A Strategic Analysis of Burberry's Entry into the Brazilian Market

This report examines Burberry's international business strategy, specifically focusing on its potential entry into the Brazilian market. It begins with an abstract and introduction outlining the scope and objectives of the study. A literature review and critical analysis of international business strategy are provided, highlighting key concepts and frameworks. The report includes a PESTEL analysis of the Brazilian market, assessing political, economic, social, technological, environmental, and legal factors to determine market feasibility and suitability for Burberry. Different entry mode strategies are discussed, with a focus on joint ventures. A risk analysis is conducted to identify potential challenges and uncertainties. The report concludes with recommendations for Burberry's market entry strategy and suggests ways to mitigate risks, referencing relevant literature throughout. The analysis emphasizes the importance of understanding the Brazilian market's nuances and the adoption of appropriate entry modes to maximize the chances of success.

INTERNATIONAL BUSINESS
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TABLE OF CONTENTS
Abstract............................................................................................................................................3
Introduction......................................................................................................................................3
Literature Review and Critical Analysis..........................................................................................4
PESTEL analysis of Brazil..........................................................................................................5
Entry mode strategy.....................................................................................................................7
Risk analysis..............................................................................................................................11
Conclusion and Recommendation.................................................................................................12
References......................................................................................................................................14
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ABSTRACT
Internationalization is regarded as a process through which business entity can enter into
new market place and through which possibilities of success and growth can be enhanced.
Operating business in Brazilian market place would assist Burberry to get competent human
force which can contribute in managing diverse aspects of the business entity. Burberry need not
to emphasize on brand management as people in Brazil are highly aware about the availability of
numerous luxury brands. Risks as well as challenges are apparent to appear; however it is crucial
for Burberry to focus on all business dimensions.
INTRODUCTION
Internationalization is the process of involving business operations in international
market and this also involves expansion and diversification of products in diverse market places
(Piekkari, Welch and Welch, 2014). Thus, in this respect the present research study has been
made on Burberry which is a British luxury fashion house operating business in London,
England. Burberry’s major fashion house focuses on ready to wear outerwear, fashion
accessories and cosmetics. Thus, in terms of expansion, Burberry decides to enter into Brazilian
market place which could assist the business entity to promote all its products and services in
effectual way.
In the present research work, Brazil market has been selected because it is the largest
country in South America and people possess good purchasing power there in the country. While
entering into Brazilian market place, it is crucial for Burberry to focus on market entry strategy
so that all the business operations can be managed accordingly. In the study, discussion has been
included regarding specific market entry strategy that would assist Burberry to manage the
business operations in effective way. Burberry needs to adopt specific market entry strategy and
for that the business needs to plan about the ways through which all the work processes will be
managed. Market entry strategy refers to planning the ways through which goods and services
can be delivered to the target market and according to that, it can be distributed among
customers.
When exporting or importing products, Burberry needs to focus on establishing and
managing contracts in a foreign country so that all the practices can be carried out effectually
(Buckley, Burton and Mirza, 2016). Thus, in order to manage business practices, it is crucial for
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Burberry to focus on joint venture so that with a specific business entity all the practices can be
managed accordingly. Under this strategy, Burberry will have to share both profits and loss as
per the determined share. Possibly, this could assist in managing business operations in
competent manner.
Thus, entering into Brazilian market would assist Burberry to get greater market share by
bringing different products and services for the new targeted customers. This will not only
enhance target market of the business; but also it will aid in maximizing customer base
(Cantwell, 2014). Thus, considering all such aspects, the study has been emphasizing on strategic
aspects which Burberry needs to consider for the purpose of carrying out all the business
activities in the best possible manner. At the same time, research study will also analyse the
methods through which risks and uncertainties can be managed.
LITERATURE REVIEW AND CRITICAL ANALYSIS
On the basis of generalized terms, international business strategy includes all those
activities and practices which will be managed in global market. It includes the exchange of
goods and services that takes place across two different boundaries. While entering into any new
market, organization must have to focus on specific technique or strategy so that it can help in
minimizing the level of risks and uncertainties (Casson, 2013). For a business entity, global
market is highly risk associated; hence Burberry also needs to adopt a market entry mode. There
are several factors in external business environment that changes the business scenario and it also
impedes the working conditions of organization. There is a big difference between home country
and host country; therefore while entering into any new market place, it is vital to consider both
advantages and consequences (Zander, McDougall-Covin and Rose, 2015).
Market entry strategies are useful in terms of safeguarding the business from diverse
challenges and through this, the opportunities of success can be enhanced. Thus, it can be said
that at the time of entering into global market, it is crucial to ascertain the factors that impacts the
business performance and productivity aspects (Picciotto and Mayne, 2016). Managing business
in home country is safe and secure and that also amends competitiveness of the organization;
however entering in host country depicts that business is much concerned about
internationalization. However, adoption of new market strategies changes them functional
aspects of the business and this also affects business positioning in external market place.
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Entering in international market shows that business entity desires to raise its productivity
level and this also depicts the ways through which external business practices can be managed.
While entering into global market, chief concern is required to be laid on advertising and
selection of media so that it can aid business in promoting all business aspects in prominent
manner. Furthermore, the business has to select several methods through which risks and
challenges can be minimized (Penrose, 2013). This could be done in the way of protecting the
business from upcoming uncertainties. Thus, the opportunities of success enhances in the same
way and business reaches to the stage of internationalization. Therefore, to conclude the
generalized overview of internationalization, it is vital for business entities to select the most
suitable market.
In terms of stating about the market entry strategy, it can be said that joint venture
involves the creation of a third independently company which helps other business entity in
managing all the business functions and activities (Dunning, 2013). In this strategy, two different
companies agree to work together for a common purpose and that also leads them to share
business activities. Risks as well as profits are equally shared among both the companies; hence
this shows that joint venture strategy can assist the organization to conduct the business suitably
in market place. However, on the other hand in order to manage business in joint venture, it is
crucial for the entities to align the business with the same type of organization. Through this, all
the activities could be appropriately managed in the new market place (Forsgren and Johanson,
2014).
PESTEL analysis of Brazil
The Brazilian economy is dominated by the service sector which generally contributes
approximately 66% to the total GDP. However, after the global recession, strong fundamentals
have led the country to survive even in this period of crisis (Beamish, 2013). Burberry can
manage its business functions appropriately according to the brand; however for that the business
needs to focus on different marketing strategies. In the below section, external auditing is being
of Brazilian market and on that basis, feasibility and suitability of the market place will be
ascertained.
 Political: The government of Brazil is proactive and stable as well; hence there is no
political instability in the country at the moment. However, this is something which
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cannot be predicted as market structure of Brazil changes frequently. Thus, it can be
said that at the time of having elections, political situation tends to heat up which assists
other business activities to manage their operations in effectual way (Cavusgil and et.
al., 2014). At the same time, it is also analysed that corruption still remains in the
country which could hamper the business activities; thus Burberry has to adopt new
modes to make payment to government representative and officials.
 Economic: Brazil has good potential for growth due to proper inflow from FDI; thus
this could assist consumers to carry out their business activities in effectual manner.
There is a substantial trend of a growing middle- class; thus difference between rich and
poor people has been declining on faster rate (Pudelko, Tenzer and Harzing, 2014).
Additionally, the Central Bank has successfully declined the risk of currency
devaluation; thus this helps in controlling the situation of inflation. Thus, looking
towards the economic condition, it is evident that Burberry can manage its business
practices effectively in Brazilian market place. Labour cost is considerably low; hence
foreign and domestic business entities are acquiring greater benefits in this respect.
 Social: It is ascertained that there is economic inequality among the population of
Brazil; hence this increase the ratio of poverty (Dinnie, 2015). At the same time, there
are a considerable number of wealthy citizens who have minimal income; hence this
could have an adverse impact on business practices of Burberry. However, one of the
most important aspects is that Brazilians are up-to-date in the fashion world and they are
also considered modern because they are much aware about big and luxury brands.
People are more likely to purchase expensive and luxurious products; thus this is highly
beneficial for Burberry. This could have a positive impact on business aspects and as a
result, large number of customers can be attracted (Knežević and Wach, 2014).
 Technological: Brazil is weak in approaching technological aspects; however the
country has been pushing up the efforts to develop the concern towards technology all
over the country. It is also ascertained that IT is a sector in which Brazil has been
constantly improving; thus Burberry could get assistance from this factor in managing a
few business practices (Meyer and Peng, 2016). A great number of start-ups have been
recently developed in the country; thus this might be a profitable state for Burberry. The
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role of technology is minimum in Burberry; however still it is essential to emphasize on
emerging technologies for encouraging the practices of business.
 Environmental: In order to operate business in Brazilian market place, it is crucial for
Burberry to focus on civil code which directs the business entities to conduct their
practices according to environmental protection laws. Environmental concern is must to
depict as then only companies can get the way to conduct the business activities. Thus,
in this respect Burberry is also required to focus on environmental aspects so that the
chances of growth and success can be enhanced (Kingsley, Noordewier and Bergh,
2017). Furthermore, this is also suitable in terms of managing business practices in the
best possible manner.
 Legal: All the legal policies and regulation are mandatory to follow in order to operate
business in Brazil market place. Thus, Burberry might get influenced through legal
aspects and this could also enhance the burden of the company in managing legal
aspects. But, at the same time, legal aspects will be supporting factors for Burberry
(Preston and Windsor, 2013).
Entry mode strategy
There are several ways through which a company can enter into foreign market such as
direct exporting, licensing, franchising, partnering, joint venture, piggybacking and strategic
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alliance. These ways are also useful in terms of managing strategic aspects of the business; hence
according to the new market, business activities can be operated effectively (Kollmann, 2013).
On the basis of generalised context, foreign market entry mode differ in degree of risk they
present; however the control and commitment of resource they require is also different according
to the market situations. Thus, all the techniques are briefly discussed in the below section:
 Licensing: International licensing agreement allows foreign firms to manufacture a
product for a fixed term in a specific market. In this foreign market entry mode, a licensor
in the home country makes limited rights or resources available to the licensee in the host
country. It is relatively a flexible work agreement that can be customized to fit the needs
and interest of both licensor and licensee. The strategy is usually adopted as political risk
is minimized because the licensee is 100% locally owned (Hill, Cronk and
Wickramasekera, 2013).
 Franchising: It is a system wherein semi- independent business owners pay fees and
royalties to a parent company in exchange for the right to become identified with its
trademark to sell the products and services. This requires the use of business format and
system in the same manner (Majaro, 2013). Therefore, it can be said that while
emphasizing on licensing, business entity needs to involve things such as intellectual
property, trade secrets and others so that to allow simultaneously expansion in diverse
regions of the world.
 Joint venture: It typically includes five common objectives such as market entry, risk and
reward sharing, technology sharing and conforming to the government regulations. Joint
venture is favourable as partner’s strategic goals converge while their competitive goal
diverge (Piekkari, Welch and Welch, 2014). At the same time, joint venture is suitable as
partners are able to learn from one another while at the same time they have limited
access to their own proprietary skills.
 Strategic alliance: This is a type of cooperative agreements that develops among diverse
firms and the modern form of strategic alliances is becoming increasingly populous
because firms belong to industrialized nations (Buckley, Burton and Mirza, 2016). They
are often created for short term durations and the focus is often posed on creating new
products and technologies instead of distributing existing ones. However, the technique is
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highly effective since it allows the business entities to get more global competitive
advantage.
Thus, on the basis of generalized strategy, it can be said that Burberry needs to adopt
joint venture which is a strategic alliance among two or more inviduals for a specific project or
system. Partnership or joint venture can be similar; however both have significant different
implications for the business entities who are involved in this type of entry mode (Cantwell,
2014). Thus, as per the strategy, it is essential for Burberry to involve a continuing and long term
business relationship so that objective of the project can be shared. In order to enter in Brazilian
market place, it is vital for Burberry to change the legal status as well because joint venture
provide companies the opportunity to gain new capacity and expertise. It also allows the
companies to merge with related businesses or new geographic markets which also aids in
enhancing technological knowledge of the business (Casson, 2013). Burberry could also have
access to greater resource which includes specialised staff and technology.
Furthermore, in the era of divestiture and consolidation, joint venture can offer Burberry
a creative way for companies to exit from non-core businesses. Thus, as per the strategy,
Burberry would be able to separate its business gradually from rest of the organizations and
eventually, the business can acquire maximum number of benefits from joint venture (Zander,
McDougall-Covin and Rose, 2015). However, at the same time, it is also required for Burberry
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ENTRY MODE
STRATEGY
Strategic alliance Joint venture Franchising Licensing

to consider that it takes time and effort to build the right relationship and partnering with another
business; thus this could be a challenging procedure for Burberry while entering into Brazilian
market place. Burberry might also experience problems in terms of communicating the goal and
aim of the joint venture. Issues might also generate due to an imbalance in levels of expertise,
investment or assets by different partners. These issues might also result in short term challenges
for Burberry.
On the basis of generalised overview, it has been identified that join venture could enable
Burberry’s growth without having to borrow funds from outside investors (Picciotto and Mayne,
2016). Initially, Burberry can also use partner’s customer database to market the product; thus
joint venture partners also benefit from being able to join forces in purchasing, research and
development. Joint venture is flexible in nature; thus while entering into Brazilian market place,
Burberry can make flexible changes in the contract. However, on the contrary, it is also evident
that partnering with another business can be complex and problems may also occur due to
cultural and social changes. Thus, along with other important considerations, Burberry should
also focus on the same aspects (Penrose, 2013). Since, it is an important decision for Burberry;
therefore it is crucial for Burberry to consider and evaluate important factors prior involving
business with any other entity.
Burberry must have to develop contractual agreement so as to set up the joint venture
enterprise; thus every aspect of the business must be legally concerned. After entering into
Brazilian market, Burberry must have to focus on its strategic choices so that long term aim and
objective can be attained (Dunning, 2013). This is also essential for the purpose of reducing
business risks and uncertainties. While formulating marketing strategies, it is vital for Burberry
to consider the impact of partnership with other business entity. Burberry makes strategic choices
as they have to manage the business entity in well-developed manner in the new market place.
Moreover, while entering into Brazilian market place, Burberry has to integrate organizational
functions with business strategies so that all the activities can be carried out in the best way
(Forsgren and Johanson, 2014).
Numerous changes will also be required to make in corporate culture as after entering
into international market, Burberry has to operate all its business activities according to the new
strategic alliance. This is also crucial for the purpose of adopting numerous changes in the
business entities and at the same time it can also generate the opportunities of growth and
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success (Beamish, 2013). In Brazil, business organizations are much emphasized towards
corporate culture which keeps on changing whenever any new business entity enters in new
market place. Burberry operates its business in fashion industry; therefore it is crucial for the
entity to adopt suitable strategy so that large number of customers can be persuaded towards
products and services. Thus, in such respect Burberry has to ensure that the business is selecting
appropriate source of media as through that only, interest of client can be protected.
Risk analysis
Risk analysis is the process that aids the business entity to identify and manage potential
problems that could undermine key business initiatives (Cavusgil and et. al., 2014). Since,
Burberry is entering into new market place; therefore it is crucial for the organization to carry out
the process of risk analysis. This is also useful for the purpose of ascertaining what needs to be
done to manage and reduce the degree of risks and uncertainties.
 At the initial stage, it is crucial for Burberry to emphasize on the process that is required
to be followed for the purpose of ascertaining associated business risks and uncertainties.
Thus, it can be said that at the initial stage, Burberry has to identify the risk that prevails
in Brazilian market place (Pudelko, Tenzer and Harzing, 2014).
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 Afterwards, it is crucial for the business entity to analyse the risk; hence on that basis,
activities must be prioritized. This is vital for Burberry to focus on so that business
challenges and risks can be reduced.
 Burberry has to assess the risks so as to determine and analyze the impact of such risk on
business activities and practices. Therefore, it can be said that after assessing risks and
challenges, Burberry will be able to adopt numerous practices which could safeguard the
business from several risks and challenges (Dinnie, 2015).
 Thereafter, it is essential to manage risks and uncertainties as that has a direct impact on
sustainability aspects of Burberry. Moreover, it can also be said that prior developing any
plan for risk management, it is crucial for Burberry to analyse the specific areas that
impacts business practices.
 Lastly, Burberry has to monitor and review the entire procedure so that the areas of
changes can be identified and this can also assist the business entity to carry out all the
practices effectually. Further, through this, the impact of strategy can also be identified
on business practices of Burberry (Knežević and Wach, 2014).
CONCLUSION AND RECOMMENDATION
On the basis of entire discussion, it can be said that while entering in new market place,
Burberry must be experiencing several challenges and risks. The entire study made it clear that
management of business in new market place is a complex process that requires several
consideration else it could impact the business adversely (Pudelko, Tenzer and Harzing, 2014).
This is yet another important consideration that needs to be considered so that Burberry can
manage its business practices in competitive manner. Focusing on joint venture strategy would
be beneficial for Burberry as number of business entities wishes to enter in Brazilian market due
to the economic benefits it can give to the new entities (Dinnie, 2015).
Considering the interesting facts about Brazilian market place, it can be articulated that
from past many years, Brazil’s stock market was struggling; however in recent years, it is flying
again which could also benefit Burberry in diverse ways (Knežević and Wach, 2014). This could
strengthen the market potential of Burberry and at the same time, chances of success and
prosperity can be enhanced. However, at the same time, Burberry could also experience issues
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