Comprehensive Business Strategy Report: Burberry Group Plc Analysis

This report provides a comprehensive analysis of Burberry Group Plc's business strategy. It begins with an introduction to business strategy and its application to Burberry, a British luxury retail fashion house. The report then delves into a PESTEL analysis, examining the political, economic, social, technological, environmental, and legal factors influencing Burberry's operations. A SWOT analysis is presented, evaluating the company's strengths, weaknesses, opportunities, and threats. The competitive environment is analyzed using Porter's Five Forces model. The report then explores different strategic directions available to Burberry, culminating in a strategic management plan with recommended strategies, objectives, and tactics. Finally, a conclusion summarizes the key findings and recommendations. The report utilizes the VRIO framework to assess the company's capabilities and competitive advantages.

32 Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
Analysis of PESTEL and SWOT analysis of the organisation...................................................1
Analysis of the competitive environment by applying Porter's Five force model......................4
PART B............................................................................................................................................5
Evaluation of the different types of strategic directions available to the organisation...............5
Justification and recommendation to the most essential growth platform and registries\..........6
A strategic management plan which contains strategies, objectives and tactics.........................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................8

INTRODUCTION
Business strategy refers to those strategies which are designed and developed by the
management department of the company for the proper running of the organisations functions
and operations. It can be the firm's working plan for achieving its vision, prioritizing objectives,
competing successfully and optimizing financial performance with the business model of the
organisation (Bocken and et. al., 2014). This assignment is related to Burberry Group Plc which
is a British luxury retail fashion house and was founded in 1856 by Thomas Burberry. This firm
deals in fashion accessories, fragrances, sunglasses and cosmetics etc. This report will be
discussing about influence of macro environment and internal environment on a company.
Further it will define the results by using Porter's five force model and a strategic management
plan will be formulated for understanding strategic direction available to a firm.
PART A
Analysis of PESTEL and SWOT analysis of the organisation
PESTEL Analysis
It is a tool and technique that can be used by the management of the company and
marketers for analysing the external environmental factors and their influence of the firm's
activities, operations and functions. Pestel analysis of Burberry is mentioned below:
Political- This factor consists tax rate, government policies and others. Burberry runs its
business in major three regions as Americas, Asia Pacific and EMEIA ( Europe, Middle East,
India and Africa). In some nations government is not stable so terrorist attack activities in Europe
leads to drop in sales and cause of it tourist visits are lack. In Chinese market fight against
corruption affect the buying behaviour of the customers. But Brexit positively affect the firm by
bringing benefits which help in enhancing notion of Britishness and brand image of the firm. A
high level of taxation would demotivate Burberry from maximizing their profits.
Economical- It include interest rate, inflation, deflation, foreign exchange rate, currency
rate and others. In Burberry, Brexit help in increasing the sales of the company in the UK by
30%. But the recession situation in some nation affect negatively and people tend to spend less
on luxury products and identify substitution with lower price (Bocken, Rana and Short, 2015).
When the economic slowdown occurs , the customers prefer to buy affordable goods to fulfil and
provide satisfaction to their basic needs. The exchange rate of the nation Burberry operates in
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would affect the profitability of this company, septically if this firm engaged in global trade. The
stability of the currency is also essential an unstable currency discourages international investors.
Social- This factor consist culture, values, societal roles & norms, traditions,
demographics and others. In Burberry, the company target different customers who belong from
different cultures and lifestyles (Boyd and et. al., 2017). Change in consumer needs and demands
highly affect the business of the firm. For example, this company manufacture new scarf colour
according to it which is liked by 61% of 16-34s as personalized service before purchasing
clothes. With it, the firm provide satisfaction to its consumers who want to DIY their scarf with
30 colours and want to embroidering initials. The class distribution between the population is of
paramount importance; Burberry would be unable to promote a premium product to the general
public if the majority of the population was a lower class rather they would have to rely on very
niche marketing.
Technological- It consist those technical activities that can be generated and
implemented by the management department of the firm for the proper running of the business.
In Burberry, the management of the company use Facebook, Instagram, Social media, Internet
and others for providing information and promote the brand rather than traditional advertisement
and social media. For example, Burberry can use live streaming promotion which attract
consumers and allowed them to buy goods online and get them delivered. Fast delivery of this
organisation is considered by the customers which provide a competitive advantage to it.
Environmental- This factor considers the laws and regulation of environment such as
pollution act, environmental act, emission act and various others. In Burberry, the management
of the company use organic cotton in its products such as inner clothing, socks, pants etc. which
do not harm the environment. This company properly follows the carbon emission act so that it
can make contribution in saving the environment. The current weather conditions may
significantly impact the ability of Burberry to manage the transportation of both the resources
and the finished product. This would impact the delivery dates of the final product in the case of
an unexpected monsoon.
Legal- It consist discrimination laws, data protection laws, intellectual property rights
protection and others. In Burberry, the management of the company properly followed equality
and diversity law so that they can provide equal rights to its employees so that they can help the
firm by using their efforts and making contribution in the growth of the business. The main legal
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laws the affect activities and operations of this company are labour and employment laws. The
firm also have patent its product so that it can maintain the rights to manufacture goods and sell
them. Discrimination laws are developed by the government to protect the employees and ensure
that everyone in Burberry is treated fairly and given the same opportunities, regardless of gender,
age, disability, ethnicity, religion or sexual orientation.
SWOT Analysis
It a strategic tool and technique which is used by the firm to determine the internal
environment such as strengths, weaknesses, opportunities and threats for the business of a
company (Bromiley and Rau, 2014). The SWOT analysis of Burberry is as following:
Strengths- Burberry is one of the biggest retail fashion house in UK which providing
clothes, perfumes and beauty products etc. This company has approximately 500 stores in more
than 50 nations and a large range of products. There are more than 10000 employees who are
working under it and the revenue of the firm is £2,732.8 million, operating income is £410.3
million and net income is £293.6 million (Foxall, 2014). This organisation manufacture
luxurious products according its consumers’ needs and demands or Burberry is a luxurious
lifestyle brand. This firm has twice received a Royal warrant from Queen Elizabeth and Prince
Charles. The management department of this organisation use good advertisement and
promotional channels which help it in make engagement with the community.
Weaknesses- The main flaw of this company is its pricing strategy because from its
products and services it target upper class people and designed and develop premium pricing
strategies according them. So there are few and limited customer base and excludes the larger
percent of customers who are not able to afford these products. This company has limited
product line and has limited segments in apparels, accessories and beauty products while other
firms had large number of product in its product line. The another weakness of this company is
that the firm has high employees turn over which decrease the efficiency of the company and
also create impact on the sales or profit margin.
Opportunities- The company can get various opportunities by making change in its
products through innovation. They can do innovation in its existing products and launch new
goods to increase the demands of luxury products. It can expand its business in those nations
where it is not operating, for this it can make collaboration with other brands and can try to make
fashion more affordable. By using different kind of promotional channels and e-commerce can
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help Burberry to reach its customers and attract them towards the firm. Burberry company can
diversified its products and out stands its competitors such as Gucci in the market. Product
differentiation will yield high profits to the organisation and minimize the risk of losses since
whenever a particular product is not selling well. Then the firm can generate revenue from
products that are high in demand.
Threats- The major threat that affect the business growth of the firm is competition.
There are number of competitors such as Gucci, Ralph Lauren, Prada, Hugo Boss, Chanel etc.
that affect the business of the company. Change in customer’s lifestyle, needs & demands, Tastes
& Preferences are some major threats that highly affect its sales, products and growth. High
bargaining power and low switching costs are another threat that affect this company and
generate threat for its business at market place (Grant and Jordan, 2015). Fluctuation in
government rule, regulation, laws, and legislations affect it and influence the business strategies
and policies in negative manner.
VRIO Analysis
It is a model that is used by the organisations to analyse the capabilities of a company. It
is an effective tool in strategic planning which is used by organisation t0o make effective
decisions. It help in providing information and outcomes with competitive advantages. The
VRIO analysis of Burberry is as following:
Value- It refers to the value of the resource that are used by the company in
manufacturing goods and services. It refers to those resources which are easily available, can be
purchased by the firm, rented and leased. In Burberry, the management department of the firm
used valuable recourse which have high quality and provide satisfaction to the customers.
Rareness- It consist those resources which are rare and they are expensive and scarce
resource. In Burberry company use rare resources like organic cotton wool etc. to manufacture
trench coat.
Iimitability- It consider the degree of imitation when it comes to resources. In Burberry,
when a resources that is used by the firm is valuable, scarce and inexpensive to replicate then it
will not help the firm in providing competitive advantages.
Organisation- It refers to the proper arrangement of resources such as the resources must
be ordered, price agreements must be set up, comparisons should be made and assembly must
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take place. In Burberry, resources which are used by the company, must be processed and used
as possible .
Analysis of the competitive environment by applying Porter's Five force model
Porter's Five Force Model
It refers to a business analysis model that help in analysis the business of a firm. It was
developed by Michael Poter in 1979 for evaluating and determining the competitive strength and
position of a business company. The Competitive analysis of Burberry is as following:
Threat of new entreats- It refers to those situation when a new firm in enter and start to
operate its business in a specific sector and industry (Nohria, 2017). In fashion retiral sector,
there are various rules and regulations which are developed by the government to enter in this
field and there are required large capital investment. In Burberry, there are medium-low threat of
new entrant as the luxury brand need sufficient capital and resources to support. This brand is
sustaining from 129 years so the threat of entry is low and difficult to create competition to it
directly.
Bargaining power of suppliers- There are medium power of suppliers because Burberry
purchase raw material from relatively wholesalers, leather, fur, Uzbek cotton and Sandblasting
and there are number of suppliers in the market who provide need material to this firm. This
organisation have the long partnership between some vendors that offer special and unique
material like Peru which provide the cotton yarn to manufacture the tench coat.
Bargaining power of buyers-The bargaining power of buyer is medium-low became it is
luxury brand which following high pricing strategies so the enantiomers have little power to
make change in the pricing of the products and goods which are offered by the firm. The
company use premium pricing because it targets upper class people so there are medium
bargaining power of customers and however the switching cost is low.
Threats of substitute products- There are number of companies such as Zara, Prada and
others in this industry which produces and manufacture substitute product so there is medium
threat as consumers can choose other brands. This brand target those people who belong from
high income group so there are are less chances to switch from the brand easily.
Rivalry of existing players- The competitive rivalry is medium high because this
company only deal in limited product line and s segments also. But at market place, there are
number of competitors such as Zara Gucci, Prada etc. which produces different products such as
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clothes, home appliances, grocery products, accessories and others (Nylén and Holmström,
2015). It also offer a limited range of products son the competitive rivalry is relatively moderate.
PART B
Evaluation of the different types of strategic directions available to the organisation
To sustain in the market till long period of time it is necessary for a company analysing
the strategies and market for the development and growth so that the firm can achieve their
business so objectives (Peppard, Galliers and Thorogood, 2014). For surviving in the competitive
market, the firm should develop righ6t directions and strategies which help in achieving its
growth. The strategic direction that can be choose by the management department of Burberry
can defined through Ansoff matrix which is as following:
Ansoff Matrix
This model is beneficial for Burberry because it help in realizing the growth of the
market, providing suggestions to adopt strategies to grow business by adopting marketing of
existing and new products.
Market penetration- It is a growth strategy in which the firm can make development in
the business of the company by making innovation in exiting product and by adopting new
technology for existing market. In Burberry, the management department of the company can
increase the sales and profit of the firm by making change in the pricing strategies and using new
technologies such as e-commerce, digital marketing etc. To penetrate and attract consumers to
increase the market share and enhance the market size, the organisation can use advertising
campaigns and channels like Facebook, Snapchat, Instagram and others. It helps in the growth of
the company through existing products in existing market. There is no risk because market and
product both are existing and the management are familiar with the needs and demands of its
target audiences.
Market development- It is another growth strategy in which with the help of existing
products company can expand its business in new market in order to achieve business growth. In
context of development, Burberry can enter in a new domestic market, foreign market where it I
not operating its business. It is little risky than penetration because products are existing but
market are new so the management department of the company not properly are about the needs
and demands of the consumers.
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Product development- It the next business development strategy in which the company
can make development by new products in existing market (Prajogo, 2016). In Burberry, the
management department of the company can make development in its business by manufacturing
a range of products in its existing market. To make technical advancement and by doing R&D,
the firm can launch new products according to the customers needs and demands. This company
and manufacture home appliances, kids wear and others and make important in segments in its
existing products. In this growth strategy, risk is high than market development because the
management department of the firm do not have proper information that customers like or adopt
its new products or not.
Diversification- It is the last growth and development strategy and there are high risk
because in it product and market both are new and the firm have not proper knowledge that the
audience accept the product of this brand when it launch them in a new market (Saebi and Foss,
2015). In it, the firm move in to a unfamiliar market with new products. For example, In
Burberry, the company can expand its business in London, Moscow, Tokyo with its new
products.
Justification and recommendation to the most essential growth platform and registries\
After monitoring all the strategies of business development and growth, it can be
analysed that the management department of the company can used and followed product
development strategy. It is defined as below:
Product development- It is a growth and development strategy in which a firm can
manufacture new products in existing market for the purpose of increasing sales and profit of the
firm. In Burberry, the firm manufacture limited products in limited segments. To attract large
number of customers, it can manufacture different products such as home products like
appliances and decoration goods. In clothing line, they can produce kids clothes and different
segments of apparels for youths, female and male etc. It will be beneficial for the company to
attract number of customers and help in creasing sales or improving economic condition of the
company in terms of profit margins.
This market strategy can be accept by Burberry because it is a well know firm at
marketplace. If the company can adopt product development strategy than it can fulfil its
consumers demands and desires (Spieth, Schneckenberg and Ricart, 2014). By doing proper
market research, the firm can manufacture and produce goods and products in the market.
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A strategic management plan which contains strategies, objectives and tactics
Strategic management plan
It is a written document which is used by the firms to make communication within the
organisation's aims, focus energy, set priorities and ensuring that employees and other
stakeholders are working against common goals (Teece, Peteraf and Leih, 2016). This plan is
beneficial for the firm because with the help of this plan the company take efficient and
appropriate decisions in order to achieve organisational growth and development.
Strategies- It refers to those plan which the management department of the firm are
designed for the development of the company. When the firm manufacture new products then
with the help of decision making process, the management department of Burberry can develop
these kind of plans and strategies. There are some strategies that can be used by Burberry, they
are as following:
Market analysis- It refers to the research of any market and the major purpose of it to
predict the direction of prices or growth. In Burberry, the management department of the
company can use this strategy from analysing the needs and demands of customers so that they
can produce and manufacture products according to them or provide satisfaction.
STP- It is a marketing strategies that can be used by the management of the firm to to
analyse different factors such as profitability, customers, effectiveness of products etc. The
overall objective of this strategy is to lead the business to the planning and implementing a
marketing mix program which is important for both the company as well as target audiences.
Segmentation- It is a strategy in which the organisations divide the market on the basis of
demographics like age, gender, income lifestyle and others. In context of geographic they make
segmentation according nation, state, religion etc. and psycho graphically, they divided on the
basis of values, attitude, risk etc. In Burberry, the management department of the company make
segmentation on the basis of elite fashion for females and males and in the premium segment
who appreciate smart and timeless classic style.
Targeting- In Burberry, the company target middle aged male and female who belong
from upper middle class.
Positioning- Burberry already has a good market position by manufacturing brand
showcasing quality, style and elegance (Tongur and Engwall, 2014). This company produce high
quality products so has a strong and great reputation at market place.
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Objective- When Burberry manufacture new product in the market than it need to set SMART
objective which is as following:
To increase the sales of the firm by 10% within 2 years by manufacturing different
products such as home appliances, kids wear etc. in its existing market.
Tactics- These are those short term strategies that can be used by the firm to solve the short term
issues. There are some tactics that can be applied by Burberry when it use product development
strategy:
Innovation- It is important for the company because by making innovation in its existing
products, the firm can provide satisfaction to its customers (Bocken and et. al., 2014). For
example, in its male and female wears, it can launch another segments in which the company
manufacture different kind of clothes.
Packaging- It is another essential strategy. It play an important role attract customers and
help in increasing sales or archiving business objectives of the firm. If the company use good and
recycling material in nits packaging than it beneficial for both the company or as well as
environment.
Budget-
Particulars Amount
Machinery lease £5,880.00
Building Rent £2,500.00
Raw Material purchased £3,980.00
Inward Wages £2,910.00
Pre operative expenses £1,150.00
Electricity and water
connection deposit £1,100.00
Legal Exp. Related to
incorporation of company £1,340.00
Repair and Maintenance Exp. £1,140.00
Investment in business £20,000.00
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CONCLUSION
From the above information, it can be concluded that business strategies are important for
the development and growth of business and organisation. With the help of designing strategies
the firms can know about the needs and demands of customers and provide product according to
them. PESTLE and SWOT analysis is defined for analysing the internal and external
environment and they are useful to analyse the impact of macro and internal environment. With
the help of Ansoff matrix, the company can analyse competitive environment. A strategic
management plan is explained for the development and growth of the firm so that it can make
increment in its sales and profits.
REFERENCES
Books & Journals
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Boyd, B. and et. al., 2017. Hybrid organizations: New business models for environmental
leadership. Routledge.
Bromiley, P. and Rau, D., 2014. Towards a practice‐based view of strategy. Strategic
Management Journal. 35(8). pp.1249-1256.
Foxall, G., 2014. Corporate Innovation (RLE Marketing): Marketing and Strategy. Routledge.
Grant, R. M. and Jordan, J. J., 2015. Foundations of strategy. John Wiley & Sons.
Nohria, N., 2017. Fast forward: The best ideas on managing business change. Business Review.
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Nylén, D. and Holmström, J., 2015. Digital innovation strategy: A framework for diagnosing
and improving digital product and service innovation. Business Horizons. 58(1). pp.57-
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Peppard, J., Galliers, R. D. and Thorogood, A., 2014. Information systems strategy as practice:
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Prajogo, D. I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics. 171.
pp.241-249.
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Saebi, T. and Foss, N. J., 2015. Business models for open innovation: Matching heterogeneous
open innovation strategies with business model dimensions. European Management
Journal. 33(3). pp.201-213.
Spieth, P., Schneckenberg, D. and Ricart, J. E., 2014. Business model innovation–state of the art
and future challenges for the field. R&d Management. 44(3). pp.237-247.
Teece, D., Peteraf, M. and Leih, S., 2016. Dynamic capabilities and organizational agility: Risk,
uncertainty, and strategy in the innovation economy. California Management Review.
58(4). pp.13-35.
Tongur, S. and Engwall, M., 2014. The business model dilemma of technology shifts.
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Online
PESTEL Analysis. 2016. [Online]. Available through:
<https://culclij108.wordpress.com/2016/11/04/burberry-pestel/>.
Porter’s five forces analysis. 2015. [Online]. Available Through:
<https://culclij108.wordpress.com/2016/10/25/burberry-macro-environment/>.
Ansoff Matrix. 2016. [Online]. Available Through:
<https://culcferna113.wordpress.com/2016/12/12/burberry-ansoff-matrix/>.
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