Introduction
H&M is located in Sweden and is known as the largest company in Sweden. It is the best clothing retail company for men, women, teenagers, and children. In terms of the operation strategies, it follows the corporate strategy which has four parts which include:
- Supremacy in the retail market
- Its expansion in the international markets and also in the US
- In the path of creating the recognition for the company and positive interest in their brand
- To segment the clothing retail market into new sectors
Aim
The current essay aims to find out the operating strategies of the H & M Company and to find out the new operation management themes so that they can be applied to their organizational strategic structure and draw the outcomes.
Brief Introduction
H & M was founded by Stefan Persson in the year 1947. This is a multinational retail corporation which is based in Sweden, which runs large department stores with discounts in chains and also the stores of warehouses. The main aim of the company is to focus on creating differences in the world of the customers and also help them and the communities to save their money and to make them live better. The growth being continuous and rapid H & M started operating its business strategies by the end of the 70’s decade in 11 states will a total of around 276 stores (Brown, Bessant & Lamming, 2013). The first Sam’s Club was opened by H & M in the year 1980’s and was involved in serving individuals and smaller businesses. The first Supercenter of H&M was opened by combining it with the supermarket consisting of general merchandise. The company soon rose into the national giant from regional fame in the early 1980’s and the early 1990’s. In the entire nation, H&M was the number one retailer. A smooth shopping experience was offered by H & M in the year 2000s either online in the store or on mobile devices (Cachon, 2016). For increasing the efficiency of energy H & M has introduced many environmental measures by putting some effort during those times. The company has now grown into the largest and possibly the most rival retailer today (History Timeline, 2013).
About the products and services
Products and services of H & M
In the United States, H&M is the retail store that is largest and is considered to be larger when compared with any other retail store in the world. The general merchandise is provided by H & M such as apparel for the family, support for health and beauty, the needs of household items, toys, electronics, fabrics, jewelry, lawn and garden, crafts, and shoes. Apart from this, the other products are it runs the Department of Pharmacy, the photo accessing center, and the Tire and Lube Express (Demeter, 2017). The corporate management strategy of H & M will be involved in the selling of goods of high quality and products with good a brand name at very low prices (Errasti, 2013). The complete focus of the H & M community is on the objective of providing satisfaction to the customers, getting involved in the services in the local community, and additionally providing the students with scholarships. It stresses on the issues related to children and the environment.
Operations of the Company
In this section, the operations strategy of H & M has been discussed in several sections. Their operations strategy is divided into three sections such as the business level strategy, the corporate level strategy, and the international level strategy.
- Business level strategy: A combination strategy of cost leadership and differentiation is used by H & M. Under this operating strategy, they will be providing a wide range of products and services to the customers with the best quality at very cheap prices when compared to the competitors which are the aim of the company (Gong, 2015). The concentration of the company has been always on finding ways to lower costs with persistent thinking on how to accomplish their support and the primary activities for reducing the costs by maintaining competitive levels of differentiation (Greene, Ekmk Limited Liability Company, 2016).
- Corporate level strategy: The Company H & M believes in the strategy of the single business which is, in fact, the key reason for the success of the company. From the grocery business, itself, it obtains more than 95 percent of its revenue (Gunasekaran & Irani, 2014). H & M has never believed in the concept of diversification since for 30 years its single business strategy has contributed to the success of its growth and offering advantages at the competitive level (Market entry strategies of H & M in the international arena, 2013).
- International level strategy: With the use of the strategy of the multinational business H & M made a successful entry into the global market. According to this strategy, customers from various countries are treated differently, as a result, the profits and the productivity are high (Hill & Hill, 2012).
Operation management theme-1
Introduction
Operations management theme-1 is the field that deals with the making of goods and services. An abundant collection of goods and services come in contact every day. All these are manufactured under the supervision of the operation managers. All kinds of services such as nonprofits and the government will be managed by the operation management theme. If operations are not managed effectively then a company like H & M cannot exist in the modern industrialized society (Ivanov, Tsipoulanidis & Schönberger, 2016). The theme of operation management is considered to be the engine that will create the goods and services for the business and reinforce the global economy. The team of operation management will have a significant position in the organization. For instance, the plant manager is considered to be in charge of the factory. The various other managers who will be working in the company are the production managers, the internal control managers, quality managers, and the line supervisors who are also included under the theme of operation management. It is the responsibility of this group of managers in the production of the supply of goods in the manufacturing business (Mahadevan, 2015).
Importance of operation management theme -1 in H & M
The significance of operation management theme-1 in the H & M can be divided into two categories such as the operation strategy and the competitive strategy.
The operational strategy is important for the H & M for the following reasons:
- With the help of an everyday low-price strategy the company has to capture the market share
- Should achieve the creative destruction process
- Giving a response to the competitive strategy
- Adaptation of culture
- Since consumers are key to H & M business the employees are to be trained
- It has the strategy of buying at less and selling at less price
- The strategy of withdrawal
The competitive strategy has to be achieved by the business for the following reasons:
- For every different demographic group, the shop has to be designed differently
- Should be proficient in using information technology for logistics systems
- Customer satisfaction should be highest
Interpretation
The operational strategy of supply chain management at H&M is successful as it is an important way of helping them implement the strategy of cost leadership. With the help of just-in-time inventory, their inbound logistics are highly effective. From the outbound logistics, they have cut costs, which are achieved by creating fuel efficiency in a better way in their trucks, obtaining more pallets in one load, and reducing the miles driven empty by the trucks ((Mikkilä, Panapanaan & Linnanen, 2016). The costs are also reduced by H & M by making the purchase of goods in large blocks. In the supply chain operation strategy of H&M, technology plays a key role. It will allow H & M to forecast the tracking, and demand and to predict the inventory levels accurately. In addition to this, the transportation routes are created efficiently and the relationship with the customer is managed properly along with the logistics of service response (Pashaei & Olhager, 2017).
Potential business opportunities
Currently, based on the operational management theme, H & M has two opportunities that it needs to capture and has to increase its total revenue. This includes:
- In the developing markets, which are existing it has to continue its expansion internationally, which means that it has to acquire huge shares in the market in the developing countries in which it is already carrying out its operations efficiently
- In the new markets, it has to open international stores since it has the strategy of selling the goods at a low price by valuing the customers.
Operation management theme-2
Introduction
In the operation management -2 the competitive advantage of the H & M business is illustrated. The operational decisions taken strategically and tactically will help determine the capabilities of the organization in accomplishing its business goals. In addition to this opportunities are provided to the organization by this strategy for achieving a competitive advantage that is unique and which attracts customers and keeps them intact. The important strategies that play a key role in the organization’s success are the supply chain and the operations (Schneper & Von Glinow, 2014, July). Today firms are standing at a very important stage. The first thing is, that the companies have to give a quick response to the changes immediately as per the customer needs. Moreover, the new product should be adapted by them with the process development and with the use of new technologies.
Importance of operation management theme-2 at H & M
The competitive strategy which is the strategy of operation management theme is important for the H & M business because it has to sustain the growth in the marketplace and has to get huge market shares with its brand products. The subset of this strategy called competitiveness is quite important to each of its units. Every store of H & M is again encouraged savagely to compete with all other stores to get the customer base until the time it does not gain dominance when compared with its competitors (Schwarz, Hall & Shibli, 2015). Currently, H&M is being ranked as the number one retailer in the world and the company that is in the top position concerning sales. It is important so that it can become dominant in the marketplace.
Interpretation
Increasing competition is being faced by H & M from all origins such as local, national, international, and regional retailers. While the competitors can benefit from the offshore costs of manufacturing this is the same and low as that of H & M. The direct competitor for H & M is Target. After H&M, Target is the largest retail store in the second position (Talk, 2016). The strategy of Target is that they are in the position of selling and delivering goods that are under discount at a high-quality level along with the offering of more varieties in the product range to their customers when compared with that of H & M. This strategy attracts customers of higher income and is generating higher revenues (Walker, et al., 2014).
Potential business opportunities
The competitive advantage of H&M will be relying on cost leadership. However, the management at the strategic level will be aiming consistently for getting the business opportunities in the market by associating with the competitive advantage of price, assortment, access, and experience. With this strategy, H & M will get the opportunity to expand its business in the marketplace along with the shares to maintain growth.
Recommendations
For H&M to stay in the top position all over the world in the retailing industry, it has to follow the strategies made by the company in terms of achieving the key goals of the policy. Its dealing with the stakeholders should be at a reasonable level and it has to make sure of guarding its reputation well. It is recommended that:
- It has to get the employees from the places where the labor is obtained for cheap
- The wage rate for the employees should be increased
- Service should be good in addition to which it should be of the low
Justification
Some of the recommendations are suggested for the operation management theme of H & M which can be justified as follows: Since H & M is expanding as a retailer globally, in addition to this it has expanded into various other sectors in the marketplace such as the electronics, groceries, gas stations, etc. as every year it is finding new ways for their growth so to sustain that growth in the marketplace it has to follow the business strategies for achieving its goals by maintaining the competitive advantage.
References
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