Burberry Business Strategy: A Strategic Management Plan

Desklib provides past papers and solved assignments for students. This report analyzes Burberry's business strategy.

Business Strategy
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Table of Contents
Introduction................................................................................................................................3
Task 1.........................................................................................................................................4
Conclusion................................................................................................................................14
Bibliography.............................................................................................................................15
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Introduction
Business strategies are techniques and frameworks through which a company move ahead in
the market and attend a larger market for this position through which more revenue and
profits come within the company. The importance of business strategies in a market scenario
is that it helps companies formulate methods with the managerial heads and employees can
work better within the organisation to produce more goods and services for the consumers.
In this particular study, the case of Burberry has been considered. Burberry is a high-end
British fashion store that primarily focuses on telling various forms of premium coats. The
company has revenue over £2,732.8 million as per 2018; the managerial heads of the
company include people such as Sir John Peace (Chairman) Riccardo Tisci (CCO) and Marco
Gobbetti (CEO) (Kingdom, 2019). In the following report, various forms of strategic
framework will be utilised. Some of these members will include techniques such as PESTLE
analysis, SWOT analysis, porter's five generic, Ansoff Matrix and others.
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Task 1
The strategic management plan will need to address the following:
1. Apply the PEST/LE Analysis to assess potential scenarios for your organisation.
PESTLE analysis is an external or outer form of procedure, through which multiple factors,
which affect and industry and the businesses in it are investigated. In PESTLE, there are six
elements, which include various aspects such as political, economic, social, technological,
legal, and environmental development. In the case of Burberry, a PESTLE analysis has been
performed their down below:
Political
In the political sphere of United Kingdom ever since Brexit has taken place the policies that
take place within the country have taken a negative turn as many political parties are in a
state of confusion and do not know which direction to head. This state leads there to be more
ambiguity in the tax policies and import export regulations that political parties set for retail
businesses and consumers (Hobolt, 2016).
Economics
In 2008 with the financial recession and market crash, there has been an interest quantum of
unemployment across United Kingdom and a large chunk of the population has not received
any form of workspace to operate in. This gives an opportunity like Burberry to employ more
people at a lower cost so that the revenue of the company is saved and more reserves are
created within the business. This would not only help The Company's existing business
endeavours but would also help in future business endeavours were as well.
Social
There is social change with the introduction of social media platforms because of which
people are interacting more on the digital plane rather than through offline mediums and face-
to-face interactions. Big platforms such as Twitter, Facebook and others have led people to
have conversations digitally that give businesses the open opportunity to market their efforts
and visibility more freely towards the consumer and become more noticeable. Retail
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businesses will now be able to perform such task such as affiliate marketing, boost
advertising and others (Laudon and Traver, 2016).
Technological
There is technological boom all around the world with more scientists and engineers making
various forms of development in fields such as robotics, machine productivity and others. For
the retail business is this is good news as it helps there be more machines that are automatic.
That would help in the ease of producing more product and services. This would help a
business's revenue stream to grow exponentially (Lientz and Rea, 2016).
Legal
There are various forms of laws and regulations that a company needs to adhere, so that it
complies with the guidelines that have been provided by the state government of the country.
Some of these laws include act such as the employment act, the data protection act
competition act trade union act and others. All these laws help the retail businesses to
function better so that there is higher compliance and ethical values within the enterprise.
Environmental
The environment in a global context is deteriorating, as there is more carbon dioxide and
other toxic elements increasing in the nature and this is influencing the atmosphere at large
causing there to be a higher degree of ozone depletion, which leads to plant life and human
being, affected. Furthermore there are other phenomenon such as global warming greenhouse
effect which are increasing at a dramatic rate as there is more population all around the world
and there is industrialisation as well which removes plant life and increases the number
building that are being created.
2. Analyse the organisation’s capabilities by using appropriate frameworks.
McKinsey 7S Framework Is an internal framework that helps in assessing the capabilities
and strengths of an organisation and how it may excel in the local or global market (Singh,
2013).
Direct Influences (Hard Elements)
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Strategy - Currently the primary strategy of the company is that it focuses on consumers with
high level of purchase power and income for its luxury products so that it can sustain in the
market in the long run.
Structure - Burberry currently has a matrix form of structure where by which there are
several categories and divisions within the company that help the managerial heads of the
company to function better and know which employees are best working in which department
(Ravanfar, 2015).
Systems – Within Burberry There are several data servers' computers and other forms of
technological advancements that help the company to store information that are useful keep it
in arranged form of consumer profiles so that it can study its audience.
Indirect influences (Soft Elements)
Skills - The skills of the employees of Burberry include making high quality garments such
as costs that last for an extremely long duration and help the company excel in sales.
Staff – The workforce of the company has a diverse portfolio has a multi skilled employee
pool with whom several tasks and duties can be met easily.
Style – Within Burberry there is a democratic form of leadership where by which the
employees of the company and the managerial heads of department have a say in the matters
of the company and can help their to be better direction so that better harmony is there within
the market (Jeston, J., 2014)
Shared Vision – There is a shared ethical and moral vision within Burberry that helps the
company to who performed tasks legally and in an effective manner so that quality products
and services are provided to the consumer.
3. Apply the Five Forces model to analyse the competitive environment.
Porter’s five forces is a strategic competitive framework that helps in understanding the
current state of the market so that better formulation and directions can be made within the
enterprise (Rumelt, 2012).
Threat of New Entry (High) – It is easy for new businesses to enter the retail and fashion
industry as a low level of income at investment is required is to enter the market and
establish a new venture. the more businesses that are active within UK the lower the chances
of success that is of Burberry as more competitive players are there to decrease the success
rate of the company.
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Buyer Power (Low) – With the high brand value that the company has created it is not easy
for consumers to have a negotiable position with the enterprise, as the business already
knows that it has several target audiences around various locations that will easily replace any
consumers who are trying to be demanding (Tanwar, 2013).
Supplier Power (Low) – Owing to high goodwill that the company has it is not easy for the
suppliers to have any power over the company as the enterprise has multiple options from
whom it can choose to buy is raw materials and other goods.
Threat of Substitution (High) – There are several clothing companies that operates
throughout United Kingdom, which offers higher, and substitution and low and substitution
as well to Burberry, which creates an alternative for the consumers.
Competitive Rivalry (High) - There is several competitive players within the fashion
industry such as Zara, Gucci and others, which offer similar high-end experiences and
accessories and clothing giving Burberry a step competition (Rothaermel, 2015).
4. Apply a SWOT analysis to the organisation and critically evaluate the external and
internal environment.
Strength
 The company has become a fashion icon throughout the ages, as it is one of the most
popular brands that offer long lasting clothes for a premium price
 The company has a global presence throughout the globe as it has more than 500
stores in 50 countries.
 The enterprise focuses on creating a brand image that fits with the high quality clothes
that it makes and tries to optimise customer retention (Varley, 2014).
Weakness
 All the products of Burberry at premium priced and limit done consumers who can
buy its products
 A significant portion of the company's incomes comes from the agent market causing
the company to not focus on other large markets as well (Shenkar et al., 2014)
Opportunity
 The company has the opportunity to expand beyond just coats and increase its product
line with various innovative and unique clothing that are focused towards all ages
(Wright and Stigliani, 2013).
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 The company can expand in underdeveloped countries as well with the high amount
of revenue it has which would enable that will be better global presence.
Threats
 There is a competitive player in the market such as Gucci, Zara and other fashion
companies, which are a direct hit to the sales of Burberry.
 Apart from these renowned companies, multiple organisations produce cheap
imitation and fake products as well of Burberry that pose a threat to the organisation
When the first section of your plan is completed, you will need to produce:
5. An evaluation of the different types of strategic directions available to the
organisation
Ansoff Growth Matrix is a framework through which the strategic direction of an enterprise
is determined and the way in which the company will head (Grant, 2016).
Market Penetration – This strategy through which the company tries to penetrate the
existing target audience, which it already has with the technology and products, is already
popular with the consumers.
Market Development – In this form of strategy, the company's tries to develop a new target
audience in a new area where the existing products of the company will be utilised to gain
more audience.
Product Development – Through this technique, new products are developed through
innovation and Research wear by which a new spectrum of the market is tried to explore.
Diversification – This is the riskiest of all strategies wear by which a new product is
launched into an unknown market where the company has not tried it is business yet. The
likelihood of a strategy like this working is extremely low (Shakhshir, 2014).
After evaluating all the four strategies, which have been discussed above it, can be said that
the best strategy for Burberry would be product development strategy through which the
company can innovate and create new products. These products would be lower in price but
still deliver a certain amount of quality, which consumers with lower income power can be
drawn towards and the target audience of the company can expand as well. This would bring
a higher degree of revenue and increase the reserve pool of the company as well. The impact
of implementing a strategy like this would mean that at other companies, which have a large
section of the audience with lower and gums, would be eliminated as Burberry is a bigger
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brand name and it would immediately shift a large amount of customers towards Burberry
(Trigeorgis and Reuer, 2017).
Porter’s Generic Strategies is a strategy through which the company attains a higher degree
of competitive edge in the market made by which it can perform better and make superior
managerial decisions that would lead to you better harmony with in the company and its
employees (Grundy, 2017).
Cost Leadership Strategy – This is a strategy through which the company deploys the
lowest of prices so that it can eliminate its current competition and elevate if sales
exponentially. In this strategy the quality of the products, take a hit as a focus is given on the
pricing system than on the quality.
Differentiation Strategy – Differentiation strategy is a technique through which the
company focuses on maximizing and improving the quality of its product and services so that
the consumers of the enterprise get higher degree of utility from the commodities and
subscribe to you buying more.
Focus Strategy – Focus strategy give emphasis on niche markets that demand more
developed and customised products and are willing to pay high prices for the commodities,
which they want.
From the three above discuss strategy for Burberry on Cost leadership strategy will be
focused on so that the company can attain more consumers around the world with a limited
degree of emphasis on cost and pricing. This strategy will allow the company to eliminate its
competitors in the market and help the enterprise grow its market share throughout the
country.
Mergers and Acquisitions - Mergers is the way through which a company will align itself
with another enterprise so that it has a larger combined work force, operations, and
distribution channels, which are spread out in various locations. Similarly, acquisition is a
method through which a company will take over another enterprise through making
investments and acquire a larger market share in the industry. Acquisitions are more costly is
then murders however it is safer in choice as it removes the competition from the market.
6. Justification and recommendation of the most appropriate growth strategies
available currently to the organisation.
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Several strategies and recommendation that can be made and in the case of Burberry, all of
which have been elected head on below:
 The company can initiate a new hiring process through which it can bring in new
employees with diversifying skill within the enterprise, which would help the
company to create and produce lower priced clothing, and products through which it
can attain a bigger degree of target audience.
 This hiring procedure would be in alignment with the strategies, which have been
chosen above. As both focus strategy and product development strategy, can be
implemented simultaneously so that the company can increase its range of product
line within the country as well as outer branches (Yin, 2016).
7. Production of a strategic management plan that addresses one of the growth
strategies, inclusive of SMART objectives, tactics, implementation and control
considerations
Strategic management plan in the case of Burberry has been presented here down
below:
About us
PAST & TODAY
Past – Thomas Burberry had originally founded Burberry in 1856 and initially it had only
one stored that operated in Basingstoke. In the initial stages of the company, the enterprise
had moderate success.
Today – Currently Burberry has more than 500 branches all over the world and is selling
products such as clothes accessories perfumes customer takes and other commodities that
have high demand in the market everywhere.
VISION
Burberry is vision is to create a harmonious work force that focuses on delivering quality
products to the market that last a very high duration.
MISSION and Objectives
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The mission of the company is to increase its profit and revenue in the long run so that the
company can perform such activities like expansion new product establishment and others.
Objectives:
 To increase its marketing efforts so that at the company gets more Goodwill in the
industry and is able to draw in higher number of consumers from all around the
world.
 To put highest emphasis on the quality and material this is being provided to the
consumer then putting high emphasis on the price at which the products are being
sold.
 To increase its product line in the market so that there is a diversifying
commodity portfolio through which it can bring in new consumers within the
enterprise.
CORE VALUES
The core values of the company include respect towards the consumer providing an ethical
and moral environment for its employees and following values through which the
community can become a better environment.
GOALS
OBSTACLES
There are several popsicle that are present within a market that include aspects such as
highest number of retail players who are active within UK a external, elements such as
Brexit the rise of social media and others.
LONG-TERM GOALS
The long-term goals of the enterprise include expanding in several other countries and
having newer lines of product and services (Panayotou, 2016).
SHORT-TERM GOALS
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The short-term goals of the company include attaining revenue and profit through which
day-to-day activities of the company can be achieved.
MEASUREMENTS OF SUCCESS
The method through which the level of success which Burberry gets in the market will be
at certain through the study of its financial documents where multiple aspect such as profit
and loss statement balance sheet and others will be investigated.
STRATEGY
RESOURCE ASSESSMENT
The resources of the company include high quality materials, skilled employees, several
investors around the globe and other factors, which help the company move forward.
IMPLEMENTATION
The way through which Burberry can implement the above-mentioned strategies such as
focus strategy and product development strategies into the market is true do higher degree of
research and development. This will leave the company to know what techniques will be
used so that superior products can be delivered to the market at lower cost (Moon et al.,
2014). For the more the company can employee high skilled subordinates who will know
how to make the products last better in the market follower rates.
Time Constraint – In order to implement it above detailed strategy a provided period of one
year has been considered
Budget – The budget for the company for the above mentioned strategy will be £1,50,000
DISSEMINATION
In order, to properly initiate with the above-discussed plan details of it will be discussed in
the Annual General Meeting where particular sections of the plan will be explored and the
information and decision, which will be recorded in this session, will be shared with the
stakeholders of the company.
PROGRESS ASSESSMENT PLAN
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