H&M vs Zara

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INTRODUCTION

I.Japan PEST analysis3
A.Political Landscape3
B.Economic Landscape3
C.Socio-cultural Landscape4
D.Technological Landscape5
II.Fashion Industry: Five Forces of Porter6
A.Threat of new entry6
B.Bargaining power of suppliers8
C.Bargaining power of buyers8
D. Threat of substitute products/services9
E.Intensity of rivalry among competitor10
III.Company analysis11
A.H&M11
1.H&M Vision, Values, Goal and Strategy11
2.H&M’s internationalization process11
3.H&M’s organizational structure12
4.H&M’s Global Role13
B.SWOT Analysis14
1.H&M in Japan14
2.ZARA in Japan17
C.Value Chain Analysis19
1.Logistics.19
2.Operation.20
3.Marketing & sales.21
4.Service.21
5.Infrastructure.22
6.Human resource management.23
7.Technology24
8.Procurement.25
IV.Strategy and environment26
V.Recommendations27

Introduction
H&M was established in Vasteras, Sweden in 1947. At the beginning, it was given the name Hennes (the Swedish word for “hers”) because only women’s clothes were sold there at that time. In 1968, men’s clothes began to be sold in the stores thus, the company changed its name to Hennes & Mauritz (H&M in short). In the following years, H&M kept expanding continuously in different markets. The business concept of the company is “to provide people with fashion and quality at the best price”.

The company arrived in Japan in 1998 seeking a notoriously market whose consumers have one of the strongest purchasing power worldwide to offer fashionable items at low price. This operation was considered an important step in the international expansion for the company because it represented not only an opportunity to grow in a solid economy but it also meant a huge challenge in considering the cultural and social differences.

The structure of the following research starts with the description of the country through a PEST analysis. Then, we analyze the Fashion apparel industry and the company through the main frameworks such as five forces of Porter, SWOT and Value Chain Analysis. After this analysis, we evaluate the different strategies implemented by the company to fit its environment and finally, based on our evaluation, we present our recommendations.

Japan PEST analysis
Political Landscape
* Japan is a stable parliamentarian democracy under the rule of a constitutional monarchy. The Emperor, Akihoto, came to power in 1989. The Prime Minister, Abe Shinzo, also chief of State, elected in 2001 mostly detains the power. * Japan is a member of different world organizations such as the G8, the ASEAN plus Three, the OECD, the United Nations and the APEC. * The Japanese government regulates the healthcare system which role is to offer the payment of personal medical services. Japan spends 7.6% on health Economic Landscape

* Japan is the third largest economy in the world with a GDP of US$ 5.981 trillion. * In 2011, the GDP-composition by sector is:

* Agriculture 1.4%
* Industry 24%
* Services 74.6%

* In 2011, the unemployment rate is about 4.5 %
* In July 2012 the inflation rate is about -0.3 %
* The largest companies in Japan are in the Bank and Automobile industries. * Regarding FDI to Japan, the country has the lowest rate (3.9% of the GDP). Some reasons are the language barrier and the cultural differences. In addition, the tsunami in 2011 as well as environmental and health concerns related to the Fukushima Daiichi nuclear power plant may be another reason hindering foreign investment. * Japan mostly imports and exports manufactured products (51% / 94.1 %). Clothes and Textile imports account for 5.1 %. 94.1 % of the exports are machinery products. Socio-cultural Landscape

* Japan’s population is estimated at almost 128 million inhabitants concentrated in large...
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