Burberry Strategic Management: Environment, Forces, and Options

This report provides a comprehensive analysis of Burberry's strategic management objectives within its competitive business environment. It examines both the external and internal factors influencing the company, utilizing tools such as PESTEL, Porter's Generic Forces, Bowman's Clock Model, and VRIO analysis to assess Burberry's strengths, weaknesses, opportunities, and threats. The analysis highlights the competitive pressures from brands like Gucci and Prada, which impact Burberry's brand image. The report concludes with recommendations based on the Ansoff Matrix, aimed at enhancing Burberry's global strategic management and overall competitive position.

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Executive Summary
The report has thrown light on analysing the different kinds of strategic management
objectives which can be adopted by the Burberry firm in the overall competitive business
environment. The external and internal environment analysis has helped in understanding the
different strengths, weaknesses, opportunities and threats which are being faced by the
organization in an appropriate manner. The Porter’s Generic Forces along with the overall
Bowman’s Clock Model have been considered which assisted in understanding the position
of the company in comparison to the other competitors which are present in the market.
Additionally, the VRIO analysis has been performed from which this has been seen that the
company is in the most competitive position; however, there is fierce competition from Gucci
and Prada in the competitive business environment which has affected the overall brand
image of the organization negatively. Lastly, the recommendations have been provided with
the implementation of the Ansoff Matrix which assisted in positively managing the global
aspects.

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Table of Contents
Introduction................................................................................................................................2
Overview of Strategy.............................................................................................................2
History....................................................................................................................................2
Vocabulary.............................................................................................................................3
Levels of Strategy..................................................................................................................4
Mintzberg 5Ps of Strategy......................................................................................................4
Overview of Organization..........................................................................................................7
Business Model Canvas.........................................................................................................7
Competition Analysis of Burberry.............................................................................................9
Organizational Structure........................................................................................................9
Strategic Processes.................................................................................................................9
Organizational Processes.....................................................................................................10
Strategic Change..................................................................................................................11
Strengths and Weaknesses...................................................................................................12
External Environment Analysis...............................................................................................13
PESTEL Analysis.................................................................................................................13
Opportunities and Threats....................................................................................................15
Strategic Capabilities...............................................................................................................16
VRIN Analysis.....................................................................................................................16
Porter’s Value Chain Analysis.............................................................................................17
Strategic Purpose and Corporate Culture.................................................................................19

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Corporate Social Responsibility...........................................................................................19
Values, Vision, Mission and Objectives..............................................................................19
Governance..........................................................................................................................20
Business Strategies...................................................................................................................21
Porter’s Generic Strategies...................................................................................................21
Bowman’s Strategy Clock....................................................................................................21
Strategic Options......................................................................................................................22
Ansoff Matrix.......................................................................................................................22
References................................................................................................................................23

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Introduction
Overview of Strategy
The strategy is defined as the knowledge along with the capability which assists in
analyzing the actions, aspirations along with the vision that will able to examine the potential
impacts and opportunities. In case of the general strategy, this is the plan of action which is
planned in such a manner as to gain positional advantage effectively in comparison to the
other competitors in the market (Baker and Cronin 2015).
In the case of Burberry, this has been noticed that the strategic plan of the company is
focused on achieving the goal and it should not depreciate in nature as well. The primary
strategy which was adopted by Burberry was to re-energize the product which will improve
the overall satisfaction among the customers effectively, and this will create sustainable
value. In the entire journey, the plans of Burberry, the primary approach is to deliver the
combination of organic profit growth and committed towards the capital allocated agenda
(Gereffi and Fernandez-Stark 2016).
History
The strategy has been evolved in the year 1934 which is essential as the different
resources are made available to achieve the goals which are limited. The procedure involves
the setting of different goals along with determining the various actions to accomplish
particular purposes. From the 20th century, the word “Strategy” came into action which is the
comprehensive way which helped in managing the different activities in an appropriate
manner (Gereffi and Fernandez-Stark 2016). From the different kinds of political events
which took place in the 20th century, the evolution of strategic activities has been considered
which helped in managing the overall operational excellence.

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Vocabulary
There are different kinds of limitations in the avenues along with complexity (wicked
problem), surprises along with interests which are the significant elements in the plan in the
business scenario.
Complexity (Wicked Problem)
This is one of the limiting factors which is not an easy task to explain as there are
different interrelated issues for analyzing the various potential solutions for the problems
which are being faced by the business or organization (Paley 2017). The multiple issues
include the different kinds of unanticipated problems and similar is the case with Burberry as
there can be various issues which can affect the potential growth of the company negatively.
The overall strategic growth and plan for Burberry will change over time, and there
should be the inclusion of potential solutions which will be helpful in managing the global
scenario. To deal with the wicked problem, the proper focus on the action along with
analyzing the level of the problem and adopting pilot programs which will be progressing in
managing the overall grand plan.
In case of Burberry, there are six pillars of strategy wherein it is inclusive of four
revenue drivers such as communication, distribution, digital and product and the two
significant enablers are inspired individuals and the operational excellence. Proper
involvement of the different stakeholders is essential as they play an integral role in the
various operations which are being done in the organization (Paley 2017).

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Levels of Strategy
Ansoff (1918-2002) who was known as the father of the Strategic Management, has
commented regarding the different levels of actions in the book which are being defined as
follows:
 Administrative- This is concerned regarding the maximization of overall efficiency of
the process of direct production (Mcdonald 2016)
 Operational- This is concerned with the straightforward method of production in
Burberry which is inclusive of raw materials, the primary element which is being
purchased along with depreciation of machinery (Dennis, Melewar and Mauri 2018)
 Strategic- The different top management officials are concerned with the organization
related environment, and they try to show the big picture of the organization
Mintzberg 5Ps of Strategy
Henry Mintzberg worked in distinguishing the different ideas for the development of
a strategy of the organizations. The 5Ps of procedure are as follows: Plan, Pattern, Position,
Perspective and Ploy. These are the different components which help the organization in
implementing a most effective strategy for analyzing the foreseeable future.
While implementing the components of the respective strategy, Burberry needs to
focus on the moves of the different competitors along with analyzing the organizational
culture along with various development within the company which will help the company in
becoming more competitive.
Plan- The central vision of Burberry is clear, and the primary approach is to
accelerate the overall growth along with the success of the brand. There is fierce competition
in the market which is inclusive of Gucci and Vetements (Felzensztein, Brodt and Gimmon
2018). Burberry has major four elements within the vision which will help them in

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succeeding the goal effectively such as distribution, digital, product along with
communication.
Product
The product is the first element in which this is inclusive of the following:
 To increase the content of fashion (Rossi, Vrontis and Thrassou 2014)
 To transform the different leather products wherein the company will generate more
than 40% of the sales in comparison to the other competitors
 The continuous engagement with the customers is the other aspect which is being
followed
 Wardrobing the different customers Rebalancing the architecture of the price as the
new CEO Marco Gobbetti has felt that there is a considerable chance of managing the
price margin for the handbags which is inclusive of $1000-$2000
Distribution
 Transforming the overall in-house experience of the different customers
 The concept of developing a new store (Banerjee 2017)
 Upgradation along with a reduction in the non-luxury PoS which is related to the
point of Purchase
 Proper growth of the wholesale image driver
Digital
 Adequate strengthening for the third-party channel is necessary
 Meaningful social content along with editorialized website
 Powerful experience to the customers (Varadarajan 2018)
Communication

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 The appropriate focus is required to be provided on the communication
 Focus on the different collaborations along with experiences
Pattern- The patterns are the different strategies which have been implemented before
beforehand. In the case of Burberry, the higher officials are required to provide a proper
consistency of the behavior which will improve the overall aspect of the company in
comparison to the other competitors in the market. Furthermore, the company needs to
upgrade the non-luxury products which helped in managing the overall aspects of the
company and become more competitive (Varadarajan 2018).
Perspective- This is essential in analyzing how different are the target audiences try to
perceive Burberry. The attitude is required to be conducted to investigate the thoughts seen
by the various customers about Burberry. The company can implement different strategic
decisions which will be beneficial for creating a positive impact on the community along with
environment as well (Josephson, Johnson and Mariadoss 2016).
Position: This is the other aspect which is the positioning of the brand which helps in
analyzing the demographics which helps in targeting the individuals. In the particular
approach, Burberry tried to position themselves in the community of LGBTQ+ by
introducing the Rainbow Legacy that has proved to be an essential strategy. Furthermore, this
has attracted the young generation who tried to buy the full looks as in opposition to one-off
items. Due to the respective positional approach, Burberry has worked more than 34 stores
along with seven outlets (Hunt 2017).
Ploy- Proper setting of ploy is one of the most effective strategies for the competition
and on 5th February, Burberry had tried in announcing that the company will be stepping
away from the traditional labels of winter, summer, autumn and spring. On the other hand,
the company will be releasing the different runway kind of collection immediately in the

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various stores, and this will help in improving the overall aspect in an appropriate manner
(Proctor 2014).
Overview of Organization
Burberry is one of the most recognized luxury brands which is known for the
authentic kind of heritage, and the company was founded in the year 1856 by Thomas
Burberry. The company has employed more than 10000 employees in the worldwide, and the
company is headquartered in London (Burberry.com. 2019). The fashion house mainly
focuses on as well as it distributes trench coats along with different fashion accessories and
cosmetics. The nature of the business is the fashion industry which has their presence
throughout the world (Proctor 2014).
The company is listed on the London Stock Exchange and in the year 2015, Burberry
has been ranked 73rd in the best global brands in the entire world. The revenue which has
been earned by the company is £2,766.0 million till the year 2017, and this has helped
the company in competing with the other competitors such as Gucci which is providing fierce
competition to Burberry. Lastly, the operating income of the company in comparison to the
other competitors are £394.3 million till the year 2017 (West, Ford and Ibrahim 2015).
Business Model Canvas
Key
Partners
Different
Suppliers
Wholesale
Key
Activities
Designing of
the different
clothes
Transparency
Value
Propositions
Qualitative
Aspects:
Design of
the different
Customer
Relationships
Personal
Assistance is
being
provided by
Customer Segments
Niche Market Segment
which is inclusive of:
Millennials

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Partners
Models
along with
Fashion
Show
Managers
Production
Site
Managers
Creation
Improvement
in the Supply
Chain
Management
clothes
produced by
the company
Exclusive
aspects of
designing
the clothes
Status and
the Brand
Image of the
company
the company
towards the
customers
LGBTQ Community
Key
Resources
Unique kind
of material
Presence is
provided with
the help of
physical
stores
Designer
clothes
Channels
The company
has developed
an own retail
network in the
competitive
business
environment
Cost Structure
The company provides value-driven
clothes and the other services to the
customers
The prices are high; however, the cost
is fixed
Revenue Streams
Sale of Assets:
Europe- 44%
Americans- 27%

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No economies of scale
Own production site
Asia Pacific- 24%
Competition Analysis of Burberry
Organizational Structure
There are two major competitors of Burberry which are being described as follows:
Gucci- It is one of the Italian Fashion industries which is the topmost competitor of
Burberry. The organization is the Italian brand which mainly focuses on the different leather
along with fashion goods and services, and the company has substantial international
exposure (Chernev 2018).
Prada- This is the other major competitor of Burberry wherein it is the other top
competitor of Burberry in the overall competitive market environment. Prada is one of the
Italian accessories along with the apparel industry which mainly focuses on the different
kinds of activities with multiple categories which are being made available to the customers
in the market.
Strategic Processes
In the case of Burberry, the diplomatic process adopted by the company is to target
the LGBTQ community along with the young generation individuals in the market. Burberry
is one of the premium brands wherein the target audiences belong to the upper-middle-class
families, and there are different kinds of gifts along with other coupons which are being made
available to them in the appropriate manner (Spanjol 2018). Furthermore, the company is
shifting their focus from the traditional clothing to the young generation clothing aspects