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In addition, H & M. outsources all of their manufacturing as a sourcing strategy. They utilize a huge network of 900 garment shops that are located in 21 different countries, primarily where cost of production is extremely low, to produce their fashions at the lowest costs possible. By shifting their production from one facility to the next, H & M. is able to continuously get the best deal possible for manufacturing (Author, year, p. x).
The opportunities for H & M. are the continued design and manufacture of the hottest fashion trends possible at the lowest prices. They have the ability to meet the changing fashion needs of consumers, quicker than almost any other organization out there. As such, they will even have the opportunity to tailor their designs to the specific markets they are serving.
The primary threat of H & M. lies in the possibility that with continued globalization, production costs in countries such as Turkey and China will continue to rise as more businesses move their operations there or outsource to these countries. Should this happen, this will dramatically increase H & M's cost structure.
H&M has big plans for international expansion. In light of their reliance on other distribution channel partners, what potential problems do you anticipate for their global plans?
One of H & M's goals is to enter a new country every two years. This rapid international expansion is quite aggressive and has not worked well for some other clothing manufacturers. Benetton tried a similarly...
Even Gap has been unable to be successful outside of their home country (Author, year, p. x).
However, others failures is not dampening H & M's spirits. They have expanded their number of stores by 75% over the past six years. They are currently expanding into Portugal, Italy, Canada, and Eastern Europe (Author, year, p. x).
Distribution channels in international markets will be the most significant challenge for H & M. The United States is a perfect example of the challenges they face. When first entering the United States, H & M. made many mistakes. Stores were too large, such as the 5,400 square meter store in Syracuse, NY, and locations were not appropriate for the H & M. line up (Author, year, p. x). Without adequate placement of its stores, H & M. will fail to differentiate itself from the variety of other low cost clothing retailers, and therefore not succeed. This coupled with temperamental foreign economies, will continue to be the largest international challenge H & M. will have to cope with during their expansion into new international markets.
References
Author, a.A. (Year). Title of work: Capital letter also for subtitle. Location: Publisher.
Facts and History. (No date). Retrieved December 9, 2004, at http://www.hm.com/uk/hm/facts_history/srt.jsp.
Zara Fall/Winter 04/05. (No date). Retrieved December 9, 2004, at http://www.zara.com/i04/eng/home.php.
M Discussion Questions
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