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Management Assignment: H&M Resource and VRIO Analysis

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Introduction

The business world is quite interesting and with this, in mind, it is always important to be

able to know, have the relevant knowledge, and comprehend what is going on at all times. In this

course, the major issue is to be able to know once business external environment and all the

factors which might be used to make the business or organizational operation more successful

(Whittington et al., 2019). This is achieved through having and being able to create strategic

opportunities and identifying all the existing threats which might affect the well-being of the

organization as it tries to make profits. By making use of the H&M organization which is in the

fashion industry an in-depth analysis can be conducted to provide more insight into resources

and capabilities. For this to be possible it is right to know the capabilities and resources which

are present within an organization (Whittington et al., 2019, pg. 95-97). The capabilities refer to

the processes, routines, and overall organizational culture which is utilized when a business or

organization is operating. On the other hand, the resources are the intangible and tangible aspects

of a business not forgetting the human resources which are made up of skilled employees (MBA

Skool, 2020). Hence, this assignment looks to address the issue of H&M resources and

capabilities, the H&M’s threshold and distinctive resources and capabilities, the VRIO analysis

and the H&M strengths and weaknesses which can be used to create/develop a competitive

advantage when it comes to the international strategy.

What are H&M Resources and Capabilities and the H&M’s Threshold and Distinctive

Resources and Capabilities

The H&M resources and capabilities are most of the time related, in one way or the other

as they are both certainly important for the success of the organization. They make sure that the

business can survive for a long time without experiencing a lot of difficulties, and when the
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difficulties arise, the business has measures in place to address them. For example, having

cutting-edge equipment would be useless if it was not handled correctly. Physical or financial

resources, or the people who make up an organization, are only as effective and efficient as the

methods and procedures used to manage them (Whittington et al., 2019). These can include, for

instance, interpersonal relationships and cooperation, adaptability, creative potential, interactions

with clients and suppliers, as well as experience and knowledge of what works and what does

not. Hence, the organization is advised to have a resources and capability analysis which will be

used in making sure that everything it needs for survival in the long term is present and also

increase its competitive advantage (Whittington et al., 2019, pg. 573). The reason for this is that

the business world today is highly competitive and it requires a firm or organization (H&M) to

be well prepared to compete favourably to retain and increase its market share in the fashion

market.

Additionally, there are threshold and distinctive resources and capabilities, which are also

important when it comes to competitive advantage. The definition of capacities is a topic of

significant debate, as there are two different kinds of abilities proposed. Threshold capabilities

are extensive and pervasive throughout the entire organization, whereas distinctive capabilities

are assets and competencies that provide a source of competitive advantage due to their

distinctive characteristics (Whittington et al., 2019). Resources and competencies that are

required to meet the bare minimum of client requirements are known as threshold capabilities.

They are the fundamental requirements that support a company's existence on the market

(Shaikh, 2021). However, they do not give that organization a competitive advantage or

improved performance. Because an organization's threshold level may change with customers'

expectations and requirements, identifying and assessing threshold capabilities can be difficult.
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VRIO Analysis for H&M

In any organization, it is also advised to make use of the VRIO framework/analysis.

Organizations, businesses and firms can identify and safeguard the assets and competencies that

provide them with a sustainable competitive advantage. Consequently, a VRIO analysis will

assist a company in locating and utilizing them as part of its strategic plan (Goggin, 2021). In the

case of H&M, which has had a dominant position in the international fashion and apparel market

as a result of its original idea, distinctive business model, and capacity to combine attractive

designs with reasonable costs (Whittington et al., 2019, pg. 573-574). However, significant rivals

have contested that claim, and H&M must assess the viability of its resource- and capability-

based competitive advantage. According to Goggin (2021), the major part that a VRIO analysis

emphasizes is value it brings to the customers, a rarity in terms of controlling scarce resources or

capabilities, and imitability which brings about the aspect of the organization's resources and

capabilities is hard to imitate, and finally, the overall organization of the management processes,

systems in place, structure and the culture to capitalize on the existing capabilities and resources.

All these work together to maintain and sustain a competitive advantage.

H&M has been operational for many years (since 1947) and has been able to a global

fashion leader with operations in more than 60 nations. This is not a small thing as it has required

the company to conduct an evaluation of its performing brands, use distinctive business

approaches, and make fashion products that are quality at low prices compared to its competitors.

With this, it has achieved all the VRIOs with ease and made sure that its sales are profitable and

can sustain itself in the long run. A good example is in 2014, it open 400 online stores in more

than nine online markets making its products accessible to all regardless of geographical location

(Whittington et al., 2019). Through the company's positioning and segmentation, the
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organization has been able to appeal well to the industry when cosmetics, accessories and shoes

are concerned. The organization's business model has been instrumental in seeing the company

perform well with a target growth rate of 10-15% per annum, as well as increasing its sale per

comparable unit. It has also been able to make use of the available gaps by providing

sophisticated products to its customers.

H&M Strengths and Weakness from the VRIO Analysis

The major strength that was evident in H&M's operations for competitive advantage was

that the company was able to, and is still able provide value to its customers. The products they

get are quality and can meet the needs of the customers. The company is also able to access the

organizational and economic effectiveness and performance, which can point out the available

gaps. When the gaps are identified, H&M can assess the available options which are done by

getting the best suitable, acceptable, and feasible strategy to address the gaps (Whittington et al.,

2019, pg. 371-372). The other strength within H&M is having good leadership who is open to

embracing strategic change when needed. With this, the organization can compete well with

other in the international fashion market without having any difficulties. The manager works

hand in hand with the employees to see that the implemented change is achieved and that it is in

line with the organizational culture (Whittington et al., 2019, pg. 466-469). All this comes into

effect through continuous practice and strategies being in place.

Conclusion

A company must evaluate which assets and skills are most critical to granting the

company a long-term competitive advantage. Additionally, it needs to evaluate its advantages

and disadvantages in comparison to rivals. The company must make sure that all resources and
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talents are utilized and completely utilized. It must concentrate on developing competencies and

regenerating important resources (MBA Skool, 2020). An emphasis on internal resources and

competencies is more secure than a market focus in a fast-changing external environment.

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References

Goggin, M. (2021, July 28). Explaining the VRIO framework (with A real-life example).

ClearPoint Strategy. https://www.clearpointstrategy.com/vrio-framework/

MBA Skool. (2020, May 16). Resources and capabilities - meaning & importance. MBA Skool.

https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/7499-

resources-and-capabilities.html

Shaikh, H. A. (2021). VRIO Framework for H&M’s Distinctive Resources & capabilities.

https://www.academia.edu/47693787/VRIO_Framework_for_H_and_M_s_Distinctive_R

esources_and_Capabilities

Whittington, R., Regner, P., Angwin, D., Johnson, G., & Scholes, K. (2019). Exploring strategy,

text & cases (12th ed.). Pearson Education.

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