Strategic Management Analysis

This document provides a critical assessment of the process used by organizations to determine their strategy. It also evaluates the critical models and tools used in strategic management. The document includes a real-life application of these tools to a company and discusses the importance of change management in the transformation process.

BSc (Hons) Business Management Top up
BMP6002
Strategic Management
Strategic management case-study
analysis
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Contents
Introduction p
A critical assessment of the process used by organisations to
determine their strategy p
An evaluation of the critical models and tools used by
organisations to determine their strategy p
An application of these tools to a real organisation p
Critically appraise the importance of change management based on
the complexity of the transformation process, its costs, risks and
sustainability p
Conclusion p
References p
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INTRODUCTION
Strategic management is the approach of management that involves in ongoing
planning, supervising, analyzing and assessment of all functional activities in order to meet
company’s objectives and goals within timeframe. It is important for the organization
because it assist to evaluate goals of the business, vision and objectives that directly brings
success in the company in its business market. In the modern world, no company can get
success in the business without involving strategic management in the practice. To
understand role of strategic management has a great example of Burberry company. It is a
British luxury fashion house company which is headquartered in London, England, UK. In
this report will discuss about strategic planning process of the company that helps to
determine strategy. Furthermore, this report will discuss about different critical models and
tools that will support to identify strategy for the company.
MAINBODY
A critical assessment of the process used by organisations to determine their strategy
Strategic planning process of the Burberry company
It is one of the most essential tools that supports organization in assessing objectives
in order to take effective decisions (Teece, 2019). It helps company to make aimful decisions
because only organizational vision supports company to promote teamwork in order to
develop innovative culture in the workplace through which it enables to gain commercial
benefits. So, it is essential for the company to have specific vision then employees can take
right decision. A effective and right planning always supports organization to move into the
right direction. So, HR management of the company decides to adapt all six steps in order to
identify the right strategy.
Figure 1: Strategic planning process
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Figure 2 Strategic planning process
Author: (Components of the Strategic Planning Process. 2020)
It is important for the Burberry to determine its current strategic position in the business in
order to develop a vision of the organization for future strategic position. When company has
specific vision then it can achieve proposed busines objectives within timeframe. Priorly,
Burberry frames it’s short and long-term objectives based on company’s vision like where
Burberry wants to stand in future in it’s market. Then it highlights steps that must undertake
to gain its proposed goal (Bondarenko and et.al., 2017). For example, if company wants to
become a differentiator then it is essential to innovate some fashionable dresses. It can be
gained if company invests large capital over R&D department. Another is that goals must be
realistic and measurable because it will lead dedication in staff in order to gain the proposed
precisely. Specific and measurable goal gives up to 50% weightage in it’s vision statement,
15% incorporate values, 30% in mission statement and 5% in company’s culture.
Strategic Components Information
Overview of the company Luxurious fashionable brand
Purpose of Burberry Selling fashionable dresses with high quality
Customers Upper- and middle-class customers as targeted population
Competitive advantage Strong global presence, exclusive design, wide product line
etc.
Future overview To become digitalized fashion company
Future purpose To give a distinctive image to the fashion lovers
Future market Young generation
Realistic and future
competitive advantage
Developing sustainable garments and improved global
presence
Declaring values  Ensures standard quality
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 Open communication and integrity
Framed Objectives  Offers high quality services to the customers by
providing good quality product
 Provides innovative work culture for the staff
Figure 3: Strategic components of Burberry
Author: (Self-made)
Figure 4: Mission, Vision, Values and Corporate Objectives of Burberry company
Authors: (self-made)
Once the upper management of the Burberry builds desirable strategic position in the
company then it collects relevant information. So, they organize meeting with all level of
managements so that individuals have idea like what company is going to do. Currently,
management of the Burberry company has planned to lead new winter collections. So,
marketing manager conducts market research for getting the idea and information from the
customers attitudes towards it’s clothes, competitors’ data, marketing data etc. This
information is essential to make decisions. Organization uses SWOT analysis to determine
strengths and weaknesses (Sarsby, 2016). It also uses to determine threats and opportunities.
When the management determines the strategic position effectively. Top management
emphases on engaging all staff so that they always stay motivated at the workplace.
An evaluation of the critical models and tools used by organisations to determine their
strategy
There are numerous strategic management tools that uses by different organizations.
Tools are mentioned below:
 Swot analysis
It is a strategic planning tool that is used to support a company or person to determine
strengths, weaknesses, threats and opportunities associated to organization competition. It is
used to determine company’s competitive positioning in the business market. This model is
considered one of the best analytical tools because it helps companies to analyze it’s internal
environment through which it can identify it’s strengths and opportunity. This analysis
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Mission
Maintain integrity and vitality of the
brand
Vision
Establish Burberry’s position firmly
in luxury fashion, drives sustainable
growth and maximize profit margin
over the period
Values
Open communication and integrity,
standard quality
Corporate Objectives
Offer high quality service to the
customer by providing standard
quality cloths as product and
provides innovative work culture in
the workplace

supports them to gain benefits in future from the analysis. While, this model also helps
companies to avoid risk areas by evaluating threats and weaknesses (Kabue and Kilika,
2016). Thus, companies can develop their weaknesses into strengths which will ultimately
enhance competitive edge of the business. This tool never gives any quantifiable measures
that is used to determine financial position of the business.
Limitations and Advantage of the Swot analysis
 This model supports companies to improve it’s strengths and minimizes their threats
by overcoming weaknesses and maximizing profitability of opportunities.
 It does not priorities issues and cannot give any solutions over the proposed issues.
These are the major limitation of the framework.
Pestle analysis
It is a strategic analytical tool that is undertaken by the organization to examine it’s
external environment in the business market. This model encompasses five forces i.e.
political, economic, socio-cultural, technological, legal and environmental factors that
impacts on organization’s profitability, operations and performance. This model is considered
one of the best analytical tool because it helps company to understand that which factor can
impact on it’s decision-making process (Perera, 2017). This model is applied most of the
companies for different situations like when a company has plan to introduce it’s business or
product into new market then it analyze growth of market, customer’s attitude, government
action, environmental issue and legal issue with the supports of different external forces.
Based on the analysis, companies take decision to establish new business or introduce
product or not. Political factor includes political condition, government tax policy etc.
impacts on organization’s operations. Economical factors i.e. inflation, disposable income,
unemployment rate, interest rate changes etc. affects company’s commercial benefits. Social
factors are age, culture, social status that affects organization’s profit margin and selling
revenue. In modern world, younger generations have become more health concern so that
demands healthy and eco-friendly foods and other food segments so it also impacts on
organization’s economical infrastructure. Technological and legal factors also impact on
organization’s productivity in the market.
Advantages and limitations
 The major advantage of the model is that it supports in developing external and
strategic thinking. It gives proper awareness and well understanding of the changes to
the decision-makers before taking any decision for the company.
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 Company cannot take any static decisions because this analysis is not static that is one
of the major disadvantages of the framework.
Porter’s five force analysis
It is a strategic tool that is used to analyze company’s competitive environment. This
model comprises five forces i.e. threats of new entrants, competitive rivalries, bargaining
power of suppliers, bargaining power of buyers and threats of substitutes which helps
companies to analyze it’s competitive positioning in the business market. Threats of new
entrants is usually identified by cost structure, capital requirements etc (Soboleva and
Parshutina, 2016). However, existing organization have less threat of new entrants because it
already has good financial status. As same competitive rivalries become too tough when there
are number of players existed and have good brand position in the business market. Threats
of substitute is the major threat for the local companies because it customer’s get similar
product at lower cost from others that directly impacts on company’s profit margin.
Advantage and limitations
 This model supports company to examine it’s competitive positioning in the business
market and increases potential of the business in particular market.
 This model is not specific for the technology industry that is one of the major
limitations of the tool.
An application of these tools to a real organisation
SWOT Analysis
The distribution network of Burberry Group Plc is very strong which makes its
financial position very strong along with a strong asset base. It also follows low pricing
strategy which helps in gaining competitive advantage. Also, the company has skilled,
qualified, innovative and diversified workforce which also helps in making strong presence in
the social media. The company can increase the marketing as the social media users are
increasing day by day. Government is also providing subsidies to the companies which
develops environment friendly products. This growth of sustainability can be proved as
opportunity for Burberry (Sah and Dadwal, 2018). The interest rates are also becoming low
so the company can lower its costs in order to increase its overall sales.
On the other hand, the weakness of the company is that it needs to pay much rents for its
rental stores and the company also makes very less investment in the research and
development. The motivation and the morale of the employees in Burberry is also very low.
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Moreover, the company also faces various liquidity problems along with the cash flow
problems. But, Burberry can use the low interest rates and take the finance ownership of
property so that it does not have to pay rent and can have much owned property. It must also
provide incentives, increased payrolls and many other benefits to the employees so that the
employees can stay motivated which increase the turnover (Olteanu, 2020).
However, the new entrants are becoming threat for Burberry but the social distribution can be
used to reach out customers. Also, the availability of its substitute products are increasing but
the company can make use of its financial position to invest in intellectual property rights.
The inputs are also becoming very expensive due to increased fuel prices and the exchange
rate is devalued (Bhasin, 2019). For this, Burberry can make investments in research and
development which can help the company to compete with its competitors and to retain the
talent of the employees the company must provide a better work environment.
Porter’s five forces
The new entrants in the field of personal and household goods bring in innovation and
the completely new ways of doing things which pressurizes the Burberry and force it to lower
its prices and provide new value propositions. The bargaining power of the suppliers is very
high as the companies like Burberry buy their raw materials from various suppliers. They use
their power to reduce the margins that Burberry can earn in market.
Due to their negotiating power, they extract high prices from the companies of personal and
household goods. This lowers the overall profitability and for this the company must build
efficient supply chain with many suppliers which gives opportunity to Burberry for
streamlining its process of sales and production (Goworek and et.al., 2016). The bargaining
power of the buyers is also very high due to the increase in their demands.
The customers prefer to buy the best offerings at minimum price. This pressurize Burberry
because this affects the overall profitability in the long run. Fr this, the company needs to
increase its customer base by innovating new products and giving discounts and offerings.
The company also faces the threat of substitute goods and services as a new product if meets
the needs of the customers at lower price then, the profitability can suffer.
For this, Burberry must become service oriented rather than product oriented and also
increase the switching cost for the customers (Porter's 5 Forces of Burberry Case Analysis,
2020). The company has to lower its prices because of the rivalry among the existing
competitors as this will affect the profitability of Burberry. It performs its operations in a very
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competitive industry. So it must build a differentiation which is also sustainable and must
collaborate with the competitors so that the market size can be increased. This helps to gain
the competitive advantage among its tough competitors including Prada, Gucci etc.
Critically appraise the importance of change management based on the complexity of the
transformation process, its costs, risks and sustainability
Change management is must for every organization whether large or small, but it
affects the most important asset of the firm i.e., the employees. If the change management is
effective, it can support the smooth transition and ensure that all the employees are guided
and motivated through the journey of change. This sometimes fail because of the negative
behavior and attitude of the employees towards the change. Change is implemented to
achieve the objectives of the organization (Courtney, 2016). But this was observed in case of
Burberry that whenever change is implemented, the employees resist it. Therefore, it is must
for the company to allocate skilled resources and adapt the policies of change management. It
is not at all easy to manage and lead the change in organizations. Importance of change
management can be examined on the basis of certain factors as described below:
Transformation: This can be done in many ways by bringing alterations in certain areas
where need is created for new behaviors or strategies in the employees’ behavior or the
organization as a whole. Burberry, being a luxury fashion brand is evolving its distribution
network to reflect the positioning of the brand in the industry (Mortimer, 2016). The company
is brining innovation and change in its product’s design and also in its sales approach. Under
this change, the company is enhancing its customer service by implementing a new program
which will help in improving the front and back of capabilities of house in all its stores
(Silvano, 2020). The availability of the products was increased and its sales associates were
equipped with the digital tools.
Costs: Every change needs a suitable budget and if the change is not managed properly, then
it will incur additional costs. There can be budgeting issues which leads to demerits of
change. It is observed that when a change is implemented, the company loses its employees
and this is the major disadvantage as the recruitment of the new and skilled employees is very
costly.
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Sustainability and Risks: This must be ensured so that the organization becomes successful
in reducing the factors of risk. Risks can be lack of resources, degradation of ethics of
employees, employees unable to perform the tasks, hazards and many more. In order to
mitigate these risks, the employees must be skilled and for that trainings must be provided. If
the change is not managed it can lead to risky decisions which hinders the progress of the
firms like Burberry.
CONCLUSION
The report was based on the strategic management of Burberry in which strategic
processes of the company were discussed. The processes used here were critically analyzed.
Furthermore, various models were highlighted and described such as SWOT analysis,
PESTLE analysis and the Porter’s five force model which helped the company to make
certain suitable strategies which can help it to increase its profitability. Furthermore, the
application of these tools were highlighted along with critically appraising the significance of
change management on the basis of transformation, costs, risk and sustainability.
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REFERENCES
Books and Journals
Bondarenko, T.G and et.al., 2017. Optimization of the company strategic management
system in the context of economic instability.
Goworek, H. and et.al., 2016. Emotionally engaging customers in the digital age: the case
study of “Burberry love”. Journal of Fashion Marketing and Management.
Kabue, L.W. and Kilika, J.M., 2016. Firm resources, core competencies and sustainable
competitive advantage: An integrative theoretical framework. Journal of
management and strategy, 7(1), pp.98-108.
Olteanu, L., 2020. Rebranding strategies and their boomerang effect—The curious case of
Burberry. The Journal of World Intellectual Property.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Sah, S.K. and Dadwal, S.S., 2018. Managing Strategic Change and ERP Implementation
under Distinctive Learning Styles: Quantitative case of Burberry PLC.
Sarsby, A., 2016. SWOT analysis. Lulu. com.
Silvano, M.D.C.L.F., 2020. Playing against the rules: how a digital strategy can enhance a
luxury business: the case of Burberry (Doctoral dissertation).
Soboleva, Y.P. and Parshutina, I.G., 2016. Management of investment attractiveness of the
region by improving company strategic planning. Indian Journal of Science and
Technology, 9(14), p.1.
Teece, D.J., 2019. A capability theory of the firm: an economics and (strategic) management
perspective. New Zealand Economic Papers, 53(1), pp.1-43.
Online
Bhasin, H., 2019. SWOT analysis of Burberry. [Online]. Available through:
<https://www.marketing91.com/swot-analysis-of-burberry/>
Components of the Strategic Planning Process. 2020. [Online]. Available through:
<https://open.lib.umn.edu/principlesmarketing/chapter/2-2-components-of-the-
strategic-planning-process/>
Courtney, F., 2016.Steps to Effective Organizational Change Management. [Online].
Available through: <https://www.pulselearning.com/blog/6-steps-effective-
organizational-change-management/>
Mortimer, N., 2016. Can Burberry’s new ‘Transformation Management Office’ make its
marketing work harder. [Online]. Available through:
<https://www.thedrum.com/news/2016/11/09/can-burberry-s-new-transformation-
management-office-make-its-marketing-work-harder>
Porter's 5 Forces of Burberry Case Analysis, 2020. [Online]. Available through:
<https://casemba.com/youngme-moon/burberry/porters-analysis.php>
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