Strategic Management and Planning in H&M Business

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25.10.2019
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Abstract

In order to understand the significance of strategic management and planning within a given organization, this study has focused on the H&M business with respect to how the company performs strategic management and planning. This is because H&M is not only a large international that is successful in Dubai but also an impressive organization as far as management practices are concerned. Therefore, in order to understand how strategic management and planning can impact on a business, it is critical to use a case study subject that is seen as successful not only within Dubai but also beyond. As a fashion company, H&M also fits into one of the most popular industries in the Middle East. The study employed interviews and surveys in order to capture the state of the organization in question with respect to strategic management and planning. This study was conducted over a period of eight weeks with the permission and cooperation of the H&M management in Dubai. The results indicated that the company was heavily impacted by their strategic management and planning concepts. Some of the identified effects of strategic management include a better understanding and thus orientation toward organizational goals and strategies amongst not only the management executives but also the staff members within the organization. The survey findings then indicated that there was a need for companies to evaluate their external environment and use the acquired information to shape the strategic planning process. Without the data on the external factors that are likely to affect the company, the implementation process could be easily derailed or even fail completely if the external factors are not aligned with the company plan.

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Strategic Management and Planning

Introduction

Activities are related to strategic management and planning deals with the use of available resources of a company to achieve a certain business aim. They ensure that the company utilizes its assets in a reasonable way to attain the corporate goal within a particular period of time. Consequently, effective strategic planning and management give the opportunity to evaluate the success of the company.

H&M is an international with more than 3,700 stores and about 130,000 employees globally (Ding, 2011). It was founded in 1947, and it is headquartered in Stockholm. The company operates on the global fashion market, retailing fashionable clothes for men, women, and children, and enjoying the growing market share and an impressive profit margin annually (Ding, 2011). It is famous for its sales and marketing solutions for running the business. Such success has been attributed to the team of experts working within the company on strategic management and planning activities. The following research will study the H&M company processes, giving insight into the effects and obstacles that strategic planning and management have been exerting on the enterprise locally and internationally.

Rationale

H&M is an economically developed entity that operates on national and global levels (Zou & Lee, 2008). For this reason, the aim of the study is to aid the enterprise in evaluating the skills required for the performance of managerial responsibilities. Moreover, it will consider the general performance of the enterprise and suggest possible solutions as to the strategic management and planning of company activities (Cesnovar, 2006). The findings of this study can be implemented to help companies sharpen their skills in the strategic management and planning process. The research results will influence the performance of different businesses and assist them in stabilizing the management of their resources. Ultimately, a positive change in the economic status of the country and world will be created (Eden & Fran, 2013). In addition, the associated students will apply their skills learned from the class is contributing to changes in the world.

Research Questions

The research questions for the study include:

i. How does H&M business benefit from strategic management?

The general purpose of the research claims to consider strategic management in regard to its vitality and methods for planning business operations. The analysis of the latter will assist in displaying the performance of the enterprise, thus providing answers to the research questions (Hunger & Wheelen, 2003). Despite the focus on the H&M company, the result of the research and the knowledge obtained in this regard can be applied to other enterprises and ventures.

The research is primarily concerned with the identification of effects that strategic management has on the company processes, and planning of business operations for H&M. The study presupposes the fulfillment of the following objectives:

i. To determine the effects of strategic management on H&M

ii. To identify various challenges involved in implementing the strategic management and planning processes in H&M

Literature Review

This literature review concerns the importance of strategic management and planning in business. The review explores sources that define strategic management. In addition, it regards strategic management concepts. The literature review spans a timeframe of the last ten years.

Article one (1) The Importance of the Strategic Management Process in the Knowledge-Based Economy

Nedelea, Stefan and Paun, Laura Adriana (2009). “The Importance of the Strategic Management Process in the Knowledge-Based Economy”. Review of International Comparative Management, Volume 10 (Issue 1), March 2009, 95-105.

Summary

The main aim of the article is to demonstrate that the most successful organizations have managers that embrace the concept of strategic management. These managers are action-oriented and keep the customers’ needs at the forefront. In addition, they search for new opportunities to remain competitive while managing the internal resources in a manner that the organization remains at the front and successful both internally and externally. Overall, these managers set a strategy and vision and implement the former in an effective manner.

The article outlines five major components of strategic management: defining the business and strategic mission, establishing strategic objectives and performance targets, formulating a strategy to meet objectives and targets, implementing and executing the plan, and evaluating results and making adjustments as necessary. The article indicated that the objectives are the end product and the strategy is the means to reach that point.

The central idea is that strategy evolves and changes with time. The competitiveness of the organization is thus dependent upon the ability of its leaders to learn and incorporate their findings in the strategic planning and management processes.

Critical Analysis

The weakness of the article is that it does not provide tools that demonstrate how to define and implement a strategy. However, the value of the article is that it indicates that strategy is not static, which is important in a fast-changing environment like the UAE. If case studies had been included, it would be a more solid article.

Overall, this article provided a sound explanation of the five components of strategic management. The job of a manager was explored in detail, which demonstrated the need to be forward-thinking and consider day-to-day implementation. It clearly defined how the manager is a contributor to the success or failure of an organization.

Article two (2) A Stakeholder Approach to Strategic Management

Freeman, R. Edward, and McVea, John (2001). “A Stakeholder Approach to Strategic Management”. Darden Business School Working Paper No. 01-02.

Summary

The main aim of the article is to define stakeholder management. Moreover, it outlines the history of stakeholder management and demonstrates how it has become a part of strategic management. The article indicates that economics is not the only consideration in strategic management.

The article outlines the history of stakeholder management and reviews literature that addresses stakeholder management. This section is quite useful as it explores both positive and negative standpoints in the literature with reference to the importance of stakeholder management in the overall strategy and success of an organization.

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The central idea is that stakeholder management is a single approach to satisfy all elements. This approach focuses on managing both the relationships and interests of the stakeholders of an organization. The stakeholders include shareholders, employees, customers, suppliers, communities, and relevant interest groups related to the organization. The main aim here is to foster the long-term success of the firm within a dynamic external environment.

Critical Analysis

The weakness of the article is that it is written at a very high level. In addition, it gives some studies but neglects to provide hard data to prove that stakeholder management as part of strategic management makes any economic difference to an organization.

Overall, this article provided a sound explanation of the stakeholder management approach. There are ample examples of the usefulness of various approaches in corporate governance, organizational theory, and social responsibility and performance. It presents good material to educate on how considering all the stakeholders within strategic management creates a more well-rounded approach that is dynamic and more suited to have a long-term effect and not be hit hard by the fast-changing environment.

Article three (3) The Importance of Strategic Management, Case Study of H&M

Ding Huiru (April 2011). The Importance of Strategic Management, Case Study of H&M. Business Administration Bachelor’s thesis in International Business.

Summary

The main aim of this thesis paper is to analyze the strategic management of H&M with reference to its marketing strategy. The author’s main question is on the importance of strategic management within the current society as seen through the analysis of H&M implementation strategies and benefits as well as their challenges.

The thesis provides a detailed analysis of the strengths, weaknesses, opportunities, and threats for the company. All of these are shown using hard data for a better understanding of the company. The article offers additional information by comparing the performance of the company with that of their major competition, Zara.

This thesis basically shows that the strategic management approach used by H&M focuses on an integrated business model that incorporates design, just-in-time production, marketing, and sales to provide a seamless operational concept that is both satisfactory to the consumers and cost-effective for the organization.

Critical Analysis

The weakness of the thesis is that it focuses on one H&M location only. Data came from managers and annual reports. This means that the data may not be reliable as the company has reported it in a non-objective manner.

Overall, this article provided a sound explanation of how H&M used an integrated strategic management approach. There are many examples of data and a useful comparison with another competitor, Zara. In general, it provides a very beneficial example of practical implementation of strategic management.

Article four (4) Strategic Issue Management as Change Catalyst

Bruce E. Perrott, (2011). “Strategic issue management as change catalyst”, Strategy & Leadership, Vol. 39 Iss 5 pp. 20 – 29.

Summary

This article introduces a process that can be used for capturing, prioritizing, and processing various strategic issues that are bound to appear occasionally within a dynamic environment. Using the case study of an Australian healthcare organization, the article shows how the management team of the organization can use the stated process to identify, rank, and address strategic issues that are relevant and significant within their specific environment.

The article provides a detailed analysis of the relationship between environment, strategy, capability, while also showing where the gaps exist whenever these three elements fail to align. External and internal forces create strategic issues that may disrupt the organizational processes. These issues need to be identified and prioritized in order of importance to develop a strategic management strategy.

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In general, the article discusses the strategic management tool used to prioritize issues during environmental challenges while still working toward the overall strategic management goals and objectives.

Critical Analysis

The weakness of the article is that the case study is at a very high level with little details provided. Essentially, the article introduces the reader to the steps of the strategic issue management process. It does not demonstrate how this fits into the overall scheme of strategic management nor does it detail the timeframe within which it should be done.

Overall, the article provides a discussion on how to prioritize issues and not how to implement strategic management on a daily basis. Therefore, it is good for examining how the importance of issues affects actions during times of instability. This could be beneficial to the UAE market as external and internal environmental issues are becoming more complex.

Article five (5) The Strategic Balance in a Change Management Perspective

Anders Bordum, (2010) “The strategic balance in a change management perspective”, Society and Business Review, Vol. 5 Iss: 3, pp.245 – 258

Summary

The main aim of this article is to explore and rebuild the role of planning, strategic management, and strategic balance in the environment of managing change. The general question explored is when and how it is possible to develop and manage a balanced strategic change process during periods of rapid change.

The article maintains that strategic management has better outcomes when applied to long-range planning. In addition, it works best when changes and challenges are sporadic and rare. The article further states that the strategic management planning model is generic and not helpful in an analytical aspect.

Critical Analysis

The weakness of the work is that the aim of the article centers around striking a balance between the need for planning and the necessity to change based on external demands and is missed in a very complex explanation that confuses the reader.

Overall, the article provides a discussion of the history of strategic management, core assumptions, the hierarchy of forces that make planning abstract, and finally, potential solutions. However, as the text is too complex, the solutions are missed and form only a small section of the article.

Article six (6) Better Strategic Planning: Managing Change and Planning for the Future Require Both Vision and Strategy

“Better strategic planning: Managing change and planning for the future requires both vision and strategy” (2013). Strategic Direction, Vol. 29 Iss: 1, pp.30 – 32

Summary

The main aim of this article is to explore how strategic management and planning varies within different industries. Therefore, companies need to identify their strengths and weaknesses and make a realistic assessment of the market before setting any strategic goals, objectives, and planning.

The article defines four broad categories of strategic planning, namely classical planning, adaptive planning, shaping planning, and visionary planning. The approach to follow is dependent on the level of stability and varies within different industries. Other tools, such as strategy testing, social strategy, and realistic assessment of the environment, are also stressed.

Overall, today’s strategy management must include adaptability and flexibility. Assessment of the business environment must be accurate and realistic in order to succeed. Furthermore, the support and responsibility of staff are crucial to the general success.

Critical Analysis

Overall, the article provides a discussion on the types of strategic planning and relates them to the environment. The examples of how different industries fit into the scheme are beneficial for providing a perspective on the matter at hand. As the text is quite short, the explanation is very broad and does not provide much detail. However, it is good for understanding the topic in order to have a fundamental knowledge of the subject.

Book one (1) Foundations in Strategic Management

Harrison, Jeffrey, and Caron St. John (2010) Foundations in strategic management, 5th Ed. South-Western Cengage Learning.

Summary

The main aim of this book is to define strategic management on the basis of the analysis of internal and external environments through strategic direction and the creation of strategy. The text also explores the leadership influence on the direction. The process is defined in a step-by-step manner and addresses both the resources and stakeholder views on the theory.

Critical Analysis

As this book is a textbook, the information is quite extensive and detailed. The process is divided into steps and addresses varying approaches to implementation. There are several case studies used for the demonstration. This book is helpful as it provides a solid foundation on the topic in order to ensure that the subject is fully comprehended before more research is done.

Book two (2) Strategy Making: The Journey of Strategic Management

Eden, Colin, and Fran Ackermann (2013) Strategy Making: The Journey of Strategic Management. Sage.

Summary

The main aim of this book is to educate the reader on how to develop strategic management that is appropriate to the industry, size, purpose, and financial and human capital resources.

The book begins by addressing theories of strategic management. Implementation is demonstrated using case studies that give extensive details on implementation, including the use of tools and guiding principles. The main topics found in the book include political feasibility, stakeholder management, and alternative scenarios among others as they are related to strategic management and planning as an organizational process.

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Critical Analysis

This book focuses on strategic management through the process of strategic planning. Like other sources, there is the presumption that strategy differs based on environment, industry, and resources. In addition, the management team is the core of the process as it is the creator and implementer of the strategy.

What is interesting is that after all the discussion about strategic management and its process, the author states that there is no empirical evidence that equates strategic management to success. In fact, the author argues that capabilities are the sources of advantage, not market position or tactics. Therefore, the value of this book is that it presents another side to the study.

Book three (3) Strategic Management: Issues and Cases

Dobson, Paul, Ken Starkey, and John Richards (2004) Strategic Management: Issues and Cases. Blackwell Publishing.

Summary

As this book is a textbook, the information is quite extensive and detailed. The process is divided into steps and addresses varying approaches to implementation. There are several case studies used for the demonstration. This book is helpful as it provides a solid foundation on the topic in order to ensure that the subject is fully comprehended before more research is done.

There are two approaches to strategy: planning and the process of management. Planning works best in stable environments and the process of management in unstable environments. The textbook suggests that a blended approach is the best. If change is needed, one must analyze both external and internal environments, where external opportunity equals internal capability. All must be aligned to arrive at a strategy or vision as the implementation of each one differs based on segmentation.

Critical Analysis

As this is a textbook, the references are detailed and have case studies for each main cause. The concepts are explained individually and then integrated. This allows the reader to learn, understand, and then see the application. Therefore, it is a good reference book for the subject.

Book four (4) Essentials of Strategic Management

Hunger, J. D., &Wheelen, T. L. (2003). Essentials of strategic management. New Jersey: Prentice-Hall.

Summary

This book offers a clear analysis of some of the most critical concepts within the subject of strategic management in the organizational context. In particular, the book covers the decision-making model based on analyzing the environment, strategy formation, implementation, and evaluation. It also addresses actions taken at each step and stresses that management and bureaucracy need to be reduced in order to be competitive.

Critical Analysis

The strong point of this book is that it is the first to address differences in approach with respect to where the organization is in its lifecycle. It details staffing and management methods, including the concepts of Management by Objectives (MBO) and Total Quality Management (TQM). These aspects make the book a useful resource in order to visualize tools in action. On the negative side, there is no empirical data to support claims, and the text is poorly written and hard to follow.

Web source one (1) The Nature and Value of Strategic Management

Summary

The aim of these web sources is to define strategic management processes and functions. This allows the user to implement the tools in the appropriate manner and time. The main idea is that strategic management, as a minimum, includes strategic planning and strategic control. All areas of strategic management, including management stages, management processes, models, tools, and techniques, are defined and discussed. The source generally emphasizes the fact that strategic management involves the entire organization as a whole. It focuses on the planning, organization, and controlling aspects of decisions as well as actions of the company.

Critical Analysis

The web source is divided into manageable chunks that complement each other. This provides a good structure summary. One area of concern is that there are no practical examples demonstrating how the tools, techniques, and strategies have been used. The source also makes no judgment on the value of the strategy.

Web source two (2) Strategic Management – Meaning and Important Concepts

Summary

The web source aims to provide a summary of strategic management. As such, it explores the concepts of strategic management as decisions and actions that are undertaken by the management and that decide how the firm is going to perform within a given timeframe. This article emphasizes that efficacy within the organization requires the management to be well informed regarding specific environmental contexts of the organization and their dynamic nature so as to enable appropriate decision-making. Therefore, the article provides a summary of strategic management, highlighting the broad perspective that allows employees within a given organization to understand job descriptions and how they fit into the organizational scheme.

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Critical Analysis

This source gives a comprehensive guide to all parts of strategic management. The differences are explored along with the processes and matrix evaluations. This is one of the first sources that address how the employee fits into the structure. The drawback of this source is that all of the many types of analysis can confuse readers and the big picture may be lost.

Methodology

Geographical Area

The methods used in this study were aimed at helping exhaustively analyze data on strategic management and planning in the H&M business in Dubai, the UAE. Dubai is one of the most preferred places for shopping with regard to fashion. Therefore, studying the H&M business practices and processes in the region will help cover most of the problems experienced by fashion companies in the fashion industry. Dubai is in the Middle East, with its highest revenue being generated from the service industry exports (Callen, Cherif, Hasanov, Hegazy &Khandelwal, 2014).

Sample Size and Sampling Method

H&M has ten outlets in Dubai situated in different locations. Different people from all the branches were interviewed. A sample size of 50 staff members, including management team members, were interviewed in regard to the performance and quality of management services in the firm. The sample population represents all the departments in the company with more than two people, thus providing a representation of all sectors involved It was also represented by junior and senior staff members to achieve equality and counter dimensions of diversity in the community. Moreover, gender equality was taken into consideration in order to avoid biased results. The sample size was chosen randomly by the probability sampling method to ensure diversity and future possibility to apply the results in a different setting. However, in order to accomplish this, it can be noted that there will be a need to acquire permission for cooperation from H&M management. The participation requests were sent earlier, informing the intended parties of the purpose and significance of this study along with the ethical standards that will be adhered to with respect to privacy and confidentiality. Moreover, the study does not intend to research into any trade secrets of H&M, which allowed cooperation with the company.

Data Collection Method

The collection of data for the research was implemented by means of primary and secondary sources. The former comprised of observations, interviews, surveys, and questionnaires. The latter included the previous researches on the subject having been analyzed for the purpose of the literature review. Moreover, the information obtained through structured individual interviews of participants ensured its relevance and unbiased nature. Therefore, the impossibility of influence from colleagues increased the reliability of the acquired data.

Observation

The observation processes took place in all the departments in all outlets of the H&M enterprise. The observations were done at random to ensure that the results are consistent.

Surveys

The study has a quantitative nature. Participants were asked to provide information enquired in the structured and extensive questionnaires at a convenient time for them and submit the results to the researchers. The comprehensive questionnaires made sure that the research was provided with a sufficient amount of data.

The Interviews

The ambiguity during the questionnaires was eliminated by using questions that were close-ended, not personal, clear, and understandable. The questions used for interviewing the participants comprise the following.

1. What is your position in H&M Company?

2. What are your specific roles in the company with respect to your position?

3. How often do you reach the set performance goals for your department?

4. What are the main challenges that you face in your office with respect to meeting the set goals?

5. How would you evaluate the strategic management and planning processes of the company?

6. Would you suggest improving any aspect in regard to the strategic management and planning process of the enterprise?

7. Are the resources needed for the company operations well allocated in your department?

8. Do you think the company can grow further by applying some changes in management?

Data Representation

The study examined the processes of strategic planning and management and their effect on the business. Moreover, it analyzed how the resources are being used and how they influence performance. In order to get insight into the effect of strategic planning and management on the operations of the company, various economic factors, including inflation and deflation, were regarded in the context of the research (Bruce, 2011). The data included the relationship between the assets available to the company and its output. Therefore, it was thoroughly analyzed in a specific, measurable, accurate, reliable, and timely manner.

Timeframe

The timeframe for the study was decided to occupy eight weeks, which was expected to suffice for sampling, analyzing, and clarifying any issues that might arise. The time set was sufficient to conduct a comprehensive study that would answer the research questions.

Week Activity

Week 1 Designing of the interviews and blank report sheets
Week 2 Pre-administration of the project, labeling of the 10 branches, and identifying the sample population
Week 3 Conducting interviews and distributing the survey questions on branches of the store (location 1,2, and 3)
Week 4 Conducting interviews and distributing survey questions in location 4,5, and 6
Week 5 Conducting interviews and distributing survey questions in location 7,8,9, and 10
Week 6 Compiling the data attain collection of the survey forms
Week 7 Re-checking for clarification if needed
Week 8 Presentation of the parameters analyzing the results against the hypothesis

Findings

The Interviews

1. What is your position in H&M Company?

2. What are your specific roles in the company with respect to your position?

3. How often do you reach the set performance goals for your department?

4. What are the main challenges that you face in your office with respect to meeting the set goals?

5. How would you evaluate the strategic management and planning processes of the company?

6. Would you suggest improving any aspect in regard to the strategic management and planning process of the enterprise?

7. Are the resources needed for the company operations well allocated in your department?

8. Do you think the company can grow further by applying some changes in management?

Discussion of Results and Recommendations

The Effects of the Strategic Management on H&M

The organizational strategy at H&M is clear although it does not undergo frequent changes despite the dynamic nature of the fashion industry. The company is still committed to its original vision and core values. The scenario described above creates a definitive structure under which the organization operates (Freeman & McVea, 2001). The current organizational strategy is thus aimed at improving customer satisfaction and loyalty for a stronger competitive advantage within the UAE. Generally, it can be seen that the organization is following a very clear vision; therefore, they have clear guidance toward the set goals (Barnet, n.d). This, in turn, implies that the company is able to achieve success with all their activities. With a clear vision, the company can avoid a lot of implementation mistakes considering that its strategic planning process is well-guided by a set of well-laid procedures. According to Management Study Guide (n.d), this scenario means that strategic management generally provides a clear vision that is set to enable a given organization to move in the right direction. With the right idea of where the organization wants to go, the management can easily find the right activities and focus for each department within the organization, thus ensuring that every investment made is utilized for the organizational goals and objectives.

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At H&M, some of the identified effects of strategic management include a better understanding and thus orientation toward organizational goals and strategies not only among the management executives but also staff members within the organization. Therefore, the company almost always strives to operate according to their set expectations in any given fiscal year, and this can be seen in the consistency of their market share growth over the recent years within the UAE and beyond. Another impressive effect is with respect to the company’s employee retention levels. The company employees are generally content with how the management is running the organization. While some of them would like more power with respect to decision-making, it was generally agreed that the work environment within this organization is progressive due to the well-structured strategies implemented within the organization. This means that every organization needs to be able to provide a clear guideline that the employees can follow for more effective organizational performance (Dobson, Ken & John, 2004).

The Challenges Involved in the Event of Implementing Strategic Management and Planning Process in H&M

At H&M, some of the most obvious challenges included financial constraints and external factors, such as market situation, competition, regulatory challenges, and economic circumstances. In the case of H&M, strategic planning within the organization was an effective process, and the implementation was rather uneventful without the interference of financial limitations and external factors. Based on how successful the company has been with respect to its strategic management and planning, it can be noted that enterprises simply need to envision these possible constraints in their planning phase in order to ensure that they succeed (Nedelea & Paun, 2009). Financial constraints are a problem at H&M because the company operates within a hierarchical structure in which the approval of funding has to go through the top-level management and board of directors. Financial constraints often cause significant delays in the implementation process (Ding, 2011). However, the company has learned to adjust their timelines in order to accommodate these anticipated delays.

Therefore, it can be seen that companies need to consider all their limitations within the strategic planning process. The survey findings indicate that there is a need for companies to evaluate their external environments and use the acquired information to shape the strategic planning process. Without the data on the external factors that are likely to affect the company, the implementation process could be easily derailed or even fail completely when the external factors are not aligned with the company plan.

Conclusion

Having established that strategic management and planning operations are the alignments of business targets with the available resources in an enterprise, it is important to appreciate the kind of benefits that strategic management offers a company. H&M is highly competitive both in the global market and in the UAE. This study reveals that the company has a comprehensive strategic management system in which the management is involved with the creation and implementation of a working organizational strategy built on the basis of organizational goals and objectives. The company has had its fair share of challenges with implementation, but the current strategic planning process has been streamlined to involve information about the external environment within which the company operates. Also, the company has learned to adjust their timelines in order to accommodate their hierarchical corporate culture that leaves the financial approval to the top tier executives, thus causing delays in an implementation where funding is a mandatory requirement.

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