H&M Case Analysis

H&ampMCase Analysis


TheGenesis of the Labor Union and Industrial Action

TheExecutive Summary of the Case Study

Intoday`s economic development, globalization contribution isundisputable. Since 1970`s, many nations have developed through theflow of goods, capital, and services in many regions across theglobe. It is undeniable that globalization gains are unequallydistributed amongst nations. Globalization has set up a new era ofinternational trade flows and simplicity international competition,best understood by analyzing the rise and fall of certain industriesin the market. The case study aims at examining the role of strategiccapability in building a competitive advantage and issues to considerwhile evaluating how firms can maintain competitive sustainability.In our case study, H&ampM has enjoyed a leading position, especiallyin the global fashion and apparel market due to its unique way ofdoing business as well as the ability to combine classic signs withaffordable prices.

Irrespectiveof that position, many challenges have arisen from key competitorsand H&ampM needs to consider its position in the market and evaluatethe sustainability of competitive advantage in its strategiccapabilities. The case also explores area and function which H&ampMhas enjoyed advantages against its key competitors and how, if atall, these benefits can be sustained in the long term. A detailedscrutiny of GVC highlights the importance of international trade, andcompetitiveness in the market (Cavusgil, Knight, and Rosenberger,2014). In the case of Romania, the article address on the importantroles of the textile industry at a national and global level as itpresents a competitiveness sector approach, and the analysis ofinnovation in the textile industry. Finally, the study presents thevalue chain for the textile industry in Romania.

Isit be better to allow free trade to take its natural course?

Ambani(2014), suggest that globalization reinforces the role of localfactors in competitive advantage. On another hand, Banga (2013) alsoindicates that clustering fosters innovation and helps local firms tocompete in the global market. Despite the support of the economistsof free trade advantages, the policy would be a better option.However, it may work negatively to some countries in the followingways:

  • Free trade policy is advantageous to developed nations only, developing or less developed countries are at a disadvantage due to unfavorable terms of trade.

  • Unfair and unhealthy competition under the free trade does not give less developed countries a chance to exercise competition in the market.

  • The gains from free trade cannot be distributed fairly due to an unequal state of development of different nations.

  • Should OPT agreements be restricted and apparel retailers be allowed to import from the most cost effective suppliers.

OPTshould be restricted, this agreement is principally, but notexclusively designed to enable developing countries to have greateraccess to markets such as EU. For example, if state members are toimport or export any commodity, one should keep up to date withdevelopment in EU or the origination or destination country.

TheAdvantages of OPT to the Romanian firms

Somefirms do benefit from the OPT agreement they were allowed totemporarily export fabric or from design to finished article, andtowards the less skill-demanding and cut make trim production. Thiswas advantageous to the firm since they gained access to the marketthey never accessed before.

Advantagesof OPT to the Romania as a country

Asa result of the OPT agreement, there was growth in orders for WesternEurope, thus becoming a major pillar of the Romanian Economy. Thegrowth in order also led to the demand for employees wherebyone-fifth of the total industrial employees was absorbed in jobscreated, accounting for more than a quarters of total exports. Peakin employment as a result of the agreement also lead to 303,000 jobopportunities in the year 2003.

WhatRomania Government should do to help keep jobs in Romania

Lackof jobs or job loss can prevent millions of Romanian people fromgaining a meaningful life the consequence also can have the greatimpact on the country`s economy thus increasing poverty level to thealready poor country. The consequences can not only be bad for thecurrent generation and government but future generation and thebusiness at large, whereby consumers will end up workforce with fewerskills to perform any duty and citizens skeptical about society andits institutions. The government, therefore, should purpose toperform the following roles

  • Increase funding for investments in roads and railroads infrastructures as well as in education sector.

  • Implement programs that would increase the competitiveness of industrial products managed by the government.

  • Implement programs that improve competitiveness in the textile sector through promoting decent work.

  • Promote the export promotion of textile industry, through active participation in international fairs and exhibitions.

  • Strengthen custom control to avoid competition from products originating from other countries.

Whatgovernment should do to attract more FDI

  • Romania should preserve sound macroeconomic fundamental and address the growing external imbalance to maintain investors` confidence.

  • To maintain real rapid convergence, Romania should make sure they improve their business climate or the environment.

  • Introduce complementary asset that includes technology, management, and organizational competence.

  • Raise the standard of product quality and consumer expectation of indigenous competitors.

  • Stimulation local entrepreneurship and deepest rivalry.

WhatH&ampM Should Do To Compete With Zara

Forthe H&ampM to outdo its competitors in the market, it shouldintroduce an after sell service as a way to lure more customers, andthey should have an innovative way of doing this. Celebrity can alsocome in handy, whereby, they can use them to advertise their product.Sport is another area with a big audience it would be a positivemove if the company consider sponsoring some sport, by coming up witha league in their name, branding uniforms of popular teams, whichwould be a milestone in reaching a wider market, hence increase insales. Apart from sport, an online platform whereby the customer cangive their opinion on the product they have used from H&ampM, givingan opinion on where to improve, whether they liked the product or notis also of great significance. Celebrity has a huge following theycould use some of them, both locally and globally to advertise theirproduct.


Emergenceand spread of global value chains in the last three decades hasgreatly changed the production process, giving it a multilateraldimension with more countries participating in producing a singleproduct. Expansion of the fragmentation of the production processacross different countries and continents had added dynamic to theinternational trade. Exporting nowadays is no longer associated withproducing more but much less with gaining. The global context of thetextile industry indicates that the tendency of production especiallyis Asian continent has gone down as the developed countries, theindustrial base of this sector is restored by engaging variousactivities on board.


Ambani,P. (2014). China Textile Industry and Apparel Production and SalesStatistics Industry 2013-2014.

Banga,R. (2013). Global Value Chains: What Role for Aid for Trade?Commonwealths Trade Hot Topics, 2(100), 2-8.

Cavusgil,T. S, Knight, R. &amp Rosenberger, J.R. (2014). InternationalBusiness, 3rd edition, Pearson Education Limited, Essex England.