The international strategy of the firm can be explained through the I-R Grid. There are two basic strategic needs that are summarized by the Integration-Responsiveness Framework. The first one is the need to integrate the value chain activities on a global level. The second is to create processes and products which are responsive to the needs of the local market. The analysis regarding the pressures faced by the firm in terms of achieving global integration as well as local responsiveness is called the integration-responsiveness (IR) framework (Roth & Morrison, 1990).
As interpreted from the Porter’s five force analysis, we can see that due to the high bargaining power of customers and intensive rivalry in the fast fashion industry, the target customers of H&M are likely to be sensitive to changing pricing strategies. There is a substantial pressure on H&M to maintain structure where the cost is continuously maintained to be low. It is possibly a strong challenge to the firm if we analyse it on the basis of the global integration. The first has shown its motivations and intent time and again to be a part of global expansion and expand internationally. However, it is a big challenge for the firm to maintain low costs of the products. Adhere to government regulations of different countries also adds up to the pressure faced by the firm (Johnson, Scholes &Whittington, 2011).
The head office of H&M is located in Stockholm, Sweden. The major business departments of the firm are also located there. Having a global presence, the firm is looking forward to standardization and adoption of a global strategy that can work at any geography and economy. Although there are many benefits of pursuing a global strategy, it is also associated with a number of risk factors. Firstly, customer preferences may change to a less priced brand. Standardizing the price of the brand across geographies can lead to major risks of the firm. It will have to face severe competition from localized brands that have a better pricing model as per local needs. To understand a country’s local needs will be a great challenge for the global brand. There are various risks in adopting an international strategy. The second significant factor to deal with is the legal and political regulations of every country to perform business. Trade and business regulations are different in every country and geography. Dealing with these regulations is the most essential part to do business in a country. Although the globalization of markets has opened up economies, it is also a major concern for the economies to adopt standardization in trade and other regulations. Scaling standardized solutions to suit the business needs of every firm is a task that requires a lot of thought and effort. This is because every firm is different with its unique value proposition. Maintaining the unique services of every firm and aligning them with standardized procedure is a huge risk involved in adopting international integration. This impact is very significant for the community as a whole and for the brand in particular (Johnson et al., 2014).