subject to the European law and the Swedish international law legislations. Meanwhile, H&M operates in comprehensive and clear code of conduct and labor legislations (Younan & Selwan, 2014). EU laws define how companies within its jurisdiction approach income tax and labor laws. While it attempts to challenge trade barriers, it imposes corporate taxes on multinational companies. Moreover, some countries like Japan and UK have high legal fees of the solicitor so as to obtain contracts and stores. Economic aspects: This involves global economy, distribution and advertising expenses and exchange rates. Developing countries such as India, China and African countries spend a lot in apparel consumption (Fred, 2011). This requires that H&M spends on advertising in different languages in the case of mergers and acquisitions with local players. For example, there is need to translate some of the ads into Chinese and Japanese language in order to make it big in the Asian market. Countries like China and India are emerging economies with high population and GDP growth rate (Partridge, 2011). Such increases in personal wealth indicate a positive impact of the apparel industry and good news for H&M. Nonetheless, growth of manufacturing countries like Thailand, China and Vietnam has kept labor costs low and so are the retail prices. Technology aspect: Technological advancement in the apparel industry that affects financial performance and resource allocation include social media marketing, manufacturing and online advances. For H&M, use of e-commerce in the franchises and leased store premises has become profitable and popular (Manrique, 2015). Through search engines, consumers are able to search for clothes while retail stores have been able to use e-commerce stores to lower their operational costs. H&M is able to build a brand loyalty and capture more markets through improved communication and technological development in the industry. Socio-cultural aspect: H&M’s consumers are spread in terms of age, tastes and preferences. Its expansion into Asian and Latin American markets implies that H&M will experience a mix of low and high context cultures (Manrique, 2015). Besides, some of its suppliers in South Asia have different work ethics and standards. For example, apparel workers in Thailand and Vietnam have lower living wages compared to their European counterparts. Their social responsibility is underdeveloped and exploits workers. On the contrary, they meet global apparel supplies with durable and clothes for all ages. There is a huge demand for clothes for children between 1 year and 14 years (Beard, 2008). On the other hand, teens are looking for street-wear fashions with concepts like Impuls and Rocky. H&M, for unique requirements, are designing working wear and contemporary casuals, sportswear and evening wear. Environmental aspects: Legislations on competition and anti-dumping are likely to affect sale and distribution of apparel clothing in some countries. For example, the UK passed anti-dumping laws for Sweatshops while recent drive by US and many European governments to go ‘green’ is affecting production of apparels (Wortham, 2014). Textile industries are required to observe carbon footprints and sustainability. For example, the EU is driving for global sustainability in the apparel industry through better cotton initiative. Increased taxation on carbon taxes will mean more costs for H&M on carbon trading and environmental taxes to the host government (Partridge, 2011). 1.5 Strategic capabilities This section looks into core competencies and resources. Barney (1991) emphasizes on firms to scale up their resources and capabilities so as to edge competitors, and create competitive advantage. Firms use capacity to acquire and generate resources, management technology and knowledge-technique base (Barney, 1991; Parkkali & Sallinen, 2010). While competitive advantage is based on specific bundling of several resources, resources alone do not lead to competitive advantage. 1.5.1 Current strategy and core competencies analysis H&M has health balance sheet and shows stability which is good news for employees, suppliers and shareholders. Just as it expects to grow strong into the future, the company has solid performance especially in the past years (Manrique, 2015). For good leadership, cost leadership strategies and supplier collaboration has solidified its financial performance as shown in the table below. Table 1: H&M financial performance 2011-2013 To ensure consistent financial results, the company has prioritized on quality, design team and pricing. First, the company collaborates and cooperates with suppliers to ensure the final products are designed to meet the expectations of customers. Second, the H&M design team is innovative and creative in providing a broad range of inspiring and bold fashions. It has also maintained a brand image of fast fashion. Third, H&M is providing products to its consumers at affordable prices by trading in large purchase volumes and efficient logistics. H&M core competencies are further analyzed in the VRIO framework as shown in the table below. Table 2 (a): H&M core competencies The VRIO analysis above can be used to analyze H&M sustainable competitive advantages. To compete in the international market, H&M has to have threshold capabilities. Although core competencies may evolve into distinctive capabilities, they do not create competitive advantages. Johnson et al. (2014, p. 70) argues that strategic capabilities contribute to the competitive advantage of long-term survival of the firm. Strategic capabilities of H&M are that it does well (competencies) and what it has (resources). The role of Karl Persson as the CEO of H&M is to protect, identify and invest in resources and competencies. Indeed, inimitable, rare and less valuable capabilities can only create temporary advantages or competitive parities (Johnson, et al., 2014). Tangible resources include the physical stores and financial resources for R&D. Intangible resources include human resources (116,000 employees), cultural (Persson’s family legacy), reputation (fast fashion business and cheap and chic business model) and innovation (style and design, and social responsibility). The H&M competencies are as shown in the table below. Table 2(b): H&M competencies 1.5.2 Resources Resources are divided into tangible and intangible resources. On tangible resources, H&M has about 3300 stores in 55 countries; own clothing line and supply chain, 200 talented designers and over 116,000 employees (H&M, 2015). Other resources include the Persson’s family, IT systems, warehouses, distribution centers, and marketing and production facilities. First, regarding financial resources, H&M is able to raise funds by trading in stocks. With its immense online and store expansions, there has been an increase by 18 percent of the stock-in-trade. In 2014, half-year profit showed an increase by 19 percent (H&M, 2014). H&M has been able to keep long-term investments to enlarge market share and increase its competitive advantages. Second, H&M has unique organizational resources that provide valuable information on stakeholder diversity (H&M, 2014). H&M is generating its sustainability reports in accordance with the United Nations Global Compact principles and GRI G4 guidelines. The GRI index provides additional indicators that are convenient to users. In 2014 alone, the number of stores globally increased by 153 after closing 23 existing stores and opening 176 new ones (H&M, 2014). The company is planning to open 400 new stores in China and the United States. Meanwhile, it opened new stores in Peru and South Africa in 2015 (Duggan, 2014). On the other hand, intangible resources include human resources, innovation resources and reputational resources (Johnson, et al., 2014). H&M has more than 116,000 employees in 55 countries. The company employees based on skills and qualification but personal reputation is the most important facet. The company believes in job rotation and internal promotion as measures to ensure employee satisfaction, commitment and retention. With ongoing training and development, the company has set standards for its workforce. H&M is involved in continuous improvement in its supply chain and design quality. With frequent and fast product development cycles, the company is deeply involved in innovation processes (H&M, 2014). H&M cooperates with customers and suppliers regarding fashion changes. On reputational resources, H&M was named as ‘the most company’ in 2014 by the Ethisphere Institute (Duggan, 2014). This means that the company is reputed for its best practices in corporate governance and ethics. In addition, it will be able to build a strong brand loyalty among its customers. 1.6 Porters’ generic strategy options H&M uses cost leadership and good quality products to gain competitive advantage. Through cost-leadership, H&M offers low prices of its fashion designs while producing massive amounts of apparels (Fletcher, 2008). This way, the company is able to edge its competitors like Zara, Gap Inc., Inditex and the Arcadia group. Figure 4: Generic strategy options for H&M From the figure above, H&M is a low-cost and industry wide in competitive scope. This is opposed to Zara, a major competitor, who uses broad differentiation as a source of competitive advantage. When compared to Zara (24%), H&M is second (21%) in terms of times people wear their brands (Smith, 2014). With a brand value of 13 billion euros, the company is highly valued given its unique product and shopping experience (Marketline, 2009). H&M low cost womenswear draw international attention through its social media and online advertising. Figure 5: H&M global presence As shown in the figure above, H&M has heavy presence in the northern hemisphere for ease of transportation and marketing. H&M has more than 100 major buyers and 150 designers around the world. Most of its products are outsourced from Asia (H&M, 2013). First, to reduce costs such as shipping, transaction and advertising, the company has networked its 20-30 production offices. The products with short lead times are manufactured in Europe while those with longer lead times are made in Asia (Fletcher, 2008). Uniquely, the production offices are located closer to the suppliers to reduce transport and currency exchange differentials. Second, the company has invested in a world-class infrastructure which is key in reducing product processing costs and paperwork. For example, all the H&M stores are connected with a central H&M warehouse, procurement systems, and corporate logistics. The robust IT systems have enabled product design, sales and product development (Barnes & Lea-Greenwood, 2006). Besides, investing on emerging trends and R&D has boosted profits in Sweden and the international branches. However, in the least amount of time, garment factories are pushed into making the largest quantities of clothing. Third, outsourcing all its production activities and owning no factories offers the company the opportunity to avoid the daily operational and managerial challenges. The company works with few middle men and buys the right items in large volumes (Manrique, 2015). This ensures that the costs are driven to the minimum in an efficient and well-established distribution channel. The transportation costs are kept low by transporting the finished products through road, rail and ocean. The sales stores locations also double up as market countries. Meanwhile, the company saves a lot in equipment, building and initial start-up costs by outsourcing. Fourth, inventory costs are kept to a minimum by recognizing that in an ever changing fashion industry, the clothes with lesser demand have lower re-orders while those with high demand have high re-order levels. 2.0 H&M Strategy evaluation Johnson and Schole’s criteria of evaluating strategic options match Rumelt’s criteria. Under suitability, the criteria assesses if the strategy addresses the external environment and if it exploits core competencies. While the strategy is determined if viable, it should create competitive advantages in the selected activity area. To analyze the ‘suitability’ of H&M’s remote and operating environment, SWOT analysis is used. A simple scoring scheme is used to assess the effect that the environment change will have on organizational strengths and weaknesses (Johnson, et al., 2014). After evaluating the current strategy, a scoring technique is used to screen the strategic options. To indicate the intensity of the impact, a simple scoring system of +3 to -3 is adopted and final results summarized on a combined matrix. Table 3: ‘SWOT analysis of H&M strategic options From the table 3 above, a suitability analysis is then prepared for all the strategic options. The remote and operating environment of H&M is represented by leadership decision making, store concept expansion and research. The strategic options are as shown below. Table 4: Suitability of all the strategic options From the table above, the most suitable strategic option is forming strategic alliances, especially with buyers and suppliers. H&M is undoubtedly a winner in cost leadership but low price may also mean bad quality which does not augur well with premium customers. For example, the perception of low price makes some H&M not to wear the clothes. David (2011) argues that owning a production facility may not be a suitable option given the fluctuations in worker wages, working conditions and climate changes. Changes in economic performance and resources may pose a challenge to strategic alliances and investment on R&D as they are needed in profitability and sustainability. The strategy will match the following; 2.1 H&M remote and operating environment Some of the strategic tools that have been used to analyze the operating environment of H&M are SWOT, PESTLE and Porters five forces analysis (Jarlaczyk, 2013). The option of forming strategic alliances with other major players will boost H&M brand image and financial performance. This is because the costs will be lower hence cheap and fashionable clothes. H&M has a global strategy of expanding into the US market by tailoring and centralizing operations to busy downtown centers and upscale malls. The new locations will be fit for the stores and new employees will have well-developed marketing skills. Moreover, the option of expanding R&D will ensure that there are always new fashionable clothes for women. However, forming alliances with companies in some countries may lead to a compromise in the level of quality. For example, forming alliances with some companies in Asia may lead to diminished control over garment quality. Again, diversifying into own production facilities may require a lot of resources and capabilities that are not available at present. As a result, it may lead to low quality clothing despite reduced dependence on suppliers from Asia. Forming alliances and investing in new technologies will take advantage of new emerging markets and online shopping. Alliances cushion the company from recession because companies all over the world operate under different laws, economies, and technological advancement (Moser, 2007). SWOT analysis shows that rising labor costs in Bangladesh, India and China can dent the hopes of reducing costs. In fact, it will be able to wade off competition from Zara and Gap Inc. While the industry operates under oligopoly, companies operating under it are interdependent (Smith, 2014). Alliances will consolidate the market and create a stronger brand ‘fast fashion’ as potential entrants are blocked. This will happen despite the relatively small bargaining power of the buyers. On the other hand, owning production facilities will increase labor and operational costs. It would be better for the company to continue relying on the same suppliers in India and China who produce low cost apparels. In the Porters’ five forces, there are many options or alternatives of spending money since clothing has not other substitute. Alliances with companies in China and India serve to lower duties since the two countries are major apparel manufacturers and suppliers (Fletcher, 2008). In the near future, rising labor costs may increase apparel costs which will impact on the outlet prices of H&M products. Again, recession and economic turbulence in the Middle East and the UK is likely to affects confidence among consumers. PEST analysis showed that the introduction of carbon taxes in many countries raises the issues related to climate change and social responsibility of companies. Indeed, Hill et al (2011) observes that alliances do not match with environmental interests that firms have to follow such as reducing waste, energy efficiency and use of renewable resources. Fortunately, increased expenditure on global R&D will improve the company’s standing on m-commerce and online shopping. In terms of legislations, foreign direct investment (FDI) and strategic alliances will require that H&M signs up to various laws and legislations that are not necessarily aligned with EU laws or Swedish legislations (Fletcher, 2008). On the contrary, some countries that H&M operate in have vague labor legislations and code of conduct. This may not fit with the H&M’s set of requirements that suppliers observe certain working and safety conditions. 2.2 H&M capabilities H&M has capabilities in three areas; supply chain, marketing and management. The company’s supply chain uses effective procurement techniques and a brand name to market itself around the globe (Quelch, 2003). With an informal and humble organizational management style alongside democratization of fashion, H&M has been able to perform financially well in the recent past. To measure sustainability performance of its suppliers, H&M uses the Index Code of Conduct (ICoC). This tool is integrated with the purchasing processes and gives H&M the opportunity to reward suppliers based on excellent sustainability performance. By entering into strategic alliances and partnerships with suppliers, merchandize distributors and buyers, the company ensures that it makes positive difference and influence to its stakeholders (Ball, 2003). In SWOT analysis, global R&D not only applies to new products but also new markets. With an effective advertising policy, Hunger and Wheelen (2006) argue that the global R&D policy run by the company will ensure that customers get the right message about company brands, quality and reputation. This involves carrying out regular surveys to assess and evaluate feedback from campaigns and get to know what the customers want. All data related to online shops collected are held centrally based on the Swedish data privacy laws (Fletcher, 2008). By doing so, it protects the privacy of customers. Regarding management, H&M has an effective organizational structure. In the company, there are about 170 colleagues who are working with sustainability. Strategic alliances with suppliers ensure sustainability of the supply chain and compliance to the company Code of Conduct (Houten, 2014). In addition, strategy and culture analysis hinted that H&M has ‘democratized fashion’ which ensures that people of all social and economic classes get what they want or need. In new markets, a company may not be able to adequately meet the various needs of its customers (Jobber, 1995). As a result, the company may lose its market share and competitive forces to Zara and Gap Inc. H&M ensures that suppliers meet stipulated environmental and social standards which include fair wages and overtime for its workers. As shown in strategic capabilities, H&M has decentralized decision making which are also independent and informal. The aspect of over-reliance on family decisions is incongruent to the organizational structure because central functions like logistics and buying are mixed up with delegation and strong centralization (Houten, 2014). H&M has a flat and simple organizational structure which is more of a challenge that a benefit. As the company is growing in leaps and bounds, the company has been forced to adopt a matrix functional organization where results are reported and managed at functional levels (Petro, 2012). Management style of H&M has little attention to work descriptions and titles which can be a little disappointment to people who prefer formality and recognition. 2.3 Stakeholder expectations H&M has diverse stakeholders that have different and unique interests. H&M suppliers expect to be paid on time and procurement requirements made on time. With strategic alliances, this matches the expectation of the company since suppliers who provide quality fabrics are socially responsible to its workers; environment and communities so as to continue doing business (Bhardwaj & Fairhurst, 2010). Customers in various parts of the world have high expectations on quality, design and timely delivery. Given the continued investment in R&D, it means that the company is able to keep abreast with trendy fashions and new designs (Singhal, 2012). On the same note, investing on employees training and continuous development ensures that all employees understand the corporate values, culture and strategic direction. The allocation of significant financial and human resources to R&D will indicate a paradigm shift by H&M to increase its market share and bolster its competitive advantages. From the SWOT analysis, H&M has dedicated and well trained employees. Houten (2014) observes that employees such as sales staff and designers are key people in the organization who require constant training and development. To ensure that H&M culture and values are ingrained in all the outlets, strong management styles should be in place. The management requires that all the corporate decisions are deployed into business and functional strategies by middle-level managers and supervisors (Hill, et al., 2014). For floor level employees to implement corporate decisions, the relationship and communication flow between members of management and lower cadre staff should have low power distance (Cravens, 2011). In the PEST analysis, host governments require that H&M adheres to local laws, taxation regimes, labor practices, minimum living wages and ethical practices. With strategic alliances, H&M spends more time studying overseas markets before entry. This involves spending on transactional costs and making negotiations for possibilities of suitable mergers and acquisitions. 3.0 Conclusion H&M is one of the global leaders in clothes fashions especially on womenswear. The company leverages on resource allocation on R&D by investing on its employees, new fashion designs and infrastructure. Human resource management is a critical aspect of H&M’s corporate level strategies in which more than 116,000 employees are managed under one centralized structure. With continued expansion into international markets, the company is finding more difficult to keep up with employee needs and expectations. As a result, the company is adopting the matrix management styles to get hold of its employees. In addition, the company has entered into strategic alliances with more than 747 suppliers who represent quality and timely delivery. Since majority of the suppliers are in Asia, it is important that H&M signs up with companies that adhere to Swedish and EU labor laws, social responsibility, taxation, and work conditions. The strategic options suggested are; strategic alliances, global R&D, improvement on the past strengths and own production facility. 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