Competitive Analysis of Burberry: UK and China Market Project Report

This business project delves into the competitive positioning and social impact of Burberry across different markets, with a specific focus on the UK and China. The project begins with an introduction to global trade and the importance of competitive positioning, followed by a comparative analysis of Burberry's performance against competitors like Gucci, Louis Vuitton, and Prada. The analysis examines factors such as product quality, pricing strategies, customer satisfaction, and employee loyalty. Furthermore, the project explores Burberry's competitive advantages, including its brand image and innovative product lines. The project then examines the application of the Competitive Analysis Model and Porter's 5 Forces in both UK and Chinese markets, assessing the political, economic, social, technological, and environmental factors influencing Burberry's performance. The project also addresses the social impact of Burberry, including corporate social responsibility, environmental protection, and cultural considerations. The project concludes with a summary of findings and recommendations for maintaining and enhancing Burberry's competitive position in the global market. The project also includes tables showing profit percentages of the company's competitors, the impact and degree of impact of Porter's 5 forces model on the UK market.

BUSINESS
PROJECT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
COMPARATIVE ANALYSIS........................................................................................................4
Competitive position of Burberry in several markets..................................................................4
SOCIAL IMPACT.........................................................................................................................11
Consideration taken by the company to create social impact....................................................11
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................17
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INTRODUCTION
Global trading which is also known as international trade has become a most emerging
trend in the present era. Every organization aim to do the business internationally. Further, by
doing this organization thrives to achieve competitive position. A position is refer to as a place
which a firm wish to acquire in the industry. Moreover, in order to assess their competitive
position a corporate do the comparative analysis of their growth performance with their
competitors (Siau and Rossi, 2011). Whilst maintaining their position in domestic market, a
company also aims to maintain the same position in international market as well. However, the
changing dynamics in international market imposes challenges on the company to maintain its
position in the global market. Changes such as advancement in technologies, changing economic
condition, cultural differences and many more. In order to survive in a global market, a firm do
the comparative analysis of themselves with other multinational corporations (Weidlich and
et.al., 2012).
On the other hand, for surviving and maintaining the competitive position in a domestic
as well as in an international market, a firm also requires to have a good social impact on the
minds of consumers and society. Social impact is equivalent in making the position of the
company at high in within and outside the boundary. Company is require to emphasize upon the
cultural aspects that assist in establishing top position in the international markets (Carney and
et.al., 2011). The firm has to focus upon various aspects of international market that are cultural
norms, values, beliefs, religious difference, environmental context, etc. This is how organization
can set up themselves in the market of other countries. However,comparison of its competitive
position can also be made in the various markets. Along with that by creating social impact in the
markets, a firm can also build competitive position in the market.
This project is mainly focused on the competitive position and social impact of Burberry
in different markets. This company is a public limited company which is headquartered at
London, England (Ahi and Searcy, 2013). Furthermore, this firm fall under the fashion industry
and deals in the products like clothing, accessories, perfumes and cosmetics. In 2015, the
company generated the revenue of £2,523.2 million worldwide. This is achieved through the
highly skilled 10, 851 employees which are employed in the firm worldwide. This firm's
competitive position is compared with the other fashion retail firms of UK market and also in the
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market of China. Along with that, discussion has been made creation of social impact through
corporate social responsibility, environmental protection and respecting the culture. Moreover, it
has also been described that social impact leads to the generation of competitive advantage of the
Burberry in UK as well as in China.
COMPARATIVE ANALYSIS
Competitive position of Burberry in several markets
In a general term competitive position refers to as the distinctive position which a
company occupies in a market or they are trying to occupy in relation to their competitors.
Burberry which is basically dealing in the fashion products have made a competitive position in
the UK market along with the global market. The firm provide product and services as per the
identified needs of their customers (Louzis, Vouldis and Metaxas, 2012). Furthermore, the
management has to maintain the same position in various parts of the world. For this aspect,
company has to analyze its position and find out where they are lacking. This way company can
maintain its position and also they can thrive to reach at the top against their competitors. Thus,
company has to assess its competitive position by comparing their position with their
competitors. Therefore, the competitors of Burberry is Gucci, Louis Vuitton and Prada. They
also deals in the similar products as Burberry and also their target market is high-end customers.
For carrying out the comparative analysis of Burberry, the competitive position in the
marketplace is identified (Shenkar, 2010). For this reason, it has been analyzed that Burberry
provides such products to the buyers which satisfy their needs. In other manner, it can be said
that customers are extremely satisfied with the products and services of this organization.
Products sold by the company are of optimal quality. Further, high prices are charged for the
products of the company as the target market of the firm is high income group. Therefore, the
firm has maintained its position as a premium brand in the minds of consumer. Thus, customers
are highly satisfied with the products and services which are provided to them. Furthermore, the
employees of the company are loyal and they are committed towards their work, due to which
there is low staff turnover and all the human resources work hard so as to satisfy their customers.
The competitive advantage of the company has been created because of the employment of
highly skilled workforce and also by providing utmost quality products. Moreover, the company
has positioned its brand in the minds of customers as 'functional luxury' (Bonchi, 2011). This
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company maintains the product line with great width and depth which consist of many products.
Further, when compared to their competitors Gucci, LV and Prada, Burberry is doing much good
than them. This organization has contributed a lot more in raising the economy of UK. GDP of
the country has raised because of the high profit generation by this company. However, the
company is facing intense competition in terms of innovation because every now and then, there
is a competition of bringing innovative qualities in the market (Tran, Hsuan and Mahnke, 2011).
Along with that, price war is also going on in the market as the company aims to provide highest
and premium quality products at lower prices then other brands. Therefore, the competitive
position of the company is quite good related to their competitors because the company provides
highly innovative products to their customers. Furthermore, the competitive position of the
company in UK market can be best described by the Competitive Analysis Model which have
been described as follows:
Competitive Analysis Model
Competitor's Objectives: The objective of the competitor is to ensure the growth of
revenue and profitability however, they are being good at this. The Burberry requires to
emphasize more on increasing revenue and profitability.
Competitive Assumption: It means that several assumptions are made by the company is
respect to the market competitors. Competitors of the given company design their strategies by
considering the previous year performance.
Competitor's Strategy: The main strategy of the competitors o0f Burberry is to provide
highest quality products at high price so as to maximize revenue and profitability (Competitive
analysis, 2016).
Competitor's Capability: The Burberry's competitors have strong financial and physical
resources along with the strong technical ground which are used in order to improve the quality
of good and to bring innovation.
After doing the complete analysis of the model, it has been assessed that company is
performing well in the country as compared to their competitors. Moreover, the political
environment
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Profit generated by Burberry and its competitors in UK
Company Profit (%)
Gucci 55.00%
Burberry 67.00%
Prada 45.00%
Moreover, the firm's competitive position can be compared in different market by
analyzing its position in the Chinese market. The company has done 50% sales in the emerging
market of China. Further, the sales of the company is increased by 20% per quarter since over a
year. Thus, against their competitors such as Gucci, Prada, etc. in China, the company is doing
well. This company has beaten the other fashion retail firms in this nation but have been facing
various challenges in the market of China due to several factors. The political environment of the
company is not good (Siau and Rossi, 2011). It is because the country has communist party and
thus they impose their decisions on the people. Thus, the foreign company has to face difficulties
in the market of China. However, the firm may not face much issues as the government of the
company is stable. Along with that, social welfare system is very poor but government has took
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Gucci Burberry Prada
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.55
0.67
0.45
Profit (%)

initiative to improve the situation. Further, Burberry have the opportunity to initiate for the
welfare of society so that government may not interfere more in the working of this firm
(Weidlich and et.al., 2012).
Furthermore, economic condition of China is not that good and therefore, organization is
facing many issues in maintaining its competitive position in this market. The tax rate is
increasing and due to which profitability of the firm has lower down. Along with that, foreign
exchange reserve have lower down which has imposed major threat on Burberry. The inflation
rate is very high in this nation due to which the firm has to raise its price (Carney and et.al.,
2011). Further, the GDP of the country has grown which is a good sign for the organization. One
of the best thing for Chinese market is that the 90% population of the nation is above poverty
line so the company can acquire larger market share. Therefore, the customer base could be
increased if the organization do the proper marketing of the company. Along with that, company
has also opened up its first flagship store in China because of the lower cost of production in
China. This way, a firm has introduced innovative services in the markets of China.
On the other hand, Socio-Culture factor of China is favourable because there are 70% of
the entire population is between the age group of 15-60 years. Therefore, company can occupy
the larger market share. Furthermore, the literacy rate of the country is 92.85 which is also a
good sign for the firm. Therefore, there can be great awareness about the brand in the country.
There are very religions exist in the country so the firm does not face much issue for the culture
differences (Ahi and Searcy, 2013). Mainly Chinese prefer first mover so Burberry do so and this
way they have built good brand image on the minds of consumer. In a similar manner, China
have a pool of technologies because lots of MNCs have established themselves in the market of
this nation. Therefore, country has started introducing many technologies. Thus, Burberry does
not face technological issues. However, there are some resources which cannot be made
available and for that company has to import form UK markets.
Along with that, to maintain the competitive position of the Burberry in both UK and
Chinese market then a firm should assess the emerging industry trends in the both the markets.
For this purpose, Porter's 5 forces model can be applied for both the nation and they have been
described as follows:
Table 1: Porter's 5 Forces Model of UK
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Forces Impact Degree of Impact
Bargaining power of
buyers
 Price sensitivity is low in this sector.
 High number of competitors in retail
sector (Tran, Hsuan and Mahnke, 2011).
 Switching cost is little or zero in some
cases.
 Customer loyalty is received mostly on
Quality.
High
Bargaining Power of
Supplier's
 Labors available are mainly young,
casual and are ready to work for part-
time.
 Low switching cost of the suppliers
(Preuss and Perschke, 2010).
 Many company has taken backward
integration and has started producing
their own products.
Low
Threat from New
Entrants
 High capital requirements and also labor
requirements.
 Already established firms have
economies of scale which closes the
opportunities for the new entrants.
 However, the other foreign investors
have made the industry attractiveness.
 Possibility of others making replica of
the design but cut down the price.
Therefore, it creates confusion in the
minds of people and this way new firms
can enter the industry in an easier
High
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manner (Moretto and et.al., 2012).
Threat of Substitutes
 High number of substitute available for
this sector but of lower quality.
 People buys clothing products form
online website.
 Customers who are loyal does not prefer
the substitute.
Low
Competitor's Rivalry
 There are high interdependence of every
firms who are competing in the market.
 There is a cut throat competition of
prices among the supermarkets of the
country UK (Li, Li and Kambele, 2012).
High
Table 2: Porter's 5 Forces Model of China
Forces Impact Degree of Impact
Bargaining power of
buyers
 There are minimal promotion and
discounts on the luxury brand products.
Therefore, customers could not bargain
more.
 The products are highly differentiated
so consumers prefers to buy such goods.
Low
Bargaining Power of
Supplier's
 They can open up their own website
which imposes threat on big brands of
fashion industry.
 They determine the price of materials
according to the luxury brands which
lower down the profits of the companies
(Shenkar, 2010).
High
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Threat from New
Entrants
 Capital investment is very high so the
all the company cannot afford to
establish themselves in the Chinese
market.
 Potential entrants have faced cost
disadvantage for acquiring the asset.
Low
Threat of Substitutes  There are less substitute available for
the apparels.
 Further, the major substitute is online
websites selling the goods of preferred
brand and they also provide discounts to
them.
Moderate
Competitor's Rivalry  There are few high competitors
available in the market.
 Low customer loyalty can increase the
uncertainty in long term profit of
Burberry (Tran, Hsuan and Mahnke,
2011).
High
As per the above analysis it has been analyzed that Burberry is performing good in
Chinese market because it has acquired larger market share in China as compared to UK.
However, this company faces more difficulties in China than UK. Moreover, the bargaining
power in Chinese fashion industry is less while in UK it is high. It is because the consumer of
UK are more aware about the quality and price. Thus, it can be inferred that competitive position
acquired by Burberry against their competitors in UK is low. While in China the competitive
position occupied by firm is better. It is because this firm provides best quality products to their
customers and also it has more advanced technology in China than its competitors.
According to Weidlich and et.al., (2012) porter 5 forces model is a most suitable model
for analyzing the competitive position of a firm in an industry. It assist for identifying the
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potential threat can be faced by the company due to the changing trends in industry. Further, it
can be explained that, by using this model an organization can also assess capability of facing the
competition happening or about to happen in the industry. For instance, companies like Gucci
and Prada also use this model in order to identify the industry trends which can be assessed and
also through this model, competitive positions in the market also get recognized. On the
contrary, Bonchi (2011) argued that it is not necessary that this model would provide accurate
information about the competitive position of the company in a given industry. Reason behind
this is that non-market forces are neglected by this model at the time of estimating the changes.
Moreover, this model does not apply on complicated market structure, in fact this provide proper
results in only those market whose structure is easy. Furthermore, Carney and et.al., (2011)
stated that various large corporate and experts researcher have used and are using this model in
order to identify the buyer's potential and also through this they can take strategic decision that
are backward integration or forward integration.
SOCIAL IMPACT
Consideration taken by the company to create social impact
In order to sustain in the market for longer period of time it is necessary for business to
create social impact so that long term performance of the business can be improved in the
market. Further, social impact is created by offering products as per need and requirement of the
target market (Esslinger, 2009). Burberry carries out its operations in wider basis and serves
large number of customers in the market. Therefore, business has to create social impact in
effective manner. The range of products offered by business involves all type of clothing items
through which customers are attracted in the market. Further, social impact is created by business
by developing the entire product range as per need and requirement of the target market.
Different type of clothing items are offered by Burbeery to its target market where social trends
are considered as most importance and this in turn acts as development tool for the company
(Betz, 2002). In different countries company operates and due to this reason creating social
impact on the target market is considered to be necessary by the enterprise. Further, it is well
known fact that need and requirement of every customer differs from each other and due to this
reason considering social trends of the customers is must for the business. In the present era
every consumer prefers to purchase luxurious products especially in the market of UK.
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Moreover, new and unique products are required such as clothing. Therefore, this social trend is
considered by the business for benefit of its target market where product modification takes place
on continuous basis.
In short creating social impact is regarded as the key to organizational success where it
becomes possible for organization to retain its customers for longer period of time and allows to
deal with challenges being present in the business environment. Further, Burberry ensures well
in advance whether its product range is able to meet with the requirement of target market or not.
The entire range of clothing items are offered by company as per customers’ trends. Moreover,
market trends changes on continuous basis and it is necessary for business to comply with the
same. Apart from this, without creating social impact it is not possible for any business to sustain
in the market for longer period of time (Williams, 2013). Further, marketing activities of
Burberry are also considered to be effective which influences social factor and in turn allow
customers to purchase the products of the organization.
The most important consideration which organization must undertake while creating social
impact is purchasing power of customers where it must be highlighted that product offered is
under income level of consumers and they can be easily influenced to purchase the same.
Generally products of Burberry are little bit costly and it represents that business has maintained
quality standard which also acts as source of attraction and provides base to organization in
serving its customers in the market (Sehgal, 2010). Apart from this, income level of every
consumer differs from one another and due to this reason this factor must be necessarily
considered. On the other hand, religion along with culture of target market is another type of
consideration which must be undertaken.
Further, it is well known fact that at the time of purchasing any commodity customers
consider their religion and it directly influences their purchase decision. Therefore, considering
this factor can also enhance overall performance of business in the market. Business has to
consider culture and religion of every individual living in the society and products must be
offered on the basis of same (Sadeghi, 2012). So, this can bring favorable results for the business
and can allow in gaining competitive advantage in every possible manner. Moreover, it is
necessary for company to understand culture of every customer and through this Burberry can
easily gain competitive advantage. Social factor is another type of consideration which highlights
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