What are the impacts of external environment on H&M Group and how can they respond to the changing environment?
H&M Group is one of the world largest fashion companies and this report has done both the PEST and SWOT analysis for them to penetrate and prosper in the new and existing markets, following series of recommendations. The pest analysis shows that technological factors highly impacted due to quick expansion of stores, penetrating into new markets, using social media, and increasing mobile apps and sales. The swot analysis found the strengths and weaknesses, and the recommendations of the strategy is formulated, so that they can take the opportunities and counter the threats.
1 Introduction

H&M is a Swedish clothing company which comprises different independent brands- H&M, Weekday, COS, Monki, Cheap Monday and & other stories. H&M is one of the world’s largest fashion companies and Germany is H&M’s largest market accounting more than 20 percent sales, followed by the US, UK and France. In 2012, total sales including VAT were SEK 140,948 (USD 21,670.34) million. (hennes & mauritz AB, n.d.)
Until 1968, H&M used to sell only women’s clothing. Today it delivers cheap fashion to the young adults which includes includes womenswear, menswear, childrenswear, footwear, accessories, home furnishings and cosmetics.

The H&M group employs over 104,000 people and it accounts more than 2,800 stores spread in 49 markets in Europe, North America, Asia, North Africa and the Middle East, including franchise markets (H&M 2013).
With a strong offering that appeals to customers around the world, H&M is able to grow successfully in all its existing markets as well as in new ones, with growth among all its brands and through new concepts. The concept of expansion is long term and self financed.
H&M’s growth target is to increase number of stores by 10-15 percent per year and at the same time increase sales in comparable units (H&M). Strong expansion during the year 2012, the Group opened 304 (266) new stores net compared to originally planned 275. China and the US were the largest expansion markets.
H&M plans a net addition of around 325 stores for the financial year 2012/2013. The new fashion brand & Other Stories will open its first stores during spring 2013 in Spain, Germany, Denmark, UK, Italy, France and Sweden. & Other Stories will also be available via online sales in these countries as well as in Belgium, the Netherlands and Finland at stories.com.

Profit after financial items amounted to SEK 22,285 m (20,942). The Group’s profit after tax increased by 7 percent to SEK 16,867 m (15,821), corresponding to SEK 10.19 (9.56) per share (. Karl-Johan Persson, CEO of the H&M, commented that in the financial year 2012 they increased the profits by 1 billion SEK – i.e. an increase of 7 percent compared to the previous year – despite negative effects from large long-term investments and currency translation effects. H&M has three main competitors: Arcadia, Inditex, and Gap (Hoover’s, 2012). Arcadia’s fashion chains include Dorothy Perkins, Miss Selfridge, Wallis, Topshop, and Evans (women’s clothing), as well as Burton and Topman (men’s clothing) (Hoover’s). The company has some 420 franchised stores in more than 30 countries.
Inditex sells on a global scale, with some 4,430 shops in 70-plus countries, under eight different banners: Zara, Oysho, Massimo Dutti, Pull and Bear, Bershka, Stradivarius, Zara Home, and Uterqüe (Hoover’s). Located mostly in Europe, the firm’s stores answer to popular trends by telling designers in Spain what customers are asking for locally (Hoover’s). Zara is H&M’s most relevant competitor.
Gap is known for providing jeans, khakis, and T-shirts. The firm, which operates about 3,150 stores worldwide, built its iconic casual brand on basics for men, women, and children, but over the years has expanded through the urban chic chain Banana Republic and ailing budgeteer Old Navy (Hoover’s, 2010).