H&M’s threshold and distinctive resources and capabilities

Part 1 Summary
There are the following H&M’s threshold and distinctive resources and capabilities be briefly discussed.
Tangible Assets: H&M's 50 production facilities throughout the world, which produce and supply
Threshold things swiftly, are a valuable resource. Internal supply chain infrastructure also is a tangible resource
Resources that is critical to the company's business model. Financial: The solid financial framework is
maintained by the long-term dedication and controlling ownership. Furthermore, despite certain
shareholders' concerns regarding reduction in annual investment returns, the financial ratios appear
to be beneficial. H&M is really in a solid position due to its tremendous brand equity.
Threshold Design: Because this activity is concentrated, the testing shop in Stockholm can investigate, rapidly
Capabilities choose on the collection, and then promptly have its Fifty manufacturing businesses to produce
those things. Store Process: H&M has some finest stores in the world. Furthermore, facilities are
rented, letting H&M should become adaptable and dynamic in the rapid shifts in the clothes retail
business. Marketing and CSR: H&M employs traditional marketing channels to raise brand
awareness, along with social media to track and collect feedback and ideas from customers.
corporate social responsibility is a critical skill for H&M.
Distinctive Intangible Assets: Information system provides this structure at factories, warehouses, as well as
Resources distribution networks all around the world. Additional intangible resources include the strong brand
identity and technical systems that are constantly developed to guarantee supply side match demand,
as well as to monitor client requirements and desires regarding sales trends. Human Resource:
Human resources, on the other hand, comprise strategic leadership, a culture of innovation, a
collaborative environment, and workers who are well educated, motivated, and enthusiastic.
Distinctive Organizational Culture: An environment that encourages innovation and hazard leads to the
Capabilities development of a personnel that is willing to take chances. Replication: When it comes to H&M's
global expansion, duplication has been the most crucial competency the business depends on. H&M
avoids using traditional rules and regulations in order to generate a significant series of innovative
shops every year, preferring rather to provide its personnel with implicit capabilities through
relevant experience. This allows the essence to be recreated at a quicker speed with less variation.

Regardless of the facts that strategic capabilities have indeed been identified in respect of
assets and capabilities, and examined through the prism of its threshold and unique
characteristics, there are much more precise techniques to assess competitive edge and their
sustainability (Ravichandran, Lertwongsatien et al. 2005) .

Strategic Valuable? Rare? Costly Supported by the Competitive Implication

Capability to Imitate Organization?

Physical Yes No - Yes Competitive Parity

Resources
Financial assets Yes No - Yes Competitive Parity

Logistics Yes No - Yes Competitive Parity

Store Concepts Yes Yes No Yes Temporary Competitive
Advantage
Designs Yes Yes No Yes Temporary Competitive
Advantage
Brand equity Yes Yes Yes Yes Sustainable competitive
advantage
Culture Yes Yes Yes Yes Sustainable competitive
advantage
International- Yes Yes Yes Yes Sustainable competitive
ization advantage

The following are the main points of this VRIO evaluation:

H&M's long-term competitive advantage stems from its own distinct corporate culture and
management of human resource, as well as its capability to modify this very same retail idea across
the globe and its extremely solid brand and industry position. Each of these sections are
engrained in H&M's business plan, have a long history, and stretch back to the company's
inception.
From the VRIO analysis, we can conclude on H&M’s strengths and weaknesses for
developing international strategy is as follow:

H&M's corporate reputation and outstanding culture set it besides its rivals, therefore it could
use these two strengths effectively gain leading position within the present market. It can use
its distinctive ability to properly duplicate its organizational model to increase its footprint in
a developing markets. As these competencies is hard to copy that is the reason they are keep
alive. It's hard to copy capabilities when: competence is indeed outcome of lengthy historical
choices with benefits that no longer exist. The origin of the abilities is elusive and cannot be
pinpointed with certainty.

Zara does have a good reputation, which allows it more closely duplicate H&M's
achievements than every rival. The culture is hard to duplicate, however, because it
incorporates social intricacies and a large number of tiny behaviours that build up to a
culture, leading in causal uncertainty. As a result, it is hard to construct in the temporary.
Customers have recently created a preference for environmentally accountable brands. If
H&M could respond to the contemporary ecological living style than all its competitors, it
will be able to reclaim market shares against a Zara and strengthen its better Brand picture.

H&M could develop into other countries if it would be successfully reproduce its model.
Globalisation processes will provide benefits such as scale economies, which will result in
lower costs, putting it a position to rival with Zara and smash any other kind of competitive
rivalry, so including local adaptation will give them a competitive advantage in their
internationalization process.

With greater competition from corporations from emerging markets, the pressure to reduce
costs is intensifying. H&M consolidates most of its logistics, and procurement processes to save
money. Throughout the globe, the corporation uses mass design patterns, retail concepts, and
HRM methods. H&M frames its strategy as a balance between significant cost-cutting pressure
and low local responsiveness pressure.
References:

Knott, P. J. (2015). "Does VRIO help managers evaluate a firm’s resources?" Management Decision.

Ravichandran, T., et al. (2005). "Effect of information systems resources and capabilities on firm
performance: A resource-based perspective." Journal of management information systems 21(4):
237-276.

Semaan, N. and A. R. B. N. Mostapha (2020). "Competitive Advantage and Performance, The Role of
Value and Rareness of Resources and Capabilities: The Case of Lebanese SMEs."

Whittington, R., et al. (2020). Exploring Strategy Text and Cases, Pearson UK.