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H&M (Hennes&Mauritz) is a global clothing brand established in 1947. Its first location was found in the Swedish city of "Västers." H&M is an accelerated retailer that sells clothing for various age groups and genders, including men, women, children, and adolescents. They strive to make high-quality clothing available at reasonable prices. Nine fashion and design brands make up the H&M Groups, including H&M, H&M Home, Arket, & Other Stories, WEEKDAY, COS, MONKI, Cheap Monday, and A Found. Every business has a distinct personality and a unique target market (Okara and Widmer, 2022). This report provides the PESTLE analysis of the H&M autocratic leadership style recommendation. This report also provides the CSR of the H&M, Brexit, and COVID impact on the H&M company business in the United Kingdom.
Figure 1 H&M company Logo
The PESTLE analysis is a model that helps assess the influence of external business environment factors on an organization's processes and activities.
Figure 2 H&M PESTLE Analysis
(Source: Lewin, 2022)
The PESTLE analysis of H&M is discussed below:
It's not surprising that it's an established truth. It is a fact that H&M is a global brand in several countries. Although, on one side, this is a massive benefit for the company, on the other hand. It could be a doorway for worldwide political tensions in nations such as those in the United Kingdom. The countries in countries in which H&M has franchises are uncertain and have uncertain political circumstances (Momin, 2022). Another new strategy that H&M has introduced is franchising. The brand has franchises in a variety of countries. Many of them have unstable political environments that keep the brand in constant change all day long. The concept of franchises was not one of the critical elements of the growth strategies for H&M earlier in the day, particularly in the UK.
The Covid-19 pandemic was a significant setback to H&M and its businesses. The habits of consumers buying have dramatically changed after the onset of the virus. Supply chains were seriously affected. The world was experiencing recessionary economic conditions because of this virus. For a lengthy period, 80 percent of H&M locations H&M were closed of the lockdown situation in various countries. The result was that they lost 18.5% of revenues in 2020 (Momin, 2022).
It is a brand that has been affected by the epidemic and is aware of how vital they are to the people they interact with and the environment surrounding them. The H&M foundation provided US 5000 to help fight the damage caused by the Covid-19 (Momin, 2022). The foundation also assisted women, specifically in the UK, which was among the groups particularly affected by the outbreak because they are part of the pre-made clothing industry that impacts the culture of social interaction that forms part of the H&M Company. H&M is recognized for the excellent care it gives to its employees at all levels and for offering equal pay. They are also recognized as a leader in promoting gender equality by providing women the opportunity of joining their ranks.
For a considerable period, the owner H&M for a long time, the owner H&M had a goal to enhance its existing logistics chain by using the latest technologies to increase efficiency. They made considerable investments in this sector in 2020 and have repaid it significantly. They have recently inaugurated the world's first modern logistics center in the UK. The center will be the principal route for any future projects to come. The mobile app also has a rewards program that gives customers points for every purchase (Momin, 2022). These points are used to buy gifts or other products. Suppose you reside within a European country that allows it to receive them. In that case, they offer instant express delivery that lets customers receive their purchases within hours. The stores found in Italy and Sweden use climate-friendly methods of delivery of the goods for their clients.
There's nothing wrong with the company's name, but. H&M is committed to adhering to international laws, particularly in their work countries. They do not allow underage employees to work, and the suppliers they collaborate with are also legal. They provide safe working conditions for employees across the world. They also promote equality against all kinds of discrimination, including race, gender, religion (Momin, 2022), or any other type of discrimination. The company is committed to transparency, and they publish various financial reports as well as other analyses of performance that are available to the public at large. The brand recently came hit with criticism due to accusations that minorities were discriminated against with ethnic backgrounds in certain stores across the United Kingdom (Arrigo, 2018). The footage from hidden cameras extensively viewed by the regional news network showed that salespeople were not the same in the way they treated people of different ethnicities, particularly customers who returned goods and demanded documents that were not required from them.
The industry of fashion is heavily dependent on the weather conditions that the climate is in the countries where the products are sold. This is why H&M supplies relevant items to the various countries where they operate stores to ensure no wasted product and reduce costs. But, because of recent climate changes and bizarre changes in weather patterns across the globe, H&M now has a difficult time accurately forecasting the new weather patterns and supplying the amount of clothing needed (Momin, 2022).
It is recommended to adopt an autocratic leadership style within the H&M. Autocratic leaders can respond quickly to any changes. Other types of leadership, such as democratic leadership, can cause slow decision-making processes (Malec, 2022). Leaders who are democratic could be waiting for a week to find out how the team plans to address a specific problem. However, an autocratic leader can make a decision today and start implementing it. The decisions that take time can be made with the firm and decisive use of a hand, as long as the writing doesn't hit the people who are accountable for it.
The autocratic leadership style will create an organized environment that allows H&M to establish clear guidelines that aid in streamlined communication. Employees under the control of an overbearing manager will know whom they need to talk to and whom they should get approval from (GOWILINGWLG, 2022). This isn't only an opportunity to increase H&M efficiency and efficiency but also to in enhancing accountability.
Figure 3 Autocratic Leadership
(Source: Sajjan, 2022)
This is particularly the case during an emergency or difficult circumstance. An autocratic leader can trust to make orders, perform rapid decisions and adjust strategies without thinking about other people's opinions(Malec, 2022). This is what increases productivity and reduces stress levels of employees. When H&M chooses to adopt an Autocratic leadership style, it will be possible to make quick decisions and implement the plan quickly.
With clear instructions and the supervision and direction of autocrats, they can reduce the turnaround time and improve productivity (Malec, 2022). Experienced leaders of autocratic organizations can ensure that teams don't make the same mistakes novices tend to make. H&M can go through the experience that the company already applied autocratic and avoid the mistakes different organizations face.
H&M is regarded as one of the most eco-friendly clothing businesses globally. It is ranked 26th in the Global 100 ranking (an index of the most sustainable companies) and listed as the world's second most sustainable clothing business. According to their Sustainability Review, H&M Group was also listed on the CDP's 2019 A-List (companies that are thought to be the first to adopt actions to address environmental issues). Dow Jones 2019 Sustainability World Index (with the most impressive score of any business). Fashion Transparency Index (where it scored seventy-three percent of the most impressive score of any other company). They were walking the Talk Report (which examines sustainability issues and ways they can be put into practice), FTSE4Good Index, and Platform Living Wage (Okara and Widmer 2022).
The fashion industry is an essential component of the European Union. It employs 1.7 million people and is estimated to have an annual turnover of around 166 billion EUR19. From the 70s onwards, the apparel industry has undergone significant transformations. Due to the wide-ranging markets for imports and the substantial reductions in tariffs (Uggla, 2015), supply chains and trade quotas that supply the clothing industry have become very globalized20. Fashion production is a labor-intensive process, and that's why most clothing is sent to countries in the developing world where labor costs are significantly less expensive.
H&M's functional system permits continuous cooperation with suppliers, increasing their capacity to adapt to changing and influencing the global marketplace (Strähle and Köksal, 2015). However, they are working to improve their system and extend it to include more third and second-tier suppliers. They are far from reaching their goals concerning these groups of participants. The same is the case for companies that provide raw materials that are hard to manage due to the multitude of intermediaries (Okara and Widmer, 2022). These barriers make it difficult to ensure continuous collaboration between stakeholders across every supply chain step.
The focus on "overspending" suppliers in the CSR strategy and the detachment of the strategy for business is central to the process. This is one reason there is a possibility that H&M is "underspending" on other stakeholders (Bini and Bellucci, 2020). There's no evidence to suggest that H&M does not take responsibility for other suppliers. However, this could be because the thesis is centered solely on the CSR strategy and does not provide a complete study of relation between H&M and the other suppliers.
Figure 4 Sustainability process of the Fashion Industry
(Source: The Collective, 2018)
Another example is the proactive approach H&M has adopted in several instances. Instead of waiting for officials from the government to act on the low wages widespread in Bangladesh, the company has lobbied for a higher minimum wage (Bini and Bellucci, 2020). The government finally agreed to increase it to the minimum wage. This was also the case for child labor in the UK, the cotton industry, where they aim not to utilize the cotton from which they get their supply. They are also trying to persuade other businesses within the apparel industry to follow the same (Okara and Widmer, 2022). But there is a space where H&M might take steps to be more in line with their Company's Stakeholder Representation. There have been criticisms attributed to the policies of H&M concerning the regulations of their CSR, which, in general, aren't more than local laws. The fact that they've advocated for a more fair minimum wage could illustrate how they can play a more active part (Javed et al., 2020). There has been critique that even though H&M is actively lobbying the government to modify its policies.
Following the historic Brexit agreement being signed, the current focus is on how businesses will respond to the new rules (Sekininno, 2022).Specific sectors will be more affected than others, like financial services. However, it's those who export clothing internationally that are least affected. Businesses that have suppliers or customers from the continent European customers or suppliers are also affected because of trade. Nations not within the EU are likely to be affected as a result of being denied access to the EU's free trade agreements and customs restrictions (Mostaghel and Chirumalla, 2021).
How Brexit impacts business is different across every country. H&M faces various challenges when expanding its operations into the UK. H&M experts have created the Brexit Bitesize Guide to assist businesses through this challenging period. Because of Brexit,there is a real risk of delays and higher costs in the supply chain. The rules and regulation policies concerning the supply of materials affect the deliveries of collection which not only affects the production activities but also raises the cost for business (Gowling WLG, 2022).
H&M outlines the few approaches that help reduce the impact of price increases and delays and address the most frequently-asked Brexit concerns about supply chains (Illes, 2020). The crucial international supply checklist offers practical advice on re-evaluating H&M Supply Chain and establishing effective global supply contracts for products (Strähle and Köksal, 2015).
Intellectual Property (IP) IP - The UK company must understand how it will affect it. Looking over H&M posts on the key aspects businesses must be aware of regarding patents, designs, trademarks, and copyright trade secrets. It helps continue business activities by minimizing the effects of BREXIT (Caro and Martínez-de-Albéniz, 2015).
The second-largest clothing retailer, Swedish retailer H&M, announced that it is closing its stores worldwide. The closures are scheduled to occur the following year, after the announcement by H&M that the outbreak of Covid-19 caused an increase in the number of shoppers who went on the internet. The company stated that sales were up in September but were still 5 percent lower than the similar month in the prior year (Rigby 2022). The company operates more than 5,000 stores across the world. However, it's unclear what the number of stores closing will be in the UK. H&M said the conclusions would be "too early for us to give any details on this. The numbers will differ from [national] market to market." H&M can renew and end leases on up to 25 percent of the stores yearly (Bonilla and co. in 2019). The retailer also announced it was planning a "net decrease of around 250 stores" in the coming year. H&M has announced that sales dropped to 10 percent during the 4th quarter, and 18% throughout the year, due to consequences of the Covid-19 virus and lockdowns. Despite the continuing decline in sales, the figures are higher than the prior quarter, where sales fell by 16 percent during the same period.
The company says the year started "with positive momentum" before the Covid-19 wave arrived. The sales then fell in the second quarter as certain stores were shut down due to lockdowns and fewer people visited the stores that were still open (Bini and Bellucci, 2020). Since then, sales have increased in the third quarter, after the lockdowns in the fourth quarter that began on November 30.
Between September 1 and October 21, sales decreased by 3% compared to the same timeframe the year before. Between October 22, November 30, and October 22, sales fell by 22%, as a second outbreak of the pandemic Covid-19 caused a decline in sales. The retailer revealed in its last figures that it had raked in SEK 54.5bn (PS4.78bn) in the final quarter of the year, which ended on November 30, which was down 10 percent compared to SEK 61.7bn (PS5.41bn). In the whole year, at the time of the same date, there was a decrease of SEK 181 billion (PS16.4bn), 18 percent lower than SEK 232.7bn (PS20.4bn) in the prior year. On October 1, H&M announced that the company was planning an omnichannel strategy to respond to the changes in behaviors during the outbreak (Raigrodski, 2016).
In a nutshell, it has been concluded that H&M is the largest clothing company that is globalizing its businesses with different strategies. This report provides the recommendation strategies and leadership style which improves the company's supply chain and other activity. Brexit is impacting the fashion industry due to the potential economic impacts (reduced expenditure and recession) and human resource issues (migrated workforces and a shortage in skilled laborers). Furthermore, the report focuses on the COVID-19 effects on the strategies of the H&M.
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