Assignment Case Study: H&M in Fast Fashion: Continued Success?

H&M constantly improves its processes to ensure their clothes are kept at a reasonably affordable range and stylish at the same time.

In every business, there will be barriers to entry that makes it more difficult to discourage new entrants coming into the market and competing for customers and profits.

Some of the barriers to entry include:

* Capital requirement

* Product Differentiation

* Access to supply or distribution channels

* Economies of scale

Capital requirement is an economic barrier to entry. Bank interest rates are dependent both by the government economic observers and financial the position of the country. New entrants may not require a large capital to set up retail stores, but still need financial resources for basic requirements like shop rental, advertising etc. Leasing a store in strategic locations equate to higher overheads. H&M, an established player, positions all its stores at strategic locations to provide customers the best shopping experience.

Product differentiation creates technological barrier entry by forcing new entrants to spend heavily on marketing and advertisements for brand awareness and to effectively position the products to the consumers. Current big players already have this in place. H&M spends about 5% of its revenue on advertising using high profile celebrities to promote and design their collection of clothes and uses social media to communicate to its online users on the latest collections and campaigns and new store locations, etc.

Access to supply or distribution centers is another economic barrier to entry. Manufacturers have control over supply & distribution channels. Manufacturers quote higher prices to new entrants because of low product quantities and high raw material cost. Big players like Gap Corporation and Inditex own manufacturing plants and sell the products in their own retail stores.

Economies of scales is another form of economic barrier. New...