Strengths Weaknesses Threats Cheap, but fashionable clothes
Strong brand image
Great locations of the stores
Well-developed marketing skills Low quality clothing
Dependent on suppliers located usually in the Far East
Lack of control over garment production Opportunities Teen market
Online shopping
Emerging markets e.g. China Recession
Competition like Zara, Gap
Rising labour costs in China, India and Bangladesh SWOT analysis Substitutes The industry operates under oligopoly
Companies are interdependent (each firm has to take account of the others) (Sloman, 2009) Intensity of rivalry amongst competitors Barriers to entry of new firms to “fast fashion” industry are high enough to block potential new entrants Potential new entrants the bargaining power of buyers is also relatively small. Buyers (customers) the company is entirely reliant on suppliers located in countries like China and India, where the labour to make the garments is cheap Suppliers There are no substitute products offered by other industries which can perform the same function as clothing
However, there are many alternatives for spending money (opportunity cost) Porter's Five Forces PESTEL analysis Economic Socio-cultural Political As H&M sources mainly from countries like China, India and Bangladesh it is subjected to custom duties recession causes lack of confidence amongst conumers
Rising labour cost in the Far East countries Technological new ways of buying: online shopping and m-commerce Rising interest in green issues Environmental use of renewable resources (H&M, 20013)
energy efficiency
reducing waste Legal The company follows Swedish legislation, international law as well as EU law
According to H&M website (2013) not all the countries in which it operates have clear and comprehensive labour legislation
The Code of Conduct (set of requirements H&M has on suppliers in terms of safety and working conditions)