SOE 09401 H&M and Severstal Case Study

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Strategic Management in a Global Context SOE09401: Coursework assignment Case Study Analysis Case 1: H&M in fast fashion: continued success? pp. 576 – 583 Case 2: Severstal: growth and consolidation strategies in a turbulent global steel industry pp. 659 – 666 Johnson, Gerry; Whittington, Richard; Scholes, Kevan; Angwin, Duncan; Regner, Patrick, (2017) Exploring Strategy, 11th Pearson This assessment contributes 90% of your final mark for this module and you are required to analyse two case studies on H&M and Severstal. A digitised copy of the case studies is on Moodle. When answering the case questions below only use information on H&M and Severstal contained in the case study. Your marks will be heavily penalised if you use information on the company from alternative sources as it is your assessment of the case information provide which is being assessed. Questions 1. Conduct a value chain analysis to identify H&M’s organisational capabilities and use this analysis to identify the core competencies that can build or sustain H&M’s competitive advantage. (30%) 2. Drawing on your knowledge of the PESTEL model, analyse the external environment facing Severstal and identify the key external factors which impact on the company. (15%) 3. Using Porter’s five forces framework, analyse the attractiveness of the global steel industry in Severstal which operates. Support your analysis with evidence from the Severstal case study. (25%) 4. Using the Ansoff’s product & market matrix, analyse the direction of growth that Severstal has undertaken to grow their business. Provide recommendations for Severstal’s future growth. (20%) Mark allocated for the presentation of analysis, use of case evidence and conclusions. (10%) 6.2 Guidance notes The assessment feedback sheet provides the marking criteria for the overall case analysis. Adjust the length of your answers to reflect the % weighting allocated to each question. Remember that in writing your solution to the questions you must not describe what the case says but use the concepts to analyse the information and use the evidence/facts in the case to support your analysis. Question 1 asks you to conduct a value chain analysis of H&M. Divide your analysis into 3 stages: • Discuss each value chain activity in turn, primary through to support activities. Some activities will have more information to discuss than others. Explain what the firm does in each activity but extend your discussion to include a brief evaluation on whether each activity is strength or a weakness. • Identify and explain key VC linkages as an intermediary stage to identify core competencies (CCs). These linkages can be: primary to primary; support to support; and primary to support. The linkages are not only between two activities but could link 3 or 4 activities. • Based on the linkages, select those which are CCs and show how they meet the VRIN criteria to be a CC (see the PDF document of VRIN criteria from the textbook (9th edition), chapter 3.3, pg.54-59). Most organisations are likely to have only a few CCs. Firms with limited competitive advantage may only have potential CCs which are still under development but have not yet yielded the superior returns associated with competitive advantage. The focus of your answer is on Internal analysis, the S & W of a SWOT not the external analysis (O & T) and is covered in Unit 3. You should read your textbook, Johnson et al chapter 4 and follow the stages of analysis above. To answer question 2 you need to review the PESTEL framework (Unit 1). Specifically, the external political, economic, social, technological, ecological and legal trends that could impact Severstal’s strategic position. At this stage, do not focus too much on how Severstal has managed to protect their strategic position because this requires an analysis of its internal capabilities and how they are utilised to establish a position in the industry which you are asked to discuss in question 3. To answer question 3, you need to review Porter’s Five Forces model (Unit 2). Specifically, the five forces which enable you to determine the overall attractiveness of the global steel industry within which Severstal operates. Question 4 focuses on how Severstal has used their capabilities to grow the business. You are asked to focus on three of the options in Ansoff’s matrix which are explained in your textbook and in Unit 5. The three options are market penetration, market development and product development. Specifically, how Severstal has used acquisitions to fulfil its strategic direction to enter new geographical and market segments (a combination of new product and market development in Ansoff’s framework). You also need to make recommendations on how Severstal should use their existing capabilities to implement future growth options. 6.3 Assessment criteria Below we give you a schedule which is used as the basis for marking your assignment in Strategic Management. This will help you to judge what you need to do to achieve any given mark range. CLASS 1 • 90-100% - An outstanding answer showing an excellent understanding of the issues and methodologies; original, independent thinking informs an answer based upon rigorous clearly directed argument accurately supported by evidence; close to perfection and could not be bettered at undergraduate level in the time available. • 80-89% - An answer demonstrating an excellent level of understanding of the issues and methodologies. The answer displays independent thought, and strong and very well organised argument, demonstrating the ability to integrate a wide range of techniques. • 70-79% - An answer showing most (although not necessarily all) of the above criteria CLASS 2:1 • 65-69% - An answer demonstrating very good understanding of the issues with a well organised argument accurately demonstrating the ability to integrate material from various parts of the module • 60-64% - As above, although there may be some shortcomings, but no fundamental omissions or errors. CLASS 2:2 • 55-59% - An answer which shows a satisfactory grasp of the main issues, familiarity with the basic reading, some minor errors and omissions of essential material. • 50-54% - As above, but with a larger number of errors, omissions, and/or the inclusion of some irrelevant material. CLASS 3 • 45-49% - An answer containing some use of relevant material and the basic application of analytical techniques which shows some understanding of some of the issues raised by the question but only a minimal or no understanding of others. • 40-45% - As above with even less relevant material and not as well directed to the question. The answer can be considered a bare pass. FAIL • 35-40% - An answer that has some limited relevance to the question set, but showing little grasp of the issues raised. The content is descriptive and based on common sense rather than the application of analytical models • 30-34% - Demonstrates an extremely weak knowledge of the question with no grasp of the issues raised by it. Poorly constructed and poorly directed. • 0-29% - A poorly directed answer containing a few minor relevant points, and only a rudimentary attempt at discussion. Lower marks will be awarded to answers falling short even of this description, down to 0 for no answer. Note, that in ALL categories above it is expected that you will provide a bibliography (where applicable) of the material used in preparation of your assignment. If material is simply reproduced from the case studies, using the same words, this will be treated as plagiarism and a fail mark will be given. Material copied from websites or other sources that provide ready made solutions to coursework will be deemed an academic offence and subject to disciplinary action. Grades will be awarded according to the following weightings and criteria and your assessment will be marked using the feedback sheet over page. Coursework Assessment Feedback Student Name: Date Submitted: Matriculation Number: Date Marked: Module: SOE09401 Assessment Category Fail Acceptable Good Very Good Value chain analysis of H&M’s value chain capabilities and core competencies (30%) PESTEL analysis of Severstal’s external environment (15%) Five forces analysis of the global steel industry (25%) Discussion Severstal’s direction of growth: Ansoff’s Matrix and recommendations (20%) Presentation of analysis, use of case evidence and conclusion. (10%) Overall Mark % Additional comments Marked by: Excellent Comments 6.5 Assessment presentation information As you prepare your case analysis there are a few other points you must take into account. • A case analysis is not a conceptual explanation or discussion so do not spend too much time on conceptual explanation, instead your focus should be on how the concepts are used to analyse the case events and reach evaluative judgments. • Always draw on evidence from the case to support your analysis and conclusions. Using evidence without analysis will amount to describing what has happened in the case and will not gain many marks. • It is critically important that if you use quotes from the case or academic texts, you do so selectively and they must be placed in quotation marks and referenced appropriately. • The cases were published in 2017 and you should answer the questions in terms of the information presented in the case up to this time. You are not required to go beyond the case end date since your analysis and judgement are being assessed at this point, not in the light of subsequent events. As a result, you should not include references on H&M and Severstal from sources other than those contained in the case. Word Limit: Word Length: 4000 words +/- 10% The word limit excludes appendices and reference list. Please note that late submission will be penalised unless a valid extension has been agreed with the module leader. Submissions in excess of the above word limit will also incur penalty. Assignments submitted after the above time will be ‘capped’, i.e. subject to a maximum mark of 40%. Submission after one week will be awarded a zero mark. However if you think you have a valid reason for late submission you should contact your module leader to instigate a Mitigating Circumstances procedure where you will be asked for documented evidence of reasons for lateness and your case will be considered by the Business School’s Mitigating Circumstances Board. Appendices can be a useful to provide additional information from your analysis provided that the key points are incorporated into the main body of the answer text. Submission deadline: Friday 4th December 2020, 11:59pm (UK time)
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Strategic management
Thesis: strategic management involves the identification of critical internal and
external environment factors and their impact on the competitiveness and profitability of the
firm. Managers use various strategic management tools to develop he strategic direction of a
firm, which includes establishing key competencies, risks and mitigation strategies, and
competitiveness. The paper review two case studies and uses different strategic management
approaches to analyze and recommend effective solutions. The outline is as follows;
✓ H&M’s value chain analysis
✓ PESTEL model
✓ Severstal’s Porter’s Five Forces analysis
✓ Severstal’s Ansoff’s matrix analysis


Strategic Management
Student’s Name


H&M's Value Chain Analysis
A value chain and value systems are critical organizational facets that identify core
capabilities and competencies. These can be used to model competitive advantage or enhance the
sustainability of the already existing strategic goals. H&M's value chain consists of a stream of
activities and actors facilitating the success of the global "fast-fashion' retailer. The value chain
activities offer a direct fulfillment or imperial support to the company's core function, enabling the
eventual success. H&M's primary value chain activities include; store operations and management,
marketing and social media, and logistics: distribution, warehousing, and IT (Johnson et al, 2017).
The support activities include; buying, local production offices, and corporate social responsibility,
design, human resource management, and internationalization and expansion.
Primary activities have a direct impact on the actualization of the firm's strategic goal. The
first activity is store operations and management (Regnér & Yildiz, 2014). H&M adopts a storepositioning strategy for all its outlets. This principle involves the strategic placement of the store
in prime locations, viable to customers, and competitive forces. The company does not own stores
but relies on outsourcing facilities. However, the management of the rented property, design
guidelines, and display windows are central to H&M. With these, the stores are centrally placed
to attract, inspire, and allow for flexibility, attracting key markets (Capell & Khermouch, 2002).
This activity is crucial to the success of the company. However, store operations and management
factors pose a weakness to the firm's overall analysis, as the outsourcing value creates
vulnerabilities for exploitation, especially by competitors (Regnér & Yildiz, 2014).
The second primary activity is marketing and social media. Social media and marketing
focus on creating a strong brand and improved market for the company's products. H&M adopts a
unique approach to create brand awareness and market its products. This approach involves


collaboration with famous designers, style and value, and others. Other activities include longterm advertisement campaigns and a strong social media presence (Capell & Khermouch, 2002).
Typically, this element substantiates H&M's success, as it serves as internal strength. H&M's
profitability and brand awareness are attributed to this activity. Third, there is logistics. The core
logistics activities at H&M include distribution, warehousing, and information technology. H&M
achieves its distribution margins through globally located warehouses and distribution centers.
With this model, the company achieves flexibility in restocking while acquiring economies of
scale. Logistics is a critical strength for the company. This can be occasioned by the economies of
scale, flexibility in distribution and restocking (Capell & Khermouch, 2002), and internal
management of all logistic operations by the firm.
Moreover, H&M's support services play a vital role in the success of the firm. Some of
these activities include buying location production offices and corporate social responsibility.
These activities focus on an outsourcing model to produce the required goods. H&M contracts
low-cost countries to purchase and create various fashion designs while observing economies of
scale (Regnér & Yildiz, 2014). Here, the company focuses on flexibility where methods and
production are redefined to meet changing marketing needs and production flow. Notably, the
company has various independent suppliers who are acquired on strategic partnership models. This
activity poses internal weaknesses to the firm, which might affect the ultimate competitive
advantage. However, corporate social responsibility facet has proved to be advantageous to the
Besides, there is a human resource management facet. This element involves the
management of the firm's resources through a stringent culture. H&M's culture encompasses
professional family leadership skills, core values, and efficient practices. Some of the admirable


practices include job rotation and internal promotion (Johnson et al, 2017). Technically, the human
resource management facet is a strength to the company. Here, the company leverages exquisite
leadership skills from the family and goal-oriented leadership while adopting and cultivating
practical strategies to manage its human capital. Another support activity is design. In design, the
company adopts numerous methods to enhance the strategic development of manufacturing
procedures and styles to match a particular fashion. These activities employ multiple production
offices globally and a team of excellent designers (Johnson et al, 2017). This group researches and
integrates the latest features and trends into actual fashion clothes. The design department is an
essential success factor at H&M. This is because of the competitive advantage acquired from this
sector. Balancing the latest trends, new collections, and basic design principles have enhanced
continuous improvement at the firm.
The last support activity is internationalization and expansion (Capell & Khermouch,
2002). This venture focuses on the creation of new business ventures and outlets to reach a global
target. H&M has achieved this through continuous investment in international areas, opening of
new ventures, and employing from diverse communities. This is a vital competitive element for
the company, as it enhances the business's expansion to international consumers. Some of the
methods used include franchising.
H&M has an excellent business model, infrastructure, and competencies likely to develop
and sustain competitive advantage. Some of the critical linkages at the firm include the following.
First, product design and development. H&M's success story has a substantial correlation with
product design and development. This is because these are the underlying processes, substantiating
the production of the core product. The company has a centralized design process with numerous
production offices and designers across the globe. (Regnér & Yildiz, 2014) The linkage is critical,


as its success or failure has a similar effect on the firm's ultimate success. Besides, store operations
have an exclusive linkage with logistics. Here, suppliers and regional managers have an integral
role in promoting the development and distribution of required products to a particular area.
Also, the marketing and CSR facets exhibit effective linkages. Here, marketing and
branding strategies may sometimes rely on corporate social responsibility to enhance brand
awareness (Johnson et al, 2017). This is essential for new areas and regions. Besides, other linkages
include human resources and technology. Human resource management advocates for practical
values and organizational culture. These facets use technological tools to predict trends and
explore likely preferences. This is essential, as it culminates in the ultimate success of the designed
Ultimately, various linkages have an exclusive effect on the determination of the core
competencies for the firm. The core competencies identified include the following. From the
design and development linkage, the design competency is evident. The design remains a pivotal
aspect of the success of the firm. This element will result in a temporary competitive advantage as
it is valuable, rare, with organizational support but has a low imitability cost (Regnér & Yildiz,
2014). Second, the human resource and logistics linkage evidences the culture and leadership
competency. Here, all managers and personnel have to adopt the business model and
organizational values to ensure success. Culture and leadership will achieve a sustainable
competitive advantage because it is valuable, rare, costly to imitate, and has corporate support.
Also, the store concept is evident from the store management and buying requirements. The store
concept ensures customer-centered and location-convenience during the design and distribution of
materials and products (Johnson et al, 2017). Store operations will result in a temporary
competitive advantage. This is because it has a valuable aspect, is rare, and with high


organizational support. However, the imitability rate is high. Lastly, the marketing and CSR
competency is vital for H&M. These create brand awareness and enhance interaction with visible
actors. According to VRIO analysis, this will result in a sustained competitive advantage. The high
value accorded to it, its rarity, high costs of imitation, and organizational support occasion this.
Severstal's External Environment
The PESTLE model uses various facets to analyze an organization's external environment.
Specifically, the model reviews the political, economic, social, technological, environmental, and
legal factors in the environment. As for Severstal, the following are evident. First, there is the
political environment. The privatization of government-owned assets resulted in foreign and direct
investment (Johnson et al, 2017). This resulted in the company's internationalization mind, which
exports and oversees activities as its core focus. This political disposition led to the acquisition
and development of numerous ventures across the globe. Policies and rules governing the steel
industry provided favorable conditions for the establishment of local and international operations.
Second, there are economic factors. Severstal leveraged the weakening US dollar during
the 2000s. This facet enhanced a direct economic impact on the company. For example, the
company leveraged the financial season to acquire global mergers and acquisitions in Russia and
China. Technically, this factor substantiated growth and development in the steel industry, as it
was characterized by increased demand for such products. Also, the right economic conditions in
2002 favored the upward shift of the company. This can be occasioned by the acquisition of
companies. Other include the production of highly-efficient and low-cost goods with readily
available steel market.


Severstal's social factors include the ready and high demand for steel products. With Russia
and China as the core market, Severstal leveraged the high demand for such materials. Technically,
governments and societies used this material for primary developmental and construction
purposes. Als...

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