H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion
The H&M case is set immediately after the Rana Plaza collapse in Bangladesh. The case explores questions of who is to blame and how it should be addressed. There is no guarantee that H&M garment manufacturing had not been subcontracted to one of the factories in Rana Plaza, and Helena Helmersson, head of sustainability at H&M, must meet with the CEO, Karl-Johan Persson, to discuss how the company will respond and devise a plan to face the media coverage and public scrutiny of the apparel industry that is sure to follow. This case was written under the supervision of Andrew Hoffman at the University of Michigan by graduate students Marianna Kerppola, Ryan Moody, Likangjin Zheng, and Amaryllia Liu.
Swot Analysis of "H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion" written by Andrew Hoffman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Rana Plaza facing as an external strategic factors. Some of the topics covered in H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion case study are - Strategic Management Strategies, Labor, Social responsibility, Supply chain and Strategy & Execution.
Some of the macro environment factors that can be used to understand the H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion casestudy better are - – talent flight as more people leaving formal jobs, increasing energy prices, increasing household debt because of falling income levels, technology disruption, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion,
increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Rana Plaza, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Rana Plaza operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion can be done for the following purposes –
1. Strategic planning using facts provided in H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion case study
2. Improving business portfolio management of Rana Plaza
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Rana Plaza
Strengths H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Rana Plaza in H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion Harvard Business Review case study are -
Analytics focus
– Rana Plaza is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Andrew Hoffman can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Diverse revenue streams
– Rana Plaza is present in almost all the verticals within the industry. This has provided firm in H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Learning organization
- Rana Plaza is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Rana Plaza is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Rana Plaza has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion firm has clearly differentiated products in the market place. This has enabled Rana Plaza to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Rana Plaza to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Rana Plaza has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Strategy & Execution field
– Rana Plaza is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Rana Plaza in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Rana Plaza
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Rana Plaza does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Rana Plaza are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Operational resilience
– The operational resilience strategy in the H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to recruit top talent
– Rana Plaza is one of the leading recruiters in the industry. Managers in the H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Rana Plaza has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Rana Plaza has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion are -
Aligning sales with marketing
– It come across in the case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion can leverage the sales team experience to cultivate customer relationships as Rana Plaza is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Rana Plaza has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Andrew Hoffman suggests that, Rana Plaza is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Interest costs
– Compare to the competition, Rana Plaza has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Workers concerns about automation
– As automation is fast increasing in the segment, Rana Plaza needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion, it seems that the employees of Rana Plaza don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Low market penetration in new markets
– Outside its home market of Rana Plaza, firm in the HBR case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Capital Spending Reduction
– Even during the low interest decade, Rana Plaza has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High operating costs
– Compare to the competitors, firm in the HBR case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Rana Plaza 's lucrative customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Rana Plaza supply chain. Even after few cautionary changes mentioned in the HBR case study - H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Rana Plaza vulnerable to further global disruptions in South East Asia.
Opportunities H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion are -
Loyalty marketing
– Rana Plaza has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Rana Plaza can use these opportunities to build new business models that can help the communities that Rana Plaza operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Creating value in data economy
– The success of analytics program of Rana Plaza has opened avenues for new revenue streams for the organization in the industry. This can help Rana Plaza to build a more holistic ecosystem as suggested in the H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion case study. Rana Plaza can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Rana Plaza has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Rana Plaza to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Rana Plaza to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Rana Plaza to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Rana Plaza can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Rana Plaza can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Rana Plaza can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Learning at scale
– Online learning technologies has now opened space for Rana Plaza to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Leveraging digital technologies
– Rana Plaza can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Rana Plaza in the consumer business. Now Rana Plaza can target international markets with far fewer capital restrictions requirements than the existing system.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Rana Plaza to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Developing new processes and practices
– Rana Plaza can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Threats H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Rana Plaza needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Rana Plaza needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Rana Plaza can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Environmental challenges
– Rana Plaza needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Rana Plaza can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Rana Plaza can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Rana Plaza business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Rana Plaza can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Rana Plaza.
Shortening product life cycle
– it is one of the major threat that Rana Plaza is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing wage structure of Rana Plaza
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Rana Plaza.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion, Rana Plaza may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Weighted SWOT Analysis of H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of H&M's Global Supply Chain Management Sustainability: Factories and Fast Fashion is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Rana Plaza needs to make to build a sustainable competitive advantage.
