Hennes & Mauritz AB

Topics: Retailing, Clothing, H&M Pages: 4 (1228 words) Published: April 19, 2014
Hennes & Mauritz AB (H&M)

Hennes & Mauritz AB (H&M) is a multinational company based in Sweden. It went public on the Stockholm Stock Exchange in 1974. Founded by Erling Persson in 1947, it was initially called Hennes, the Swedish word for “hers”, and sold only women's clothing. In 1968, the company was renamed to Hennes & Mauritz and, since then, has diversified over the years and expanded its product portfolio to include women’s wear, menswear, children’s wear, footwear, accessories, cosmetics and home furnishings. With years of development and acquisitions, the company is now comprised of five independent brands: H&M, COS, Monki, Cheap Monday, and Weekday (Hennes & Mauritz AB, n.d.).

1. The Porter's five forces of H&M

Competition in the Industry
Rivalry is high because there are a large number of similar retailers including both large and small firms. Furthermore, slow growth resulting from the 2008 recession has decreased the level of demand in the apparel industry intensifying competition. The rapid change in the industry also leads to firms constantly H&M’s main competitors are: Zara, owned by Inditex Corp.; PVH Corp. including Calvin Klein, renewing their product to appeal to fickle customer bases.

Potential of New Entrants
The threat of new entrants is high. Entering the apparel industry does not require a huge capital investments and many individuals have the means to start a clothing line. Because quality is a central topic for H&M and fashion for a low price, H&M shouldn't fear for being replaced by another company's products. 

Power of Suppliers
An increased globalization has originated international trade, thus more options for retailers to source from foreign manufacturers. H&M Buys its products from approximately 800 independent suppliers, primarily in Asia and Europe, in countries where the textile industries offer considerable skill and experience. Cooperation with suppliers is both a close and a long- term relationship....
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