Relevance of Stakeholder Relationship Management for Luxury Brands

This research aims to analyze the relevance of stakeholder relationship management for luxury brands and identify the impact of external environment on luxury brands. It examines the concept of relationship management with stakeholders, identifies the challenges faced by managers in building and maintaining stakeholder relationship, analyzes various external environmental factors and their significance in business, determines the relationship between external factors and luxury brands, advises luxury brands for water usage and the fabrics to effectively deal with external environmental factors, and recommends strategies for developing healthy relationships with stakeholders of luxury brands.

1.0 INTRODUCTION
1.1 Background
Stakeholders are the parties who have invested in the company and these parties can
affect the company or get affected by a company. The stakeholders of a company are
mainly of two types, they are primary and secondary stakeholders (Astudi and
Utami,2018). The primary stakeholders of the company are present within the company
they are the internal stakeholders including managers, employees, shareholders etc.
The secondary stakeholders are the external parties interested in the activities of the
company and include investors, regulators, consumers, suppliers, etc. The stakeholders
of the company are an extremely important party affecting the success of the business
as they help in building relationships with the external parties and also help in building a
strong internal environment.
The luxury field has several features that have allowed experiencing a spectacular
evolution over time, to acquire remarkable stability and power of recovery after adverse
economic events, including world-wide. It can be said that luxury has come to be
desired by almost everyone, though only some can afford it. The progressive expansion
of global demand makes it possible to meet in different parts of the world various
evolutionary stages of the luxury market, which creates new opportunities, as well as
challenges. For example, the stakeholders for luxury brands Gucci and their
significance in the company are described below the main stakeholders are employees,
managers, government, etc.
Employees: Employees of the company as the stakeholders create the economic
wellbeing of the company (Barnett, Henriques and Husted 2018). According to an
Independent article, Luis Vuitton employee staffs are very satisfied working for the big
enterprise everything is very productive with their product training and staff development
that helps you in your career progression (Sara Yung, Tuesday 4 October 2016)
Managers as stakeholders play a key role in the success of the business. As the
manager's forms and designs the project in such a way that it increases the company

value in the market (CARDONA and et.al., 2018). A manager always focuses on the
management of the company stakeholder by hearing the suggestion of the stakeholder
and use to decide based on that. Burberry the British luxury fashion house signifies
managers to develop the management work in quality for increasing the company sales
and improve the company financial report by comparison with the previous financial
report and take measures to improve it.
Government: The managers of luxury brands always try to build a strong relationship
with the government to help the company to become more successful by following all
the rules and regulation of the company. The government can get benefits for
increasing the economic wealth of the company (Hayes, 2018).
The role of investors is that they provide financial help to the company for investing the
money in a different activity. Investor used to get the monetary return from the
company..
SHAREHOLDERS: The shareholders invest in the share capital of the company and
become the owner of the company by the proportionate share taken by the shares.
(Hazlett, McAdam, and McKee, 2019). The significance of the luxury brand Gucci
shareholders is that the company distribute the dividend to the shareholders when the
company had earned the profit it is not compulsory to give every financial year when the
company had incurred losses. Hence the pressure of giving dividend lies less on the
company.
Impact of external environment on luxury brand
High use of raw materials in the manufacturing of luxurious brand product results in
increasing its scarcity which causes a rise in the price of the brand products. This is
becoming a threat to the firm as with raising the price of the goods, no. of sales of the
brand is decreasing. Meanwhile, the company also have to face high competition from
the market at the international level as the competitors' controls the market by changing
their strategies or by lowering the prices of their products. Manufacture of luxurious
brands consumes a high amount of natural raw material which is causing pollution and

high risk to public health along with increasing environmental risk, for which firm has to
become a social activist and also has to get engaged with its responsibilities towards
nature by fulfilling its CSR responsibilities. The sales of luxury goods also get affected
by some of the political factors. Such as changes in the policies of the government
along with changing government and due to the high tax rates of the country which
results in increased operating cost. For manufacturing luxurious product in the
company, a high amount of water and natural fabrics are used due to which natural
environment gets affected and developing issues like decomposability. Due to all the
environmental factors of the luxurious products is facing no. of problems such as
increasing costs of the resources and responsibilities of the firm towards nature, and
decreasing number of sales, lowering the profits.
The company faces problem in managing the relationship to take care of all the
shareholders and fulfil their need with the satisfaction in terms of dividend received by
the shareholders and the overall profit earned by the company (Jachi and Yona, 2019).
External environment impacts badly on the luxury brand and affects its sustainability.
This is the major problem and reason why the researcher selected this topic for further
study.
1.2 Importance of problems
An investigation into the problems that luxury brands are facing in managing the
relationship with stakeholders is that the stakeholders focus on safeguarding their
position in the organization and they always try to influence the functioning of the
business according to their need which influences the work of the company and
sometimes it becomes a big problem for the organization. Through the critical analysis,
the stakeholders of the company have been finding that there are many confusions in
regarding the function of the organization is created by the stakeholder due lack of the
effective communication in between the company and stakeholders (Kannan, 2018).
The result of the investigation has established that relationship with stakeholders not
able to fulfil the social and governance responsibility of the luxuries brand like Gucci. As
per a report a critical investigation was done on the supply chain of the company in

relation to management of stakeholders of the luxury brand Gucci supply chain uses the
direct and indirect channel of distribution for increasing the brand awareness of the
company in public establishes to attract more stakeholder for the company (IMPACT OF
STAKEHOLDERS, 2019).
1.3 Aim of research
Aim
The research aims 'To analyze the relevance of stakeholder relationship management
for luxury brands and identify the impact of external environment on luxury brands: A
case study on luxury brands.
Objectives: -
2.0 RESEARCH OBJECTIVES (200 words)
Objectives
 To examine the concept of relationship management with stakeholders.
 To identify the challenges faced by managers in building and maintaining stakeholder
relationship on luxury brands.
 To analyses various external environmental factors and their significance in business
 To determine the relationship between external factors and luxury brands
 To advice luxury brands for water usage and the fabrics to effectively deal with external
environmental factors
 To recommend the strategies relevant to the development of healthy relationships with
stakeholders of luxury brands.
 Research Questions
 What are the various external environmental factors and their significance in business?
 What is the relationship between external factors and luxury brands?

 What are the ways that luxury brands can use for water usage and the fabrics to
effectively deal with external environmental factors?
3.0 LITERATURE REVIEW (1000 words)
External environmental factors and their significance in business
Companies which deal in luxury goods like bags, watches, fur coat etc. are facing the
problems of lack of natural resources and hence they are willing to protect them and
nurturing them. It is an essential term for the luxury brand industry. The luxury brands
are careful about their carbon footprints and promote themselves as environmentally
friendly brands. Thus, it shows that the environment factor (external factor) is affected
from from the business. Such firms are investing in the environment and develop
sustainability. Luxury brands were using environmentally friendly raw materials and
packaging materials. In the current period, buyers are looking for products which do not
harms the earth (Amatulli and et.al., 2017). The firm which manufactures the luxury
goods needs raw material like leather or fabric such fabric consumes more water in
fomentation which leads to the shortage of water and polluted the water with the use of
harmful chemicals in the fabric. The brands should remove such carbon footprints and
adapts the corporate social responsibility initiatives to maintain the brand image in the
market.
Luxury brands were facing the challenges in the market due to the economic factors like
buyers are looking for the insurance goods before the purchasing and skimmed prices.
These are the issues that can affect brand goods economically. Luxury brands
companies can contribute to the rising of the global economy by an increase in GDP
and upgrades the living standards of the individual. Thus, it is the economical factor that
affect the business in negative way. Technological factors also impact the business of
luxury goods. Firms are needs to adapt the advancement of new technologies because
individuals are aware of the new product launch by the brand. Therefore, it may affect
the business in negative way.

Social factor is another external factor that affect the business in positive and negative
way. Such that the luxury brand needs to keep the buyers happy by giving them unique
and attractive products with abiding the environmental laws (Kapferer and Michaut-
Denizeau, 2017). Political Factors (another external factor) like government changing
and change in the laws regarding luxury goods affect the sale of luxury branded goods.
Relationship between external factors and luxury brands
All the external factors which include political, legal, economic, social, environmental as
well as technological that are important. But the environment factor is an essential
external factor for every industry whether it is the automobile industry, clothing industry
or any other. Every firm should consider the environmental factors like cutting of trees,
wastage of resources etc. while producing any products to protect the environment.
Talking about luxury brands which produce bags, watches etc. The company especially
needs to produce the eco-friendly products for protecting the environment.
As products like leather bags and watches are produced by the luxury brands but some
consumers don't prefer it as these bags are made of animal skin so it can affect the
customer relationship and environment as well for the company (Amatulli and et.al.,
2017). Today the customers want the products that do not damage the environment.
The company, those who produce the luxury products it needs material like leather, fur
and fabrics.
Water usage and the fabrics to effectively deal with external environmental
factors
The leather which is used to create the bags and fur to create warm clothes are brought
by killing the cows and other animals and then its skin is used which can lead reducing
animals around 50 million every year. At the same time the fabrics that are used,
consumes lot of water for fomentation that wastewater which is toxic. That comes from
the industry and it directly goes to the rivers that can affect the health of billions of
individuals, those who live at the river banks .The contaminated water reaches to the

sea, then sooner or later it spreads all over the globe which will result to polluted water
as well as water shortage.
For achieving sustainability for the long-term the company should maintain the
ecosystem by reducing waste as well as pollution the company should make use of
technology to produce the leather bags and other products as the technology is
advanced. The alternatives have emerged in respect to leather that is synthetic
alternatives like polyurethane (PU) which reduces global warming as well as pollution.
The company should manufacture products by abiding the environmental as well as
ecological factors to satisfy the needs and wants as well as to protect the environment
(Kapferer and Michaut-Denizeau, 2017). The company should use the organic materials
instead of using of chemicals for producing bags and watches, optimum use of
resources etc. and recycling of the product which can result to the sustainability of the
environment increase in brand value of the company for the long term.
4.0 METHODOLOGY
4.1 Research design, approach, type
Research philosophy and paradigm: for current study, researcher chooses
interpretivism research philosophy because it is based upon the assumptions of the
researcher and It is also used in qualitative research methods. Theerfore, to attain the
aim i.e. To analyze the relevance of stakeholder relationship management for luxury
brands and identify the impact of external environment on luxury brands, choosing
interpretivism research philosophy is consider the best method in order to conduct the
research in more precise manner.
Research Methodology:
Research Methodology is the technique used to identify, process, select and elates the
information about the specific topic (Quinlan and et.al., 2019). It refers to the theoretic
analysis of the system of methods and rule used in a specific discipline. For the current

research, researcher chooses mixed methodology which involves collecting, analyzing
and also integrating the quantitative as well as qualitative research.
Research Design:
Research Design is the set of methods and operation used in gathering and evaluating
the measures of the variables in the particular research problem. (Daniel and Harland,
2017). There are four types of Research Design, first one is Correlational Design is
explore the relationship between variables using statically evaluation. It is the empirical
term of data collection. Second, Descriptive design seeks to exploit the current status of
the variables. In this design, the researcher does not begin with a hypothesis but
develop one after the collection of data. The third design is Experimental Design which
is used to establishing the cause and effects relationship among the variables in the
research study by using the scientific method (Basias and Pollalis, 2018).
In the current study, the researcher will apply the descriptive design because this design
facilitates the effectivity in the evaluation of topics and issues. There is the possibility to
observe the variables in an unchanged natural environment. It is adapted by the scholar
because it consumes less time than other designs.
Research methods: for this research secondary research method are used in which
researcher review different articles, copyright protected website, books in order to
conduct the research in more better way. Further, the method also helps to save efforts
and time but in the same time, it also provides incomplete information that affect the
entire research in opposite way. In order to ensure with the quality of data, researcher
chooses recent articles (from 2015 onward) and use using specific key term related to
topic, researcher find different journals that helps to make sure that research is on right
track. Further, using copyright protected articles, researcher easily ensure the quality,
validity and reliability of the data.
Research approaches:
Research approaches are the plan that consists of the steps of broad assumption,
analysis and interpretation of data collection. The research approaches can be divided

into two types in which the first one is, Deductive research approach is concerned with
the developing a hypothesis which is based on the existing theory and after that the
designing the research strategies to test the hypothesis. This approach facilitates the
possibility of explaining the causal relationship between the concept and variables
(Quinlan and et.al., 2019). second type of research approach is Inductive approach
which starts with the theory and observations. Its analysis the narrative description and
constant comparison among the variables. This approach involves the search of the
pattern from the observation and development of explanatory theories.
In the current study, the researcher will apply the inductive research approach because
this approach gives work with probabilities and not all the probabilities will be true but it
provides the various options. Inductive approach fuels more exploration to test if the
result is right or wrong. That is why the researcher uses such an approach for the study.
Research types:
There are two types of research are the following:
Qualitative Research and Quantitative Research:
Qualitative research is the exploratory research which can be used to understanding the
opinions, motivation and reasons underlying. It helps to develop the hypothesis for the
potential qualitative research (Basias and Pollalis, 2018). Qualitative research approach
collects the data to unstructured or semi-structured techniques. While Quantitative
research is used to identify the research problem by creating the numerical data which
transfers to the usable statistic.
In the current study, the scholar will apply the Qualitative research because this
research provides the depth detail of the problem and analysis the ranks by recording
attitude and behavior. It creates openness and encourages individuals to expand their
responses.
4.2 Rationale

In this research, the scholar applies the descriptive research design helps to identify the
variables that can be tasted. It studies the results in the rich data that collects in the
huge amount. This design gives an opportunity to integrates the methods of data
collection while performing research. The researcher uses the inductive approach in the
study because it can be used to improves the user experiences and gives a high rate of
probabilities (Daniel and Harland, 2017). It takes particular observation and provides the
conclusion out of them. In this study, the scholar will apply the qualitative research
depth and detailed analysis of the problem and arrange it according to the behavior and
attitude recordings.
5.0 RESEARCH ETHICS
Ethical consideration in research is very critical. Ethics are the standard or norms for
establishes the research which provides the differences between the right and wrong.
Many principles should be keeps in mind to performing the research. The research will
not harm any informed consent and participants (Quinlan and et.al., 2019). There is a
norm that researcher must protect the anonymity and confidentiality of research
participants and other components.
6.0 LIMITATIONS
One of the limitations of this research is that there is less time to establish research.
The duration of the projects is estimates of each task and there is no real completion of
time exceeds. The researcher has less budget for collecting more informational data.
There is a lack of prior research studies on the topic. Because of the lack of
experiences in primary data collection the implementation of data collection is flawed.

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