PLC: Organizational Structure Design

 

PLC: Organizational Structure Design



Organization structure is defined as the framework within which activities are distributed in order for the organization to fulfil its aims and objectives. (Kenton, 2021). This becomes an essential aspect of running a successful business because the purpose and goals are communicated with clarity throughout the organization through direction and influence.



Hennes & Mauritz, or H&M for short, is a Swedish multinational apparel and retail corporation. It began as a womenswear store called "Hennes," which is Swedish for "Hers" ("History", n.d.), and later expanded into the H&M Group, a multi-brand conglomerate. They now have 75 nations and 54 online markets, and they are still growing ("Market overview," n.d.).

SWOT Analysis

Strengths


Global footprint - By the fourth quarter of 2021, H&M Group will have 4,801 physical stores, including 4,242 dedicated to the brand H&M. Their products are also available online, allowing them to expand their global reach through brand websites, social media, and other digital marketing platforms.

Competitive pricing - While they are not the most economical store in the industry, they do provide high-quality products at lower prices. They provide low-cost apparel made of sustainable materials, and their styles are similar to large brand designs, making them desirable to consumers.

The sustainability - One of the H&M Group's beliefs is "we are cost-conscious," which represents their approach to a sustainable lifestyle. They adopt several practises and programmes that are applicable not only to their end-products but also to the entire supply chain. One of the programmes they launched to promote recycling was the garment collection initiative, which was disrupted by the Covid-19 outbreak ("Reuse and recycling," n.d.).


Weaknesses


Disagreements: - H&M's most recent controversy occurred in 2018, when they produced a photo commercial featuring a black child modelling a sweater with the words "coolest monkey in the jungle." The public soon accused H&M of racism and insensitivity, and the firm severed ties with celebrities such as The Weekend and G-Eazy. H&M promptly pulled the photo ad from their website and apologized publicly. (Thomas, 2018).

Lack of originality: - Although H&M is known for its fast-fashion strategy, the majority of its designs and products are based on key trends established by designer companies. Consumers shopping for trendsetting clothes will be unable to find them in H&M stores.

Complete reliance on suppliers: - All of their products are manufactured and processed entirely in Europe, Asia, and Africa by 700 vendors ("Supply chain," n.d.). H&M does not have its own manufacturing or processing plant that supplies its stores and online sites. This is regarded as a drawback because the corporation must constantly rely on its suppliers while maintaining excellent commercial connections with them.

Opportunities


Market expansion: - H&M is constantly expanding as they sell products such as their conscious line in support of sustainability, sports apparel, and many more in various markets. They are also diversifying their services through various channels or techniques, such as the launch of their re-selling program "Re:Wear."

Innovation: - Because the fashion industry is constantly changing in all aspects such as marketing, supply, distribution, and sustainability, there is always an opportunity for the company to develop innovative strategies, operations, and business models to improve customer experience and working conditions for direct and indirect employees.

Threats


Competition - The retail sector is highly competitive, and H&M is no exception, competing in physical stores and online with brands such as Zara, Topshop, Garage-Dynamite, and many more. Due to lockdowns and restrictions created by the Covid-19 outbreak, H&M may be endangered by the expanding market share of other fast-fashion internet brands such as Shien.

Product alternatives - Other brands are likely to have substitutes for the trendy products that H&M sells for a lower price, which may have an impact on the company's sales.

Global economy - Inflation is increasing the cost of raw materials, resulting to an increase in product prices, as a result of global issues like as the Covid-19 pandemic and the Russia-Ukraine war. As a result, operating costs rise and net income falls.

Organizational Structure


H&M Group is a multinational company with 177,000 employees and 1.5 million workers employed by their suppliers. Having stated that, a matrix organizational structure will be the most successful. A CEO should ideally oversee the senior management team, which includes persons in charge of the H&M Brand, Portfolio brands, and H&M Group's business endeavors, as well as local department leaders.

It is best to integrate geographic and functional structures for H&M because it is run in various nations, each of which has its own rules for conducting business. In this approach, it guarantees a balance in decision-making regarding business models, strategies, and innovations for a consistent brand image between the executive management team and local management. Additionally, it gives local stores the flexibility to tailor their operations to their needs and objectives with regard to their target markets, marketing strategies, distribution routes, and other elements of day-to-day management.





References:

Company management. H&M Group. (2022, February 1). Retrieved March 25, 2022, from https://hmgroup.com/about-us/corporate-governance/company-management/ 

H&M SWOT analysis. Business Strategy Hub. (2022, March 9). Retrieved March 24, 2022, from https://bstrategyhub.com/hm-swot-analysis/ 

Kenton, W. (2021, November 10). How organizational structures work. Investopedia. Retrieved March 24, 2022, from https://www.investopedia.com/terms/o/organizational-structure.asp 

Market overview. H&M Group. (2022, January 28). Retrieved March 24, 2022, from https://hmgroup.com/about-us/markets-and-expansion/market-overview/ 

Reuse and recycling. H&M Group. (2022, March 29). Retrieved March 25, 2022, from https://hmgroup.com/sustainability/circular-and-climate-positive/recycling/ 

Supply chain. H&M Group. (2022, March 21). Retrieved March 25, 2022, from https://hmgroup.com/sustainability/leading-the-change/transparency/supply-chain/ 

Thomas, L. (2018, January 8). H&M slammed as racist for ‘monkey in the jungle’ hoodie. CNBC. Retrieved March 25, 2022, from https://www.cnbc.com/2018/01/08/hm-slammed-for-racist-monkey-in-the-jungle-hoodie.html 









Comments

  1. Plc 5- organizational structure designMarch 28, 2023 at 12:46 PM

    After reviewing your analysis of H&M, I think you've done a great job identifying the company's strengths, weaknesses, opportunities, and threats. I especially appreciate your emphasis on sustainability as one of H&M's strengths, which is increasingly important in the fashion industry.

    I also agree with your decision to recommend a matrix organizational structure for H&M. Given the company's multinational operations and complex supply chain, a matrix structure would allow for a balance between centralized decision-making and local flexibility. However, I would suggest to more elaborate about the internal and external factors of the organization.

    Additionally, while you mention the importance of geographic and functional structures, it would be beneficial to explain how they would be integrated in practice. Would there be separate teams for each function and region, or would there be cross-functional and cross-regional teams? These details can help provide a clearer picture of how the matrix structure would work in practice.

    Overall, I think you've provided a strong analysis of H&M and made a solid recommendation for an organizational structure. With some additional detail on implementation, I believe this structure could be effective for H&M's complex operations. you have done good job and I enjoyed the reading.

    ReplyDelete

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