The H&M sustainable competitive advantage started on 1947, being a pioneer of fast-fashion business. They explored a blue ocean foccusing on fast-fashion, the cheap and chic business model had been launched that year. Start in the fast fashion market, gave H&M the advantage to be the innovative in the apparel market, attracting the whole public, without competitors.
Although, any blue ocean become a red ocean with competitors in the same segment. Specially in 2011, when Zara(Inditex) overtook the H&M first position. Also caused by the rise on cotton prices and rising productions costs in Asia. H&M had a challenge to elaborate an strategy to eliminate those threats. The company opted for long term strategy. Deciding for invest to the future, not raising the prices to the costumers, even with the economic climate, the chief executive Karl-ohan Persson calmed the shareholders. Opting for keep the fundamental principle being, since the company, keep offering the best combination of fashion and quality for the best price.
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According to Alfred D. Chandler, strategy is “The determination of the long-run goals and objectives of an enterprise and the adoption of courses of action and the allocation of resource necessary for carry out these goals”(1977). From that analyse, we can sustain the strategy adopted for H&M CEO, even without sharehoulders approval. According to VRIO framework, to umplified the competitive advantages of the company:
Value: The codified core values of the company are:
1) keep it simple: The company have a strong culture in simplicity, the value in humble, democatisation of fashion; the management is more informal and the style is non-hierarchical.
2) straight forward and open-minded: The company is open minded to try anything new things, and new mistakes is aceptable for the company. Experimentation is part of the company. Not afraid of take risks. although the idea is learn with the mistakes and not repeat them. In the end is how the company grow on the market.;
3) constant improvement: is possible to maintain due to company network with customers from strong social media relationship what keep possible the company to respond the updated threats or opportunities on the market;
4) enterpreuerial spirit: Adopting descentralised decision making, giving the store managers autonomy, like running he own business like an enterpreneur, give to the employees a great motivator, increasing loyalty and commitment;
5) cost conscious: The value is notable by the fundamental principle being of H&M since they started in the market. “Fast fashion at the best price”. It’s valuable the fact that H&M philosophy is make fast fashion with lower costs and consecutivelly generate revenues for the company. Also the project H&M cost conscious collection, with adopt ethical practices, improving work conditions and using natural resources responsibly;
6) Team work: The design team work in direct contact with the productions offices around the globe, what allows rapid response-manufacturing process. The focus of people involvement is a philosophy that H&M adopt. Encourage the team take risks, trying new things which is the pillar of the oganisation;
7) Belief in People: Delegation of responsability is a carachteristic of H&M, based one of CEO Earling Person’s values. Everyone opinion and ideas inside the company is relevant. Regardless position, evreyone is open to use give suggestions, trying new ideas and experiment them inside the company. Also in each store, the managers are open to create their own style based on their knowledge of public, market
Rarity: Is identified by the companybeing the pioneer of fast-fashion gave H&M the distinctive business difficulted the approach for most competitors in 2009;
Inimitability: The strong brand image associated with value and stylish collection. In-house designer collaboration wih famous designer, is a unique approach tha has been employed by the company; Even after so much effort in research and predict the new trends in different ways, H&M awas put it’s own touch to the design, creating collections that strick a good balance between the latest trends and the basics. The company philosophy is not copy. Keep its own personality in eacha country
Organisational Support: The long term advertising campaigns with high light celebrities, in order to enhance the value of H&M’sbrand name; the H&M focus on employee involvement; the design is centralised at the Stockholm headquaters, allowing minimal time-to-market, allowing minimal time response to the market. Design inspiration
The sustained competitive advantage H&M can be defined by design centralised, add H&M unique style.The others fashion retailers to be success in imitate H&M in terms of store management they could stabilish the store in the best locations offices, by renting a place, instead of acquire. What give flexiility to adapt change demands patterns and location attraction.
The key competitor of H&M is Zara (Inditex) They started in emergent markets, opening 120 stores in China. Zara had a big advantage as they manufacture their own products lowing their costs and gain in supply chain products control. Due to the fact that Zara is a manufacture and retailer. The marketing strategy is based upon different of H&M which make higher costs for the company in reseaching and big fashionists.
Zara promotion is more foccused on word-of-mouth advertising, making clothes for public between 18-40 whose is happy to talk about Zara for their friends. Which nowadays is more effective than advetisem*nts sometimes. Also have the support of some considerable fashion experts. Zara repair all customer complains very fast in order to guarantee their satisfaction.
The image of Zara has been building since 1975, coping the most actual fashion designs and put at the stores in few days in order to not waste sales time. The positioning is create a unique design and the customer acquire in delayed, cannot find anymore. The product is attract by price as its made with cheap materials, every month the shop have new tendences that give them rapid process and competitive by new trends on quick time at stores.
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In terms of Supply chain Management, H&M outsource the products in low-cost countries, focusing in economy of scale, with high-volume and low-cost. The company idea is maintain low imputs costs and have the more inovative fashion trend in H&M stores with a fast output between a month of the initial design. H&M always changes production in order to reduce lead time and improve the efficiency. The fact the production offices are in constant contact with suppliers, keep the company updated to identify the right suppliers.
http://www.huffingtonpost.com/ira-kalb/if-you-think-zara-does-no_b_12187058.html
FAQs
H&M has become one of the leading fast fashion companies using its supply chain and techonology as core competitive advantages. H&M's business model consists of creating value for customers by offering fashion and quality at the best price.
What competitive advantage does H&M have? ›
H&M is a leader in the "fast fashion" space, competing with Zara and Forever 21. Fast fashion relies on high volume sales of trendy and inexpensive clothing. H&M claims its mix of brick-and-mortar and online sales is a business strength.
What is an example of a competitive advantage through sustainability? ›
A well-known example of a company with a sustainable competitive advantage is Walmart. Walmart maintains a sustainable competitive advantage in part because its strategies are specific to its organization and these strategies are known for creating a gap between Walmart's performance and that of its competitors.
What are the 4 sustainable competitive advantages? ›
The idea here is that if a firm is to maintain sustainable competitive advantage, it must control a set of exploitable resources that have four critical characteristics. These resources must be (1) valuable, (2) rare, (3) imperfectly imitable (tough to imitate), and (4) nonsubstitutable.
How does H&M promote sustainability? ›
Through initiatives such as reducing emissions in their supply chain, incorporating recycled materials in products, and maximizing product life through repair services, the message across the intensive 84-page report is very clear: H&M is doing their best to become a more sustainable company.
How does H&M define sustainability? ›
H&M itself states the following about articles of its Conscious Collection: “They're made from at least 50% sustainably sourced materials – like organic cotton and recycled polyester — but many Conscious products contain a lot more than that.
What are five example of competitive advantage? ›
Highly skilled labor. Strong brand awareness. Access to new or proprietary technology. Price leadership.
Which is an example of a competitive advantage? ›
For example, if a company advertises a product for a price that's lower than a similar product from a competitor, that company is likely to have a competitive advantage. The same is true if the advertised product costs more, but offers unique features that customers are willing to pay for.
What is the biggest sustainable competitive advantage? ›
Outstanding customer care is one of the most powerful competitive advantage examples and brand positioning strategies. Exceptional customer service proves that you truly care about your customers' satisfaction. Make your customer service memorable and the customers will want to repeat the experience.
What are the 3 elements of sustainable competitive advantage? ›
What are the Sources of Sustainable Competitive Advantage? The sustainable competitive advantage sources for any company include Brand Loyalty, Innovation, Proprietary Information Scale, Intellectual Property, Innovation, Network- effect.
The three main types of competitive advantages are differentiation, cost advantages, and focus advantages.
What are the 7 sources of sustainable competitive advantage? ›
There are eight main sources of sustainable competitive advantage, including Brand Loyalty, Location, Scale, Intellectual Property, Innovation, Proprietary Information, Network Effects, and Lock-up Supply. Let's go over them in a bit more detail.
What is the only sustainable competitive advantage? ›
Jack Welch, famous or infamous former CEO of GE, once said, “The only sustainable competitive advantage is to learn faster than your competition and to be able to act on what you have learned.” Whatever your feelings for Jack Welch and his management methods, this quote is universally recognized as both true and ...
What is the difference between competitive advantage and sustainable competitive advantage? ›
A competitive advantage is anything that allows a business to outperform other businesses in the same industry or sector (its competitors). A sustainable competitive advantage is one that lasts in the longer term.
Does H&M have a sustainable line? ›
One pillar of H&M's sustainability efforts is their Conscious Collection. This clothing line within the brand is marketed as a sustainable fashion collection that uses eco-friendly materials.
Does H&M claim to be sustainable? ›
Despite its claims, H&M ranked C (mediocre) on the just published Impakter Sustainability Index and is currently not sustainable; the Index analysts concluded that if the retail brand genuinely pursues the goals it has set for itself and reports transparently, it could become “greener”
What sustainable materials do H&M use? ›
We mainly use Tencel™ lyocell fibres, which is made from sustainable wood-pulp produced in a closed-loop process. Lyocell feels very similar to cotton but needs a lot less water to manufacture and requires no, or very little, pesticides.
What 3 components is H&M focusing on? ›
We are a value-driven, customer-focused, creative and responsible fashion company. For us, fashion, fun and action are essential. We are defined by “the H&M way”: our culture, values and guidelines which reflect the heart and soul of H&M. “The H&M way” defines who we are, what we do and how we do it.
How much has H&M invested in sustainability? ›
H&M Commits Nearly $300 Million Annually to Tackle Supply Chain Emissions.
What is H&M main message? ›
We believe in people. We are the best we can be and bring out the best in everyone and the business. We empower and trust others to take ownership and embrace diverse perspectives. We listen to and learn from our colleagues.
Gaining a competitive advantage
- become the low-cost supplier.
- develop differentiated, innovative products and services.
- target a niche: geography, industry, product/service.
- employ differentiated business methods and approaches.
A competitive advantage must allow a company to distinguish itself from others in its field of business, but it must also be difficult to replicate quickly. That's what will give the company a head start. A competitor needs to invest a lot of time and money to get things done the same way.
What is the main source of competitive advantage? ›
1. Product Attribute Differentiation. One way to gain an advantage over competitors is by differentiating your product from theirs. Ask yourself: What makes my offering unique?
What is competitive advantage in your own words? ›
A competitive advantage is anything that gives a company an edge over its competitors, helping it attract more customers and grow its market share.
What are the advantages of H&M? ›
The main competitive advantage of H&M is the ability to deliver on trend fashions at an affordable price for customers. The production process to delivery ranges from a few weeks to six months, with basics and children's wear in high volume.
What makes H&M different from other brands? ›
The H&M group has a circular approach which is reflected in the increased use of recycled and sustainable materials. Aiming for a relevant and well-curated offering at all times, the brands work constantly to make their product ranges even better.
Who is H&M biggest competitor? ›
Gap is an omnichannel retailer of clothing, accessories, and personal care products for men, women, and children. Fast Retailing is a retail holding company. Uniqlo is a casual wear designer, manufacturer and retailer. Inditex is a company operating as a clothing and fashion retailer.
What are the 5 characteristics to sustain competitive advantage? ›
1) Cost advantage 2) Value-added advantage 3) Focus advantage 4) Speed advantage 5) Maneuverability advantage Page 2 2 The culmination of building advantages is a set of sustainable competitive advantages (SCAs) for the business.
What is the sustainable competitive advantage of Walmart? ›
Walmart continues to deliver quality merchandise for the lowest prices possible. In addition to building a reputation for low prices, it also maintains strong processes in terms of logistics, supply chain management, and operational efficiency.
Is H&M more sustainable? ›
The brand's low-cost, high-volume, trend-driven business model is not conducive to green business practices. H&M's business model involves creating clothes cheaply and in high volumes, as is typical for fast fashion companies. Frequent and large-scale production of clothing is not sustainable or eco-friendly.
The H&M business concept is to offer fashion and quality at the best prices with sustainability as an added value. We achieve this by buying directly from manufacturers and by having efficient logistics and our own warehouses, not by compromising on our sustainability requirements.
Is H&M 100% sustainable? ›
Our materials goals
All materials have an impact on climate, nature and people - from production, use and end of life. To reduce this impact, we aim for 100% of our materials to be either recycled or sourced in a more sustainable way by 2030, and 30% recycled materials by 2025.
What is H&M biggest weakness? ›
Overdependence on Outsourcing:
Instead of manufacturing in-house, H&M outsources most of its production to over 900 independent suppliers in Europe and Asia. While this strategy has contributed to its success, it puts the company at the mercy of the suppliers.
What is H&M sustainability slogan? ›
TOGETHEr WE STrIVE FOr SUSTAINABILITY H&M takes pride in running all its business opera- tions in a way that is economically, socially and environmentally sustainable.
What is H&M sustainability budget? ›
H&M said it is implementing an annual budget of around SEK3bn (US$283.4m) to work toward its goal of cutting emissions throughout its value chain. The budget will be used for investments to phase out coal and increase the share of more sustainable materials, amongst others.
When did H&M become sustainable? ›
Rewind back to 2010 when H&M first launched its Conscious Collection of clothing made from organic cotton, recycled polyester and other sustainable materials.
Who is the leader of sustainability in H&M? ›
Leyla Ertur - Head of H&M Group Sustainability and Quality - H&M Group | LinkedIn.
How does H&M reduce cost? ›
H&M Launches Cost-Saving Program
The major portion of the cost-cutting would include streamlining organizational structure and using fewer tech services. The effort is also aimed at reducing business travel and office rent.
