Question Besarta Business & Management

Can H&M internationalisation strategy be explained by the Ansoff matrix?

Can H&M internationalisation strategy be explained by the Ansoff matrix?

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Answer Internal Staff

The Ansoff matrix can be used to analyse the main strategic directions followed by H&M. The four key elements or suggested growth strategies involved within the matrix are market penetration, market development, product development and diversification.

Market penetration: An objective of market penetration is to maintain or increase the market share of current products. H&M’s means for market penetration is offering fashionable clothing with cheaper prices than their competitors for example, Zara. H&M collaborates with famous designers and has long term advertising campaigns and this has increased its popularity worldwide, helped by the globalisation of fashion trends.

Market Development: H&M’s internationalization strategy is based on entering one market at a time. Although there is standardization of H&M's products, the company introduces slight variations to be adapted to the new market culture. The retailer continues to open new stores in new countries. Furthermore, to meet the rapid development of the online market, they continue investments into distance selling.

Product Development: H&M develop this strategy, for example, through strategic alliances with famous designers and fashion icons like Karl Lagerfeld and Roberto Cavalli which improve H&M's prestige worldwide. Furthermore, the company invests in research and development, for instance, it introduced environmental friendly materials like organic cotton in its 2008 Spring Collection and then along its entire range of products.

Diversification: This strategy is the riskiest because it requires developing new products and entering new markets. The company has developed curious products such as the stuff pack for the computer game "The Sims 2" called "Fashion Stuff Pack" in June 2007 in collaboration with Maxis game developers. They also sell household items through H&M Home.