Free H&M Case Study Case Study Example

Summary

H&M is the world’s second largest multinational company which is a major retailer of clothing. Its headquarters are in Skockholm, Sweden, a European country. Due to its large scale business and transactions, it has few big competitors like Gap, Topshop, Unilqo and Zara. All of these are very big in magnitude as they are from different countries of the world. H&M is considered as pineor of fast fashion industry firstly in Europe then in the world. Fast Fashion means all those items which are in and out of the fashion very swiftly. They also produce staple items as well as fast fashion items. Their product line has been divided into these two. Staple items are items which are needed urgently as the items of Fast Fashion. OPT (outward processing trade) reduced the problems faced by H&M as it arranged matters more gracefully in Romania than in Sweden. Due to H&M, new paths of international trade were opened for Romania. And it became the first country to export raw material to Europe. It resulted in development and evolution of industry in Romania But with evolution of MFA (multi-fiber arrangement) quota system, major portion of business went to low cost Asian countries from Romania. But with the passage of time, situation was reversed and once again, Romania became leading exporter of raw material of H&M. Romania’s skilled workforce and textile industry has suited the manufacturing style of H&M as they need to produce clothes quickly as per requirements of fast fashion. Also, H&M played an important role in shaping the economy of Romania as more than 10% of employment in Romania is due to their units back in Romania. So, concluding the case, we can say that 40% of fast fashion in Europe and also, 60% of slow moving lines are getting the raw material from the raw material units which are found in Asia.

Question no 2

Free trade and agreements like OPT have their advantages and disadvantages. But some of the general characteristics are as follows;
Free trade increases efficiency as well as overall production of the economy of the country.
As level of production increases, customers have more options between products; companies will work harder to sell their products resulting in high level of customer satisfaction. This will ultimately cause economy to boom and grow.
However, free trade also needs to be taken care as spectaculars may use it as per their benefits. So, certain tariffs can be put up to restrict extra trade.

Question no 3

OPT (outward processing trade) has the following positive and negative impacts on Romania and its economy
Advantages
Because of OPT, many multinationals are coming up in developing and under developing countries especially like Romania bringing with them opportunities of employment, more production and business etc.

It becomes a strong pillar of the economy of Romania as it is helping in increasing the business activity.

Unemployment rates as well as risk of poverty are reduced to the minimum due to implications of OPT.
Disadvantages
Romania’s economy is dependent on OPT and its policies causing it to become the sole reason of the progress of economy of Romania.
So, when MFA will come to an end, it will reverse the whole process resulting in slowing down of economy and causing employment rates fall.
Increasing exports, no doubt, is great sign for development of the economy of Romania but somehow domestic market and local firms are lost in the midst of exports an international market discouraging them to reduce their investments from the local market of Romania.

Question no 4

Romania is considered as a less developed country as compared to the remaining European countries which are not only sufficient enough to fulfill their own needs but also they have been helping other under developed countries. Government of Romania can take the following steps to increase the FDIs (foreign Direct Investment) for Romania;
Government needs to give more opportunities for education of general public including to initiate more and more colleges and university projects.
Local infrastructure should be developed and given more importance than before, improving things like hospitals, roads and other governmental institutions etc.

Government needs to open new ways for communication both locally and internationally.

It also needs to promote the natural resource industry of Romania as it will boast the economy.
Government should intervene in international trade, tariffs and custom issues in order to minimize trade barriers.
Question no 5
No doubt, H&M’s magnitude is very small as compared to its competitors like Zara and Gap. But H&M can take the following steps to compete them on a better level;
H&M needs to change its current strategy and they need to involve few of the celebrities to their campaigns in order to get the attention of general public.

H&M may start the online service as it is the age of globalization and internet.

It can also give guarantees as well as after sale services in order to maintain their customers and increase customer’s loyalty.
H&M needs to plan out their strategy of opening new branches to different and new places in order to increase the magnitude of their business.