INTRODUCTION TO H&M

To begin with, today H&M is a well-known global Swedish company offering fashion clothes for the whole family and their home. Company started its existence in 1947. At that time in Sweden shop was opened. It was called Hennes. It was just a single women wear shop. However, store started to expand and in 1964 the first Hennes store was opened in Norway. In 1968 the founder Erling Persson buys fishing equipment store Mauritz Widforss. Sales of mens and childrens clothing begin and so shop was renamed to Hennes & Mauritz, now known as just H&M. From the 1974 as H&M was listed to stock exchange in Stockholm, H&M started expanding outside the Scandinavia to Europe and later in 2000th even to United States. Today almost 2,500 stores are spread across 44 markets. Also H&M owns other companies such as COS, Monki, Weekday and Cheap Monday. However, company did not stop there. In their nearest future plans are to open 275 stores more and to expand its online sales. Furthermore, H&M has established a strong media presence which is still growing. Company has a big role in their customer life through pages of Facebook, Twitter, Instagram, Google+ and YouTube as well as the Chinese social networks such as Youku and Sina Weibo. When thinking about new market place H&M have few most important criteria. One of it is always to find the best business location combined with most favorable market terms. Moreover, H&M does not own any premises, which makes very easy for them to be flexible. Every time when H&M is planning to move to new country a very careful investigation is made about markets potential. Factors such as demographic structure, purchasing power, economic growth, infrastructure and political risk are analyzed. H&M is also working actively to make all stores sustainable in the long term, for example through energy-saving initiatives and environmentally adapted materials. Also H&M one of the biggest target is that all the cotton comes from more sustainable sources by 2020. H&M does not own any FACTORIES.Instead, clothes and other products are ordered from around 700 independent suppliers, mostly from Asia and Europe. Fashion and quality at the best price that is H&Ms basic business concept. In order to create a fashionable and suitable for everyone collection a lot of efforts are put and a lot of people works for this purpose, including H&M designers, pattern makers and buyers. The overall collection themes are always planned in advance, when the latest trends are chosen in a very short notice. The main goal is to make a perfect balance between fashion, quality and the best suitable price. At the end men, women youth and children can find something suitable just their taste and individual style. However, to have that perfect balance is not that easy. H&M has the whole system to reach that goal. The best price is insured by 4 factors: having few middlemen, having a broad, in-depth knowledge of design, fashion and textiles, being cost-conscious at every stage, buying the right products from the right markets. However quality is a central issue, from the very beginning to the very end of the production. Also it is very important to sure that goods are produced with the least possible environmental impact and under good working conditions

H&Ms Value Chain

It is very important to analyze company as much more as it is possible in order to see how company structure is created. Thus, I am going to use analyze called Value Chain made by Michael Porter. Value Chain consists of two parts: support activities and primary activities. Furthermore, after this analyze will be done, we will find it out why H&M is able to offer such a good products at very kind price. Moreover, as this analyze includes Firm Infrastructure, Human Resource Management, Technology development and procurement, we could be able to understand how H&M is going to work in Lithuania after its expansion in it. Thereby, the prognoses of H&M development in Lithuania could be predicted more correctly by using data from this analyze. Therefore, this is why Value Chain of Michael Porter is useful for us right now. Moreover, to better understand how H&M achieves its advantages against competitors, we are going to analyze H&Ms primary activities. That consists of Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, Service. In order to gain bigger market share, H&M has to work very efficiently on primary activities.

Support activities

Firm Infrastructure H&M group holds over 2.500 stores in the whole world. Today over 94.000 people are employed in H&M in over 44 markets in the world: Europe, North America, North Africa, Middle East and Asia. Only developed infrastructure could let them achieve such as wonderful results as it is right now. The head office of H&M is in Stockholm, Sweden. Stockholm is also where the main departments for design and buying, finance, accounts, expansion, interior design and display, advertising, communications, IR, HR, logistics, security, IT and CSR and environment are located.

1.5.1 H&M

H&M opened its first womens clothing store in 1947 as Hennes (Swedish for "hers") in Vasteras, Sweden. It later bought the hunting and men's clothing store Mauritz Widforss. H&M is controlled by the family of Chairman Stefan Persson (the billionaire son of founder Erling Persson); they own nearly 37%. It operates more than 1,400 stores in 28 countries with direct sales operations in selected areas. Germany is H&M's number one market, accounting for more than 25% of sales. About 60% of its clothing is made in Asia; the rest is manufactured primarily in Europe. From being Hennes and Mauritz they became H&M. Today H&M has 120 stores in Sweden making them the second largest market in the country. H&M is a very fast growing company and in the last five years time until today it has about 1400 stores. The company uses a lot of good and positive tactics to grow world wide. The first store that was opened abroad was located in Norway in 1964. The store became a huge

success there and resulted in over 70 more stores all around the country4. Since 1980 it has been possible for H&Ms customers to shop through mail order. This service is functioning in Sweden, Norway, Finland and Denmark. Their online shopping service became available in 1998 where it first extended in Sweden, then Denmark and Finland. A few years later it was possible for Norway and the most recent country to join in on the online shopping was the Netherlands.
H&Ms head office is located in Stockholm where the central functions such as advertising, buying and designing, investor relations, communications, finance and IT are found. The sales countries have their own national office except for Luxembourg, Poland, the Czech Republic, Portugal and Italy who are administrated by their neighbor countries. H&M has 28 production offices around the world. The production offices are located in Asia, Europe, Central America and Africa. They have approximately 100 designers who work with a team made up of 55 pattern designers, around 100 buyers and a number of budget controllers to create H&M clothing collections for women, men, teenagers and children. The group has more than 60 000 co-workers. H&M does not have any factories of its own but instead works with around 700 independent suppliers. Around 60% of their production takes place in Asia and the rest mainly in Europe5. H&M even has donating activities to international organization as well as keeping their prices low by buying large quantities of garments. H&M is in collaboration with famous people for designing or modeling which attracts new buyers. Their employees are in focus. Their employees commitment makes a major contribution to H&M success. They believe in individual abilities and encourage employees to develop further either by taking them to special courses and training facilities on the companys budget.