Table of Contents
Hennes and Mauritz (H&M) was first established in 1947 and have since expanded internationally and currently operate in 34 countries (H&M, 2009). As H&M continues to expand every year, the following report has chosen Australia as the new market, where analysis has been conducted to provide H&M with recommendations of which market entry method they should adopt and the threats and issues they must overcome to be able to succeed.
1.0 - Country Analysis – Australia
For the purpose of this report H&M (Hennes & Mauritz) has chosen Australia as the foreign country in which they wish to enter and introduce their products. Australia is the largest island, however, is also the smallest continent in the world which is situated below South East Asia (Department of Immigration and Citizenship, 2009). Being the sixth largest nation on earth it also consists of six states and two territories with the lowest population density per square metre (REFERENCE).
As it is practically impossible for H&M to enter the whole Australian market simultaneously, H&M has, therefore, chosen Melbourne as the first Australian state they wish to enter.
There are many reasons for choosing Australia and Melbourne in particular including: •
Melbourne is the second largest capital city in Australia with a population of 3,634,200 (REFERENCE). •
Melbourne is renowned as the fashion capital of Australia, where the Melbourne Spring Fashion Week (MSFW) is one of the largest and most popular consumer fashion events in Australia (City of Melbourne, 2009). This may then make it easier for H&M to launch their products and also obtain brand awareness, as Melbournians are relatively ‘fashion conscious’. •
New business opportunity, since 2006 there has been a 15% growth in the segment where young female consumers are demanding for low priced yet high quality and fashionable apparel (Euromonitor, 2009). •
Australia has a similar country profile as previous countries H&M has successfully entered and launched its product. Hence, H&M appears to have prior knowledge and experience in expanding internationally into a Western country. 1.0
Product Analysis –
Hennes and Mauritz (H&M) was founded by Erling Persson in Vasteras, Sweden, in 1947. It was initially known as Hennes, which is the Swedish word for “hers”, as the company only sold women clothing. Persson purchased Mauritz Widforss a small sporting apparel company and since then formed Hennes and Mauritz (REFERENCE). The company now operates in 34 countries including Germany, France, Hong Kong, USA and the UK. H&M continues to expand internationally where they expanded into the Japanese market in 2008 and will further expand into Russia and Lebanon by the end of 2009 and Israel and South Korea in 2010 (H&M, 2009). The core concept of H&M is to provide fashionable products at the lowest price possible, to compete with expensive department stores. H&M has 6 main product lines which include:
Women – diverse range of apparel spanning from basic sportswear to corporate and party garments. •
Men – includes tailored garments such as jackets to fashionable apparel that reflect the latest trends. •
Children – is divided into three categories – babies, children and H&M Young which is aimed at children up to the age of 14. •
Divided – targeted at teenagers and young adult, which offers fashion with a young look with creative designs that reflect those of the latest trends. •
&denim Jeans – provides both traditional five-pocket jeans to the trendiest cuts. •
Accessories – H&M also produces its own footwear, handbags, jewellery and even cosmetics. It should also be noted that H&M does not own manufacture any products, instead they rely on over 700 independent suppliers primarily in Asia and Europe which enables them to select the best supplier (H&M, 2008).
3.0 – Market Segments
With the diverse range of product lines, it appears that H&M has the...
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