Business Environment Analysis Report: Burberry Group PLC

This report provides a comprehensive analysis of the business environment of Burberry Group PLC. It begins with an overview of the company, its history, and its global presence in the luxury fashion industry. The report then delves into Burberry's management structure and governance, including the roles of the Board, various committees (Nomination, Remuneration, Audit, and Risk), the Chief Executive Officer, and the Senior Leadership Team. It also defines stakeholders and examines the relationships between the Board of Directors and key stakeholders such as shareholders, employees, and customers. The core of the report focuses on a PESTLE analysis, evaluating the impact of political, economic, social, technological, legal, and environmental factors on Burberry's operations. Each factor is discussed in detail, highlighting its influence on the company's strategies, manufacturing processes, and customer preferences. The report emphasizes the importance of PESTLE analysis for strategic formulation, decision-making, and expansion plans, especially in a global context. The analysis covers the impact of political instability, economic fluctuations, social trends, and technological advancements on Burberry's business. The report concludes by underscoring the significance of understanding the external environment for the company's sustained success.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Overview of Burberry.................................................................................................................1
Management Structure and Governance of Burberry.................................................................1
Importance of PESTLE analysis for an organisation..................................................................4
3. Briefly discussing the PESTLE factors...................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment is the combination of internal external factors that influence the
operations and function of the company. There are various factors like clients and suppliers,
improvement in technology, laws and government activities, clients and suppliers and market,
social and economic trends. It is very important to analysis the impact of these factors as these
factors are outside the control of the business. In this present report, Burberry Group PLC is
being chosen for assessment. This present report will essay will examine the management
structure and the governance of Burberry. Moreover, the report also assess as well as evaluate
the impact of external environment on the operations and functions of company.
MAIN BODY
Overview of Burberry
Burberry Group PLC is one of the famous luxury British fashion house. Burberry was
founded in 1856 by Thomas Burberry. Burberry is famous for its clothing, Accessories,
Perfumes and Cosmetics. In 1870, the business started focusing on development of outside attire.
Moreover, in 1879 Burberry introduced a fabric called gabardine in it brand. Burberry first sold
online in US and then in UK in 2006. The company is selling unique pattern – based scarves,
trench coats and other fashion accessories. Burberry opened its first shop in The hay-market,
London. The company is operating at a global level and have large number of customer in
different countries. The total revenue earned by Burberry in 2018 was £2732.8 million. This
company have stores in about 51 countries which it has large market share in the fashion
industry.
Management Structure and Governance of Burberry
Management and Organisation structure are almost same. It defines how the activities
like allocation of task, coordination and supervision are directed towards the achievement of
organisational aims (Bayer and et.al., 2018). It is very essential that company's need to be
efficient, flexible, caring and innovative in order to achieve a sustainable competitive benefits.
There are mainly three types of organisation or management structure which are as follows-
Functional Structure: This is one of the most common organisational structure which is
used by many organisations but especially for small and medium scale organisation. It is one of
the simple and easy organisational structure. In this structure, task or role are allocated according
1

to a specialized or similar set of work or task. Managers do not have autonomy to take decision
by their own. This is the structure that operated very well in the stable business environment.
Divisional Structure: This is the types of organisational structure that groups each
organisational functions into a division. This is the types of structure which is used by
organisation which have chains of businesses across the regions. It is very suitable and
appropriate structure for big organisations (Parkinson, 2018). The management and
organisational structure followed by Burberry is Divisional Structure. In this structure, managers
have right to take decisions of their own.
Matrix Structure: This is one of the most typical and complex form of organisational
structure. It is structure of company where the reporting relationship are set up as matrix or grid
instead of traditional hierarchy.
Illustration 1: Organisational structure of Burberry
(Source: Organizational Structure of Burberry, 2018 )
Organisational or Management structure of Burberry are described as below:
Board: They are the top most people of the company who are elected to represent
shareholders. They are key people of Burberry who determine the missions and vision to guide
as well as set the pace of its current operation and future development (Tripathi, Matlani and
2

Maheshwari, 2018). Further they also determine the vales to be promoted throughout the
organisation. In addition to this, all the policies and rules are determines by the board of
directors. The board of directors of Burberry are DR Gerry Murphy (Chairman), Julie Brown
(Chief operating Officer) and many others.
Nomination of Committee: They are also one of the most important part of the
organisation. It is committee which acts as part of the corporate governance of company. They
used to measure the boards of directors in respect of the company as well as determine the skill's
ans knowledge required in board candidates.
Remuneration Committee: The role played by remuneration committee in Burberry is
very essential as they help as well as suggest the Board on matters relating remuneration of the
senior management along with boards so that the retention of executives is increases. Further,
they are also responsible for attracting the best talent in the market so that the value of
shareholders is increases.
Audit Committee: It is the duty of audit committee that they should report to the boards
on regular basis. They play a key role in assisting the boards in order to fulfils its oversight
duties in some fields like financial report of Burberry, risk management system of Burberry,
internal control system as well as external and internal audit functions (Organizational Structure
of Burberry, 2018).
Chief Executive Officer: The ranking of the executives is the highest and on the top in
the company. The chief executive officers are responsible for formulating all the corporate
decision, management of entire resources and operations of the Burberry. Further, they also act a
medium of communication between corporate operations and boards of directors. The chief
Executive Officer of Burberry is Marco Gobbetti.
Risk Committee: Risk committee are also very important for Burberry as they help BOD
of the company in accomplishing its management responsibilities as well as governance and
compliance structure which support it.
Senior leadership team: They are also one most important people of all the organisation
as they are allowed to manage the day to day operations of the company. They play variety of
roles in order to execute the desire aims and objectives of the company. They used to assign roles
and responsibilities of the employees in the firm (Parkinson, 2018).
3

All these people or groups of people are collectively accountable for the long term
success of the company as well as for planning its strategic aims and ensure a structured of
judicious and impelling control. \
Meaning of a stakeholder
A stakeholder is a person, group of persons or an organisation who has an interest or
concern in a company which are or can be affected by the operations of the company. The
stakeholders can be within or outside the entity and are generally concerned about the financial
success of the organisation (Boesso, Favotto and Michelon, 2015).
Examples of stakeholders that are present within the organisation are Board of Directors,
Employees, shareholders, managers. Stakeholders that are present outside the organisation are
government agencies, suppliers, customers.
Relationship of BOD with shareholders : Board of directors are the people that are
represented by the investors called as shareholders for representing them. It is the duty of BOD
to conduct company's affairs in the interest of shareholders that is to maximise the wealth of
shareholders.
`Relationship of BOD with employees : BOD are responsible for forming the strategic
decisions for the company which have to be followed by each and every employees. These
policies and strategies are the guidelines for the employees regarding how the activities and
operations of the organisation would be carried out in the future. Employees are required to carry
out business function in the way stipulated by the top management (Haldane, 2015).
`Relationship of BOD with customers : BOD are connected with the customers in the
sense that they are responsible of offering the most fair and quality products and services to the
society. Customers want the best quality product at the most reasonable prices which could be
possible through the effective strategies and decision making of the top management of Burberry
PLC. Also, conducting the business operations in the most ethical and socially responsible
manners is also the responsibility of BOD that is one of the pre-requisite demand of the
customers and the society as whole.
Importance of PESTLE analysis for an organisation
PESTLE analysis is a technique that is used by the organisation in assessing the impact of
macro environmental factors on its business operations (Sammut‐Bonnici and Galea, 2015). It
has the following components such as political, economical, social, technology, legal and
4

environmental. The tool is especially useful when the corporate is expanding its business
operations in the foreign markets or starting a new venture (Shabanova and et.al., 2015).
Illustration 2: PESTLE analysis
(Source : Scanning the Environment: PESTEL Analysis, 2016)
The technique holds great importance for the Burberry because:
 The purpose of undertaking a PESTLE analysis is to assess the condition of external
environment that have the potential of affecting the business negatively or positively.
Thus, it facilitates strategic formulation and decision making (Chernysheva, and et.al.,
2017).
 It warns the Burberry before entering into any other nation by scanning nation's external
conditions such as political stability, economic growth etc. Therefore, holds importance
in Burberry's expansion plans.
 It helps the company in identifying the opportunities available in the external
environment that could be grabbed by it with its available resources and core
competencies like the latest technology, skilled and talented workforce etc (Selvaraj and
Harnett, 2018).
5

 Government's policies, trade laws, customers' changing preferences could be effectively
known by conducting a PESTLE analysis. Producing a product as per the lifestyles of
people is an important aspect of company's financial prosperity.
3. Briefly discussing the PESTLE factors
For the purpose of analysing the effect of various external factors of the company over its
various major key operations, the PESTLE analysis can be done as under:
Political factors:
Political factors have a major influence over the key business operations of the Burberry
Group Plc. Being a global company, it operates its business in all over the world. Each country
have its own political rules and regulations for the companies (Tripathi, Matlani and
Maheshwari, 2018). The business needs to comply with each rules applicable over the fashion
retailer business. Further, lack of political stability in any of the country, may result in frequent
change in the rules and laws applicable over the company. Due to these frequent changes the
company may need to change its policies and procedures frequently. It may affect the efficiency
of working of the firm.
In this regard, the political instability may have major influence over the working of
company.
Economic factors
The economic factors include the inflation rate, saving rates, spending capacity of the
customers, etc. These factors influence the volume of sales made by the company. Due to
economical instability in all the countries, the Burberry needs to set the price of its fashion
products for each region, as per the economical condition of the company. It directly effects the
cost ODF manufacture, number of volume to be manufactured, etc. by the firm. In this regard,
the economic factors also have a major effect over the business operations of Burberry plc.
Social factors
Being a global company, the Burberry plc have customers related to different culture and
lifestyle. This difference directly effects the preference of the product. The Burberry plc needs
to manufacture its products in each country as per the preference of the population. It effects the
manufacturing process of the company, as not manufacturing the products as per the needs and
reference of the population may result in lack of attraction of the customers towards the company
(Aithal, 2016).
6

For example, due to the lifestyle difference, some of the people may prefer the casual
dressing, in the other hand, some may prefer the reserved dressing. The firm needs to
manufacture the dresses as per the preference of the customers. In this order, it can be analysed
that the social factors also have major influence over the business of Burberry Plc.
Technological factors
It refers to the adopting various technological changes happening in the environment in
order to gain the competitive advantage against the competitors. Burberry uses the latest form of
technology for promoting its products and services. The company is having global presence
which means it has its operations in different countries through use of technology the Burberry is
able to reach the large number of customers and can promote its products and services in
different places. It uses social media sites such as Facebook, Instagram for promoting its
products and services and also it provides its customer with an option of online shopping through
its website top reach many customers and attract more customers. By using the technology the
company is able to reach a wide range of customers and promote its products and services
throughput the world.
Legal factors
The laws and legislation have their greater influence on the operation of the company. It
is required that Burberry follow the rules and legislation of that country in which it is operating
to have smooth functioning of its operations. The main legislation which have their impact on the
operation of Burberry is labor laws and employment laws. The company have to follow the labor
and employment laws of the country for performing its various operations (Burberry PESTEL
Analysis, 2019). The laws and regulation have their impact on the operations performed by firm
due to which the company have to face various problems. If Burberry foes not follow the laws
and legislation of the country in which it is operating that it have top face various problems
which may affect their operation and reduce their brand image and reduction in their customer
base etc.
Environmental factors
These are the factors which have their impact on the operations performed by Burberry.
This factors consist of changes in climate, laws relating to environmental protection, producing
eco- friendly products etc. are considered. There are various places which are attack prone and
thus operating at that places can have harmful effect on the operation of this company. Due to
7

increase in attack the Burberry does not want to take risk in investing in those locations which
are attack prone (Yu, Cao and Tan, 2018). It is the social responsibility of the company to
protect the environment and must conduct its operation with sustainability policy to increase
awareness regarding the environment. The Burberry products such as inner clothing, knickers
and socks are made up of organic cotton wool which does not harm environment.
CONCLUSION
The above report comes to the conclusions that it is very important to analyse the impact
of external environment as it is not able to control by the company itself. Further, it is also very
essential for firm to have hierarchical management structure so that the goals and objectives will
be accomplish effectively and efficiently. Report also summarised that divisional organisation
structure is best for large scale organisation and the manager enjoys the privileged to take
decision. Moreover, the roles and responsibilities assigned to people or group of people at
Burberry is also discussed in this assignment.
8

REFERENCES
Books and Journals
Aithal, P. S., 2016. Study on ABCD analysis technique for business models, business strategies,
operating concepts & business systems. International Journal in Management and Social
Science. 4(1).
Aithal, P. S., 2017. An Effective Method of Developing Business Case Studies based on
Company Analysis.
Bayer, C.N and et.al., 2018. GLOBAL GOVERNANCE–Compliance and Conformance with
UK MSA and Good Practice in Human Rights: FTSE 100 and Real Estate 100.
Boesso, G., Favotto, F. and Michelon, G., 2015. Stakeholder prioritization, strategic corporate
social responsibility and company performance: further evidence. Corporate Social
Responsibility and Environmental Management. 22(6). pp.424-440.
Books and Journals:
Chernysheva, Y. G and et.al., 2017. Business Analysis as an Important Component of Ensuring
Enterprise's Economic Security. European Research Studies. 20(3B). p.250.
Haldane, A., 2015, May. Who owns a company?. In Speech, University of Edinburgh Corporate
Finance Conference, May 22nd.
Parkinson, M.M., 2018. Corporate Governance in Public Companies. In Corporate Governance
in Transition (pp. 9-41). Palgrave Macmillan, Cham.
Parkinson, M.M., 2018. Corporate Governance in Transition: Dealing with Financial Distress
and Insolvency in UK Companies. Springer.
Sammut‐Bonnici, T. and Galea, D., 2015. PEST analysis. Wiley Encyclopedia of management.
pp.1-1.
Selvaraj, S. and Harnett, D., 2018. An analysis of the quality and operational efficiency of the
Crest Clean franchise.
Shabanova, L. B and et.al., 2015. PEST-Analysis and SWOT-Analysis as the most important
tools to strengthen the competitive advantages of commercial enterprises. Mediterranean
Journal of Social Sciences. 6(3). p.705.
Tripathi, A., Matlani, D. and Maheshwari, N., 2018. INNOVATIONS IN CORPORATE
GOVERNANCE PRACTICES. Digitalization.
Yu, M., Cao, D. and Tan, J. Y., 2018. CSR-consumption paradox: examination of UK apparel
companies. Journal of Fashion Marketing and Management: An International Journal.
Online:
Organizational Structure of Burberry. 2018. [Online]. Accessed through:
<https://www.burberryplc.com/en/company/governance.html>.
Scanning the Environment: PESTEL Analysis. 2016.[Online]. Accessed through
<https://www.business-to-you.com/scanning-the-environment-pestel-analysis/>
9

Burberry PESTEL Analysis. 2019. [Online]. Available through
:<https://businessteacher.org.uk/pestel/burberry.php>
10