What Is H & S Five Forces Model

Hennes and Mauritz AB is a Swedish retail-clothing company, which has expanded enormously in the past years. H&M has grown from one single store in a small town in Sweden to a multinational ranked as the second largest global fashion retailer with its 3,600 stores in over 58 countries and $22 billion in annual sales (The World’s). This incredible story of success makes us wonder about their strategies and how they managed to get where they are today.

This report contains the analysis of value and culture of reputable apparel retailer H&M, as well as three analysis method, which is PETEL, Porter’s five forces, and VRIO framework, to analyse the external influence factors, competitors, and competitive advantages of H&M.

II. Over the past few years, fast fashion has been an extremely hot segment and source to help some clothing companies increasing on their economic growth.

The threat of new entrants is moderate. It is relatively easy for a company to enter this market because there are not a lot of legal barriers. But a smaller company that has just entered the market would have a tougher time competing with some of the larger companies – an obvious reason being that larger companies can have larger inventories. Another reason is that larger companies can do things to weaken the smaller companies, such as offer discounts, sales promotions, and increase spending on advertising. Since most of the companies in this industry are competing on

The U.S. women’s apparel industry market is mature, given that the average growth rate from 2005 to 2007 was 4.66%. Within the industry, there are 6 categories of clothing in which companies compete: haute couture, designer, bridge, better, moderate, and budget. Each category targets customers with different needs and different price ranges, with haute coutre and designer clothing ranging upwards from $10,000 and moderate

2. Richard M. Johns (2006). The Apparel Industry. 2nd ed. UK, London: Blackwell Publishing Ltd.. 1-124.

In apparel industry the level of competition is very high, as there are big players competing in industries such as Jovian and Medeena. New entry threat are higher as they require less investment to enter the industry, whereas bargaining power buyers are also higher because of the wide alternative available to them. Suppliers' power is lower due to the existence of a large number of sellers and ultimately, treats of substitution is lower, as clothing is a basic needs whereas consumers have no alternative to clothing.

‘Fashion industry is characterised by short product life cycles, volatile and unpredictable demand, tremendous product variety, long and inflexible supply processes and a complex supply chain.’

In the apparel industry, the American Apparel’ faces stiff competition from the Gap, Urban Outfitters, American eagle, and Express.

As shown in Figure 2 of the Appendix, a Porter Five Force Analysis makes it clear that the overall rivalry within the athletic apparel industry is medium to high. Because Nike and Adidas already have a substantial amount of capital resources and other assets, Under Armour struggles against them to gain market share. 8Also, private labels of retailers and newer sports apparel companies could potentially pose a threat to Under Armour, but mostly due to the fact that Under Armour does not hold any fabric or process patents. This makes it extremely easy for any competitor to duplicate a product or process with no consequence. However, the threat of new entrants is not too troublesome within the industry because of the great capital cost required for branding, advertising, and meeting product demand. Furthermore, the sports apparel industry is in the maturity phase of the industry life cycle. This means that each company included in the oligopoly must

Porter 's Five Forces Model is a critical instrument to break down an outer aggressive environment of the business. The model incorporates threat of entry, the threat of rivalry, the threat of suppliers, the threat of purchasers and threat of substitutes.

The clothing industry in South Africa has always been an industry where there is intense rivalry between the companies. There are main companies in the industry namely Edgars, Woolworths Truworths, but there are smaller retail companies that enter the market that can satisfy the demand of the consumer’s better.

Sweden 's Hennes & Mauritz, more commonly known as H&M, is a retail-clothing company, famous for its reasonably priced “fast fashion.” With 6 different brands sold in 3,300 stores spread out over 54 countries, the company is second only in size to its direct competitor Zara. H&M uses psychographic segmentation, targeting at customers who belong to the group of fashionable and trendy consumers, who see shopping as a social activity providing pleasure in their daily life.

First we will start with the Macroeconomic factors. Economic factors can have both positive and negative impacts on the clothing industry. Consumer purchases generally decline during recessionary periods and other periods where disposable income is adversely affected. And that will increase the competitive pressures in the industry. Which will lead the company to be stuck with large amounts of inventory. Thus they might have to sell the clothing at substantially reduced prices. And that could adversely impact the company’s liquidity, capital resources, results of operations and continued growth. On the other hand, during an economic boom period, people have more disposable income. Hence, they may buy more clothes, which will ease competitive pressures, and that will result in an opportunity to expand operations and earn higher profits. Thus in todays growing economy, the macroeconomic factors represent an opportunity for ANN INC.

The fashion industry too, is influenced by external forces be they social, political, economic, technological or even competitive, which