H&M´s expansion has been through its own subsidiaries. Plans of opening stores in Dubai and Kuwait in the near future have led H&M to sign a franchise agreement, giving the management control to the Swedish company to keep H&M concept across countries. The store location is a key factor in H&M´s business model regardless of the market, establishing new outlets only in the best shopping areas. Hence H&M´s strategy resembles that of Zara: replication of the same concept with some local adaptations.
H&M’s business concept is to offer fashion at the best price. In order to offer the latest fashion, H&M has its own buying and design department. And in order to offer the cheapest price, it sources 60 percent of its clothes from Asia and the rest from other low-cost producing areas. It achieves the best price by:
- Having few middlemen
- Buying in large volumes
- Having a broad, in-depth knowledge of design, fashion and textiles
- Buying the right products from the right market
- Being cost conscious at every stage
- Having efficient distribution
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