Relevance of Stakeholder Relationship Management for 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?