Value Chain and Value Network

The value chain indicates the kinds of actions in an institution that deliver manufactured goods as well as service. The majority of institutions are also involved in value network, which builds connections between entities and might be essential for organisations to deliver good and service. A company’s value chain and the means how it presents singular actions reflection are an indicator of its strategy and system to actualise its competitive edge and implications of its activities.

One of the variety of frameworks, which is developed by Michael E. Porter, can well present the value chain with an organisation, shown in Figure 1.

There is a direct correlation between primary activities and construction or distribution of product and service.

According to the case study, the activities of inbound logistics of H&M are almost well-ordered by itself by averting middlemen and being cost-conscious to a certain extent. Therefore, inventory of tangible goods is reduced to the minimum. It can be regarded as a unique feature of H&M.

In terms of operations, the newest IT system that launched by H&M offers the feasibility to gain a better understanding of what consumers really need.

Outbound logistics also might be a distinctive point making H&M a respectable trendsetter. With its direct and well-organized distribution approaches, H&M can adjust lead-time of goods easily to govern the balance of price and quality.

With regard to marketing and sales, H&M runs a lot of campaigns for advertising and has set up a goal to increase the figure of stores. However, Inditex(Zara) do not invest on advertisement in order to save budget for increasing more stores, which could be imitated by H&M. This can also partly transform the cost and price structure to make cost lower.

H&M’s excellent service manifests in social media, in which customers can get answers of their enquiries conveniently.

The cluster of primary activities can be connected with support activities which are beneficial to boost the availability of primary activities.

As to procurement, H&M does not have any factories. It purchases products from outsourced distinct suppliers. Therefore, H&M cannot deliver new goods efficiently. By contrast, Zara’s in-house design system excels in this point, which will be discussed further below.

Although there is a high-level R&D department in H&M, it will be much more integrated to learn from UNIQLO’s SPA model to consolidate different parts of business. It can really make the company convenient for accelerate the pace of adjustment to meet consumers’ needs accurately.

People in H&M are considered as self-driven workers. H&M encourages employees to have conversations directly with managers.

Apart from these point, firm infrastructure of H&M is well-planned as a prestigious firm in the apparel industry.