The company has been tremendously successful in fast fashion and has a range of strategic capabilities. C]The roots of the H&M ‘spirit’ can be traced back to the sass when the first store was opened by Reeling Person, whose legacy and philosophy for keeping business simple is still influential in the corporate culture. O H&M relentlessly continues to emphasis the long-term view and expansion story. In that regard, successful replication of its business model is a key to the survival of the Swedish fashion retailer.
Presentation Title 3 in fast fashion: continued success I CLC The business model, commonly referred to as fast fashion or ‘cheap-and- chic’, emphasizes high fashion at prices significantly under those of competitors. D While H&M pays special attention to having the right design team to capture and respond to the market trends, the cost advantage is being threatened by rising input prices and rivals with lower cost structures. 0 The flat and simple organizational structure has also been more challenging to preserve due to H&M’s tremendous growth.
L] Another possible challenge is that H is lagging behind its main impetigo in key emerging markets in Asia and South America, which contributed to H falling behind Ezra in terms of market capitalization. C] Thanks to its long-term advertising campaigns with high-profile celebrities, enjoys a clear brand recognition and reputation advantage over its major rivals like Ezra and Gap. 4 Assessment of H’s strategic capabilities Resources possessed by Physical facilities Hess include, e.
. Production offices (which are primarily responsible for coordinating with commissioned and approved suppliers and factories across the globe), distribution centers and warehouses. Intangible assets – These include the H&M brand name, which has strong reputation/ equity, and IT systems, which are continuously improved in order to ensure supply and demand match and to monitor customer needs and preferences based on sales patterns. Human resources – These include strong leadership, I. E. Here generations of the Person family, whose legacy and influence is key to H&M’s culture, as well as a committed and highly motivated workforce, whose personal qualities matter much more than formal qualifications and credentials. 5 3/10/15 Resources possessed by H Financial – The long-term commitment by, and majority ownership Of the Person family provide a strong financial foundation for H. Competences Culture – The business model of H is aimed to deliver latest fashion at best price, in a simple way and through a committed workforce.
To deliver this, H relies on its strong culture where values and norms like employee involvement, experimentation, pace, informality, initiative taking and decentralization are highly encouraged and praised. Replication – As far as H’s growth strategy is concerned, replication is the cost important competence the company relies upon. In order to open up a sufficient number Of new stores each year, H&M minimizes the use Of formal rules and procedures and instead prefers to equip its employees with tacit skills via experiential learning in the field.
This way, the ‘spirit’ is replicated at a faster pace with minimum variability. Brunet University London 6 Design – Centralized design activity not only enables faster response to overcharging market trends in fashion, but also ensures that H&M can remain novel and original. Store concept – H&M always prefers to have its stores in the best business actions and makes sure that the window displays are periodically changed and updated to garner continuous customer attention and that internal design of the store is arranged in a way to give the most convenient in-store experience for customers.
Marketing and CARS – H&M uses conventional marketing channels to create high brand awareness as well as social media to follow and collect customer feedback and suggestions. Corporate social responsibility is a key competence for H&M, given that the textile/apparel industry is under constant scrutiny and that H&M is one of the more visible actors in this arrest. 8 9 Competitive Advantage & Sustainability C] H&M derives much of its sustained competitive advantage from its unique organizational culture and related human resource management, its ability to replicate the same store concept worldwide and its overall strong brand and market position. The organizational culture in is heavily influenced by the strong persona of founder Reeling Person. 0 Unique position of the H&M brand as being equal to high fashion with quality at low prices; virtually shaping the fast fashion segment of the apparel industry.
C] The H&M spirit and values developed by these leaders are central in recruiting and training new employees around the world. H&M is thus able to successfully replicate its culture and business concept in different stores around the globe, which enables the company to grow at a steady rate. CLC The track record of also attests to the fact that its unique culture, leadership and the HER practices of H&M are valuable strategic capabilities, which give the company a sustainable strategic edge. 10 CLC H&M enjoys competitive advantage over its rivals, but where long-term sustainability of their position is only temporary.
C] Both their particular and flexible store layout and their unique design collections are valuable and rare strategic capabilities. C] Purchasing is another area in which, the competitive advantage of H&M can be regarded as temporary. C] The large number of small- and medium-sized vendors and suppliers enable fashion retailers of various sizes to have buying power during negotiations. Is at competitive parity with its competitors.