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Extreme Business-Models in the Clothing Industry

A Case Study of H&M and ZARA

Written by S. Göransson, A. Jönsson & M. Persson

Paper category

Bachelor Thesis


Business Administration>General




Bachelor Thesis: Choice of Methodology In order to explain why H&M and ZARA compete differently and why their business models are different, we have studied traditional theories such as internalization theory, transaction cost analysis, and resource-based viewpoints. In addition, studies were conducted on two companies and the entire EU apparel industry. No one theory can fully explain the business models of H&M and ZARA, but these theories can be a useful tool to find key features that can explain the differences in business models. John Roberts described complementarity as a variable in mass production and modern manufacturing industries. By extending Roberts' concept of complementarity, we have created our own set of complementarities for H&M and ZARA, based on information obtained from research on the two companies and interviews with experts. 2.2 Research method This paper uses deductive method as the main research method. It starts with a literature review on which the complementarity is based. Starting from theory, the goal is to find a causal relationship between two different business models and complementarities. The aim is also to find some complementarities that can distinguish the two business models. In order to assess these complementarities, they tested them through interviews. The opposite of deduction is induction. The purpose of this method is to build a new theory from the data explored, not to develop an existing theory. When using inductive research methods, it is more appropriate to conduct research on smaller populations. In contrast, research on larger populations is more suitable for deductive research methods. In this study, a small number of people were interviewed, so this paper also has some characteristics of inductive methods. According to Saunder, a mixture of deductive and inductive research methods, called abduction, is possible, and this is the most appropriate method for this paper (Saunders et al., 2007). 2.3 Data collection This section describes the process of how to collect data, first showing the second-hand data, and then showing the original data. 2.3.1 Secondary data Data reanalyzed from earlier studies for other purposes is called secondary data, including original data and abstracts. The combination of data will form new data, and new relationships can be explored (Saunders et al., 2007). 2.3.2 Raw data Data that was specifically conducted for the research project is classified as raw data. Interviews are conducted as a way of collecting raw data, and the interviews have a semi-structured outline. Semi-structured interviews are when the researcher makes a list of questions that should be answered, but the questions may vary from interview to interview. This means that according to the dialogue flow, researchers can ask more questions than they have prepared (Saunders et al., 2007). Since our paper is an explanatory study, semi-structured interviews are appropriate. We want to delve into the business models of H&M and ZARA. By conducting semi-structured interviews, interviewees can further explain unclear answers. The goal is to allow interviewees to talk as freely as possible. Questions vary from interview to interview, depending on the people involved. The interviews were conducted one-on-one over the phone. 2.4 Philosophy of Science There are three common philosophies in the research process; positivism, realism and interpretivism. The first is the positivist view, which means that when a person works in an observable social reality, the result may be a generalization of similar laws. It is also important that research is conducted in a worthless manner, and researchers should influence the research process as little as possible. The second is realism, which means that our senses tell us that reality is truth, and reality is independent of thought. Therefore, it is very important to recognize that different forces can change people's perceptions of behavior and interpretation. The last kind is called interpretivism, which means that people must understand the differences in human roles. This is useful when the research process involves complex environments that cannot be generalized (Saunders et al., 2007). When existing theories are used to explain the choice of business model, a set of complementarities is created, and the results are affected as little as possible. In order to influence the results as little as possible, gather information in a worthless way. Based on the above discussion, this article constitutes a positivist philosophy. However, it is difficult to exclude all our own values ​​and expectations in the research process (ibid.). The research method does not have the characteristics of realism or interpretive philosophy. Realistic methods are excluded because there is no research on the forces that can influence people's behavior. Interpretation methods are excluded because the research environment is not too complicated to generalize. Read Less