Burberry Brand Analysis: External Factors

This assignment examines the impact of external factors on the Burberry brand. It explores how global trends, competition within the luxury goods sector, and policies of the European Union influence Burberry's operations and success. The analysis draws upon relevant literature and real-world examples to understand the complex business environment faced by luxury brands like Burberry.

Business Environment
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TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
TASK 1 ...........................................................................................................................................3
(a) Purpose of Burberry along with the purpose of any other organization................................3
(B) Extent to which Burberry meet the objectives of stakeholder...............................................4
(C) Internal and external responsibilities of Burberry.................................................................5
Task 2...............................................................................................................................................6
(a) Economic system helps in allocation of resources in mixed economy..................................6
(b) Importance of fiscal and monetary policy along with its impact on Burberry ......................6
(C) Impact of competition policy and other regulatory mechanism on global activities of
Burberry ......................................................................................................................................7
Task 3...............................................................................................................................................8
(a) Determination of price and output decision of Burberry and other organization by market
structure.......................................................................................................................................8
(B) Determination of how market forces shapes response of Burberry.....................................8
(c) Cultural and other business environment shaping behavior of Burberry...............................9
Conclusion ......................................................................................................................................9
References......................................................................................................................................10
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Illustration Index
Illustration 1: Power/Interest grid of stakeholders ..........................................................................5
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INTRODUCTION
In the present scenario, activities and operations of an organization directly gets affected
by the kind of business environment in which it operates. Furthermore, in order to survive in
market, firms are required to take care of their changing business environment (Bansal, 2012).
External environment forces, competition policy, regulatory policies etc. are some elements
which have direct impact on overall performance of a business enterprise. The present report is
based on Burberry which is the UK based luxury fashion retailer. The study depicts purpose of
the organization behind carrying out its operations. Along with this, it also highlights the impact
of fiscal, monetary and competition policy on Burberry.
TASK 1
(a) Purpose of Burberry along with the purpose of any other organization
The main purpose of Burberry is to provide people in market with innovative and unique
outwear. Every organization operates in business environment with its own set of purpose and
objectives. Some seeks for getting high market share and profitability whereas some business
operates with purpose of achieving efficient degree of customer satisfaction. It can be stated that
Burberry always looks forward to provide innovative products to all its customers. For example;
new raincoat developed by brand has gained attention of people because of its distinctive quality
of water resistance feature (Ekins and Lees, 2008). There are different types of organizations
such as sole traders, private organizations, public organizations, partnership firms etc. The goals
and objectives of each business can be different from other. For instance; private organizations
operate with the purpose of providing the best quality of products to customers at very nominal
prices. Therefore, to a certain extent, these businesses stop private firms to charge inappropriate
price against their products and services. On the other side of this, organizations such as non-
profit operate with the purpose of carrying out welfare and development of society and people
(Sloman, 2007). It can be argue that even purpose of private organization differs from one
organization to another. For example; Marks and Spencer which is an international clothing and
food retailer operates with a purpose of becoming the most sustainable multinational retailer in
the industry. In the current scenario, Burberry is considered as a forefront of innovation and
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technology in the entire fashion industry of the world (About Burberry group, 2016). Further, the
brand invests huge amount of human, financial and technological resources in carrying out
research and development of new products. In addition to this, all strategies and action plan
which are being created by taking its purpose into consideration.
(B) Extent to which Burberry meet the objectives of stakeholder
Stakeholders can be defined as those people and parties who have any kind of interest in
the working of the organization. Further, these have indirect or direct impact on operations and
strategies of business enterprise. After carrying out the stakeholder analysis of Burberry, it is
identified that key stakeholders include shareholders, government, employees, managers,
customers and suppliers (Fernando, 2011). In order to grow and survive in long run, Burberry is
required to address the objectives of all its key stakeholders. Brand can also arrange all its
stakeholders in power/interest gird in order to prioritize them.
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On the basis of this grid, the brand can segment its entire major stakeholders. Internal
stakeholders of Burberry are the one who fall under the category of high power. The objective of
stakeholders such as employees and managers is that the brand should engage them at the time of
decision making. Along with this, these stakeholders also want that Burberry should give best of
their efforts to satisfy them. On the other hand, government and people in society falls under the
grid of low power as their objective are to have proper information about the company (Hamilton
and Webster, 2015). For example; government wants that Burberry should follow all legal laws
and regulations strictly while carrying out its operation. Other than this, suppliers of Burberry
fall under the grid of low power as they want that the organization keeps on communicating with
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Illustration 1: Power/Interest grid of stakeholders
(Source: Faul, 2008)

them at regular intervals in order to avoid issues. The objective of investors or shareholder is to
get adequate returns against the investment which they have made in the organization.
(C) Internal and external responsibilities of Burberry
Burberry is one of the leading and renowned brands in the entire fashion industry of the
world. The organization posses different sets of internal and external responsibilities which it is
required to accomplish in the best possible manner. Furthermore, Burberry's internal
responsibilities include providing safe and healthy working environment to all its staff members,
giving them adequate opportunities for growth and development etc. Along with this, it is the
internal responsibility of Burberry to encourage views and suggestions of employees at the time
of making decision. On the other side of this, the brand has some responsibilities towards people
and parities which are outside the business (Hill, 2008). For example; it is responsible to provide
customers with innovative and quality fashion products at fair prices. In order to earn adequate
sales and profits in long run, Burberry is responsible to maintain long term relationship with its
suppliers. It can be stated that the brand has developed and employed adequate strategies to meet
all its responsibilities. Effective training and development sessions are organized for employees
to enhance their skills and make them available with better opportunities for growth. Meetings
are held with suppliers at regular intervals to understand and satisfy the needs and demands of
suppliers (Sloman, 2007.). This supports in maintaining healthy and long term relationship with
the same (Henderson and Kelliher, 2010). It is very important for Burberry to act and behave in
responsible way in relation with government, society and business environment. This retail
company is required to strictly follow legal laws and regulations framed by government of the
country. Other than this, it is also required to ensure the fact that its operations do not have any
kind of negative impact on society and environment under which it works. This will support the
brand in carrying out all its operation smoothly and achieving all its objectives and mission in
effective manner.
TASK 2
(a) Economic system helps in allocation of resources in mixed economy
Economic systems consists of three major types of economy which are free market,
command and mixed economies. Furthermore, each of these economies have unique
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characteristics along with their own set of advantages and disadvantages. At the time of carrying
out its operations in mixed economies businesses such as Burberry has some benefits as well as
certain drawbacks. It can be also stated that a mixed economy is the one which is developed by
integration of central planning and market forces. The process of resources allocation is taken
care by both private businesses and government of the country (Klapper, Lewin and Delgado,
2011). In this economy the concept of what to produce is determined on the basis of preference
of government and people in market. This will have a direct impact on operations of Burberry as
it will require carry out its production on the basis of above stated two factors. For example in
such economy Burberry will be required to follow all the restriction imposed by government. On
the other hand, positive impact of operating in mixed economy is that Burberry has some control
over determining how it can carry out the production (North, 2010). The last factor which is for
whom to produce defined on the basis of customer purchasing power and preference of
government. The key benefit of operating in mixed economy is that it encourages Burberry to
earn adequate amount of profits. Other than this, operating in such kind of economy helps the
brand top carry out operations with more freedom. Burberry do not have many restrictions in
terms of determining productions. On the other side of this, the drawback of operating in this
system is that the business is required to strictly follow labor regulations, antitrust laws etc, at the
time of carrying out its operations. Along with this, such economy offers the organization with a
opportunity to manufacture and sale products as per choice and demand of customers. This helps
in enhancing the degree of customer satisfaction and loyalty for Burberry. Therefore, it can be
stated that there are some drawbacks as well as benefits of operating in mixed economy to the
organization.
(b) Importance of fiscal and monetary policy along with its impact on Burberry
Fiscal policy and monetary policy are the two important and most powerful tools which
are used by government of UK to maintain good economic conditions in the country.
Furthermore, supply of money within the nation is controlled by government with the help of
monetary policy. On the other hand, with the help of fiscal policy, demand of products and
services is managed in the marketplace. It can be stated that businesses such as Burberry has a
direct impact of both monetary and fiscal policy (Malhotra, 2010). Low rate of interest
encourages the organization to seek for growth and expansion. In situations when government
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makes some modifications in monetary policy and increases interest rates, entire operations of
Burberry get affected. On the other hand, if taxes are high, businesses are not able achieve higher
profits and sales. When government make changes in fiscal policy and decrease taxes, businesses
such as Burberry are able to enhance their profits (How Does Fiscal Policy Affect a Company?
e.d). Low taxes increased overall profits margins for organization and purchasing power of
customers. This means that people are left with more money to spend on luxury fashion products
offered by Burberry. On the other side, by paying low taxes, the organization have an
opportunity to invest remaining money in marketing and advertisement of products which
increase sales (Palmer and Hartley, 2008). Therefore, it can be summarized that both the policies
affect Burberry in negative and positive terms. In the future, low taxes and interest rest will
support the brand in increase sales, profits and customer base.
(C) Impact of competition policy and other regulatory mechanism on global activities of
Burberry
One of the main objective behind implementing competition policy is to ensure the fact
businesses are not able to carry out their operations against abuse of monopoly power.
Furthermore, it can be also stated that because of competition policy, Burberry is required to
provide customers with high quality products at lower prices. This becomes very complicated for
Burberry at the time of carrying out its global operations (Shaikh, 2010). Another impact of
competition policy is that the organization is required to take care of the fact that it do not get
indulge in any kind of unfair practice. On the other side of this there are other regulatory
mechanism such as Office of fair trading (OFT), Enterprise and Regulatory Reform Act 2013
ect. The main motive of OFT is to make sure that the market runs smoothly and business carry
out fair competition against each other. Burberry needs to compile all its process and strategies
with regulations and laws that are established in competition policy and other regulatory
mechanism. Competition commission is responsible to deal with process such as merger and
acquisitions. This means that at the time of carrying out any kind of merger and acquisitions,
Burberry needs to follow proper process developed in Competition commission. As per the
competition policy of UK, Burberry is required to reduce and prevent abuse of monopoly power.
Along with this, it also force the organization to develop and offer better products to people in
market. Furthermore, it needs to always seek for ways through which it can enhance its product
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quality. On the other side of this, competition policy also forces Burberry to pay adequate
amount to all its suppliers. In any situation, the brand is not able to charge higher prices which
are not suitable as per market trends and conditions. On the other side of this Enterprise and
Regulatory Reform Act 2013 consist of various kind of employment laws which needs to be
taken care by Burberry at the time carrying out its operations. Enterprise Act 2002 is another
regulatory mechanism which has direct impact on the activities of Burberry. The objective of
Enterprise Act 2002, is to ensure protection of consume and competition laws. It forces Burberry
to take care of its customers and operate fairly in the market. It can be also stated that at the time
of operating in business environment, the brand is required to strictly follow competition policy
and other regulatory mechanisms.
TASK 3
(a) Determination of price and output decision of Burberry and other organization by market
structure
Every organization's prices and output decision gets affected by the type of market in
which it operates. Further, there are different types of market structures which have their own set
of features and characteristic (Bansal, 2012). In market such as monopoly, business have the
opportunities to charge prices and decided its output on the basis of its preference. One of the
main characteristic of such monopoly market is that there is only single seller in entire market
place. At the time of operating in such market structure, Burberry has opportunity to dominate
the entire market and can also make supernatural profits. On the other side of this, monopolistic
market structure are the one in which Burberry has full freedom in terms of entry and exit
(Klapper, Lewin and Delgado, 2011). In perfect competition market structure, there are large
number of buyers and sellers. Burberry develop products and charge prices according to its need
and demand. Further, in perfect competition, the organization is required to charge prices
according to market trend. It can be also stated businesses such as Burberry and Marks and
Spencer need to defined their pricing strategy and output decision on the basis of demand and
supply of products in marketplace.
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(B) Determination of how market forces shapes response of Burberry
It can be stated that at the time of operating in global business environment, Burberry
faces lots of challenges and issues. In addition to this, there are various forces present in market
which contributes a lot in shaping the overall response of the entire organization. In this context,
demand can be termed as one of the most crucial forces which shapes response of Burberry. The
brand needs to be aware of the changing need and demand of people in market (Malhotra, 2010).
Further, on the basis of this, Burberry is required to have some modification in its existing
products and services. This will help in meeting customer demand in the best possible manner.
The fashion retail industry in which Burberry operates is highly competitive and therefore, it is
very important for the brand to take care of customer needs and demand. Another force which
can be considered as responsible for shaping Burberry response is level of competition in market.
High degree of competition affects the organization in negative terms (Shaikh, 2010). For
example, if any of the major competitor of Burberry makes changes in its pricing strategies then
the organization directly gets forced to make changes according to the same.
(c) Cultural and other business environment shaping behavior of Burberry
Cultural of business plays very important role in making business successful in
marketplace. Strong and cooperative culture in organization encourages employees to give their
best in accomplishment of all aim and objectives. Other than this, it can be also stated that
businesses such as Burberry is required to make changes in exiting process and strategies on the
basis of changes in the external business environment where it operates (Hamilton and Webster,
2015). For example of the country in which Burberry is operating is politically stable than it
wont face too many issues in growth and development. Introduction of new tax and norms by
government will force the organization to make modification in its existing operations. On the
other hand, in situations of economic downfall, the brand will need to lower down prices of
products and manufacturing of the same. This will help in supplying products according to
demand in market. It can be also argued that the brand needs to take care of changing customer
trends in marketplace. At the time of producing good and services in needs to take all social
factors into consideration. In order to maintain and enhance its present market-share, the brand is
required to upgrade its technology at regular intervals (North, 2010). By using advanced
technology it is able to manufacture innovative products at low prices. In recent years,
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government and other regulatory bodies have become very careful in taking care of environment.
Therefore, Burberry is required to make sure that its practices remain more sustainable in nature.
At last, the organization needs to adhere to all legal laws and regulations in order to operate
smoothly. Therefore, it can be stated that the overall behavior of Burberry is affected by its
culture and various kind of environmental factors.
CONCLUSION
From the above report it can be concluded that Burberry is required to identify and satisfy
the objectives of all its stakeholders in order to grow in long run. Furthermore, it can be also
concluded that the brand is direct or indirect affected by global factors, competition and polices
of European union.
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REFERENCES
Books and journals
Bansal, P., 2012. The Oxford Handbook of Business and the Natural Environment. Oxford
University Press.
Ekins, P. and Lees, E., 2008. The impact of EU policies on energy use in and the evolution of the
UK built environment. Energy Policy. 36(12).pp. 4580-4583.
Faul., 2008. Business Environment:Test & Cases 2E. Tata McGraw-Hill Education.
Fernando, A. C., 2011. Business Environment. Pearson Education India.
Hamilton, L. and Webster, P., 2015. The International Business Environment. Oxford University
Press.
Henderson, B. J. and Kelliher, F., 2010. A framework for the small business environment.
Journal of European Industrial Training. 14(6) .pp.520-529.
Hill, C., 2008. International business: Competing in the global market place. Strategic Direction,
24(9).
Klapper, L., Lewin, A. and Delgado, J.M.Q., 2011. The impact of the business environment on
the business creation process (pp. 108-123). Palgrave Macmillan UK.
Krasniqi, A. B., 2009. Personal, household and business environmental determinants of
entrepreneurship. Journal of Small Business and Enterprise Development. 16(1).
pp.146-166.
Malhotra, N., 2010. An Organizational Model for Understanding Internationalization Processes.
Journal of International Business Studies. 41(2). pp. 330-349.
North, K., 2010. Environmental Business Management. International Labour Organization.
Palmer, A. and Hartley, B., 2008. The business environment. McGraw-Hill.
Shaikh, S., 2010. Business Enviornment. 2nd Ed. Pearson Education.
Sloman, J., 2007. Economics and the Business Environment. Financial Times Prentice Hall.
Online
About Burberry group. 2016. [Online]. Available through:
<http://www.burberryplc.com/about_burberry>. [Accessed on 11th March 2016].
How Does Fiscal Policy Affect a Company? e.d. [Online]. Available through:
<http://yourbusiness.azcentral.com/fiscal-policy-affect-company-28862.html>.
[Accessed on 11th March 2016].
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