H&M in Fast Fashion: Continued Success?
Case Study:
H&M in fast fashion : continued success? by Patrick Regner & H. Emre Yildiz
Q1) Evaluate the external environment in which H&M operates in.
External environment refers to the challenging and complexity in which the firm operates. It is important to highlight the factors of the external environment because it is very critical to the success of the firm. PESTEL model and Porter’s 5 Forces (P5F) models will be used to evaluate the external environment of H&M. These models will determine how challenging and attractive the environment is for H&M.
1. PESTEL
PESTEL highlights 6 environmental forces namely political, economic, social, technological, ecological and legal (Johnson, et al. 2014). This model analyses the general environment that influences the industry and the organisations in it as well as how challenging the environment is to operate.
1.1 POLITICAL
H&M is subjected to political pressures from the labour rights movement especially in low-wage countries. H&M has outsourced its manufacturing line to low-cost countries. H&M has no or little control over the operation in those countries. Hence, the firm would be closely scrutinised by the labour rights movement to spot any abuse in the rights of employee e.g. poor working condition. Government expansion and international trade policies would greatly impact the growth of the industry and increases competition.
Threat
1.2 ECONOMIC
H&M will not be spared from the increase in cotton prices and rising product cost in Asia. Economic downturn will have an impact on all the stakeholders in the environment especially the customers. Demand for luxury goods would decline for customers who are price-sensitive. They would then consider H&M competitors that offers similar goods which is are much cheaper than H&M or go for substitutes.
Threat
1.3 SOCIAL
Due to the ‘fast fashion’ business, customers taste in high fashion is constantly evolving. Customers are now
H&M in fast fashion : continued success? by Patrick Regner & H. Emre Yildiz
Q1) Evaluate the external environment in which H&M operates in.
External environment refers to the challenging and complexity in which the firm operates. It is important to highlight the factors of the external environment because it is very critical to the success of the firm. PESTEL model and Porter’s 5 Forces (P5F) models will be used to evaluate the external environment of H&M. These models will determine how challenging and attractive the environment is for H&M.
1. PESTEL
PESTEL highlights 6 environmental forces namely political, economic, social, technological, ecological and legal (Johnson, et al. 2014). This model analyses the general environment that influences the industry and the organisations in it as well as how challenging the environment is to operate.
1.1 POLITICAL
H&M is subjected to political pressures from the labour rights movement especially in low-wage countries. H&M has outsourced its manufacturing line to low-cost countries. H&M has no or little control over the operation in those countries. Hence, the firm would be closely scrutinised by the labour rights movement to spot any abuse in the rights of employee e.g. poor working condition. Government expansion and international trade policies would greatly impact the growth of the industry and increases competition.
Threat
1.2 ECONOMIC
H&M will not be spared from the increase in cotton prices and rising product cost in Asia. Economic downturn will have an impact on all the stakeholders in the environment especially the customers. Demand for luxury goods would decline for customers who are price-sensitive. They would then consider H&M competitors that offers similar goods which is are much cheaper than H&M or go for substitutes.
Threat
1.3 SOCIAL
Due to the ‘fast fashion’ business, customers taste in high fashion is constantly evolving. Customers are now
Bibliography: Ireland, R. Duane, Robert E. Hoskisson, and Michael A. Hitt. The Management of Strategy. Australia: South-Western Cengage Learning, 2013. Johnson, Gerry, Richard Whittington, Kevan Scholes, Duncan Angwin , and Patrick Regner. Exploring Strategy. Harlow: Pearson, 2014.