H&M in Romania

H&M Internationalization

Catalinescu Cristina
Căpățînă Bogdan
Căpîlnean Sergiu
Gama Cristina
Șerban Alexandra
Toader Alexandra

958
General Presentation
According to the data published on the official website, we know that H&M was established in
Vasteras, Sweden in 1947 by Erling Persson. At the very beginning, when the first store was opened, it
was actually given the name Hennes (the Swedish word for “hers”) because only women’s clothes were
sold there at that time. Later in 1968, Erling Persson bought Mauritz Widforss, a hunting and gun store in
Stockholm. Just from then, the men’s clothes began to be sold in the stores. Thus, soon Erling
Persson gave his company a new name Hennes & Mauritz (H&M in short) instead. In
the following years, H&M kept expanding continuously. Especially after 1982, it
expanded with a high speed. The milestones in the company’s development have been presented in
the table below.

Year Milestones

1947 opening the first shop "Hennes" in Vasteras, Sweden

1964 opening the first shop in Norway
1967 opening the first shop in Denmark
1968 acquisition of MauritzWidforss, new brand Hennes and Mauritz, men
clothes are added
1972 Stefan Persson (son) joins the business
1974 the company goes public (Stockholm stock exchange)
1975 cosmetics are added
1976 entry the first non-Scandinavian market - Great Britain
1977 clothes for teenagers are added
1978 clothes for babies are added
1980 acquisition of Rowell's mail order company, introduction of sales
through catalogue
1987 Margareta van den Bosch joins the company as design director
1998 the company starts online sales in Sweden
1999 the company starts online sales in Denmark and Finland
2001 the company starts online sales in Norway
At present, H&M has already owned more than 1,500 stores in 28 countries. Among them, most are in Europe
and the left ones are in China, Canada and the United States, Kuwait, Qatar and United Arab Emirates
respectively. In addition, nowadays H&M has extended its products to children and teenagers, and also
cosmetics under its own brand. Furthermore, apart from the traditional shopping in stores, H&M has begun to
sell its products through catalogues and the Internet, which provides more convenience to customers.

Although better known for their focus on providing people with good fashion for affordable prices and
although positioned as a brand for the low to middle income categories, H&M offers a wide range of apparel
from basic items to more high-end fashion products, for which they collaborate with famous designers and
celebrities, such as Madonna, Karl Lagerfeld, Roberto Cavalli or Stella McCartney and their products are
very popular among all income categories.

Nowadays H&M has around 87,000 employees all over the world and also has become one of the largest
clothing retailers in the world.

The most important distribution channel are own stores, complemented by online shopping and
catalogues. However, in September 2006 H&M began its expansion in Middle East in cooperation
with franchise Alshaya. Operations through franchising are considered an exception from the
expansion strategy of the H&M and were chosen because in the Middle East it is not possible to operate
wholly-owned subsidiaries.

H&M expanded through organic growth, and it financed new market entries with own cash reserves. In
2007 the company managed more then 1,500 stores in 28 countries. Its development is not only fast
but also profitable - during the last five years sales including VAT has increased by 73% and profit
after tax by 139%. H&M aims at increasing the number of stores by 10-15% a year, and to increase
sales at the existing stores.
As a part of this expansion strategy, H&M has chosen to expand in Romania, as well, through a wholly
owned subsidiary which will operate 2 stores in 2 large Bucharest Malls, to begin with.

II – Planning
1. Mission statement: "Fashion and quality at the best price."

2. Premises, values, lines of action

As a successful company, H&M always sticks to its own business concept, that is, “to provide people fashion
and quality at the best price” (Facts about H&M, 2007). For the fashion, it has its own design and buying
department that creates the collections. As for the good product quality, H&M pays much attention on the
control of quality and also tries to make its products have minimal impact on the environment and to control
good working conditions in suppliers’ factories.

H&M’s main designer, Margareta van den Bosch, supervises a team of many different designers,
average aged 30, coming mostly from different European Cuntries, but also Americans and Africans.
They are required to “constantly observe the trends in the fashion industry, street fashion, college
fashion, and events, encounter different cultures, travel, visit exhibitions, flea markets, and films and
keep eye on television and Internet”.

Although there are two main collections every year - the spring and the autumn one,
H&M release many sub-collections in every season, so that each week customers can
find something new in the H&M stores. Every concept, like Women, Men, Kids,
Divided and Denim has its own team of designers, buyers, pattern makers, assistants and controllers.
Their common goal is to produce garments according to consumer demands.

About the best price, it is just achieved by “having few middlemen, buying in large volumes, having a
broad, in-depth knowledge of design, fashion and textiles, buying the right products from the right market,
being cost-conscious at every stage, and having efficient distribution”. Thus, H&M does not have its own
factories. It just cooperates with around 700 independent suppliers in primarily Asia and Europe.

H&M has reached its iconic status by targeting each member of the consumer group by primarily dividing
them into convenient groupings as men, women, teenagers, children and future mothers and has exclusive
offerings to satisfy each group. Moreover, the company slots its customers into two distinct categories –
practical consumers and fashionable and trendy consumers and caters to requirements of each group
separately. While clothing never exceeds basic physical requirement for the former group, it becomes a
matter of sartorial elegance in case of the latter. Keeping this basic difference of these two groups in mind,
H&M stocks its stores with clothes of distinct categories so that not one member of either group return
unsatisfied. Thus, H&M pursues a policy of uniqueness and differentiation from its competitors and manages
to create a unique position for itself in the minds of consumers.

3. Strategic goal: internationalizing operations in an area which already has a supplier and
high-potential human resources and which will represent a market that can absorb the
company’s products.
4. Strategic planning –SWOT Analysis

Strengths Weaknesses

Fast fashion retailing Ubiquitous – „too“ popular

The appeal for H&M products Scale makes control difficult
Increasing inventory turnover time May be perceived as „too cheap“ – „McFashion“
Economies of scale
Global reputation already formed
Universally likeable designs
Effective communication 
 Innovation 
 Market share leadership 
 Strong brand equity 
 Strong financial position 
 Supply chain 
 
Opportunities Threats

Romania - Emerging economy suitable to Unemployment and the aftermath of the

support H&M’s expansion plans economic crisis continue to pressurize
H&M well positioned to tap the niche organic discretionary spending
apparel market Weak competitive position as the
Its reputation precedes itself in Romania – some prominence of value retailers and premium
consumers used to travel to near-by countries luxury brands increases
with H&M stores simply for their products – high Big competition in the form of Inditex brands
demand (Zara, Bershka, Pull&Bear)
Presence of supplier here- low transport and RON-EURO exchange rate ( they will have to
supplying costs lower some prices due to imperfect psychological
Ease and accessibility of EU regulations convertibility)
 Bureaucracy

5. Strategy
The pursued strategy will be a maxi-maxi one: H&M will use its already established global reputation
(S) to capitalize on the high demand and high interest already existent in Romania for H&M products
(O).

5.1. Strategy at the company level – Ansoff Matrix

Market development: the firm wishes to pursue a growth strategy where the business seeks to sell its
existing apparel products into a new geographical market, Romania, by establishing here a wholly-
owned subsidiary, thus satisfying a documented, existing demand (demonstrated by the example of
Romanian “H&M tourists”). As a secondary opportunity which will benefit the firm, H&M will also
take advantage of the pre-existing supplier in Romania, which makes this market ideal for cutting
supply and logistics costs.

5.2. Strategy at the product level

Porter’s Generic Strategies: Differentiation Strategy (world famous design-focused products at

best quality/price ratio)

Seeing as the lower income level of Romanians, as compared to other EU countries, makes it so that
H&M products are not perceived as very low cost and affordable, the best strategy to pursue from
Porter’s generic strategies would be the product differentiation one; H&M will have to set its products
apart as being the worldwide renowned fashionable designs which are offering the best quality-price
ratio on the market. Thus, the product differentiation itself will be aided by the image differentiation
aspect, where H&M will capitalize on its status as an icon in the world of apparel before coming to
Romania.
 5.3. Miles and Snow framework: Prospecting strategy

H&M is proving, by expanding into the Romanian marketing, its almost continually search for market
opportunities and its eagerness to regularly experiment with potential responses to emerging
environmental trends. Thus, it has the potential to create the change and uncertainty to which their
competitors must respond.

It will be the only company providing cutting edge design and fashion at affordable rates and with a
fast collection turnover to the middle and upper-middle income categories in Romania.

6. Tactical goals
a. Department of Logistics – bringing in H&M quality products by using available and
affordable resources (supplier and distribution channels)
b. Department of Sales – ensuring recovery of Romanian investment within 18 months
c. Department of Finance – ensuring a continuous flow of financial resources that will allow
start-up and maintenance of operations; monitoring this flow
d. Department of Marketing – developing a promotion strategy for the Romanian market,
based on conveying the message of a fashion industry hallmark brand offering the best level
of the quality - price ratio
e. Department of Human Resources – putting together a competent and effective team, in
keeping with H&M values and image

7. Tactical planning

A. Department of Buying&Logistics

H&M controls all the stages of the logistics, as it acts as an importer and wholesaler,
and then as a retailer and the process is managed centrally from Stockholm. There people employed
in the logistics department in H&M will be organized under a head of department who will report
directly to the headquarters in Stockholm. For transport, H&M will use external
contract companies, and, seeing as the goods will be produced in Romania, the transport will be by
auto carrier from the main warehouse. The Logistics department will also handle appropriate product
packaging, labelling and all that those entail.

Since, in every country of its operations, H&M builds a distribution center that receives goods, them
as per the stores and controls the quality. Distribution centers either send items to the stores, or to a call-
off warehouse that hold the stock and distribute later products according to demand reported by
stores. The distribution center will be built when sales volumes in the market reaches economy
of scale and when the quantity of stores reaches some “critical mass”. Immediately upon entering the
Romanian market and for the short-run, the company will use distribution centers located in the
neighbouring countries, in order to avoid high initial costs.

Resources needed: physical: clothes as manufactured by supplier, packaging material (paper, boxes, labels,
printers etc.), storage building for distribution center, human: transportation sub-contractors, logistics
employees and head; financial: budget for covering all the above mentioned.

B. Department of Sales

Within 18 months from market entry, H&M is targetting to recover its initial investment in setting up a
Romanian subsidiary. The whole department will have employees both as sales associates engaged in direct
sales and as supervisors, reporting to 1 department head. They will each have completed the necessary 3
week training program.

They will work in turns, with no less than 5 employees per store at any one time, tending to the arranging,
placing/replacing products and answering customer questions. 3 employees will handle the cash registers.

Resources needed: human: sales employees, physical: cash registers, uniforms, shelving &arrangements;
financial: money to cover all the mentioned expenses

C. Department of Finance

In order to achieve the projected goals, the Finance- Accounting department will begin by performing an
analysis of the selected financing method – own equity – and how it is to be used specifically within the next
time intervals.

The Department will oversee the level of acquisition and distribution costs and will evaluate the investment
recovery process in the first 2 years, under the supervision of the department head.

Resources needed: human: finance/accounting employees; physical: computer software, computers, desks
and office equipment; financial: money for expenses above and for wages

D. Department of Marketing

In its intent of positioning and differentiating H&M as the best fashion value for money provider, the
Marketing Department will organize and control promotional activities. The department will engage in
research of customer perception of the image of competitor brands and of H&M itself, selecting from the
research the specific key elements that will help the company in its desired positioning. The overall
marketing goal and vision of H&M for Romania will be the responsibility of a department head.

The department will use the same simple advertisements campaigns, posters, billboards and ads as in other
H&M countries, to reduce costs, but will make sure to properly translate all promotional messages.

Resources needed: physical: translations, printed media ads in publications,billboards and banners; human
resources: translators, marketing employees and head; financial: budget for translations, employee wages
and media coverage

E. Department of Human Resources

An effective and competent team will be fully set within 6 months. H&M will largely practice job
rotation. Stores staff must carry out various duties such as cash desk, displaying and customer
assistance, and they have possibilities of promotion, for instance for positions like production
coordinators, quality controllers, auditors, etc.

On the other hand, people who work in offices are sent from time to time to stores in order to maintain
contact with clients. Stores personnel are recruited locally, because they have knowledge about the
local market and are considered important when deciding about the strategy.

All new employees must participate in a three week long introduction course and are assigned a
mentor. Both recruitment and training will be initially carried out by experienced staff from other
locations – 6 in sales and 2 in managing. It is considered important to transfer and implement
knowledge, skills and H&M culture in new locations.

After the three weeks, the Romanian HR department will have a head and 2 recruiting and control
assistants.

Resources needed: human: 8 experienced staff members, physical: plane&accomodation for them,
training rooms and office equipment, financial: budget for these
 8. Operational Scope and Planning

Operational plans are realized at operational units level and have a short term, usually no longer than
one year, and the plans can be unique or permanent

 Accounts Office of the Financial/Accounting Department

o Scope: To provide accurate evaluation of commercial operations and to analyze and
apply the Romanian institutional accounting system

o Planning: This type of activity requires a standard operating procedure as the activity
is routine and required by national and European legislation. Accounts will be kept
and the same depreciation and amortization and the same method of bookkeeping will
be kept for all accounts in order to ensure accordance to legislation and to internal
requirements. The necessary time period is 1 year, as accounting information is
required on a yearly basis. The person responsible will be the manager of the
Finance/Accounts Department

 Ordering Office of the Buying & Logistics Department

o Scope: To ensure that up-to-date collections and products are available

o Planning: This activity requires the buying office of the Romanian branch to keep
track of current trends in international fashion and in local fashion trends in order to
seek approval from the central office in Sweden and in order to best request from the
production department the necessary products and collections which would maximize
sales in Romania. The usual time period is 6 months, as H&M operates on a bi-annual
collection, but additional sub-collections can be required all year round. The person
responsible will be the manager of the Buying Department. This standing plan will
represent a policy

 Advertising Office of the Marketing Department

o Scope: to ensure a strong entry on the Romanian market and to create a powerful
brand image in the local market as a newcomer with tradition
 o Planning: First of all, the program for supporting the entry will begin before the actual
store opening and will require studying the local market, contacting advertising
agencies, choosing the appropriate media, designing the actual campaign. The policy
of creating a powerful brand image will require building upon the initial entry
campaign and continuing to pursue innovative advertising through unusual channels.

 Press Office of the Marketing Department

o Scope: To ensure constant communication with local press and media

o Planning: The program before entry will be to ensure media coverage about the store
openings and the employees will have to give out press releases with information on
location, date, time, number of employees, job openings and so on. The standard
operating procedure will require constant press releases regarding new store openings,
new collections being added and other important information

 Training Office of the HR Department

o Scope: To train future H&M employees and managers in the corporate culture, work
ethics and know-how

o Planning: Besides the training done for the country manager, which will be carried out
in Sweden, after selection, the training office will have to instruct and train the new
employees on both managerial positions and on sales positions in order to be
according to the H&M general guidelines. This will require bringing in training
personnel from the home office, conducting workshops and training seminars and
working with local training companies for a period of 3 weeks. At first this will
constitute a program of training all required managers and employees and after the
initial opening, whenever there are new recruitments, this will constitute a standard
operating policy

 Distribution office of the Buying&Logistics department

o Scope: to ensure availability of products and collections at all times

o Planning: the distributions office must keep in touch with the buying department and
the sales department in order to keep track of required inventories in stores and to
restock those inventories when needed. The distribution office will take over the
inventories from the shipping office, store them and then distribute them at the
 required store and at the required time. This procedure will represent a policy. The
plan will have the period of 2 weeks.

III. Organizing
1. Organizational Structure
 2. Justification of organizational Structure
H&M has a matrix organization in which country managers and the members of the executive
management team report directly to the Managing Director (see section on control environment). The
matrix organization consists of the sales countries, headed by the country managers, and the Group
functions/central departments for which the executive management team is responsible. The
organizational structure of the company simply adds another level following internationalization in the
Romanian Market.

H&M has a matrix organization, which means that those on the executive management team are
responsible for performance within their function in each country (the vertical arrows). The country
managers are responsible for profitability in their country and thereby have overall responsibility for
all the functions within their operations (the horizontal arrows). The country organization is in turn
divided into regions, with a number of stores in each region. All the companies within the H&M
Group have the same structure and accounting system with the same chart of accounts. This simplifies
the creation of appropriate routines and control systems, which facilitates internal control and
comparisons between the various companies.

There are detailed instructions for the store staff that control daily work in the stores. Many other
guidelines and manuals are also available within the Group. In most cases these are drawn up in the
central departments at the head office in Stockholm and then communicated to the respective
department in the country offices. Each central department regularly reviews its guidelines and
manuals to see which ones need updating and whether new guidelines need to be developed.

H&M’s Managing Director is responsible for the day-to-day operations. The Managing Director has
appointed a team of senior executives with ongoing responsibility for the various parts of the business.
This team consists of the Managing Director himself and eleven other individuals. The executive
management team is responsible for the following functions: Finance, Buying, Production, Expansion,
Accounts, Human Resources, Marketing, Communications, Investor Relations, Security and Corporate
Social Responsibility.

In general, matrix structures are assumed to be most appropriate for larger corporations that operate in
unique or fast-paced environments. Matrix management further requires a workforce that has a diverse
set of skills and employees that have strong interpersonal abilities.
The cardinal advantage of a matrix structure is that it facilitates rapid response to change in two or
more environments.

Matrix structures are flatter and more responsive than other types of structures because they permit
more efficient exchanges of information. Because people from different departments are cooperating
so closely, they are eager to share data that will help them achieve common goals. In effect, the entire
organization becomes an information web; data is channeled both vertically and horizontally as people
exchange technical knowledge, marketing data, product ideas, financial information to make
decisions.

In addition to speed and flexibility, matrix organization may result in a more efficient use of resources
than other organic structures. Other benefits of matrix management include improved motivation and
more adept managers. Improved motivation results from decision-making within groups becoming
more democratic and participatory because each member brings specialized knowledge to the table—
and since employees have a direct impact on day-to-day decisions, they are more likely to experience
higher levels of motivation and commitment to the goals of the departments to which they belong.
More adept management is the result of top decision makers becoming more involved in, and thus
better informed about, the day-to-day operations of the company. This involvement can also lead to
improved long-term planning.

3. Departmentalization

The Romanian branch of H&M will have a total number of 140 employees, as follows:

1 Country Manager, in charge of performance of all functions within his/her operation, which is to be
departmentalized as following:
 Finance/Accounts:
o 1 department manager
o 6 employees for the Financial Office
o 3 employees for the Accounts Office
 Sales
o 1 department manager
o 2 store managers
o 5 assistant store managers
o 35 sales assistants
  Buying
o 1 department manager
o 3 employees for Ordering Office
o 3 employees for Logistics Office
 Marketing
o 1 department manager
o 4 employees for Marketing Office
o 4 employees for Advertising Office
o 3 employees for Communications Office
o 2 employees for Press Office
 HR
o 1 department manager
o 5 employees for Recruitment and Selection Office
o 5 employees for Training Office
o 6 employees for Salary Office

Part IV. Coordinating (human resources policy)

Human resources policies of a company describe the process of selection, training, evaluation,
compensation and motivation of its employees. When a company expands and develops its activity at
an increasing rate in host countries, it has to adopt a multicultural policy which should be reflected in
the relationship with the employees. Therefore, recruitment, selection, training and motivation policies
should be in correspondence with the characteristics of the country where the company has expanded
its activity.

Concerning work relations, H&M is registering increasing demands as an employer. The

objective of H&M is to be a good employer, focusing its entire activity around the fundamental
respect for the individual. This characteristic can be found in every aspect, from equitable salaries,
work schedules, freedom of association to promotion opportunities. H&M has an open door policy
granting all employees the right and the opportunity to discuss any work-related issue directly with the
management. The company also supports the employees' right and ability to organise and to decide
who should represent them in the workplace. 

The company, through a participative culture, encourages what it calls the “The H&M spirit”;
employees committed to their work and prepared to take on new challenges, common sense, hard
work and team spirit are encouraged. Recruitment needs to focus on finding candidates with the
„right fit” to the organizational culture, facilitating expatriation of experienced staff when new stores
are opened, facilitating rewards schemes aligned with organizational culture, enabling human
resources development schemes that can empower employees to take on new challenges and work in
new teams.

H&M as an organization is constantly evolving and is growing fast, thus providing more
opportunities to its employees. Employees are motivated by providing new challenges; in another
department, another role or, another country. H&M encourages employees to try many different roles
within their organization.

H&M’s HR strategies and policies, resonate with Herzberg’s 2 factor model of motivation.
“Advancement”, “responsibility” and “satisfaction gained from the work itself” are main motivators,
while benefits, fair treatment etc. prevent dissatisfaction. The main motivational issue and challenge at
H&M is nurturing and maintaining a balanced relationship with employees.

H&M values personal qualities much more than formal qualifications. The company looks for,
more than anything, people with the right personality. The belief is that people can gather skills as
they go along, but personality and attitude cannot be taught.

At H&M, individuals are expected to drive their own development, within the framework that
the organization provides. The organization facilitates and promotes cross-functional and cross-
boundary development opportunities for individuals, which is aligned with its own development and
growth strategies. Individual development and organizational development are treated as tightly linked
areas.

1. General Manager

Entering the Romanian market as a subsidiary, the company H&M should adapt to the local
business environment and take into consideration local customers needs and their mentality.

In the internationalization process, the management system of the new company should also
suffer a few alterations in order to fulfill the requirements of the new market. According to this, the
new general manager should be familiarized with the characteristics of the host country’s market and
culture.

Consequently, the personnel policy regarding the general manager, the head of department and
the operational worker includes the four following stages: recruitment, selection, training and
motivation, which will be customized for the Romanian market.
 The adaptation of the human resources policy constitutes a vital objective for H&M
management, which is directly oriented towards gaining of a strong position on the Romanian market.

In choosing the general manager for the Romanian subsidiary, H&M will use a combined
method: it requires firstly a manager belonging to the culture of the company, who will supervise the
internationalization process of the company and will be directly responsible for the training of the
future local general manager.

a. Recruitment
As the recruitment method for the general manager position (country manager), the
company has chosen hiring people from inside the company. The job announcement is posted in
several places like central spots which are frequently used by all employees, on the intranet platform
where all employees have access to and any visual display that can be easily observed by the
employees.
This job announcement will contain the following information:
- the job description;
- necessary qualifications and professional background;
- the salary;
- the time period when the application can be submitted;
- specific standards regarding the vacancy;
- future employees’ motivation for choosing this job.

This job announcement should contain detailed information about the job in order to avoid
the applications for the general manager position belonging to people that do not fulfill the required
qualifications.
Recruiting from university campuses is not an optimal solution mainly because students
do not have enough experience for the general manager position, even though they might have
sufficient theoretical knowledge.
On the other hand, suggestions coming from the company’s employees should be free of
any subjective connotation in order to be taken into account with respect to the position of general
manager.

b. Selection
The selection process of the international manager will be based on assessing the
qualifications and evaluating his personal qualities, taking into consideration the following criteria:
 - technical and managerial skills, which are mandatory for a good manager and they
usually consist of past performances of the manager;
- personal motivation and desire to obtain the job - the future manager should be
highly motivated to obtain this position;
- social skills - a good manager should be able to interact with people from other
cultures;
- language skills - usually the understanding of more foreign languages creates a
competitive advantage for the potential employee and smoothens the communication
process (at least two foregn languages of international circulation, at a proficient level);
- diplomatic skills - foreign affair contacts are very important for a general manager’s
career, who should be able to transmit the values of his company throughout the world.
Also, negotiation skills are crucial when dealing with people from other countries and
cultures;
- maturity and emotional stability - the manager should be able to recognize its own
values, needs, motivations, strengths and weaknesses, but in the same time he should
accept and understand the cultural differences;
- family adaptability - this feature influences the performance of the manager when
occupying an international position or when he needs to be relocated;
- academic studies - encompasses the theoretical knowledge of the manager;
- international experience – very important for an expatriate general manager.

The selection process will focus on choosing a manager from a third country,
preferably having occupied a similar position in a more developed country, thus being able to adapt to
the conditions of the emerging market and perform well, also being adequate for achieving the goal of
transmitting the values of the company.

Selection methods

As the most suitable selection method to evaluate the compatibility of the candidate
with the position requirements, after the assessment of previous performance and specific practical
tests, the company will organize an interview, which will comprise, among others, the following
questions:
- What is your motivation for applying to this job?
- Are you aware of the opportunities and risks of a job in a foreign country?
- Do you consider you have the ability to learn quickly and efficient new foreign
languages?
- Which is the greatest success of your career so far?
 - Do you have any medical problems? How about your family members?
- How many kids do you have and what ages are they? Are they willing to live in another
country?
- What is your family’s opinion regarding relocation?

c. Training
The assumption has been made that the manager has all the necessary technical
knowledge, so the focus will be onthe cultural training.
The process of training is be based on two separate phases: the first one containing a
training for adaptation before leaving and the second one regarding adaptation in the foreign country.
In the first stage of the training process, the two key-factors which which the company is
considering are:
- concerning the individual
- concerning the company
Both the manager and his family should attend intercultural workshops in order to
familiarize themselves with some basic general information about the new country. Courses regarding
the foreign language should be also provided to them.
When taking into account the host-country, some adaptation problems may occur: critical
situations, cultural differences or even cultural shock and difficulties in socialization and
communication.
Critical situations should be considered or viewd as positive opportunities or challenges
that the manager should overcome successfully.
The company is highly oriented towards cultural values assimilation, which will facilitate
the adaptation process.

d. Motivation

Employees’ motivation is essential inside one company and it constitutes the leading force of
the company’s growth.

Motivational theories are split in two different categories: the first one that focuses on
motivational factors and the second one that describes the motivation’s mechanism.

In his Pyramid Of Needs, Maslow identified 5 different human needs according to their
importance:
 This pyramid illustrates the human needs in a hierarchical way, meaning that once a level of
needs is satisfied, automatically appears the need for the superior level.

The H&M company decided to use this method because it clearly presents the human needs
and their evolution in time.

In the case of the general manager, the basic and the safety needs are satisfied taking into
account that his relocation will suppose the following: a house for him and his family, personal
automobile, mobile phone, laptop, a top salary and the assurance that the children can continue their
studies in the foreign country.

The safety need is satisfied through the general manager position.

The first two needs being obtained, the managers feel the need for individual recognition,
which is also obtained through the general manager position.

The social needs are accomplished through the social integration of the manager in the new
country. H&M ensures this need by providing foreign language courses to the manager.

2. Head of Marketing Department

The Marketing Director will be selected from Romanian potential candidates, because their
whole activity will be shaped around the necessity to have a thorough knowledge of the Romanian
market characteristics.
 a. Recruitment

The main option to recruit the head of the Marketing Department will be through
recruitment web sites, but this action will be paralleled by advertising the position on the home page of
the company and in the relevant press. Considering the good reputation and the strong image of the
company at an international level, it is expected that competitive potential candidates would be
attracted by this position. Thus, the company will benefit from a generous data base of valuable
candidates.

b. Selection

The marketing director will be the person responsible with the design, implementation and
evaluation of marketing programs and campaigns to increase the market share, sales, revenues and
brand awareness. This person should display strong strategic and analytical thinking, organizational
skills, creativity and ability to cope with strict deadlines in a rapidly changing environment.
The selection criteria, based on an analysis of the CVs in an initial phase, will include an
assessment of the following: studies, certificates, experience in a multinational company, language
skills, personal qualities and abilities of the candidate. Lack of experience or technical ability will
eliminate the candidate from the start. Minimum work experience of one year and a half in the field is
necessary, as well as a good understanding of the company’s vision and ability to put in practice the
tactical plan of the department and to coordinate the operational planning.
The selection methods used are tests and interviews, the first being very important in order
to test numerical, analytical and interpretative skills needed to fulfill the job’s requirements. The
interview will finally test the compatibility between the candidate and the company and his
motivation. During the interview, he will be asked to present his professional achievements, results,
performances, future aspirations, knowledge of the Romanian market and previous experience in a
multinational company if it is the case.

c. Training

The head of department will be required to have a cross-cultural training, in order to have
a better understanding of the Swedish business behavior, and also to improve the cooperation and
communication with the general manager. The importance of knowing at least two foreign languages
by the person occupying this position cannot be overestimated.
 Concerning the technical training, the department director will attend a professional
course both in Romania, and in Germany, the best performing market of the company in Europe.
Every year, or two times a year, depending on his performance, the head of the marketing department
will have the opportunity to observe the activity of the corresponding department in an international
subsidiary, in order to improve his perspectives and share experiences.

d. Motivation

For the motivational process, the Maslow pyramid can be applied to cover the needs.
Thus, physiological and safety needs will be covered by the company by offering the employee a
mobile phone, personal laptop, attractive salary, bonuses and other performance compensations.
Socialization needs can be fulfilled, for example, through vacations paid for by the company.
Having these needs satisfied, the head of department will be more oriented to the
accomplishment of superior needs. The recognition need can be considered satisfied by obtaining the
current position in the first place and self-actualization needs can be covered through the attendance of
courses offered by the company.
The main motivational factor can be represented by the salary increase according to
performance and efficiency, comparing the results of the department with the ones at an international
level, but in the context of the Romanian market characteristics.

3. Operational Worker – Sales Advisor

“Fashion, Fun and Hard Work” – this is how the head of the job position description sounds
like. Attractive, but realistic the description is intended to bring the most suitable and competent
candidates for the job.

a. Recruitment
The main recruitment method in this case is advertising the position under the job opening
section of the company’s recruitment section on the web page and other recruitment sites on the
Internet. Potential candidates can register and create an account on the web page, where they can fill in
the main general information about themselves that the company needs, and upload a CV, motivation
letter, recommendation letters and other necessary documents, depending on the specific job. The
candidates should display strong motivation and compatibility with the field they want to work in.
 The company provides a section under the name “Before You Apply…” on the
recruitment page that the persons willing to submit their applications are advised to read before doing
so. The main things that the candidates should take into account before applying are:

 They must be at least 16 years old to apply.

 They should read the full job description of the role they are interested in before applying, to
ensure that they understand and meet the requirements.

 Watching the career films provided on the web site to get a sense of everyday work at H&M.

 Accessing the section "How H&M are you?" to test their compatibility with the company.

 Being sure to update the application, in order to have an accurate image and to be able to
contact the candidate.

 Always attach a CV and personal letter to give a full picture of the skills when applying for a
job.

 Based on the skills and experience, the candidate may be asked to interview for a different
position than the one targeted.

 If applying for a store job, consider the flexibility of retail hours.

 Research into the company.

 Be prepared for a fast-paced, physically demanding and fun work environment

b. Selection

The criteria for selection will be a minimum experience in the field, having a good
understanding of the job requirements and of the fashion area, being good at multi tasking, knowing
how to prioritize, working well in a team and being able to work in a fast paced retail environment.
The selection methods used will include practical tests and an interview after the
assessment of the on-line application.

c. Training

All workers will be provided training by the head of their department, to have a better
understanding of the mission and vision of the company. Workers should receive catalogues, fashion
catalogues, information about collections and brochures to deepen their understanding of the firm’s
current activity and goals and also an employee’s guide to provide them with a strong sense of
responsibility and willingness to convey the values of the company to the customers.
Also, as sales advisors, they should attend one week training every three months to be able
to successfully adapt to the rapidly changing environment they are working in.

d. Motivation

H&M provides more than just a job to its employees, it offers them the opportunity to
grow and build a career. Workers are given the sense that what they are doing is most important for
the firm, that they are working in the place where the best ideas and future managers are born. Internal
succession is given priority in the company as a motivational method for those who are eager to be
promoted and perform better to achieve this. Vouchers and discounts are given to workers as bonuses.
The employees are motivated by the daily challenges they face and dynamic environment.
Every month, the company repays the best performing employee by granting him the
“Employee of the month” title and a bonus to his salary.
A motivational theory that can be used is the expectations theory. According to this
theory, the level of motivation of the employee is related to his expectations regarding the
compensation, his efforts and the actual compensation.
Therefore, the company will provide at first incentives for the individuals by offering
them compensation which exceeds their expectations, which will be successful on the short run.
Afterwards, in order to efficiently and permanently motivate them, compensation will correspond to
expectations.

Part V. Controlling

The control activity inside H&M refers to three main categories of performance – financial, quality
and human resources – for each of them being established the type of control – preventive, current or
of verification – and the type of control – direct or indirect-.

The direct control involves personal interaction between the CEO of the company and the managers of
the subsidiaries. These meetings could take place at the headquarters of the parent company, or
through business visits at every subsidiary. The Romanian general manger must present a report
referring to all the achieved goals and the subsequent issues (a detailed presentation of the causes of
their appearance and the solutions proposed for their development – this may be useful for avoiding
the emergence of the same type of problems at other H&M subsidiaries).
The indirect control should be realized through the written reports of the subsidiaries to the
headquarters. These should comprise a detailed performance of those for a long period of time. Three
sets of reports should be sent: the first one made in accordance to the standards of the Romanian
environment, in order to make a comparison with the firms from the host country; the second one
according to the country of origin (Sweden), in order to compare relative performances among
subsidiaries from different countries; the third set with the purpose of displaying n overall financial
situation of the company at the global level. Given the smaller costs of this type of control, it would be
made more often, on a monthly basis.

The preventive control will have its main goal the avoidance of potential problems and coming up
with solutions ahead the emergence of the issue. This type of control will be realised in the planning
stage and it is strongly dependent on a reliable informational system

Financial performance: is measured mainly through the obtained profit (several factors should be
taken into account such as the influence of inflation and the sources of the profit: the real profit
registered through productivity increases or through management efficiency or obtained from funds
transfers from a subsidiary in another country.

The control will be carried out indirectly by sending monthly reports to H&M headquarters each
semester and, once a year, directly by being visited by the Financial Director of the H&M headquarter.
In the first year of activity there will be two direct controls, first after six months and the second one
after one year of activity, followed in the next years of this type of control on an annually basis. It will
be a verification control taking into account that the measurements of financial performance are made
after the activity has stopped.

Quality performance: is probably the most important type of performance for a company, quality
being the one that makes the difference on a market where the competition is fierce. Therefore, the
quality performance will be supervised thro current control, throughout the entire product
development cycle: starting from the checking the imported goods, their technical characteristics and
the methods of packaging, distribution, stocking and others. The controlling process will be direct by
the international quality division, the one responsible for checking compliance with all H&M
products, despite which division they belong to or geographic region.

H&M clothing store caters to the tastes of consumers across a wide range. It seems like variety is the
keyword when talking about the products. The company attempts to give the customers choices,
products that appeal to their aesthetics (by offering clothes ranging from retro-vintage up to the latest
trends of the season). The company introduces new products in its stores everyday to keep the
collections always new. The product lines offered are distinct and reflect a diverse range in designs.

H&M clothing store aims to offer and cater to consumers across a wide base and do not compromise
on either quality or style. Therefore making clothes affordable is a prime target, for which H&M buys
huge amounts of clothing material by approaching the suppliers directly. In this way it helps to save
costs by eliminating the middleman in the process. The focus of the company then is on delivering the
quality style and design without compromising on their cost policy.

The final goods that reach the H&M clothing store go through numerous quality and safety checks.
The products are tested for wringing, color fastnesses, shrinking and dry rubbing to ensure they meet
the quality standards. H&M is also conscious of the environment impact caused during its
manufacturing process and takes due measures to minimize the effects.
Also, twice a year, the general manager has to send to the headquarter an evaluation portfolio which
will show the situation of the Romanian subsidiery. This portfolio will contain a report about the
H&M company, drafted according to Romanian standards, to facilitate the comparison with other
companies from Romania and one drafted according with the standards that H&M uses, to be easier to
compare with subsidieries from other countries; and the manager will also draft a report with the
financial situation of the company in RON to measure the profit share or looses.

Human resources performance: it will be checked directly before employment, when there will be
established if the interviewed persons have or not the desired qualities for taking this position in the
H&M company, and after that, during their activity in the company, there will be evaluations twice a
year. So, the human resources performance control will be done preventive and, also, current. The way
the control will be realised will be a direct interview with the employees, with the Human Resources
Director from Romania, who will present his reports in an annual meeting with the Human Resources
Director from the H&M headquarters.

H&M’s corporate strategy is to expand on a continuing basis, and as a consequence, employee

strength also increases continuously. The strategy is to recruit locally whenever a new store opens. To
quote the Head of HR “In order to meet people’s expectations of H&M as an attractive employer, the
company develops global guide lines on diversity, equal rights and against discrimination”. At H&M,
HR activities are guided by a fundamental respect for the individual. This applies to every aspect from
fair wages, working hours and freedom of association to the opportunity for growth and development
within the company. This also indicates that the company has specific policies for areas such as Equal
opportunity, Managing diversity, Employees development, Health and Safety, among others.
H&M has an open door policy granting all employees the right and the opportunity to discuss any
work-related issue directly with management. They also support their employees’ right and ability to
organize and to decide who should represent them in the workplace. H&M has positive experience of
open and constructive dialogue with the trade unions and they welcome such relations wherever they
operate. They consider such cooperation to be essential if they are to improve.

H&M focuses on rewarding people by providing more opportunities and responsibilities, and not
through a promotions and job titles. The firm will provide structured opportunities for on-the-job,
hands on and work place based training. The company offers a comprehensive benefits package,
which includes staff discounts, incentive bonuses, company sick pay, private health care & a pension
scheme. H&M values personal qualities much more than formal qualifications. Since H&M is a fast
company and the tempo is always high, they need employees who are self-driven and capable of direct
communication well.

The prevailing organizational culture at H&M encourages team work, supports effective leadership
and provides adequate growth opportunity for employees. These HR strategic initiatives in turn make
significant contributions to the organizational goals of continuing growth and profitability.