Burberry Business Environment Analysis

The provided document is a detailed analysis of Burberry's business environment, which includes an examination of internal factors such as organizational structure, infrastructure, and productivity level, as well as external factors like legal laws, consumer rights, product safety, and labeling. The report also discusses the importance of maintaining relationships between management, employees, and customers to minimize disputes and ensure long-term success.

PESTEL analysis of
Burberry

Table of Contents
INTRODUCTION...........................................................................................................................3
Overview of Burberry ...........................................................................................................3
1: Examine management structure and governance of Burberry company............................4
2: Access and evaluate the effects of external environmental influences on Burberry
organisation............................................................................................................................7
CONCLUSION................................................................................................................................9
REFRENCES.................................................................................................................................10

INTRODUCTION
Business Environment include internal as well as external environmental factor that
influences the working or performance of business. In simple words, the performance of business
depends upon raw material, government regulations as well as on the performance of internal
staff to achieve the objective of business. Thus, there are various factor which are beyond the
reach or control of business, they act as a a constraint in the growth or survival of business. In
such case business can only take effective decision in favour of its operations. For the better
understanding of report, Burberry has been taken whose headquarter is in London, England. It is
basically family controlled independent company that mainly deals in clothing, fashion
accessories, cosmetics, fragrances, sunglasses and so on. This report contain following topics
like management structure and governance of Burberry. Apart from that discussion will be made
on effects of external factor which is PESTEL that influences the performance of business (Zada,
2017).
Overview of Burberry
Burberry is a public limited company which is luxury fashion house of Britain and serve
its brand worldwide (About Burberry, 2018). It manufacture as well as market several brand for
categories like kids, men and women apparel. Moreover, to gain the competitive advantage over
rivalries respective company has taken the licence of its fabric and extend its brand to cover
various category. For instance, in clothing industry Burberry extended its brand for fashion
conscious group that is younger generation and launched designer collection of Prorsum for its
premium customer. Apart from clothing category company expanded their business in
fashionable accessories, sunglasses, perfumes and so on. Furthermore, the current chairman of
Burberry is Dr. Gerry Murphy who is 62 year old, along with that there are total eight board of
directors within the company. However, among them seven members are part of non executive
director and one is executive director (Zada, 2017).
This company was founded in 1856 by Thomas Burberry, they started their invention
with gabardine fabric which is breathable as well as weatherproof fabric. Additionally, respective
company took the patent of gabardine fabric in 1888 and then they diversify their business to
various places. Then from 2015 onwards company sell their brand through their outlet and put

more emphasis on online medium to capture the market globally. Moreover, respective company
launched various new brand like monogram and logo with Peter Saville.
1: Examine management structure and governance of Burberry company
Management structure: IT emphasise on the task, level of communication, authority as
well as duties to be performed by organisation. It simply define role, responsibility and power
assigned to various level of management on the basis of strategies and objective of organisation.
Different organisation adopt different structure on the basis of its business size. Therefore,
adoption of management structure uniformly allocate the authorities of organisation. There are
various types of management structure like functional, divisional, strategic and so on.
Functional management structure: Within functional structure, each function has its
own hierarchy and the manager of each hierarchy has expertise knowledge over its function.
Among various level of management structure Burberry has adopted functional level strategy to
provide long term success to company by achieving sustainable development. This strategy
provide benefit to all its shareholders including customers, investor, government and so on. Here,
each department or function wheteher it is operation, finance, human resource etc. are grouped
together and headed by specialist (Dimitrakopoulou, 2015).
Divisional organisational structure: Within, divisional organisational structure people
having same specialisation, skill and interest are categorised together. Therefore, under this
structure organisation basically decentralise the roles and responsibility of various division to
achieve their group target effectively. The prime advantage of divisional structure is that it has
independent operational flow, which means failure of one operation or company does not affect
or threaten other's existence.
Strategic business unit structure: Strategic business structure is basically used by big or
large organisation. They are the independent division of parent company having their own
purpose, vision, objective as well as long term plan. Therefore, the profit which business derive
after making the use of strategic business unit structure is that it provide an opportunity to new
business unit to exploit the market opportunity by identifying the strategic direction and makes
the better business decision (Parab and Salker, 2018) .
Matrix organisation structure: Within this structure interaction take place between
functional department as well as project manager. They together overcome the organisational
issue to provide the direction to financial manger and attain the overall objective of organisation.

The main advantages associate with this type of management structure is that it clearly articulate
the objective of project and makes the optimum utilisation of resources like manpower.
Horizontal/Flat structure: This type of management structure is only adopted by start
up or small medium companies as large companies with huge operations cannot rest on this
structure. The main advantage of using this management structure is that it does not include any
middle level management which makes the decision making process easier as well as quicker
(Votsari, 2015).
Therefore, among various organisational structure respective organisation has adopted
functional management structure by grouping together the people on the basis of their skill sets
and expertise knowledge over their respective areas. Hence, CEO that is chief executive officer
is placed at the top of each function or department.
Governance of Burberry: Governance refer to the policies and regulation of
organisation which needs to be monitored continuously by the member of various committees.
The board of directors of Burberry are collectively responsible to promote the brand for long
term success of company. Moreover, the board of director support the company to achieve its
objective by sustaining the growth of shareholders. Herein, Burberry the role of director is to set
the appropriate strategy implement it to provide right direction to company. They are sole
responsible to maintain internal governance system and manage the risk of organisation
(Rajkumar and Arulraj, 2018). Therefore, major decision of Burberry which require the
approval of its board of director includes preparation of annual budget report, strategy made by
group members in favour of company, capital expenditure and major transaction made by
company, capital return, approval of the financial result and so on. Hence, these are the matters
where the intervention of board is mandatory
Role of board committee within Burberry company

Board of director include various committees such as nomination committee,
remuneration committee and so on. The role of these committee is to engage professional advisor
and third party consultant which can help them in delivering respective role and responsibility.
Additionally, some committee members, external advisor as well as company secretory becomes
the part of meeting when invited by respective company. Therefore the role of some essential
committee members are defined below (About Burberry. 2018):
Nomination committee: Nomination committee plays an essential role within company's
corporate governance. Their role is to identify and evaluate suitable candidate for the position of
director. Moreover, they appoint the chairman for the board, who make sure all the meetings are
conducted smoothly as well as systematically. Additionally, in context to Burberry the
responsibility of this committee is to review as well as change the governance policies if required
to safeguard the interest of various shareholders. Thus, it provide a framework for company to
achieve their organisational objective.
Remuneration committee: The role of remuneration committee is to set the amount of
remuneration on the basis of delegated authority (Kolokolnikov, 2013). Herein, Burberry the role
and responsibility of remuneration committee is to formulate the structure of all employee as
well as senior management. Moreover, they review and approve the policies regarding result
oriented incentives, annual bonuses , give recommendation on the basis of payment and so on.
Audit committee: The role of audit committee within selected company is to check the
financial report of the company (Crawley, Swailes and Walsh, 2013. Their primary role is to
oversee the internal control laws and regulation of company via audit process. The member of

audit committee are independent director which are not the part of organisation. Minimum one
person who is expert in the field of finance can be a part of this committee. Thus, among other
committees this is one of the significant operated committees of company.
Therefore, above mentioned committees plays a valuable role within Burberry company
by providing an appropriate framework for decision making. The role of chairman Dr. Gerry
Murphy is to effectively lead and manage the business of board. Similarly, the role of
independent director Jeremy Darroch is to support the chairman of company while the function
of non executive directors of company is to manage business and show the direction to group
members.
2: Access and evaluate the effects of external environmental influences on Burberry organisation
External environment includes all those things which are not part of the organization but
affects the working of the organization. Such environment includes various micro and macro
factors which affects an organisation to great extent. Some of the micro factors includes
competitors, suppliers, customers, public, market intermediaries etc. Various macro environment
factors includes political, legal, social, economical as well as technical conditions (Evans, 2017).
To analyse such environment, PESTLE Analysis is selected. Such analysis is used by various
analysts to scan and monitor the external macro factors which influence the working of any
organization. PESTLE stands for political, economic, social, technological, legal and
environmental. Such factors acts differently in different kinds of industries. This analysis
provides a clear concept related to the business position, market decline or growth, its
potentiality and also gives directions for the operations of any business. Such analysis provides
simple and easy to use framework which helps in reducing the impact as well as encourages the
decision making and thinking capacity to identify and exploit the opportunities for the
organizations.
Political factor: Political factor include government intervention, tax policy, political
stability, trade restriction, instability while operating business overseas and so on. Organisation
must change or adjust their organisational policy on the basis of political factor. Herein,
Burberry company plays a significant role in anticipating these external factor as they operate in
household as well as personal good worldwide. Thus, respective company closely analyse
following factor like trade regulation in consumer good, pricing mechanism and wage legislation
before expanding their business in any country. Moreover, selected company make sure they

abide by the domestic rules of various country to lower down the chances of risk related to
operation of business. Therefore, company makes the exclusive strategy against competition and
high tariff to leave a positive impact on the benefit or profitability of firm.
Economic factor: Economic factor include macro as well as micro environment factor
that impact the operations and profitability of company. These factors include interest rate,
inflation rate, disposable income, exchange rate etc. Burberry makes the use of macro economic
factor like inflation or growth rate for its personal as well as household goods. Apart from that
respective company analyse the disposable income and growth rate to anticipate the growth of
respective company. Therefore, they need to analyse educational level of economy, skill
workforce as well as labour cost in various countries for its offerings to gain the benefit by
reducing the operation cost and minimising the risk.
Social factor: Social factor includes the interest, belief and preferences of customers
towards any product. In context to Burberry company the role of shared attitude and belief of
population related to fashion plays a significant role. Additionally, the marketing team of
respective company design the advertisement campaign accordingly. For instance, within some
geographical region people prefer skimpy clothing while other may prefer reserved dressing.
Therefore, selected company analyse its demographical market by engaging with its community
which is a part of their CSR activity. Thus, they majorly makes the use of social media to engage
as well as collect huge information regarding the need of customer to gain the maximum benefit
by managing its cost and risk appropriately (Parab and Salker, 2018).
Technology factor: Technology factor include innovative ways of producing,
distributing and communicating goods and services. Company must not only maintain but also
upgrade the speed of its existing technology. As slow speed of technology will take more time in
production of final good while speedy technological will take less time for production and give
profitable or beneficial result. In respect to, Burberry makes the use of latest technology or
innovation to reach their target audience. For instance, they make the use of online shopping to
promote their product overseas. Additionally, company provide quick delivery services of
clothing or home accessories to gain a competitive advantage over competitors. Thus, selected
company need to analyse recent technology, impact of consumer good sector in value chain
structure, advancement of technology for product offering and so on.

Environment factor: There are different environmental norms and standard followed in
different market like European countries impose healthy tax on those companies that uses
renewable resources. Additionally, before diversifying the existing product into new market or
starting totally new business in existing market company must carefully examine the
environmental factor like climate change, recycling or management of waste in good sector and
so on. The product of Burberry like cloths, socks, pants and dresses are made up of organic
cotton which is not harmful for environment. This helps the company to attract the customers,
gain benefit in term of market share and reduces the risk of operation worldwide.
Legal factor: Legal factor include consumer right, product safety and labelling to trade
worldwide successfully. To ensure the long term success by cutting the cost and eliminating the
risk Burberry follows legal laws. Favourable legal laws positively benefit the company by
enhancing the performance of respective company. Whereas, unfavourable legal regulation
adversely effect the profitability of company by increasing the chances of risk. They basically
follow the employment and labour laws also they must take patent over its product to enjoy the
exclusive right of production and selling of product.
CONCLUSION
From the above report it has been concluded that business environment plays a
significant role in showing the direction to company. As business environment has direct impact
on the working as well as performance of organisation. It is essential for managers to maintain
the relationship among employees as well customers to minimises the chances of dispute. Thus,
company must maintain wise organisation structure, infrastructure as well as its productivity
level to keep the employee motivated by attracting huge customer base. Therefore, all the
external as well as internal issues must be tackled significantly by strengthening the relationship
between management, employee and customers.

REFRENCES
Books and Journal
Zada, I., 2017. Studying the External Environment of the Organizations and Evaluating the
Strategic Options to Win a Business Competition.
Dimitrakopoulou, P., 2015. The Development Of A Bussiness Strategy Model For A Luxury
Brand.
Votsari, E., 2015. The Chinese Luxury Fashion Market.
Rajkumar, C. and Arulraj, A., 2018. Seed mediated synthesis of nanosized zinc oxide and its
electron transporting activity in dye-sensitized solar cells. Materials Research Express.
5(1). p.015029.
Kolokolnikov, A., 2013. International Fur Trade: Trends, Challenges, Prospects.
TEIGLAND, R., BOGUSZ, C. I. and FELLÄNDER, A., Future Outlook on Digitalization. Per
Andersson, Staffan Movin, Magnus Mähring, Robin Teigland, and Karl Wennberg
(eds.). p.301.
Crawley, E., Swailes, S. and Walsh, D., 2013. Introduction to international human resource
management. Oxford University Press.
Evans, N. N., 2017. The internationalisation strategies of small and medium-sized enterprises
(SMEs) clothing suppliers in the UK (Doctoral dissertation, Manchester Metropolitan
University).
Parab, S. S. and Salker, A. V., 2018. Structural and optical properties of Tb and Na–Tb co-doped
Ca3V2O8 phosphors prepared by sol–gel process. Materials Research Express. 5(1).
p.016302.
Parab, S. S. and Salker, A. V., 2018. Structural and optical properties of Tb and Na–Tb co-doped
Ca3V2O8 phosphors prepared by sol–gel process. Materials Research Express. 5(1).
p.016302.
Online
About Burberry. 2018. [Online] Available through:
<https://www.burberryplc.com/en/company/history.html>

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