Business Strategy for H&M in Brazil - Essay Example

Hennes & Mauritz, hereafter H&M, is a well-known Swedish firm specializing in retailing and designing fashion apparel and accessories. The firm offers a variety of cosmetics, apparel, footwear, and accessories for children, teenagers, women, and men. The firm operates in Asia, Europe, and North America, having numerous outlets in over 38 countries. The company employs over 87,000 people, with headquarters in Stockholm, Sweden. This paper presents a business strategy for H&M for the introduction of the clothing brand in Brazil, one of the rapidly emerging economies in the world (Doyle, Moore, and Morgan, 2006:275).

The paper analyzes the company and clothing industry, market analysis, target group analysis, and entry strategy for the company into Brazil, including the PEST and SWOT analysis. The paper concludes with a recommendation part for the company. Erling Persson established H&M in 1947 in Vasteras, Sweden. Over the years, the company has had significant growth in the clothing industry, currently operates in over 38 countries, and has an employee base of over 87,000 spread all over Europe, North America, and Asia.

The central idea of H&M is to offer its clients a variety of fashionable products of good quality at an affordable price. One of the strategies of H&M is the continuous development of its collection such that each customer finds a new product o the next visit to the stores. In essence, the company uses over 100 buyers and pattern makers, and designers (Capell and Khermouch, 2002:107). Apart from the permanent designers, the company connects with other top-class designers in creating fashion campaigns, including reputable designers such as Madonna, Stella McCartney, and Karl Lagerfeld.

Their collection includes children’s, teenagers’, women’s, and men’s apparel, cosmetics, footwear, and accessories. Moreover, the company has recently developed a full interior design collection. Due to the nature of its products, the company targets people of all ages and tastes, which has both its challenges and benefits (Chetty and Campbell-Hunt, 2004:62). Apart from the over 2200 stores spread across the world, the company also offers catalog sales and internet shopping in Germany, Austria, Sweden, Finland, and Norway.

One of the interesting aspects of H&M is that it outsources all its production (Larenaudie, 2004). The company boasts of over 700 independent suppliers, primarily situated in Europe and Asia with 16 production offices. However, their suppliers have their own subcontractors, thus the overall figure of manufacturer units sums up to 2700. In 2010, the company’s turnover was about 12 billion Euros. The company targets a 10-15 percent growth per year for all new stores. In this regard, therefore, H&M plans to employ an additional 6000 or 7000 people (Capell and Khermouch, 2002:107).

The head office in Stockholm houses the entire corporate management, as well as other departments including finance, expansion, advertising, communication, logistics, security, information technology, designing and buying, expansion, corporate social responsibility, and international relations. Nonetheless, the company’s corporate culture adapts to the conventional global corporation culture, treating the entire world as a single market. The company operates in different countries, but the operations and plans are essentially similar in all the stores.

The company does not prefer any country from its market areas but rather implements its business strategy similarly in all. The central idea here is to offer products to various segments, rather than marketing for one only (Dimitratos and Plakoyinnaki, 2003:191). This is common for companies like H&M that have resources to cover a broad market.