Business Economics Report: Burberry's Recession and Market Strategies

This report delves into the business economics of Burberry, a luxury fashion house, examining the impact of economic recessions, particularly the COVID-19 pandemic, on the demand for its products. It analyzes how changes in consumer behavior and market conditions, including store closures and decreased sales, have affected Burberry's profitability and market share. The report provides strategic suggestions for Burberry to respond to these challenges, emphasizing the importance of customer service, marketing adjustments, staff management, and inventory control. Furthermore, it discusses how Burberry can maintain its profitability within an oligopolistic market, focusing on advertising, capacity management, product innovation, and new product development. The analysis highlights the need for Burberry to adapt to changing economic conditions, implement effective marketing strategies, and foster customer loyalty to ensure long-term sustainability and success. The report concludes with a synthesis of the findings and recommendations for Burberry's future strategic direction.

Assessment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK1.............................................................................................................................................1
Describe how demand of Burberry's luxury products will change during recession..................1
Provide suggestions that Burberry respond to demand changes due to recession......................2
TASK2.............................................................................................................................................4
Discuss how respective organisation remain profitable within oligopolistic market.................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Business economics is defined as the combination of theories of economics associated to
business practices that helps to develop effective decision making and future planning for the
business firms. It is also refers as the application and implementation of principles, theories of
economics and methodology of decision making processes in business organisations that helps
to formulate rules and regulations so as to attain economic objectives of firm in effective and
efficient manner (Business Economics, 2020).
Burberry is a luxury fashion house based on Britain which designs and distributes ready
to wear goods and products such as- footwear, leather goods, eye wear, trench coats, cosmetics
and fashion accessories. The company founded in 1856 wi9th its headquartering in London, UK.
It has 9,892 employees who manage its stores in 421 locations worldwide.
This report is based on business economics that helps respective organisation in order to
make effective decision making for future growth of Burberry. This report covers how demand
of luxury words of respective firm will change. Furthermore suggestions are provided in order to
respond towards changes in demands. In addition how Burberry remains its profit within
oligopolistic market are considered within the report.
TASK1
Describe how demand of Burberry's luxury products will change during recession.
Coronavirus recession is serves global crisis that reflects depressive recession in entire
world. It is stated in reports that it was the worst economic crises faced by entire world. This
results in negative impact on demand of luxury products (Canuto, 2020). Because of global
recession where everyone faced a critical time and struggled to fulfil their basic needs, thus it
changed the buying habits of customers that will decreasing the demand of luxury products
within UK. In terms of Burberry Covid recession forces the firm to close its stores due to
decrement in its demand for luxury goods. Thus closing its stores for longer period will impact
the firm in terms of decreasing market share of firm due to slower economy of nation. This will
also impact in terms of loosing retained customers who switched to other brands and become
habitual to nominal products. Due to no sale for a constant period will impact the profitability
and sales of firm requires to running the firm in effective manner. The Governmental rules and
regulation at during the period of Covid recession changes the entire industry of luxury brand. It
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was difficult for largest business firms to predict accurate impacts on luxury industry as well as
economy. Due to complete lockdown respective organisation is forced to stop its operation
constantly for months that will impact the retained policy of employees of firm. Due to Covid
recession multi year turnaround plan of Burberry is stopped. It fails operating of 57% of $189
millions of ending of march. Sales of respective organisation was declined 3% to $2.6 billion.
This will impact the operation and smooth functioning of firm in negative manner. Because of
the lack of proper guidance for the upcoming year will impact its stores towards closure at near
peak. It will take time of overcome from this situation as it will impact the demand of its
products in declining manner. After Covid recession growth of Burberry was supposed to reach
acceleration phase after strategic changes from two years, But economic downturn will impact its
growth (Fernandes, 2020). Economic recession during Covid 19 creates a pandemic situation
that not only impact a particular nation but affected entire world. This will impact the entire
industry of luxury products in terms of reducing their demand will affect the sales volume of
respective company. As per governmental regulations it loses its customers who are loyal and
trustworthy for the firm will reflect the lower sales volume and profitability of business. Due to
constant closure of respective business loses it retained employees will impact the firm in term of
rising cost, time and efforts of business requires for development of team for making effective
policies for retaining employees for long terms. Thus economic recession during pandemic
Covid 19 creates huge impacts on performance and profitability of respective firm that requires
many changes in order to back to track on existing position (Li and et. al., 2020).
Provide suggestions that Burberry respond to demand changes due to recession.
In terms of responding to changing demand of luxury products and goods of respective
organisation it is suggested to make customers on priority. Customer service should be on
priority of firm in order to deal with changing demand of customers. Offer effective quality of
services that secures and protect the health and wealth of customers so as to build trust in their
minds this helps the firm in order to attract customers for better purchase and raise sales volume
of firm. For the purpose respective organisation can arrange customer incentive programs,
adapting of products and services that suits the current needs of customers (Christ, Burritt and
Varsei, 2017). After Covid pandemic customers are more concerned about their health and
wealth thus providing proper safety measures at stores is also an important suggestion
recommended to Burberry in order to deal with changing demands of its goods and products
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effectively. Another way to respond effectively within the situation of customers demand are
changed due to impact of economic recession within UK after pandemic Covid-19 is to review
marketing strategies of firm. This help in coming back with new and creative ideas in order to
enhance the sale of business as well as helps in evaluating better ways of how to use marketing
dollars efficiently. It also helps to develop effective strategies and unique selling techniques that
helps to effectiveness of marketing strategies and helps to attract customers. Marketing is an
costly approach in times of recession thus respective organisation should use free marketing
tools such as- word of mouth as well as social media platforms so as to save the cost of business.
Managing of staff is also an important solution for Burberry in order to deal with changing
demand of customers in economic recession (Rognlie, 2016). In terms of human resources
department of firm will make an effective plan for staffing costs of firm and focus on retaining
employees who have great experience to attract and influence customers for more purchase. It is
advisable for respective not change the staff and communicate the business downfall with its
customers in order to build moral and motivation of employees for giving their best in order to
deal with economic recession successfully. Inviting employees to participate within decision
making process of firm so as to make it clear in their mind how much it is important for
economic balance of firm to work hard and cooperate and coordinate with management in
reaching desired outcomes. This will help the firm in reaching highest potential of employees
and running business effectively. It is also suggested for respective organisation to give better
offers to its customers in order to retain existing customers. For the purpose Burberry can offer
discounts for existing customers, bulk purchase offers at nominal prices. Inventory management
can also be beneficial for respective firm in order to balance between demand and supply. This
will save the cost of firm and helps to function smoothly and constantly. Networking is also
suggested for Burberry in order to balance economy of firm. It is beneficial for firm to discover
new opportunities, ideas, customers by aligning with other business partners. For instance
offering complimentary services, discount offers. This helps in meeting changing demand of
customers. Seeking assistance from financial officer or adviser like consultant or accountants so
as to help in surviving in economic downturn. Ask employees for extra works and use of job
sharing agreements in order to perform effectively within economic downfall and changing
demands. This will help Burberry in performing well even after economic downfall times (Yan,
2017).
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TASK2
Discuss how respective organisation remain profitable within oligopolistic market.
Oligopolistic market is the market where there are small number of firms that doesn't
keep other from having benefits. It is defined as the term which is used to discuss the structure of
unique and specific market, business firm or a industry. A market can be called oligopolistic
when it shares by few common firms. Thus oligopolistic market benefits the business business in
terms of low competition and doesn't impact each other. In terms of Burberry it is said that it
comes under oligopolistic market of UK where there is less competition from other players due
to limited competitors within the market. There are some method can be used by in order to
remain profitable (Gugler and Szücs, 2016). Advertising: In tight oligopolies business
organisations boosts the intensity of advertising that is beyond from the information needed by
the customers about their goods and services. Business organisations are usually advertise
profligate with objective of not only make recognition of brand but strongly recognize the brand
require for effective competition within the market. Once an organisation comes with strong
brand recognition it will be needed for new business firms invest more money as compared to
existing brand in order to formulate recognition of its good and services within same market.
Thus in terms of respective firm needs to remaining effective position and profitability within
oligopolistic market it is advisable for respective firm to enhance marketing and promotional
strategies of it that doesn't cost more. For instance Burberry should use social media marketing
for promoting of its good and services with new benefits and word of mouth publicity in order to
become profitable through taking competitive advantages. Excess capacity: Another significant
way to remain profitable within oligopolistic market is to excess the production capacity of firm.
It is advisable for respective firm to plan capacity that is enough in terms of production volumes.
Due to pre planning of capacity and actual plan may vary as per time, respective firm has excess
capacity that has prominent impact in terms of become profitability through fighting with other
competitors. Product innovation: It is also a method for respective firm in order to be profitable
in oligopolistic it is an significant way to innovate existing products and services. Due to few
competitors it is cost effective for the firm to innovate its existing products and goods so as to
retain existing customers as well as attract new customers. This will enhance the sales volume of
firm as well as raise the profitability of business. This will affect firm's competitive position for
long term that secures its position as well as ensures long terms sustainability within the market.
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Development of new product: It is also an important way for respective firm in order to remain
profitable into oligopolistic market. Development of new, creative and innovative goods and
products may helps the firm in building strong competitive position within the market which can
be difficult for other to beat. It not only helps in increasing customer base of the firm but also
secure the position of firm for long term that leads completive benefits over other players within
the market. Development of new and innovative ideas or goods in the market where there are
few competitors helps the firm in terms of building effective position that has prominent impact
over firm's profitability as well as sustain growth. Thus all are the ways that will help respective
organisation in terms of remain profitable within oligopolistic market (Shafie-khah, Siano and
Catalao, 2017).
CONCLUSION
As per above consideration it is observed that business economic is an essential part of
business organisations that plays prominent role in identifying and developing measures for
successful operation of firm in effective as well as efficient manner. Pandemic Covid 19 affected
the global economy that will impact business organisations in adverse manner. Economic
recession due to coronavirus forces the firms for stop their stores that leads loosing customers
interest, decreasing the demand of luxury items and products, breaking retained policies of firm
that impacts the entire profitability and sale of business. Thus it is very important to take
corrective measures in order to balancing the economy and profitably of firm. There are several
ways for business firm to remain profitable within oligopolistic market.
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REFERENCES
Books and Journals
Canuto, O., 2020. The Impact of Coronavirus on the Global Economy.
Fernandes, N., 2020. Economic effects of coronavirus outbreak (COVID-19) on the world
economy. Available at SSRN 3557504.
Li, R. and et. al., 2020. Investment analysis and strategy for Covid-19. Available at SSRN
3563300.
Christ, K.L., Burritt, R.L. and Varsei, M., 2017. Coopetition as a potential strategy for corporate
sustainability. Business strategy and the environment. 26(7). pp.1029-1040.
Rognlie, M., 2016. Deciphering the fall and rise in the net capital share: accumulation or
scarcity?. Brookings papers on economic activity. 2015(1). pp.1-69.
Yan, M.R., 2017. Strategic product innovations and dynamic pricing models in oligopolistic
market.
Gugler, K. and Szücs, F., 2016. Merger externalities in oligopolistic markets. International
Journal of Industrial Organization. 47. pp.230-254.
Shafie-khah, M., Siano, P. and Catalao, J.P., 2017. Optimal demand response strategies to
mitigate oligopolistic behavior of generation companies using a multi-objective decision
analysis. IEEE Transactions on Power Systems. 33(4). pp.4264-4274.
Online
Business Economics. 2020. [Online] Available through <https://www.geektonight.com/what-is-
business-economics/>/.
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