Essay: Management structure of H & M

​Building an effective management structure one should fully understand the need of balance between rewards, culture, and boundaries, the pros and cons of different organizational structure, the elements of effective leadership, ethics program, and the types of risk a company may take. A successful management leadership requires an understanding of how to incorporate these strategies and recognize the economic impact some decisions have on a company. Therefore, to provide an evidence of required perceiving of the given material one should deeply explore a chosen case study. The most key part of this exploration is represented by the discussion six main topics of the management course in relation to the selected company and also the incorporation of the issue of managerial economics within this company as well as how the economic situation of today influences the strategic decisions the company is making. A Sweden company called Hennes & Mauritz (H&M) was chosen for this particular research as it stands for a vivid example of high-grade management represented on the world business arena. Operating in sixty-six markets the corporation undoubtedly deserved its global name, while its customary directed and ethical politics significantly evoked a benevolent attitude expressed by the consumers. The specificities of the management structure that allowed the company to achieve the mentioned successful performance will be deeply explored and evaluated further throughout this particular research paper.
Discussing the management structure of H&M one should start with the organizational structure of the mentioned corporation. The stated mission of the company is to provide a qualitative and fashionable product for the affordable prices. Taking into account the scope of products distribution one should emphasize the lack of favor to a specifically chosen market. H&M attempts to supply the world community with its useful and affordable production as well as an efficient and qualitative service regardless of the sale territory and the political specificity of the distribution region. The organization structure proceeds the following hierarchy:
It was stated that “because products and support services are often produced by multiple business units in multiple product facilities, standard production function and factor substitution models must be updated… however, departments in business units of large firms are making outsourcing and re-engineering decisions frequently, as the pressure of global competition and information technology change force repeated reexaminations of ways to serve customers and cut costs” (Egan, 1995). The organizational structure of the mentioned company allows frequent updating, while the lack of impact of the sales is predetermined by the low costs, mass distribution, and relevance of the offered product. Therefore, one should state that the organizational structure of the company beneficially influences its performance and occurs to be a vivid example of successful managerial economy.
Another significant topic for the exploration of the management model of H&M is an environment which greatly influences the status of the company as well as its overall performance of the company in the business arena. This term includes the internal and external factors that influence both the manufacturing process and the distribution on various markets. “Wheelen & Hunger put forwards that environmental scanning is the monitoring, evaluating and disseminating information from the external and internal environments to key people within a company” (Huiru, 2011). The continuous tracking of the environment stands for an effective investment predetermined by the peculiar management strategy of the company as it allows to follow the environmental changes and react on them beneficially for the rate of sales. At the same time, the competition stands for a valuable point of the research. “In Spain, one is very proud of Inditex, one of H&M’s main rivals and a group that includes brands like Zara, Mango and Massimo Dutti. In Japan, one is equally proud of another H&M competitor, Uniqlo, and in the United States, one is thrilled when GAP Inc does something good just because they are American” (Grankvist, 2017). Nonetheless, the politic of affordability and loyalty to the customers allows the company proceeding its leading position. Another factor, which stands for a successful implementation of the managerial economy is a frequent appearance of shares and discount that demonstratively attract the new customers to the product while retaining a favor of the regular customers. Taking risks in creating some principally new collections and offering an original product may be defined as another positive factor that influences the economic growth of the corporation and enhances the management performance of H&M. In one of the required articles, it was stated that: “Decision-making under risk is becoming an application of rules that are more sophisticated than the rules of traditional managerial economics” (Birch, 1965). Consequently, the ability of the management group to take risks and act boldly results in a beneficial performance of the company, while the economic part of the matter remains successful and eminent. The five forces framework which includes the following points: barriers to entry, bargaining power (buyers), bargaining power (suppliers), competition, and a threat of substitutes may be considered as another distinguishing factor of the company’s prominent managerial achievements. The strategic decisions and qualification of the employees allow the directorate to effectively cope with every force mention previously and economize sources consequently investing them into the improvement of the business structure. The last significant point analyzed in this research paper is the cost leadership and differentiation. It was already mentioned that the mission of the company is to offer some affordable products as it occurs to be a base of its managerial strategy and consequent business success. An impressive manufacturing process complied with a wide range of distribution guarantees a beneficial financial situation for H&M. While the differentiation of the consumers group effectively results on the sale rate of the company as all the members of various social groups consequently become potential consumers of the company.
To sum up, the usefulness of understanding the types of strategic control, the need for a balance between rewards, culture, and boundaries, the pros and cons of different organizational structures, the elements of effective leadership, ethics programs, and the types of risk a company may take is essentially significant for the beneficial development of today’s corporate structure. The managerial strategy of the H&M company occurs to be a vivid example of how the understanding and implementation of the previously mentioned factors may positively impact the sales rate of a particular corporation and bring it up to the leading position in the worldwide business arena. All the six explored and described topics related to the managerial economy occur to be the main factors of the mentioned corporation success. One should also state that the managerial decisions of the H&M company may be defined as the most relevant and useful for the modern business structure especially considering the great competition on the American, Asian, and European markets.