H&M is a private company that operates only in the developed markets that will be able to generate the revenue. According to Statista.com, more than 60% of the sales are made in ten developed countries of Europe and North America (Statista.com). So there is no point in opening the new stores in some of the regions of the world where the people’s incomes are very low. The running costs are very high for H&M and it may be very difficult to adjust the supply chain in order to deliver the products in the new locations.
When H&M subcontracts production to the other companies, it always makes sure that the H&M Global Quality Department sets up the appropriate standards for the ordered products. Consequently, all suppliers have to comply with H&M’s strict requirements. After the products are produced, they are always checked in the H&M laboratories. Chemical and product safety tests help to understand how good the quality is (H&M corporate web-site). So subcontracting does not represent any threat in terms of the worsened quality or failure to meet the other conditions.
A team of 80 people regularly audits the working conditions in the factories (H&M corporate web-site). However, according to the study that was carried out by the NGO Clean Clothes Campaign, H&M cannot control all the factories at the moment and the changes are introduced too slowly. H&M agrees with this statement, but stresses that the company shows commitment to the improvement of the working conditions in all countries where H&M’s clothes are produced (Bain). Even though the factories do not belong to H&M, the company should contribute to the improvement of the working conditions and protection of the natural environment, because it will be fair in relation to the people that are involved in the productions process and the local people that suffer from the negative ecological footprint. The people in the poor countries should not be exploited and instead they should be able to work in the rewarding working environment. H&M should spend part of its revenue on the improvement of the local infrastructure in order to compensate for the negative impact.
In order to grow further, the company should reassess its business strategy. For example, it should try to expand in the USA and Canada, because these two countries are far behind Germany in terms of sales (Statista.com). In addition, it should continue to outsource its production to the developing countries in order to keep the costs low. Finally, H&M should pay much more attention to the development of the other more expensive brands that include COS, Monki, Weekday, etc. These brands may help H&M to set the higher prices and attract more affluent customers in the future (Bhasin).
The company continues to follow its business strategy and popularizes its core brand H&M. Some of the latest news about the company is as follows. H&M will provide the uniforms to the Swedish Olympic team in Rio-de-Janeiro in the summer. Caitlyn Jenner became the new face of H&M’s sportswear line and Katy Perry participated in the advertising campaign during the Christmas season. According to the 2015 Annual Report there are now 3,924 stores in 61 markets and sales increased by 19% in 2015 (2015 H&M Annual Report). At the same time there are still many critics in the key markets that think that H&M does not care about sustainability and relies too much on selling the clothes that are cheap and easily disposable (Bain).
Works Cited
Bain, M. Is H&M misleading customers with all its talk of sustainability? Qaurtz. 16 April
2016. Web. 29 April 2016
Bain, M. Most of H&M’s “best” factories in Bangladesh still don’t have working fire exits.
Quartz. 3 October 2015. Web. 29 April 2016.
Bhasin, K. H&M Is Working on a Mysterious New Brand. Bloomberg. 25 June 2015. Web.
29 April 2016
H & M Hennes & Mauritz AB Full-year report. 1 December 2014 – 30 November 2015.
Web. 29 April 2016
Quality is key. From idea to store: Production process. H&M Web-site. n.d. Web.29 April
2016
Sales of the H&M Group from 2008 to 2015, by country (in million U.S. dollars).
Statista.com. 2016. Web. 29 April 2016.
