Evaluate the external environment in which H & M operates in.
1.1. PESTEL Analysis
As companies begin to expand globally, it needs to understand the laws of each country. Since each country regulations are different, its needs to take special consideration before entering and investing into a new market in order to prevent violating any of them. This is especially true when regulations involving imports and exports are affected. While the restrictions of goods shipments may not be a major concern, selection and switching of suppliers relating to manufacturing and outsourcing can greatly affect profit margins, production costs as well as other incentives in different areas. Moreover, laws governing corporate social responsibility like minimum wages, child labour and other environmental issues affect organisational growth.
Due to inflation, the rising costs of raw materials like cotton are felt globally. This in turn forces manufacturers to increase their production cost and future affecting potential profits globally. As international trade liberalises, the demand for suppliers and manufacturers in low-wage countries increases and completion between fashion retailers intensifies. In-addition, the recent economic crisis has affected consumer spending patterns, forcing organisations to push their retail prices low to meet consumers ' lower spending power.
Different cultures have different fashion senses, likewise while consumers in Europe like Sweden embraces 'fast Fashion ', Customers in Asia for example Singapore adopts fashion at a slow pace. To understand 'local fashion ', most companies depend on home grown designers or in-house sales employees to pick up the latest treads to redesign their products. Moreover consumers globally are growing more conscious about the environment, which encourages the production of environmental friendly/sustainable products.
References: Johnson, G. (2014). Exploring Strategy. 10th ed. Harlow [u.a.]: Pearson.