Essay on H&M in Fast Fashion: Continued Success?

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Case Study:
H&M in fast fashion : continued success? by Patrick Regner & H. Emre Yildiz

Q1) Evaluate the external environment in which H&M operates in.
External environment refers to the challenging and complexity in which the firm operates. It is important to highlight the factors of the external environment because it is very critical to the success of the firm. PESTEL model and Porter’s 5 Forces (P5F) models will be used to evaluate the external environment of H&M. These models will determine how challenging and attractive the environment is for H&M.
1. PESTEL
PESTEL highlights 6 environmental forces namely political, economic, social, technological, ecological and legal (Johnson, et al. 2014). This model …show more content…
Customers who are price-sensitive have the power to look for products that could provide them better value for money.

2.4 POWER OF SUPPLIERS
Factor
H
L
Case evidence
Effect (High/low)
Concentrated suppliers
√

They are many suppliers in the industry.
High
High switching cost

√
Switching suppliers is not expensive and is easy as there are many suppliers available.
Low
Supplier competition threats

√
Suppliers do not have the ability to cut out buyers.
Low

Power of suppliers is low as there are too many suppliers competing for a cut in the market. As a customer to these suppliers, H&M has the ability to switch supplier if they found their suppliers are not up to standards and does not match up.

2.5 COMPETITIVE RIVALRY
Factor
H
L
Case evidence
Effect (High/low)
Competitor balance
√

Fierce competition among the incumbents – Zara took over H&M as the world’s biggest fashion retailer
High
Industry growth rate

√
Slow growth between 2007 – 2011 which intensifies competition among small players
Low
High fixed cost

√
H&M has made some savings by its reduced lead-time by 15-20%
Low
High exit barriers
√

Fierce competition among the incumbents to maintain market share
High
Low differentiation
√

There is high differentiation between all the incumbents (see Table 1 in the case study).
High

The competitive rivalry is moderately high because the market is fragmented and there are few
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