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Now that we have taken a look at both the external and internal strategic analysis,

I will now take you through 2 key financial ratios which demonstrate H&Ms
Now moving on to its international strategy,
key competencies and core business.
H&M is a brand with strong global presence across all continents, hence it is
Firstly, conducting a profitability analysis across its key competitors over a 3 year important to consider the strategic importance of its international strategy.
time horizon, we found that H&M consistently remains the industry leader in
Apart from its main brand, the H&M group also owns smaller niche fashion
gross profit margin, edged out narrowly by Fast fashion giants, the Inditex group
brands such as COS, Weekday, Cheap Monday, MONKL, H&M Home, &other
for the past 3 years.
stories.
This illustrates how H&Ms cost management strategies have successfully boosted
The H&M group plans to open approximately 430 new stores net in the
the firm value in the long-run.
2016/2017 financial year. Kazakhstan, Colombia, Iceland, Vietnam and Georgia
It is also worth noting that from the investor management point of view, due to are planned to become new H&M markets. In addition, H&M plans to continue its
their consistent profitability, H&M was able to pay out annual dividends for the online roll-out into six new markets: Turkey, Taiwan, Hong Kong, Macau,
past 2 years, boosting investor and shareholder value. Singapore and Malaysia.

Secondly, we conducted an activity analysis of inventory turnover in to key The H&M group plans to launch one or two new brands in 2017.
industry players over a similar time horizon of 3 years.
New growth target: to increase the H&M groups sales by 10 15 percent in local
We have chosen inventory turnover ratios as an appropriate comparison, as we currencies per year with continued high profitability.
have defined h&m to be in the fast fashion industry, where we compare the
The spillover effects of an extremely fast STM are 2 pronged.
speed at which its inventory is able to be sold is key to the success of its
competitive advantage. Firstly, quick response to local trends and demands, on a seasonal and monthly
basis
However, we found h&m to have the lowest inventory turnover among its fast
fashion competitors. While an inventory turnover of above 3 is rather impressive, Secondly, the ability to detect and predict new market opportunities (in terms of
it is indicative that h&ms profit margin is likely highly attributable to low cost, consumer taste and preference)
rather than high revenues. As a low inventory turnover is indicative of a lower
sales, or higher inventory value propotionally, benchmarking against key industry -> mainly attributed to its sophisticated and talented team of fashion designers
players. For the case of H&M it is likely to be the extremely high inventory values, for its fast fashion products
due to its mass production method in order to reap economies of scale. Global Integration: LOW
Key factors could also include, producing in bulk in order to reap economies of Outsourced manufacturing to lower cost of production
scale as a cost management strategy, hence resulting in high wastages and high Current establishment consists of franchised production offices
inventory obsolescence while maintaining costs low. This is indicative of several Low degree of control over production quality and speed
gaps in its business strategy which we will address further on in our presentation. CURRENTLY, H&M ADOPTS A TRANSNATIONAL STRATEGY