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Question: Critically review the theories of competitive advantage and evaluate their relevance to management. In particular, discuss how such theories could inform H&M managers in their quest to gain sustainable competitive advantage.

09 Oct 2022,12:26 AM

 

Case – H&M

The apparel retailer H&M has made an incredible journey since its start in 1947 with a single store for women's clothing in Sweden to become one of the leading global fashion and design groups. Currently, H&M has 4200 stores in 72 countries and employs around 177,000 employees worldwide. H&M also has a robust online presence, and their products are available on 47 online markets (platforms/ countries). A pioneer in ‘fast fashion’, H&M has positioned itself as a firm that responds quickly to new trends and creates fashion items that are made available to customers both online and in-stores immediately after that.

You are required to answer the following THREE questions that pertain to the case – H&M. For further details on H&M, you may refer to the case study, ‘H&M in fast fashion: continued success?’ (Exploring Strategy, pp- 576 – 583). It is also recommended that you research information additional to the case study to support your arguments. This may be obtained from a diverse range of sources, and you are encouraged to explore the issues in whichever way you deem appropriate.

 

Question One: Sources of Competitive Advantage and its relevance to management

Critically review the theories of competitive advantage and evaluate their relevance to management. In particular, discuss how such theories could inform H&M managers in their quest to gain sustainable competitive advantage.  [40 marks]

 

Question Two: Firm’s strategy and strategic position

H&M’s home page includes several statements like “We are a family of brands with a shared ambition to make great design available to everyone in a sustainable way. Together we offer fashion, design and experiences that enable people around the world to be inspired and to express their own personal style” (H&M, 2018); “Fashion and quality clothing at the best price”. Drawing from relevant literature, critically discuss how the above statements from H&M align with the firm’s resources and capabilities. [30 marks]

 

 

Question Three: The role of innovation and internationalisation in a firm’s Competitive Advantage

Evaluate the relevance of innovation and internationalisation in designing and implementing H&M’s strategy/competitive position [30 marks]

 

Expert answer

 

Theories of competitive advantage offer an explanation as to how and why some firms are more successful than others. The most popular theories are the resource-based view (RBV) and the transaction cost economics (TCE) perspective.

 

The RBV suggests that a firm's success is based on its ability to utilize its unique resources and capabilities in a way that is not easily replicated by its competitors. These resources could be anything from tangible assets like factories and land, to intangible factors such as a strong brand name or skilled workforce. The TCE perspective takes a slightly different approach, arguing that a firm's success is based on its ability to minimize the costs of doing business. This can be done by outsourcing key functions to specialized suppliers, or by forming strategic partnerships with other businesses.

 

While both of these theories have been widely studied and applied by managers, there is no one-size-fits-all answer when it comes to choosing a competitive advantage strategy. Some firms may find that the RBV approach is best suited to their strengths, while others may benefit from using the TCE perspective. It is important for managers to carefully assess their own firm's capabilities and the competitive landscape before making any decisions about which strategy to pursue.

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