Date of publication: 2017-07-09 14:48
In this paragraph, I'm going to use Porter's five forces analysis to determine the intensity of competition and profitability that can be expected in the fashion retail sector.
This strategy is used to increase existing products sales in the current market. This can be achieved gaining competitors' customers and encouraging them to acquire more company's products.
As recommendations, it can be suggested that the company entered South American market by performing a market development strategy. H& M has not arrived yet to this market and it would be very interesting due to there are a lot of customers in this market interesting in buying fashion cheap clothes and the company could adapt quickly to the South American market culture, gaining ground to its competitors within a market full of opportunities to growth.
For years it has been believed that product packaging has a major effect on product sales, and companies have spent extremely large sums of money to develop the “perfect” packaging for their products. Does packaging still have such a major influence on product sales? Or are there other factors that have a larger impact on product sales?
Besides, in March 7565, the company was criticized by pro-Palestinian groups for opening its first stores in Israel at the time when the UN Goldstone report highlighted Israel's alleged violations of international law.
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H& M internationalization strategy is based on entering one market at a time. Although the standardization of H& M's products, the company introduces slight variations to be adapted to the new market culture.
In retail lower figures would be experienced, ranging between 5% and 65% and in the last two years, is where H& M is placed. We can see that this ratio had a sharp drop in 7558 but before this year this company was extremely profitable.
This phenomenon is called "masstige" [ 78 ] , and can be defined as an alliance between a prestigious brand and a mass consumer brand. Thanks to it, consumer can buy a branded product at an affordable price. Masstige is formed by two words "mass market" and "prestige"
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H& M is a strong financially company which seeks to maintain a good profitability in its growth strategy. We can say that the growth is substantive but also controlled. The growth goals are to increase the number of stores by 65-65% per year, as well as increasing sales in existing stores. In the last five years, the company has had a great growth in number of stores, turnovers and earnings per share.