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Competitive Advantage: Case of H&M
The United Kingdom has always been renowned all over the world for its fashion statement. Fashion is very important having the power of portraying a person’s mind, background, legacy, culture, and etc. Fashion is not only about cloths or accessories but also it can reflects a person’s lifestyle as well. The fashion industry has always been very complex, dynamic and challenging as well because of the ever-changing and ever evolving demands of the customer. This report deals with the approaches H&M, a key player in the UK fashion industry, adopt to outperform its competitors by delivering the best quality and fashion at the best price.
The UK has been considered as one of the most influential trendsetters in the fashion world. More than 500000 people in UK are now employed and somehow associated with this fashion industry. More than £25 billion are revenue from this industry. Fashion industry holding major economic growth of our country. UK gained worldwide recognition for their innovative clothing brands. Some of the clothing brands are Mark & Spencer, Asos, River Island, H & M, Next, Primark, Zara, etc. (Jiménez-Zarco, Moreno-Gavara, and Njomkap, 2019).
H & M is the world-famous clothing brand which was originated from Stockholm, Sweden. Erling Persson opened first women wear Hennes store in 1947 for making fashion available and affordable to common people. Over time it has spread its wings all over the world in more than 60 countries having more than 5000 global outlets and more than 100.000 direct employees.The name H&M is the abbreviated form of Hennes& Mauritz AB, which is the original Swedish name of this clothing company. In 2015 this company became the world’s second largest retailed clothing company after the Spanish company Inditex (the owner of Zara) (Eliasson, 2018). The products of this company are also available are some famous online retail sites. Apart from this, they have an online shopping site. This site is available in more than 30 countries globally. At the year of 1968, Persson merged his company with Mauritz Widforss and launched men clothing business apart from women. Over time many famous fashion designers were associated with this company. In UK the H & M store is situated at Birmingham, at the Pavilions shopping center (Arrigo, 2018).Numerous fashion designers of UK like Matthew Willimson, Stella Mc Cartney, etc. have launched their clothing collections collaborating with this company. According to, Arrigo, (2018) H&M is customer oriented, innovative, creative fashion company driven by their values. H&M, being a firm believer of people and teamwork, always strives for continuous improvement along with cost conscious business strategy.
Competitive advantage helps a company to let them perform beyond the expectation compared to its competitors (Namada, 2018). With the help of this attribute a company can achieve its superlative goals and can create a brand image about their products as well. To achieve this goal there are some steps which a company needs to maintain:
- A company must need lots of natural and organic resources which must be very difficult to access by their competitors.
- The employees of that company must be skilled, efficient and dedicated towards their respective company (Kumar and Pansari, 2016).
- The location of that particular company must be very unique and user friendly.
- The market price of their product must be cheap compared to its competitors.
- The brand reputation and brand recognition are the most important thing to sustain in the competitive market (Albrecht, 2015).
To sustain and to lead the ever-increasing competitive market a company needs to follow some strategies (Allahverdiyeva, 2016). Three different strategies are there which can be helpful for a company to sustain into a competitive advantage, those are
Figure 1: Competitive Advantage strategies
1. Cost leadership
H & M need to imply differentiation and cost leadership strategies to upgrade their brand image and recognition (West, Ford and Ibrahim, 2015).
The porter’s five forces are a business model which is implied on the strategic business management. With the help of this business model, a company can easily identify and evaluates their competitive market (Madsen and Walker, 2015). This model is also helpful to understand the current marketing trends and which strategies are helpful for the growth of their company. With the help of this business model, we can identify the current competition and strategies of H & M Company.
Figure 2: Porter’s five forces analysis of H&M
- Threat of new entrants:
By taking advantage of the industrial economy of scale, H&M outperforms new entrants through cost effective business strategy. By innovative product development and unique marketing strategy, H&M focuses on customer retention (Tsougkou, 2019).
- Bargaining power of suppliers:
Multiple suppliers as per different geographic locations and purchase of raw materials at lower cost strengthen its supply chain management with cost effective business (Lazzarini, 2015).
- Bargaining power of buyers:
By innovative, unique and good quality products as well as with well-established marketing strategy, H&M focuses on building loyalty of brand .............
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