Introduction
H & M is a leading multinational company which deals with production and selling of fashion clothes. It was founded in 1947 as “Hennes”, having its headquarters in Stockholm Sweden. It has about 2, 300 stores in 43 countries and reports show that it had 94, 000 employees as in 2011. It is the Second World largest company after Zara and bigger than Gap Inc company which is based in the United States of America.
H & M Swedish offices comprise of design teams responsible for merchandise planning and establishment of specifications. Production is outsourced from 800 factories located in Asia and Europe. As in 2010, the company had a revenue of 126.97 billion, an operating income of about 24.66 billion and 18.68 billion in profit (Tungate, 2003).
Competitive environment analysis
The major competitors include Zara and Gap Inc companies. Zara Company was originally referred to as Inditex manufacturing company, with its headquarters located in Spain. Zara launched an exemplary advertising campaign in the 1960’s which has favoured its growth. Zara has adequate managerial expertise and employs many expatriates who have imparted skilled labour force in the company (Hopkins, 1997).
The reason why Zara Company is a big competitor to other cloth dealers is that it develops its products and brings them into store within only two weeks instead of the average industry time of six months. This makes it possible for the products to reach consumers within a short period of time as compared to other companies (Hopkins, 1997).
Zara has adopted a zero-tolerance advertising strategy policy by using its revenues to start new stores instead of advertising its products. This is contrary to other cloth dealers that invest millions of funds in product advertisement. Zara offers more products than its competitors. It produces 11,000 items in a year compared to 3,000-4,500 items produced by H&M and Gap Inc companies (Lussier, 2011).
Vertical integration adopted by the company makes it easy to control production steps from designing, supply-chain management, distribution and manufacturing. This helps the company to be self-contained throughout all stages of manufacturing, completion of products and distribution to the departmental stores within a few days (Lenkert, 2006).
The company carries out marketing research to understand the fashion items needed by its customers and then delivers them rather than carrying out fashion shows to influence potential customers. The above reasons have made the company a leading competitor compared to other cloth dealers like H&M and Gaps Inc (Guffey, 2007).
The other competitor is Gap Inc located in the United States. Gap Inc manufactures products that are later sold in America and other parts of the world (Broom, 1979). When the company was launched in 1969, it targeted the young generation as its potential customers.
Initially, the company sold blue jeans and white t-shirts but later introduced clothing for women, men and children. Gap Inc owns stores in Canada, United States, United Kingdom, Korea, Ireland, Japan, France and China (Hopkins, 1997).
Strategic objectives and mission
The Company plans to increase its sales stores by 12% annually while increasing the total number of sales in similar units. The growth is largely self-financed and embarks on sustainability, quality and high profitability.
Quality is of central concern from the start of the manufacturing process up to the development of the final product. Goods are tested for quality standards before they are sold (Lenkert, 2006).
The company also ensures a conducive working environment free from environmental hazards that may lead to the production of harmful products. The finished products are transported either by air or railway to the required destinations. Its mission is to be a leading producer of clothes in the world. Recent global marketing strategies carried out by the company are aimed at diversifying its products to the African countries (Tungate, 2003).
One of the current strategies adopted by the company includes marketing its products to potential consumers through mobile marketing campaigns. Through this marketing strategy, customers receive SMS coupons and mobile banner advertisements that are placed on media sites and major portals. This strategy helps the company to increase its sales by reaching many consumers within the shortest time possible (Lussier, 2011).
The company intends to expand its e-marketing strategies to reach computer literate consumers across the World so as to narrow the competition gap with Zara Company. H&M also aims at expanding its businesses and at the same time, maintaining profitability. The company endeavours to satisfy its customers by providing quality fashionable clothes in order to remain competitive in the market and attract consumers who have lost confidence in the company (Guffey, 2007).
Recommendation
H & M should adopt current global marketing strategies to diversify its stores to other parts of the world like Africa, Oceania and the Caribbean. Managerial training is important to equip the managerial staff with additional knowledge in marketing, sales promotion, advertising and production in order to provide high-quality products to meet consumer requirements.
H&M should change its brands occasionally in order to reduce the competitive threat posed by Zara Company and hence attract new and existing consumers. Since the consumers have lost confidence with the company, efforts should be made to restore its lost glory through the introduction of discounts and after-sale services.
Reference list
Broom, H., 1979. Commentaries on the laws of England, Maxwell & Sons, Michigan
Guffey, M. E., 2007. Business Communication: Process & Product, Cengage Learning, California.
Hopkins, J. L., 1997. The Law of Unfair Trade: Including Trade-Marks, Trade Secrets, and Good-Will, Hein Publishing, New York.
Jennings, M. M., 2008. Business Ethics: Case Studies and Selected Readings, Cengage Learning, California.
Lussier, R. N., 2011. Management Fundamentals: Concepts, Applications, Skill Development, Cengage Learning, California.
Tungate, M., 2003. Fashion Brands: Branding Style from Armani to Zara, Kogan Page Publishers, New York.