Analyzing the Impact and Influence of Macro Environment on Burberry's Business Strategy

This report analyzes the impact and influence of macro environment on Burberry's business strategy. It includes frameworks like PESTLE analysis, SWOT analysis, stakeholder analysis, and Ansoff matrix. The report also examines Burberry's internal environment and capabilities using the resource-based view and VRIO analysis. It provides insights into how Burberry can leverage its resources to gain a competitive advantage in the luxury fashion industry.

Business strategy

Contents
INTRODUCTION.......................................................................................................................................3
TASK 1.......................................................................................................................................................3
P1/ M1 Application of appropriate frameworks to analyze the impact and influence of macro
environment on the company and its strategies.......................................................................................3
TASK 2.......................................................................................................................................................8
P2/ M2 Analyze the internal environment and its capabilities of the company by using effective
frameworks..............................................................................................................................................8
TASK 3.....................................................................................................................................................10
P3 Application of Porter’s five forces in order to evaluate the competitive force of company..............10
M3 Devise appropriate strategies to improve competitive edge and market position based on the
outcomes................................................................................................................................................11
TASK 4.....................................................................................................................................................12
P4/D1 Devise strategic planning for the company using range of model, concepts and theories...........12
M4 Produce strategic management plan that has tangible and tactical strategic priorities and objectives.
...............................................................................................................................................................13
CONCLUSION.........................................................................................................................................15
REFERENCES..........................................................................................................................................16

INTRODUCTION
The Business strategy is referred to as those means by which the pre- determined
objectives of the business can be achieved by way of planning. It is also called as long term plan
wherein the organization is engaged to work according to it so that it can gain the competitive
advantage in the market and focused to achieve its goals. There are many aspects of business
strategy which involves the offering of the company, target customers, market which is to be
served, target and objectives and many others. It consists of the guiding principles that help the
organization to make efficient decision with the aim to expand and grow the business. When a
company has a definite business strategy, it can allocate the resources and then prioritize them in
an appropriate manner so that the goals of the organization are achieved on time and effectively
(Aveh, 2018). The organization chosen for this report is Burberry which is a leading luxury
fashion house that is headquartered in London. It was founded in the year 1856 and serves its
product worldwide. This report shall cover the impact and analysis of external environment,
analysis, the analysis of internal capabilities and environment, competitive analysis and lastly the
strategic planning using various frameworks and models.
TASK 1
P1/ M1 Application of appropriate frameworks to analyze the impact and influence of macro
environment on the company and its strategies.
The external environment consists of the macro environmental factors which have a huge
influence in the working of the company. There are various frameworks which are used to
analyze the macro environment which are discussed below for the Burberry -
PESTLE Analysis
It is a tool that is used in identifying the external factors which influences the decision
making of the organization (Jain and et. al., 2018). In relation to Burberry, it is narrated
thereunder -
 Political- It is concern with interference of government in the working of company.
Burberry operates across the globe so it is required to comply with different rules and

regulations that are laid down by different countries. The states which have stable
political environment make it easy for Burberry to operate. Brexit in UK has left the
uncertain environment where Burberry is under the dilemma as to what rules will change
and what will be the impact on its profitability.
 Economic- It deals with the economic factors such as inflation rate, economic growth,
etc. Due to the impact of pandemic of COVID-19, there is an economic downturn where
the purchasing power of the people reduced. This resulted in changing of customer
preference to buy affordable goods instead of luxury. This affected the brand of Burberry
and resulted in reduced profit and sales.
 Social- It includes the demographic characteristics of the society. The target audience of
Burberry has different lifestyles and culture so Burberry has to consider all these factors
when distributing its product. It uses social media platforms to increase the customer
engagement so that it can collect important information about the customer experience.
 Technological- It is concerned with the adaptation of technological advancements in the
organization. Burberry uses advanced technology in advertisements so that it can reach
the target customers. It introduced online shopping that created efficiency as the
customers were assessing the products online. Its fast delivery added more efficiency in
taking competitive advantage.
 Environmental- It is concerned with the working of organization that affects the ecology
and the environment. Burberry make sure that it offering does not cause any damage to
the ecology so its product like inner clothing, socks and pants are made from the organic
cotton which does not harm the environment.
 Legal- It involves compliance with the legislation and rules. Burberry abides the legal
laws of every country where it operates. The favourable regulations heads in placing
positive impact on its performance while the unfavourable regulations can result in
compromising the profitability of the firm (Martí, 2017).
SWOT analysis

It is a tool that is used to identify the strength and weakness of the organization together
with the opportunity and threats so that it can know about its inner capabilities. In context to
Burberry, the SWOT analysis is discussed below-
STRENGTH WEAKNESS
 Burberry has a popular and strong
brand image which is its biggest
strength. Its brand value helps in loyal
customer retention that also helps in
maintaining the customer base in order
to maintain its profitability.
 Burberry is also engaged in designing
its product where it has distinctive
design which attracts the customers to
avail the luxury products, thereby
giving them luxury experience.
 Burberry has a global presence across
the world where it serves in more than
420 locations. Its brand image is
created across the world that helps the
customer to avail its service from all
around the world (Ahmad and
Krishnan, 2017).
 Burberry deals in luxury products so its
price is relatively higher which can
only be afforded by the high income
people. It does not serve anything for
the average income people which are its
biggest weakness as it fails to attract
them.
 Another weakness of Burberry is its
product line where it deals only in
fashion industry. Its limited product
line fails in attracting huge customer as
its competitors had broaden its product
line by introducing personal grooming,
home decor and furniture and other
segments.
 The significant proportion of sales
comes from the Asian market so any
change in the customer preference or
taste, economic, political and social
environment may affect the disposable
income of the Asian consumers which
can affect the revenue and profits of the
Burberry.
OPPORTUNITIES THREAT
 Burberry can enter emerging markets
such as Turkey, Thailand or Egypt so
 There is an intense competition in the
market whose global presence may

that it can increase its revenue by
penetrating in these markets.
 Another opportunity for Burberry can
be to expand its range of products so
that it can make differentiation from its
competitors and attract a different
customer segment into its business.
 Burberry can expand its market size in
the developing nations where there is
demand for the premium products. It
deals in luxury product line which can
be profitable for Burberry for
generating high revenue (Harris, 2018).
threaten the market position of
Burberry. Competitors such as Gucci,
Louis Vuitton or Prada may threaten
the existence of Burberry in the global
market.
 The premium brands often face many
issues relating to fake products that can
affect the brand equity. Any imitation
of the Burberry's product line may
affect the reputation of the company
and its competitive position what which
can result in damaging the profitability
of the firm.
 There is a continuous change in the
fashion and lifestyle which is also one
of the threats to the company as these
products have the shortest life cycle.
This can affect the long term
profitability of the Burberry
Stakeholder analysis
This is a technique that is used to identify the top personnel of the organization so that there
can be effective planning for the expansion and growth of the organization. In order to analyze
the stakeholders, power interest grade is being used so that they can be prioritized on the basis of
the interest and power. In relation to Burberry, it is discussed below-
 High power high interest- The stakeholders which are categorised in this category have
high power in the business. They are required to be closely monitored due to their high
interest and power. In Burberry, the owners and top level management are categorised in
this category because they have high decision making power in the organization.

 Low interest high power- It includes those stakeholders which are necessary to be kept in
loop and also satisfied because of their high power in the organization. The employees of
Burberry come into this category because they are required to be satisfied in the
organization due to their high power.
 Low power high interest- It comprises of those stakeholders which are required to be just
informed about the working of the business. They have high interest and low power in the
organization. The customers of Burberry are included in this category due to their high
interest but low power in the decision making.
 Low power low interest- It comprises of those personnel that has less power and interest
so they are only required to be monitored but are not needed to be given excessive
information. The suppliers and the government come under this category because they
have low interest and power in the business (Büyüközkan and Ilıcak, 2018).
Ansoff matrix
It is a tool that comprises of various strategies that can be used by the organization to expand
its business. In relation to Burberry, these strategies are discussed below that can be opted by it
in order to grow and expand its operation.
 Market penetration- This strategy involves focusing on the existing product and service
in the existing market with an aim to increase the sales only. Burberry can use this
strategy to enhance its sales volume in its existing market so that its profitability is
enhanced.
 Market development- This strategy focuses on same product and service but introducing
it into a new market so that the new customer segment is attracted. Burberry can adopt
the strategy when it requires the expansion of its operation in the new market.
 Product development- It focuses on introducing a new offering to the customer in the
existing market so that the consumers are served with different offering. Burberry can opt
this strategy in order to take competitive advantage in the market with its different
product line with an aim to increase profitability.
 Diversification- It involves entering a new market with the new offering so that the
company can take competitive advantage in a new market. Burberry can adopt this

strategy in order to look different from its competitors so that a new customer segment is
created and attracted for the company (Suriyanti and et. al., 2020).
TASK 2
P2/ M2 Analyze the internal environment and its capabilities of the company by using effective
frameworks.
It is very essential for the company to analyze its internal capabilities and environment so
that it can make efficient use of the resources which can help in accomplishing the
predetermined goals. The internal capabilities will help the organization to allocate its resources
in such a way that they provide competitive advantage to the firm and helps in achieving
sustainability (Kublinskis, 2019). The following frameworks can be used by Burberry to analyze
its internal environment and capabilities.
Resource based view
There are commonly two kinds of resources for a business which includes tangible that
comprises of resources such as car, land, machinery, etc. and intangible which includes
intellectual property rights. This framework does not provide that all resources are of equal
importance rather it just helps in optimum utilization of resources so that the company can take
sustainable advantage in the market.
VRIO analysis
It is a tool that is used for assessing and then evaluating the resources of the business in order
to determine the strategic advantage. It mainly facilitates in identification of the long term
competitive advantage of the firm through evaluation of its internal resources and capabilities
with an aim to develop a sustainable competitive advantage (Rengarajan, Moser and
Narayanamurthy, 2021). In relation to Burberry, its resources are classified into 4 different
categories that are aimed to provide sustainable advantage to the company. These are discussed
below-
 Valuable- It comprises of those resources which add value to the business. The valuable
resource for Burberry lies In the Britishness of its products, mainly the trench coat roots.

The company was known for its coats and the brand image of Burberry for these coats is
very valuable for it as it is its brand identification.
 Rare- It involves those resources which are very rare for the company. As Burberry is
focused on its Britain origin and its brand image created is very rare in the global industry
that is mainly populated by the Italian and French luxury brands. In simple words, the
brand image of the company is its rare resource.
 Inimitable- It comprises of those resources which are very difficult or expensive for other
competitors to copy or imitate. As Burberry is known for its product line, these are very
much difficult to imitate for the competitors as it is being designed a long back ago. The
British identity in the clothes of Burberry is its inimitable resource.
 Organized- It includes those resources which are placed in an organised manner. The
centralised and the consistent design is its organized resource which helps Burberry in
attracting the customers. The company hires more than 1000 people specifically for
producing the designing clothes so that its brand image is maintained (Barbosa,
Castañeda-Ayarza and Ferreira, 2020).
McKinsey’s 7S
This is a framework that comprises of internal elements which are divided into 2 categories that
includes hard and soft elements. According to this model, there are 7 internal elements which
help in performance enhancement for the organization (Dewanti and et. al., 2018). In context to
Burberry, this tool is narrated thereunder-
 Strategy- It is a plan of the organization in order to build and maintain the competitive
advantage in a marketplace. The Burberry uses ansoff matrix for it strategy where it
specifically focuses on diversification and product development in order to attract more
of the customers.
 Structure- It provides how a business is organized in terms of different departments and
teams. Burberry uses matrix organizational structure where every employee is required to
report to more than 2 managers rather than one.
 System- It includes the day to day activities and procedures of the business that are used
by the workforce to get there work done. Burberry has a system where its objectives and
missions are the core indicators. It has different systems such as management, operations,

marketing and product designing which altogether helps in achieving the business
objectives.
 Shared values- It mainly comprises of the core values of the organization which depicts
the work culture and ethics. Burberry have a customer centric approach where it allows
its employees to share the value of the customer satisfaction together with building the
brand reputation so that the customers are given enhanced experience which will help in
maintaining the brand image of Burberry.
 Style- It involves the leadership style adopted by the leaders of the business. Burberry
follows participative leadership style where every employee has the right to speak and
participate in discussions. As the company deals with the customers that have high
fashion sense, so it is important for the firm to engage its employees who have daily
interactions with them in order to know their needs and demands.
 Staff- It is concerned with the number of workforce employed in the organization and
their capabilities. Burberry currently employs approximately 10,000 workers in its
business so that it can globally serve the customers with it high quality products.
 Skills- It relates to the capabilities and competencies of the workforce engaged in the
business. Burberry has a well- trained and skilful workforce that helps it in operating at
national and international level. Its talented workforce serve the international and national
markets so that its brand image is built and maintained (Ochoo, 2018).
TASK 3
P3 Application of Porter’s five forces in order to evaluate the competitive force of company.
It is a model that is used to identify and analyze the competitive environment of the
business. In relation to Burberry, this framework is discussed thereunder-
 Threat of new entrants- This force is mainly concerned with the ability of the new
organizations to enter the industry. The power of this force for Burberry is low because it
is very difficult for the new entrants to come up with luxury accessory and clothing as it
requires high fashion sense and investment. Moreover the brand image of Burberry shall
not be so easily threatened by the new entrant due to its loyal customer base.

 Threat of substitute- This force involves the availability of the substitute of the product
or service in the market. The power of this force is high for Burberry because there are
various options for the clothing and accessories available in the market which are offered
by end number of organisations. Moreover the high competition in the market threatens
the market position of Burberry.
 Bargaining power of suppliers- It involves the ability of the suppliers to drive the prices
high. In relation to Burberry, the power of this forces moderate as there are many
manufacturers across the world that can finish the production process themselves. For
instance, Burberry has a long partnership with some vendors that provide them with the
unique material that is used to make the trench coat. This place is the high bargaining
power of the supplier for the company.
 Bargaining power of customers- It relates to the ability of the buyers to drive the price
low. The power of this force for Burberry is moderate to low because it offers high price
range for its luxury brands for which the customers have low power to change but the
switching cost is relatively low that provide strength to the customers to drive their prices
low to some extent.
 Competitive rivalry- It involves the number of customers and strong position in the
market that can affect the business of the organization. For Burberry, the power of this
force is moderate to high because there is a high competition in the fashion industry that
consists of top brands such as Gucci, Prada, and many others (Bolcaş and Ionescu, 2017).
M3 Devise appropriate strategies to improve competitive edge and market position based
on the outcomes.
The Porter’s five forces model can be used by Burberry in order to initially analyze the
competitive environment so that it can improve its competitive edge in the market. It is a
framework which can be used by companies to analyze the industry and make such strategy in
order to take competitive advantage. This strategy helps it to position itself into the market so
that it can generate high profitability. The competitive analysis will help in providing the actual
industrial position which can help in drawing adequate strategy to position the company
effectively.

TASK 4
P4/D1 Devise strategic planning for the company using range of model, concepts and theories.
Porter's generic strategy
It is a framework which is used to determine the market position of the industry. It comprises
of 3 methods by which the organization can position itself in the market. Burberry can make use
of any of these methods that are discussed below-
 Cost leadership- This strategy requires the company to become the low cost producer so
that it can become the cost leader in order to retain the existing customer base and attract
the new customers. Burberry can use this to become the market leader by offering its
products at relatively low cost to capture more market.
 Differentiation- This strategy involves the business to position itself uniquely in the
market by selecting a single attribute that is perceived by the customer so that it can
position itself in order to meet their demands. Burberry can adopt this strategy and bring
a new product range in order to take a competitive advantage in the market.
 Focus- It is based on a choice of narrow competitive scope. Here, the business selects
one segment and develop a strategy aligned with it. It comprises of 2 variants, first is cost
focus wherein the company sets to take a cost advantage into a target market and
secondly, differentiation focus where it makes a differentiation in the offering. Burberry
can make use of any of its variants in order to enhance its service (Mahsud, Imanaka and
Prussia, 2018).
Bowman’s strategy Clock
It is a tool that supports the business in getting the correct position with its strategy so that it
can effectively position itself into the market. It is aimed to take the competitive advantage.
Burberry can make use of any of these strategies that are discussed below-
 Low price- This strategy requires the organization to offer its goods or services at a low
cost. Burberry can use this strategy to attract new customers segment by offering its
products at low cost.
 Low value and low price added- This strategy involves adding a very little value to the
product and offering it to the customers at low price with an aim to increase the sale.

Burberry can use this strategy to attract other segment of the market that has low
disposable income.
 Differentiation- It involves making the differentiation in the offering by adding a high
perceived value. It mainly engages the firm to bring people some new offering into the
market. Burberry can opt this strategy and introduce an innovative offering for its
customers.
 Hybrid- It is a combination of differentiation and low price where in the company offers
the products at competitive price and promotes the added value in the offering. Burberry
can make use of this strategy to increase its sales.
 Focused differentiation- It involves offering the high value goods and services to the
customers at a relatively high price. This strategy cannot be adopted for a longer term but
is suitable for short period of time in order to generate high profit.
 High risk margin- In this strategy, the company offers the products at high cost without
addition of any perceived value. Burberry can use this strategy to generate high profits as
its product will be sold at a higher cost.
 Loss of market share- It is a strategy that can be used by company where it has to make
an exit from the existing market and enter a total new market so that a new customer
segment is attracted. Burberry can use this strategy by making an exit from its existing
locations and moving forward to a new Market
 Monopoly pricing- It involves taking control of the price in the market by a single
company (Holmqvist and Ruiz, 2017).
M4 Produce strategic management plan that has tangible and tactical strategic priorities and
objectives.
Vision Its vision statement is to establish the market position of Burberry
in the luxury fashion. It is aimed to drive the sustainable growth and
the high margins while also continuously delivering the attractive
returns.
Mission Its mission statement is to sharpen the market position of Burberry
in the enduring and rewarding market segment so that there is
sustainable growth.
Strategy For attracting more of the customer segment and increasing its

sales, Burberry can opt the product development strategy where it
will introduce something new in the same market a it is less risky.
Tactics  Product- The company can offer the personal care products
to the customers so that it can create its brand in this product
line.
 Price- It will adopt the competitive pricing where it will
select the price similar to that of the customers so that the
customers are attracted.
 Place- The personal care products will be made available at
the physical outlet of Burberry and on online platforms.
 Promotion- Burberry can promote its new offering on social
media and other channels of marketing so that it reach large
audience in short span of time (Gray, 2018).
Evaluation The performance of this plan shall be evaluated by using the
benchmarking tool by which the company will set the standard and
then compare its actual performance with that of the standard set.

CONCLUSION
It is summarized from this report that it is important for organizations to come up with
business strategies that can help in developing the long term plans with the sole motive to
achieve the objectives. Before developing a business strategy it is important to analyze the
external environment and the internal capabilities so that an efficient plan can be created. It is
also important to analyze the industry so that the company can plan to position itself in the high
competitive market. Further it is added that strategic planning can help the business to grow and
succeed for a longer term.

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