COPORATE STRATEGY:

Hennes & Mauritz (H&M) is a 100 billion SEK company, engaged in designing
and retailing of fashion apparel and accessories. H&M is also the third largest
clothing retailer in the world( table 1). H&M primarily operates in Europe, North
America and Asia, and has a presence in over 33 countries. The company is
headquartered in Stockholm, Sweden and employs approximately 53,430 people
on a full time basis (Datamonitor, 2009). H&M becomes the “fashion icon” and
provide the concept of high fashion but low price.

TABLE 1

Company Name Sales

Country Fiscal Year End
(Flagship Brand) (¥ Billions)

GAP USA Jan. 2008 1723.7

INDITEX (ZARA) Spain Jan. 2008 1517.5

H&M Sweden Nov. 2007 1342.1

Limited Brands USA Jan. 2008 1108.2

NEXT UK Jan. 2008 666.2

FAST RETAILING
Japan Aug. 2008 586.5
(UNIQLO)

Polo Ralph Lauren USA Mar. 2008 533.6

Liz Claiborne USA Dec. 2007 500.5

Esprit Hong Kong Jun. 2007 415.0

Abercrombie & Fitch America Jan. 2008 410.0

Benetton Italy Nov. 2007 335.4

• Source:Compiled from the annual reports of the Uniqlo companies listed

above.
* Figures calculated in yen using August 31, 2008 foreign exchange rates.

BUSINESS STRATEGY
The company offers a range of apparel, cosmetics, footwear and accessories for
men, women, children and teenagers. However, they increasingly focus on two
types of clothing. Firstly, they specialized in women's clothing. Though they now
produce clothing for both men and children, this remains their focus. Their women's
fashions tend to focus on a combination of skirts and tops, forgoing any real focus on
dresses, as they tend to be more expensive and do not fit with their mandate of providing
great clothing at a reasonable price.

Second, they focus on petite clothing. This is, to some extent, a result of the difference in
weight between the average European and the average North American. There are many
theories about why this is, but H&M's European origins can be seen here. This is great
news for a lot of petite women. North American clothing increasingly is designed for
women of different sized, but such clothing doesn't necessarily look very good on petite
women. H&M provides a wide range of clothing for them.

H&M’s strategy is to offer fashion and quality at the best price . H&M’s
annual report (AR1 2008) emphasizes that “quality” relates to both; H&M’s
products exceeding customer expectations, and also customers being
satisfied with the company itself.

Sales including VAT for the first nine months of the financial year amounted to
SEK 92,174 m (85,939), an increase of 7 percent. In local currencies the
increase was
14 percent and in comparable units sales increased by 4 percent. H&M Group
sales excluding VAT amounted to SEK 78,772 m (73,382), an increase of 7
percent.

Sales including VAT for the third quarter amounted to SEK 31,475 m (27,587), an
increase of 14 percent. In local currencies the increase was 21 percent. Sales in
comparable units increased by 11 percent. Sales excluding VAT for the third
quarter amounted to SEK 26,893 m (23,545), an increase of 14 percent.

• Price, which is controlled by: limiting the number of middlemen, buying in

large volumes, relying on it’s in-depth, extensive expertise within the
design, fashion, and textile industries, buying the right merchandise from
the right production markets, being cost-conscious at all levels and
maintaining effective distribution procedures (Job advertisement for Buyer
on the careers site at ).
• Design: Products are designed in-house and production is completely
outsourced (AR1 2008, p.13).
• Quality: Central emphasis on quality with extensive testing and ensuring
least environment damage (AR1 2008).
• Merger and Acquisitions: Acquisitions (like FaBric Scandinavian, the
Swedish design company), and Design Collaborations ( like the
collaboration with Mathew Williamson) are adopted (H&M press at ).

Source: www.hm.com, financial report, 2010.

External analysis

Since 1947, H&M, the Sweden-based vertical retail chain, has made its mark on
the apparel industry, mixing the latest trends with fashion classics. Like some of
its global competitors, such as Gap and Zara, H&M has cut a swath across the
supply chain, successfully managing 680 stores, more than 900 suppliers and 21
production offices worldwide.

Internal analysis

H&M is driven by strong value such as complicity, continuos improvement, team

spirit, cost consciousness n entrepreneurship.

H&M does not own any factories but instead works with independent supplier via
local H&M production office in Asia n Europe. Product shoule be made under
good working conditions and with the least possible impact on environment.

Key success factors

Having been in the fashion business since 1947, this company knows what it
takes to make great clothes.The cool thing about this brand of clothes, though, is
that they don't focus just on the style then slap a hefty price tag on the finished
product. Instead, they craft great fashions and use materials that make them very
affordable. This is why they're so hot right now.

H&M clothes have been around a long time, but that doesn't mean their brand or
their sense of style is dated. In fact, they go out of their way to make sure their
styles are fresh and hip every season. One of the things they've been doing the
last few years is invite guest designers to come up with a clothing line for their
brand. With guest designers in the past like Madonna, they've really been able to
inject some life into their clothes and accessories, making sure they're not an old
fashioned fashion company. (Nothing is worse than that.)

H & M noted that no fashionable shoppers do not like the design, the image of
luxury designer clothes, but most people only have to wait until clearance sale,
"shot in time", why not meet famous fashion design and customer demand for
cheap cheap it?
. The success of H&M is primarily based on the business model of entire
design being done internally and centrally, manufacturing totally
outsourced, but quality ensured and local retailing with hired places, local
staff and local shop managers empowered to take decisions. The success,
business growth and expansion plans were possible because H&M have
formatted their HR strategy in line with the corporate strategy. As evident
from their Annual Report (Ar1 2008), when they expand into new markets
they do not lose sight of their core values. They have succeeded to manage
all components of HRM effectively to ensure that core values are upheld in
all parts, regardless of country and cultural differences. Their strategic and
coherent approach in recognizing that the organization’s most valued
assets are the people working there is evident from the statement issued
by their CEO,

, H&M's business concept lays the foundation for the company's success. "Our
business concept is really what attracts the H&M customer: Fashion and quality
at the best price. Because we do carry all these different lines in our stores, we
allow our customer to address [his or her] personality, and that's really
important."

PERFOMANCE

In the month of November 2010, sales in local currencies including VAT

increased by 17 per cent compared to the same month previous year. In
comparable units sales increased by 8 percent.

The total number of stores amounted to 2,206 on 30 November 2010 versus

1,988 on 30 November 2009.

· The H&M Group’s sales excluding VAT during the first nine months of the
financial year amounted to SEK 78,772 m (73,382), an increase of 7 percent. In
local currencies, the increase was 14 percent.
· Profit after financial items amounted to SEK 17,830 m (14,111), an increase of
26 percent. Group profit after tax was SEK 13,194 m (10,230), corresponding to
SEK 7.97 (6.18) per share.

H&M’ s growth target is to increase the number of store by 10-15 percent per
year, but also increase sales in comparable units. The growth whici will be
entirely self- funded, will proceed with an emphasis on quality n continues high
profitability
In the past five years, from 2004 to 2009, sales including VAT increased by 88%
n profit by after tax by 125%
H&M’s annual report (AR1 2008) and website (Careers website), emphasize that
working at H&M is about commitment, both from the individual and the
organization. H&M’s Head of HR emphasizes that organization can grow only if
the individuals grow (AR1 2008, p.34). H&M won’t make a career plans for it’s
employees, but will provide them with tools to go as far as they possibly can on
their own.

The average numbers of training days per employee in 2008 are, 10 for new
sales staff, 1 for existing sales staff and 5 for existing management positions.
H&M usually conducts all training in-house (classroom, stores and one to one),
written and produced by H&M staff. External training has been considered for
some areas like “buying’. E-learning has also been initiated for a few subjects
(SR 2008).

In 2009, H&M plans to open 225 new stores and recruit 6,000 to 7,000
employees.

PROSPECTS

Long-term strategic goals of H&M

In the Annual Report (AR1 2008, p.7), H&M, CEO Rolf Ericsson states that the
long term goal is to “Make fashion available to everyone, give the customer a
fashion experience that strengthens H&M brand”. They also state the goal of a
10-15% increase in the number of stores every year, which would be funded
internally (AR1 2008, p.13). The aim to increase sales in existing stores, while
focusing on quality and continued profitability. They have penetrated Singapore
market as a first step in South East Asia.

To conclude, H&M has balanced the needs of coordination, control and

autonomy and maintained the appropriate balance between them. These are
critical to the success of any multinational company ( Bartlett & Ghosal (1991)
from Armstrong (2006), p.104)