| LB5813: Corporate Strategy |
ASSESSMENT TASK 2: Strategic Capability Analysis
H&M in fast fashion: continued success?
The goal of this task is to conduct a strategic capability analysis of a specific company, H&M. All of H&M’s resources and capabilities and functions should be carefully scrutinised. It is essential to emphasise that H&M does not have competitive advantages in all functions.
Equally, important is the point that H&M may not be able to sustain its competitive position even where it has an advantage vis‐à‐vis its competitors.
1. In which areas does H&M have significant resources and capabilities and what are they? What are H&M’s threshold and distinctive resources and capabilities? What are the implications of these resources and capabilities for the international strategy of the company?
2. In what areas and functions do H&M’s resources and capabilities provide for competitive advantage? To what extent can they be sustained? To what extent can other fashion retailers be successful in imitating H&M’s success? Which competitor(s) is/are/will be a real threat to H&M? Why?
3. What should H&M and CEO Karl‐Johan Persson do to sustain and further strengthen H&M’s competitive advantage? What should they do about areas with only temporary advantages? Are there areas where H&M need to develop further capabilities and, if so, in which areas/functions?
Instruction/ Format:
1. Synopsis of H&M’s strategy and competitive position
What are the real competitive threats H&M is exposed to? What resources and capabilities and their competitive advantage relative to competitors? Is this position defendable and sustainable in the long term?
2. Assessment of H&M’s resources and capabilities
Distinguish between H&M resources and capabilities and provide an overview of what they are. To that end, the VRIO framework can be used as an effective tool. Explain how diverse activities and processes are related and combined and form resources and capabilities that are protected from imitation and thus provide the basis for sustained competitive advantage.
3. The value system and H&M international strategy
Students should provide the value chain and system to cover all primary activities (i.e. inbound logistics, operations, outbound logistics, marketing and sales and service) and support activities (i.e. firm infrastructure, human resource management, technology development and procurement) of each of these for H&M’s operations.
Overall, students can discuss possible ways for improvement in areas where H&M only has temporary advantages or is at par with competitors. Based on this, evaluate H&M internationalisation strategy (export, multidomestic, global and transnational). Question the viability of this and the extent to which this strategy can successfully be pursued in the long term.
4. The future of H&M’s competitiveness
Explain how H&M and its CEO Karl‐Johan Persson can sustain and further strengthen the resources and capabilities where the company has competitive advantages.
In that regard, students can be asked to find ways with which H&M can mitigate risks associated with the erosion of competitive advantage due to imitation. Students could consider new possible resources and capabilities H&M can develop new or new ways of managing existing resources and capabilities.
