Burberry's Business Environment and Performance Analysis

The provided document is a solution to an assignment that involves analyzing Burberry's business environment using PESTLE analysis. The report includes references to various sources such as academic journals, books, and online resources. It also provides information on Burberry's revenue by product division and the company's logo. The assignment requires students to analyze the business environment and performance of Burberry, a luxury fashion brand.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
Task..................................................................................................................................................1
1. Management structure and governance of Burberry PLC..................................................1
2. Effects of external environment that influence Burberry Plc.............................................6
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment refers to the sum of total of all internal and external factors such
as; consumer's need and expectations, employees, management, supplier, activities by
government, etc. that directly or indirectly influence organisation's performance and stability. In
other words, business environment can essentially characterise as a sum of elements that are
impact to the business.
The study will analyse the business environment of Burberry Plc that is one of the
leading manufacturer of high-end luxury products in UK and renowned brand worldwide. The
beginning of report will give company's overview with the history, management structure and
their governance and then External environmental analysis of Burberry PLC will be done
through PESTLE analysis model and the importance of the analytical tool will be evaluated.
Task
1. Management structure and governance of Burberry PLC
An overview of Burberry Plc.
Burberry PLC is a renowned manufacturer of variety of luxurious products range from
apparel to cosmetics and other non-apparel products (Calabrese and et. al., 2018). The
organisation is public limited company and was formerly known as Burberrys Limited and in
January 1999, the name changed as Burberry Limited. They deal in the fashion industry, where it
distributed clothing, variety of fashion accessories as well as licensing fragrances. The company
sells variety of goods including; skincare, hair care, bath and body, make-up products. Along
with it, they also deal with men's products including; shaving equipments, cleanser, moisturisers,
etc. The company is most famous for its trench coats, that was designed by the founder, Thomas
Burberry (Burberry, 2019).
Thomas Burberry was an 21 year old learner to the country drape when he decided to
open his own store (Zozulya and et. al., 2015). The organisation thus founded in 1856 in
Basingstoke, England and in 1891 Burberry moves into the first London store at Haymarket. In
1879, Thomas invented Garbardine, a breathable and water-resistant fabric that is made by using
an innovative process.
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Burberry Group Plc operates as a holding company and they design, manufacture and
distributes accessories and apparels under the Burberry brand. The organisation has stores in 51
countries in 498 location in the form of diversified network of digital commerce, retail,
wholesale, franchises and also through third party stores that are licensing channel with nearly
10,000 associates. The retail and wholesale segment sells luxury products through Burberry
mainline stores, outlets, concessions and digital commerce (Chang, 2016). The licensing channel
segment provide global licenses of eye-wear, European children wear, fragrances and timepieces.
Mission and Vision Statement of Burberry
Mission- Burberry is a luxury brand, that is recognised globally with a worldwide
distribution network. The mission of the company is to maintain its integrity and vitality of their
brand. Along with it, they also have mission of continuous development of the business that
remains relevant to consumer taste and ever evolving markets.
Vision- The vision of the company is to be the first company that is fully digital and to
build a social enterprise (Zozulya and et. al., 2015).
Governance of Burberry
Burberry Plc. Is governed by the board of directors of the organisation. Burberry is of
Hierarchical organisational structure that follows the layout of pyramid that starts from top level
management to bottom level employees. Macro Gobbetti became CEO of Burberry on 5th July
2017. Dr. Gerry Murphy is appointed by replacing Sir John Peace as Chairman of the Board of
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Illustration 1: Burberry logo
(Source: Burberry, 2019 )

the company on 17th May 2018. There are five non-executive directors in the company. In 1904,
Thomas registered the logo brand with a horse, but the logo did not appear in their clothes till
1920. In 1920, company's check was registered as trademark and it is introduced as lining for
French coats. Later on brand name of Burberry began to appear on personal products, children's
clothes, fragrances, shoes and watches (Teece, 2018). The company was brought by Great
Universal stores in 1955. In 70's organisation has a great expansion of all type of products. The
organisation gained popularity during the First world war when it won the contract of supplying
Trench coats to the British army.
Board of Directors
Dr. Gerry M. Murpy (Chairman of the board)
Marco Gobbetti (Chief executive officer) Julie Brown (Chief operating and financial
officer)
Fabiola
Arrendondo
(Non-
executive
Director)
Ian Carter
(Non-
executive
Director)
Ron Frasch
(Non-
executive
Director)
Stephanie
George
(Non-
executive
Director)
Matthew
Key
(Non-
executive
Director)
Dame
Carolyn
Mccall
(Non-
executive
Director)
Orna
Nichionna
(Non-
executive
Director)
The company is listed on the London Stock Exchange. In 2015, Burberry raked on the
73rd position in Inter-brand's best global brand report as the most valued brand in the world
(Schaltegger and Wagner, 2017). The revenue was calculated by their annual report of 2017-18
as £2,733.0 million and operating income is £394.3 million, net income is £403 million in the
year of 2017-18. BOD will be delivered through six strategic pillars, four revenue drivers to re-
energise the brand and enhance luxury consumer engagement (Burberry, 2019).
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The chief executed said the financial figures reflected continuous investments, sustainable
strategic focus and outstanding brand momentum during the year. The organisation said they put
many efforts to integrate its physical and digital presence that had helped to drive sales and in
future they wanted to increase revenues by 10% from current revenue. Burberry is a worldwide
company and has structured product offering and has seen growth across each of their area of
business line. For 2015-16, accessories represented 36% of wholesale/retail revenue, men 23%,
women 29% and children 4% and beauty care with 8% (Burberry's share of revenue by product
division, 2018).
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Illustration 2: Burberry Revenue
(Source: Burberry, 2019)

Stakeholder of Burberry
Stakeholder can be defined as a person, group or any organisation that has an interest in
the specific organisation and they can affect or affected by the business. The primary stakeholder
of Burberry are; customers, investors, employees and suppliers. The stakeholders of Burberry are
as follows; Employees, trade union, brick and mortar store customers, online customers,
suppliers, government and public administration, shareholders, environment.
It is responsibility of the Board to support management in strategic aims and maintain the
relation with all its stakeholder. Board of Directors maintain a relation of transparency and
dialogue with the stakeholders. For example; Organisation follow code of conduct and
responsible practises that maintain the relation with the manufactures and suppliers. They also
maintain the relation with the potential employees by giving them appropriate salary and other
benefits such as, accommodation, health security, by fulfil their basic needs, conducting
innovative programs. Relationship between BOD and the shareholders is very active and
positive. Both are active in ongoing meeting as in 2017-18 member of boards and investors
relation team held over 350 meetings with investors/shareholders. All the important decisions are
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Illustration 3: Revenue of Burberry in its product line
(Source: Burberry's share of revenue by product division, 2018 )

taken by BOD of Burberry is essential to report to the shareholders. Furthermore, the Board
receives monthly updates on investor relation and other senior departments maintain regular
dialogue with their shareholders.
Board of director of the company maintain a healthy relation with its customer to provide
them best and quality services. They focus on to provide customer assistance 24*7 in 14
languages across many mediums and they take many more decisions to meet consumers need by
using their potential resources. BOD allows employees to use data from customer feedback and
text analytics and build comprehensive understanding of their consumer need and demand. BOD
launch many innovative programs including Burberry disrupted such as; cross functional
problem solving day and inspiring talks that engage the employees to the board comfortably.
BOD of Burberry also make many efforts to make their employees feel comfortable and as the
result the relation between both of them is open and trustable.
The section 100 (1) state, BOD can call an EGM by passing an ordinary resolution
meeting. They should prior give notice 21 days before holding an EGM. Last Extraordinary
general meeting in the organisation was hold on 12th December 2005.
2. Effects of external environment that influence Burberry Plc.
PESTLE analysis is a strategic tool that can be use by marketers to analyse internal and
external factors of Burberry Plc. PESTLE stands for- Political, economic, social, technological,
environmental and legal factors (PESTLE Analysis, 2019.). Changes in external environment
have direct impact on Burberry and the analysis is important to evaluate the factors and the level
of affection that help the organisation to understand where they need to implement the strategies.
The strategies help the company to overcome the impacts.
Importance of PESTLE analysis
The analytical tool provides a great detail about operating challenges Burberry Plc will
face in prevalent macro environment other than competitive forces. Without having an idea about
the external factors that can affect the company and its strategies, organisation will never be able
to attain the goals and reach the target effectively (Prajogo, 2016). The analysis allow marketers
of Burberry to visualize all the factors in one place for better decision making and building
strategy. It allows Burberry to identify opportunities area as well as threats as it gathers
information of all the external factor. Thus, the organisation can focus on the most important
opportunities and take advantage of them. Therefore, conducting PESTLE analysis is prior for
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the company to their strategic planning. It helps the organisation to identify the significant
changes in political, environmental, social, technological, legal, economic factors. It allows
Burberry to do strategic planning to expand their business effectively. It provides a deeper
understanding and strategical thinking of all the factors that affect the business environment. It
helps Burberry to get prepare for possible threats that arise time to time in the industry because
of external factors and it helps in exploiting opportunities (Saleem, 2017). These can influence
the relation with its consumer in positive way.
Political: Political factor is related to the level of intervention of the national and local
government in the business environment (Kozubíková, Homolka and Kristalas, 2017). Political
factor plays an important role in determining the factors that can impact Burberry's long term
profitability. The organisation operates in many countries and expose itself to various types of
political system and environment. The policies of government and governance system plays a
huge role in objective and nature of the policies of the company. Political factor include; political
stability, trade regulations, employment laws, tax guidelines and safety regulations.
Burberry plc. Operates in global market, that makes important for them to consider the
policies and regulations in the specific country (Banica and Hagiu, 2015). It is essential for the
company to consider political stability as this has potential negative effect on the revenues.
Burberry relies on its risk assurance department in monitoring market development before
making decisions.
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Illustration 4: PESTEL Analysis
(Source: PESTLE Analysis, 2019)

For example; The government resource allocation affect the company as it is difficult for
the company to infer that there will be change in resource allocation. The organisation faces
intense competition from developing countries due to inexpensive transcripts of its trade name
where no proper right of first publication law exist.
Economic: The economic factors include; economic growth, unemployment rates,
interest rates (Calabrese and et. al., 2018). The factor are determinants of an economy's
performance that have direct or indirect impact on the company as they affect the buying power
of customers and can change supply/demand in the economy. The economic factor have
significant impact on how Burberry carries its operations in the future.
The unemployment rates are declining and economic growth of developing countries are
high that is an opportunity for Burberry plc to gain more revenue from across the world.
However, the labour cost in developing countries can be a threat for Burberry as it may increase
spending more on the workforce (Nguyen and Bug, 2016). The growing inequality in the society
will negatively impact sentiments of customers and that impact spending behaviour of the client
of organisation. The volatile exchange rate affect Burberry luxury investment plans in long run.
The company need to monitor the inflation rates as it may affect directly on the buying capacity.
For example; UK's economy contracted in 2008 following on the onset of global
economic crisis. The slow down of economy negatively affect job creation in UK that weakens
the market. As the economy remains weak, purchaser reduce their spending on luxury and
premium goods and consider their spending limit on basic commodities like shelter and food.
The competition norms impact the competitive advantage of the organisation (Chang, 2016).
Socio cultural: The elements of social environment represent the value of the population,
demographic characteristics, class structure, skill level, education level, culture, leisure interest,
etc. that affect organisational operations. This factor scrutinizes the social environment of the
market. Burberry expands in the variety of market that include; social cultural factors of new
market, emerging economies will affect how the company conducts business effectively. Along
with it, Culture of society and the way of doing things impact the culture of Burberry (Prajogo,
2016). The population trends like income distribution, age distribution, career attitude, growth
rate, etc. are essential for marketers for targeting the customer effectively and they are
responsible for providing them the services and products accordingly. Attitude and shared belief
of the population play a major role in how marketers at Burberry Plc will understand the
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consumer, their need, preference of a specific market. Authentic wear historic icons and heritage
make the brand so popular among the people.
The targeted people of the company give high preference to experiential products and
services (Hamilton and Webster, 2018). The company need to spend more energy to meet the
expectations and preferences of its potential targeted customers. There is an increasing trend of
inequality in Burberry's most prominent market that affect the power structure of the company.
Under its marketing strategy, company invest under-penetrated market.
Technological: Technological factor are the variables that are related to the existence and
development of technology and it refers to automation, R&D. This factor can directly affect the
business of Burberry Plc. The technological factor pertain to innovation in technology that may
affect overall operations of the company (Ibrahim and Primiana, 2015). In the case of Burberry,
technological factor include; emerging technologies, research and innovation, information and
communications, intellectual property issues, etc. that affect the business. The R&D of
organisation invest at both micro and macro level in sales and marketing. Dissemination and
development in mobile technology by sales and marketing has transformed the experience of
customer and it is not only essential to meet their expectations but they also have to innovate to
stay ahead of the competition. Burberry has focused its attention on exploiting the profit of social
networks for successful growth.
For example; Burberry applied this factor in the organisation to stay ahead from its
competitors and for enhance its productivity (Kozubíková, Homolka and Kristalas, 2017). For
example; the company launched a new website Burberry.com that allow buyers to make
purchase online. Burberry is the first company that use 3D technology in their fashion show and
allow audience to buy directly from the catwalk that makes the organisation recognisable. They
also introduce a website named artofthetrench.com in November 2009 from where consumers
can customize their products according to their preference. This social networking site is in
collaboration with leading fashion photographers. The arrival of digital to fashion has influence
consumer behaviour and revolutionized the shopping experience.
Furthermore, they set the mindset since 2006 after digital innovation aimed to reinvent
itself as an end to end digital enterprise and they have currently presence across 20 various social
platforms. Burberry delivered on the digitally focused business model in two main area; by
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creating a model for position in the in-store digital experience, and by going all in on social
media and mobile marketing.
The connectivity with their stakeholder is also main;y done through technologies and
telecommunications. The strategy was use to Big data and Artificial intelligence that help them
to meet customer satisfaction and boost sales. Burberry was the first brand who launch its own
dedicated channel on Apple Music.
Environmental: This factor relates to the environmental and ecological aspects that will
affect the demand of products of company and how Burberry operates (Leitner, 2016). The
environmental factor should be consider by every organisation such as; environmental protection
laws, energy consumption and waste disposal. The company operates in different countries that
have different laws and policies regarding environmental management. These factor posses
challenge to the organisation, as meeting all the environmental laws is expensive. Burberry
renewed their focus on diverting waste from landfill. The recycling partner of the company has
converted over 130 tonnes of raw material wastes and sample into insulation of car door.
Legal: Legal factor include; advertising standards, health and safety, consumer right and
policies, equal opportunities, product labelling and product safety, competition laws,
employment law should be considered by the company to develop strategy and to protect it (Lin
and et. al., 2016). There are many companies that make copies of Burberry products that
infringed its trademark. Burberry claimed to spend 2 million Euros a year to fight these
counterfeits. To protect the trademark from counterfeiting, Burberry works in collaboration with
the law enforcing agencies that help them to keep track of the counterfeits and sue the
perpetrators. It is important for the company to meet health and safety norms of the country as
well as it cost evaluation is also needed to meeting these norms (Nguyen and Bug, 2016). Legal
factor made impact on the value of business and on the fame. But they develop strategies and
take support of legal laws to overcome the factors.
CONCLUSION
From the above study it had been concluded that Burberry Plc in just few years it lost its
old traditional culture and developed new cutting edge trends to become a modern luxury brand.
In this process the development of effective strategies help them to beat the competition and it
always focused on new development and innovation in their products and services. The
governance structure and overview was given in the report that help in understand about the
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company in-depth. Micro environmental factor have some negative and positive affect on the
operations of the company and it had also analysed that company utilised theses factors very
effectively by marketing and operating strategies.
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REFERENCES
Books and Journals
Banica, L. and Hagiu, A., 2015. Big data in business environment. Scientific Bulletin-Economic
Sciences. 14(1). pp.79-86.
Calabrese, M. and et. al., 2018. From mechanical to cognitive view: The changes of decision
making in business environment. In Social Dynamics in a Systems Perspective. (pp. 223-
240). Springer, Cham.
Chang, J. F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Dechezleprêtre, A. and Sato, M., 2017. The impacts of environmental regulations on
competitiveness. Review of Environmental Economics and Policy. 11(2). pp.183-206.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Ibrahim, R. and Primiana, I., 2015. Influence Business Environment on the Organization
Performance. International journal of scientific & technology research. 4(4). pp.283-293.
Kozubíková, L., Homolka, L. and Kristalas, D., 2017. The effect of business environment and
entrepreneurs’ gender on perception of financial risk in the smes sector. Journal of
Competitiveness.
Leitner, J., 2016. Political risk and international business: Where they interfere, consequences,
and options. In State Capture, Political Risks and International Business. (pp. 52-66).
Routledge.
Lin, Y. and et. al., 2016. Political networking strategy and firm performance: a moderated
mediation model. International Journal of Conflict Management. 27(4). pp.570-590.
Nguyen, K. L. and Bug, P., 2016. Burberry: a model for successful technology integration.
Prajogo, D. I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics. 171.
pp.241-249.
Saleem, M. A., 2017. The impact of socio-economic factors on small business
success. Geografia-Malaysian Journal of society and space. 8(1).
Schaltegger, S. and Wagner, M., 2017. Managing the business case for sustainability: The
integration of social, environmental and economic performance. Routledge.
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Teece, D. J., 2018. Business models and dynamic capabilities. Long Range Planning. 51(1).
pp.40-49.
Zozulya, D. and et. al., 2015. Burberry Group PLC.
Online
Burberry. 2019. [Online]. Available Through: <https://www.burberryplc.com/en/index.html>.
Burberry's share of revenue by product division. 2018. [Online]. Available
Through:<https://blog.euromonitor.com/burberry-puts-on-a-brave-face-as-luxury-goods-
environment-worsens/>.
PESTLE Analysis. 2019. [Online]. Available
Through:<https://www.business-to-you.com/scanning-the-environment-pestel-analysis/>.
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