Based on the provided case, answer and discuss the following questions:

1. What are the main competitive strengths and weaknesses of H&M? 2. In your opinion, how well equipped is H&M to deal with current and future challenges?

H&M In terms of sales, Swedish H&M was the second largest actor on the fast fashion market in 2011. This did not mean, however, that they could be complacent about the future. Even with well-established financial, brand and organiza- tional strength there were challenges ahead. Disappointing financial results in 2010 made these issues more tangible. One of these challenges stemmed from the stagnating growth in the established markets in Europe, others from the volatile raw material prices and logistics. These issues were critical for H&M as they held their position against a new range of strong competitors. H&M engages in designing and retailing fashion apparel and accessories, with an aim to offering fast fashion that is priced considerably lower than designer clothing but is in line with current market trends. Collaborations with upmar- ket celebrities and guest designers such as Madonna, Karl Lagerfeld and Roberto Cavelli have added a touch of glamour and improved the appeal for the merchandise as a whole. With retail distribution in 43 countries, the company core is the 140 in-house designers, who work together cen- trally with buyers and pattern makers at the organizations headquarters. Production is carried out through 16 produc- tion offices that work closely with over 700 independent suppliers located in Asia and Europe. The choice of low-cost suppliers places H&M's supply chain management under scrutiny; however, the company claims that they work hard on sustainability and own the responsibility for ensuring that all products are made under good working conditions and with the least possible impact on the environment. The key to fast fashion is the short production and distribution lead times along with meeting current fashion trends. H&M refreshes the stores with new items daily. While exact times can vary, it takes approximately 15 weeks for H&M to get an item from design to retail. Traditional retail operates with lead times of at least six months. As for many retailers, online presence is increasingly relevant as a distribution channel for H&M with online shopping available in eight major markets. H&M's attributes its speed to decisiveness. The people in charge of each collection can dream up and produce new fashions on their own authority. Only huge orders require approval from higher up. With a flat organization, decisions are made quickly. This decision-making forms part of the famous H&M team-oriented, entrepreneurial culture. Competitive pressures stem from a range of global and local players; however, Inditex, the parent company of Zara brand, is the strongest direct competitor to H&M. Zara has retail distribution in 77 countries and produces the majority of its designs in European and North African factories rather than outsourcing to cheaper Asian facilities. The Inditex business model is highly vertically integrated and supply chain management is a strong competence. The designers, factories and distribution centres are primarily on-site at its headquarters. The Inidex group directly controls the fabric supply, cutting and finishing while subcontracting the garment-making stage. Merchandise is delivered from distribution hubs simultaneously to all stores twice a week. An advanced logistics system ensures that the order to delivery time from distribution centres 24-48 hours. Compared to H&M's 15 weeks lead time, Inditex can get a garment from idea to store in just two weeks. QUESTIONS 1. What are the main competitive strengths and weaknesses of H&M? 2. In your opinion, how well equipped is H&M to deal with current and future challenges