H&M in fast fashion:

continued success
WORKSHOP 3 CASE STUDY REFLECTION

RIDA SALIM
This study source was downloaded by 100000852216861 from CourseHero.com on 09-25-2022 18:26:49 GMT -05:00

https://www.coursehero.com/file/111077412/HM-CASE-STUDY-NEW-ridapdf/
 The fashion industry is very unpredictable and uncertain. Using resources and capabilities in the right manner can
lead to a competitive advantage. H&M, in the beginning, was a leading apparel brand but now if in recent days a
not case study due to its scarce resources and capabilities competitors have taken over the market due to which
investors are questioning that whether H&M can sustain its competitive advantage or not in the long run?
RESOURCES
Intangible assets These embody the H&M name, which has a robust reputation, and IT
department, that is endlessly improved so as to make sure that supply can meet
up the demand and to watch client wants and preferences on behalf of sales
patterns.
Financial Strength: The long-run commitment by, and majority possession of the
Persson family offers a robust monetary foundation for H&M.

Physical activity/facilities These embody production offices (which area unit is primarily answerable for
coordinating with approved suppliers and factories across the globe),
distribution centers, and warehouses to ensure timely deliveries of products

Human Resource These embody sturdy leadership, i.e.,3 generations of the Persson family,
Management whose inheritance and influence are essential to H&M’s culture, furthermore a
committed and extremely actuated force, whose personal qualities matter way
more than formal qualifications and credentials.

CAPABILITIES
Design Its centralized style and design activity not solely allows quicker response to
dynamic market trends in fashion however additionally ensures that H&M will
stay novel and original
The flexibility and loyalty As H&M don’t own any store so this is their capability that they are flexible
and can move to any place where the demand is high, also the loyalty of its
employees is also its capability.
Marketing and CSR: H&M uses conventional selling channels to form high brand awareness also
uses social media to follow and collect client feedback and suggestions by
organizing dialogue sessions and focus groups. Company corporate social
responsibility may be a key ability for H&M, as long as the textile/apparel
business is under constant scrutiny and that H&M is one of the additional
visible actors in this market.
Culture: The business shape and model of H&M is aimed to supply the modern-day
style at a satisfactory and low price, in an easy manner via a dedicated and
hardworking workforce. To deliver this, H&M is based on its strong
subculture and legacy in which values and norms like worker involvement,
experimentation, informality, initiative-taking, and decentralization are
relatively recommended and praised.
Store concept: H&M invariably prefers to possess its stores within the best business locations
and makes certain that the window displays are sporadically modified and
updated to gain continuous client attention and the interior style of the shop is
organized in a way to offer the foremost convenient in-store expertise for
purchasers.
This study source was downloaded by 100000852216861 from CourseHero.com on 09-25-2022 18:26:49 GMT -05:00

https://www.coursehero.com/file/111077412/HM-CASE-STUDY-NEW-ridapdf/
 Replication As a long as H&M's growth approach is concerned, replication is the most
essential functionality the enterprise relies upon. with a view to open up an
adequate variety of modern shops annually, H&M minimizes the usage of
formal guidelines and tactics and as a substitute prefers to equip its personnel
with implicit competencies through experiential mastering in the field. In this
manner, the 'spirit' is replicated at a faster tempo with minimal variability, and
the manner they mirror their shop interiors and each different aspect.

Threshold Resources Threshold Capabilities

• Their 800 independent suppliers that have • Using ICT tools efficiently
1688 factories are threshold • Efficient supply chain model
• 171000 number of employees • Own designs by in house designers
• Online platform Biggest distribution • CSR activity to maintain a positive
network of over 4000 stores impact on the brand name
• ICT tools • Marketing
• 200 Designers & 100 Pattern makers • Store concept
• Production offices • Managing IT system
• Financial strength

Distinctive Resources Distinctive Capabilities

• Their number of stores • Organizational Culture
• Home Concept Store • Cheap and chic fashion strategy
• Brand Name (Intangible Assets) • Replication
• Human Resource Management • A well-positioned concept (flexibility)

Its competitive advantage stems in part from its unique organizational culture and related human resources
management approach, its ability to replicate the same store concept around the world, as well as its overall strong
brand positioning.
VRIO ANALYSIS
H&M derives abundant of its sustained competitive advantage from its distinctive organizational culture and
connected with human resource management, its ability to duplicate a similar store thought worldwide, and its
overall sturdy brand and market position. All of these areas are deeply embedded in H&M’s business model, have
a chic historical background, and initiate to the very starting of the corporate. for instance, the organizational
culture in H&M is heavily influenced by the sturdy persona of founder and leader (Erling Persson), and has
become hereditary as he was succeeded by second and third-generation CEOs from a similar family. These leaders
managed to unambiguously position the H&M brand as being adequate to haute couture with quality at low prices;
nearly shaping the fast fashion section of the industry. The H&M spirit and values developed by these leaders are
central in recruiting and coaching new staff around the world. H&M is so capable to effectively mirror its tradition
and commercial enterprise concept in several shops across the globe, which permits the company to develop at a
slow rate. Therefore, there is a clear relationship between culture and leadership, HR management, brand and
positioning, and market replication. All this makes these capabilities valuable, rare and tough/ costly to imitate.
The data of H&M additionally demonstrates and attest to the actual fact that its distinctive culture, leadership,
and hr practices are valuable strategic capabilities, that provide the corporate a sustainable strategic and
competitive advantage.
There are a few other areas where H&M has a competitive advantage over its competitors, but the benefit is only
transitory. For example, both their distinctive design collections and their unique and adaptable retail layout are
valuable and rare strategic skills. However, H&M's competitors (particularly Zara) have similar abilities in terms
This study source was downloaded by 100000852216861 from CourseHero.com on 09-25-2022 18:26:49 GMT -05:00

https://www.coursehero.com/file/111077412/HM-CASE-STUDY-NEW-ridapdf/
 of detecting and molding fashion trends, as well as opening stores in high-traffic areas and developing window
displays and interior layouts that provide customers with convenient and pleasant shopping experience. Another
area where H&M's competitive advantage can be considered temporary is purchasing. While H&M retains its
purchasing power, similar-sized and bigger rivals enjoy the same benefits as H&M due to the magnitude of their
purchases. Furthermore, sophisticated IT solutions for coordinating global value chain buying operations are
considerably easy to develop nowadays. Furthermore, because of the vast number of small and medium-sized
vendors and suppliers, fashion shops of all sizes may negotiate with purchasing power. In the same way, increases
in material costs (such as cotton) have an equivalent impact on fashion businesses.
H&M has competitive parity with its rivals in some support areas. Supply chain management (SCM) and finance
are two examples. H&M, for example, has a sophisticated supply chain management system that makes it a
valuable resource. The resources on which SCM is based (i.e., IT systems, warehouse facilities, and logistics
systems) are, nevertheless, easily available to anybody. Even though it may take some time to develop, the skills
necessary to properly manage the SCM system are increasingly available from IT firms and SCM professionals.
Although the Persson family offers financial stability, H&M's competitors do as well. In summary, these are
strategic competencies where H&M is on level with competitors, making it difficult to understand how they may
acquire a competitive edge. The marginal advantage of investing more in these competencies would be negligible.

Supported
Resource/Capability Valuable Rare Inimitable/costly by the Competitive implication
to imitate organization
Human resource Yes, it is yes Yes yes
management Sustainable competitive advantage
Organizational culture and Yes yes Yes yes
leadership Competitive advantage is sustained

Market position and brand Yes yes Yes yes

name Sustainable competitive advantage
Cheap and chic strategy Yes yes Yes yes Sustained competitive advantage

Replication/ Yes Yes Yes yes Sustained competitive advantage

internationalization
Flexibility of stores Yes Yes Yes yes Sustained competitive advantage

Procurement/ purchasing Yes Yes No yes Temporary competitive advantage

Store operations and Yes Yes No yes Temporary competitive advantage

concept
Design Yes Yes No Yes Temporary competitive advantage

Financial strength Yes No - Yes Comparative Parity

Supply chain management/ Yes no - Yes Comparative Parity

logistics

The VRIO experiment demonstrates that there are some instances when it's difficult to tell what's sustainable and what's
not, or what's a transitory advantage vs competitive parity. In these situations, the attention should be on the fundamental
tendency. For example, H&M enjoys a brief edge in retail operations, but when competitors catch up, this strategic
competence it approaches competitive parity. Similarly, H&M still has long-term competitive advantages in terms of
brand and market position, but this is becoming more of a transitory benefit as competitors get stronger.

This study source was downloaded by 100000852216861 from CourseHero.com on 09-25-2022 18:26:49 GMT -05:00

https://www.coursehero.com/file/111077412/HM-CASE-STUDY-NEW-ridapdf/
 STRENGTHS AND WEAKNESSES
▪ Seven codified core values
▪ Long established brand name
▪ Every outlet manager is an entrepreneur
▪ Wide distribution network
▪ Centralized logistic and designing department
STRENGTHS ▪ Focus on sustainability projects strengthening the group's brand image.
▪ Continued robust enlargement permitting H&M to diversify its commercial
enterprise risk.
▪ Flexibility of stores
▪ Its way of replication and store concept
▪ Its human resource management.
▪ Collaboration with famous designers and celebrities to advertise their
products.
▪ For Asian customers, H&M makes adjustments in sizes according to their
needs
▪ IT AND CSR are very good.
▪ Organizational culture is its strength.
▪ In order to understand changing trends designers, hold surveys and discussion
groups from customers. It also different brands afound, artek etc.
▪ Demands cannot be met immediately in changing trends sometimes.
▪ Don’t own any store every outlet is rented and don’t have any manufacturing
WEAKNESSES office of its own.
▪ The company relies too heavily on third-party vendors to supply merchandise.

Part 2
Sharing a personal experience/observation, please do analyse strategy and the strategic decision using the relevant
models in the theme in focus?
While working as a part-time employee with my mother in her exhibitions named APPNA CONVENTION in the
USA as she is a dress designer. We enjoyed success and good profits in the beginning years but now due to a lot
of competition, as a very famous designer also showcases their product in this exhibition we seriously need to
works on our strengths and weaknesses by doing a SWOT analysis. Our enthusiastic designers were always ready
to do new experiments using a new pattern, colors schemes, and materials. Our tailors were trained and equipped
to get the orders ready in time, these were basically the resources and capabilities of our business. Now after
studying different models to evaluate any business I would collaborate with my mother’s team force and will
implement some of the relevant analyses for example VRIO analysis, Value chain analysis to use resources and
capabilities in a better way to gain competitive advantage and present our products on a global platform with
more professionalism.
In your opinion, what were the most valuable learning outcomes from today´s theme/session?
One of the most important learning outcomes of the topic/session for me is that using only a different model and
populating it out is not the goal of the strategy. When compiling a model, it is important to look at the relationships
between different topics, aspects, or issues. A factor rarely affects only one aspect of the business it impacts a
group of aspects together for example while doing VRIO analysis I explored that there is a relationship between
resources and capabilities, and I learned that in order to gain sustainable competitive advantage in the market
companies should use its resources and capabilities together in a way that they can earn maximum profit and

This study source was downloaded by 100000852216861 from CourseHero.com on 09-25-2022 18:26:49 GMT -05:00

https://www.coursehero.com/file/111077412/HM-CASE-STUDY-NEW-ridapdf/
 achieve a good market share. In my opinion, most models are only used to visualize analysis results and to assist
with guidance on how to "fill out" and use a model template. However, the answer itself is never clear.
3) What (There is always something anything) did you pick up from discussing or working with your fellow
students/peers that you did not know or think of before coming to class and that can help you to grow as strategic
manager/leader?
Coming from a different background and country it is often difficult for me to remember the aspects I have gone
through for example using different models and connect them but after the last workshop, I gained clarity on this.
Now if I talk about this session before coming to the workshop, I did not know the difference between the
threshold (resources and capabilities) and distinctive (resources and capabilities). In the last session, we were
asked to prepare presentations of articles suggested by the professor in groups it was a fun task related to dynamic
capabilities and resource-based view, after discussions with my team members I think we all were able to tell
what dynamics capabilities and resources are, and how they can be used to gain a competitive advantage.
Professor and some of the fellow students including me shared their views on H&M's case study. One of my
classmates talked about flexibility, others told us the managers work like entrepreneurs in the stores. Professor
told us that monki which is the brand of H&M is actually another name for it and he also told us that in the coming
years H&M will close its outlets and will open online stores instead. I learned a lot of things from fellow students
as someone told us that H&M collaborate with famous celebrities and designer so that they can attract customers,
they used it as their strategy for marketing their products. I think all the learning that I gained through these
sessions will help me to become a better strategic leader as I can implement these to run my business in the future.
4) Using the reflections, you have, please select on databases ONE scientific article from 2015 or later.
a) Answering this particular question is very difficult for me but I tried and chose two articles. First is written by
Aimilia Protogerou, Yannis Caloghirou, and Spyros Liouka, Dynamic capabilities and their indirect impact
on firm performance (Aimilia Protogerou). This article through empirical observation explores the link between
dynamic capabilities and firm performance. More specifically, it addresses the issue of whether dynamic
capabilities influence performance directly or indirectly. The article determines whether the impact of dynamic
capabilities on performance is mediated by operational—marketing and technological capabilities, and employs
structural equation modeling, to do so the planned model is tested in several levels of environmental dynamism
using knowledge on 271 Greek companies belonging to the producing sector. The empirical findings counsel that
a collision occurs between dynamic capabilities and operational capabilities that gradually have a significant
impact on performance. Direct effects on performance are near insignificant. Moreover, the effects appear to be
the same for each higher and lower level of environmental dynamism.
The second is written by Andreas Hinterhuber, (Can competitive advantage be predicted? Towards a
predictive definition of competitive advantage in a resource-based view of the firm) (Hinterhuber). It is
proposed in the paper that the RBV model is extended to include variables related to customer demand and the
size of the market segments on a segment-by-segment basis in defining the resources and capabilities that enable
competitive advantage and superior profitability. According to this article in this model, a company incorporates
a competitive advantage if its resources and capabilities are valuable, rare, inimitable, organized and if these
resources and capabilities address the unmet client wants in market segments massive enough to hide
organizational mounted prices.
b) The practical implication of this article says that with the Resource-based model, decisions can be made about
how to invest in resources and capabilities in order to further develop competitive advantages and build new ones.
The model's primary advantage lies in its ability to identify ex-ante the resources and capabilities that will lead to
superior profitability.

This study source was downloaded by 100000852216861 from CourseHero.com on 09-25-2022 18:26:49 GMT -05:00

https://www.coursehero.com/file/111077412/HM-CASE-STUDY-NEW-ridapdf/
 So according to this article H&M should use a resource-based model so that they know how to use their existing
resources and capabilities in a way that they can enjoy maximum profit and superior competitive advantage also
through this they will know in which particular resource and capability company should invest to expand its
business. H&M should do its VRIO analysis in order to know that its resources and capabilities are valuable, rare,
inimitable and organized, and are fulfilling customer needs.
5) How do you assess your involvement and contribution to class discussions, and what can you do better to
contribute to the discussion next time you are in a similar situation? (max 0,5 page only).
I think I contributed very nicely by being the first to discuss the articles which the professor gave us to read, I
discussed dynamic capabilities and resource-based view as I was pretty much informed about these after our
group discussion in which every member shared some information. It is an interesting model to use as it can help
companies especially H&M to achieve competitive advantage by utilizing their resources and capabilities in a
better way and by analyzing the relationship between these two. I would grade my participation with a low B.
Last week I decided I should start making notes more actively in the hope it would help me participate more.
While I did take more notes, I think there were few points that I did not know however I got a clearer idea of the
topics I didn’t know from my peers and enjoyed hearing about different viewpoints as this increased my thinking
horizon. I always try to raise my hand first and most of the time I answered first but I also noticed that at some
point I feel hesitant to raise my hand because of the queue. I always think that somehow someone would say
exactly what I want to say before me or we switch topic before I get my chance and I was right because in the last
session exactly the same thing happened to me when I was about to say something that was a very good point one
of my peers said exactly the same thing that I wanted to share.
To conclude, after this learning experience, I think I am pretty much well informed now about the topic that was
discussed in the workshop. I am able to understand the use and importance of different models for a company and
how to critically evaluate the case studies. I think now to some extent I am equipped with the process of evaluating
a business and recommend strategies to bring the business to the next level by using different models.

References
Aimilia Protogerou, Y. C. (n.d.). Dynamic capabilities and their indirect impact on firm performance.
Hinterhuber, A. (n.d.). (Can competitive advantage be predicted? Towards a predictive definition of competitive
advantage in a resource-based view of the firm).

https://oiipdf.com/download/exploring-strategy-text-and-cases-12th-edition
www.google.com
H&M in Fast Fashion: Continued success? – Prezi

This study source was downloaded by 100000852216861 from CourseHero.com on 09-25-2022 18:26:49 GMT -05:00

https://www.coursehero.com/file/111077412/HM-CASE-STUDY-NEW-ridapdf/
Powered by TCPDF (www.tcpdf.org)