Entry Strategy of H&M

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Since H&M opened the first shop in Sweden in 1947, using an American concept of shops selling stylish clothes with low prices bring H&M successful in the domestic market. H&M started to expand internationally from 1964. Not only Europe market, H&M also enter in North America, Asia and Middle East market.

H&M became one of the biggest worldwide leading fashion retailers. Until Year 2010, H&M has around 2,000 stores in 37 markets (Data from H&M-US Website). Details of market overview of H&M can be referred to Appendix I. [pic]

Source: Annual Report of H&M 2009
http://www.hm.com/filearea/corporate/fileobjects/pdf/en/ANNUAL_REPORT_ARCHIVE2009__ITEM_3_1269424409886.pdf

In this part, we will study how H&M enter into United Stated market using wholly owned subsidiary and evaluate the outcome of this strategy. Before this, we need to look at the general principle and criteria for entry America first.

Principle of selecting oversea market of H&M
People may say that successful expansion of H&M was come from its targeted entry strategy for different countries. H&M usually choose a politically stable developed or developing foreign country to enter. The reason is that company can balance the benefit, cost and risk because of a free market system. H&M entered into the United Stated market also based on such principle because America is a country which has stable and developed political. Therefore, it facilitates H&M to do its business in here.

Criteria for entry in America market
A. Time to entry – Late entrant
Based on the annual report 2009, it’s easy found that H&M entered America market much later which in Year 2009. Although the early entrant can have first mover advantages, H&M still prefer entry later because company can learn from the success or failure of other international firms and also didn’t pay such costs. It can reduce the risk of failure when entry in American market.

B. Scale of business – Small Scale
Many firms may enter a...
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