BTEC HND Business Strategy Analysis Report: Burberry

This report provides a comprehensive analysis of Burberry's business strategy. It begins with an introduction to strategic planning and its relevance to Burberry, an international fashion house. The report analyzes the impact of the macro environment using PESTLE and stakeholder analyses, followed by an assessment of Burberry's internal environment and capabilities, including SWOT and VRIN analyses, and McKinsey's 7S framework. The report then delves into competitive analysis using Porter's five forces and Ansoff's growth strategy. Finally, it provides strategic planning recommendations for Burberry. The report covers various aspects of Burberry's operations, core values, vision, mission, and business strategies, offering insights into its strengths, weaknesses, opportunities, and threats. The analysis includes factors like political, economic, social, technological, legal, and environmental considerations, as well as an examination of Burberry's stakeholders. Furthermore, it details the company's internal environment, resource-based strategy, value chain analysis, and strategic capabilities.

BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1 Analysis of impact of the macro environment of Burberry....................................................3
LO 2.................................................................................................................................................6
P2 Internal environment and capabilities of Burberry.................................................................6
LO 3...............................................................................................................................................10
Porter’s five force Analysis.......................................................................................................10
Ansoff’s Growth Strategy..........................................................................................................10
LO 4...............................................................................................................................................11
P4 Strategic planning.................................................................................................................11
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Strategic planning in business is the process of establishment and documentation of a
specific direction where short- and long-term goals and objectives of the company is enlisted and
appropriate plans and strategies are devised for achievement of those goals (Bryson and et.al.,
2018). The devised strategies could be applied to the strategic, tactical and operational role of
Burberry for its effective and efficient contribution to development. Burberry is an international
fashion house headquartered in London, UK which deals in high end consumer goods around the
globe like leather goods, trench coats, fashion and clothing accessories. This report will aim at
analysing the macro level impact upon Burberry and its business strategies, assessment of
internal capacities and competitive analysis of the company. The report will also device a
strategic plan for Burberry through application of various strategies models, tools and
techniques.
LO1
P1 Analysis of impact of the macro environment of Burberry
Company profile: Burberry plc designs, distributes and deals in clothing and fashion apparel
and accessories. It is one of the most innovative companies which has a global reach with
multiple distribution channels. It caters to high end consumers and the most popular clothing
item are trench coats (HU and XIANG, 2019).
Core values: The three core values that inspires the corporate and business strategy of Burberry
are protection, inspiration and exploration.
Vision: To position the company firmly in luxury fashion, sharpening and positioning in most
rewarding markets and riving a sustainable growth to deliver attractive returns.
Mission: Burberry’s mission is to maintain its integrity and vitality and continuously develop
business relevant to ever evolving fashion markets.
Business strategy: Burberry has pursued an internal expansion strategy in order to widen its
market outreach, brand equity and profitability. The company focuses on leveraging franchises
and accelerating growth of the retail market (Bryson and et.al., 2018).
A business strategy refers to the course of action, plans and a set of decisions that are
aimed at achievement of busines objective through in-depth analysis of external and internal
factors, tools and frameworks. In order to attain strategic intent, direction and company
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objectives, a business strategy mobilises resources, secure advantageous position, utilises
opportunities and takes a set of actions to attract customers, compete with rivals, strengthens of
operations and performance. Various frameworks can be used to evaluate strategies such as
Pestle, SWOT, stakeholder analysis, porter’s five forces, Ansoff matrix model, bowman’s
strategy clock, VRIN and value chain analysis, porter’s generic strategies and horizontal
integration.
SWOT analysis: The internal environment assessment for Burberry is as follows:
 Strengths: The brand is considered iconic, has high brand equity, in recognised for its
innovation, distinct checkered pattern in clothes, trench coats, has global presence,
celebrity endorsements and high brand value and awareness, has received royal warrants
many times (Abalkhail, 2019)
 Weaknesses: The product line is quite limited and only focussed on fashion accessories,
apparels and beauty products in fashion segments. It depends on Asian markets for a
major portion of its revenue.
 Opportunities: Changing lifestyle and demand for premium goods and clothing in
developing countries like brazil, India, Malaysia etc. and development of emerging
markets. Burberry can also expand its product line by differentiation.
 Threats: Intense competition from high end luxury brands like Gucci, Prada, Chanel,
Louis Vuitton. Threat of changing lifestyles and consumer purchase behaviour, threats
from imitation and fake clothing products.
PESTLE analysis: The external environment assessment of Burberry is as follows:
 Political factors: Burberry gets affected by political decision-making that takes place in
various countries where it operates. The political situation also impacts how the
company’s operations will get impacted. These are tax regulations, restrictions on import
and export, tariff regulations etc. Brexit has adversely affected the supply chain and
logistics for movement of clothing products across European countries (HU and XIANG,
2019).
 Economic factors: The economy of the country of operation affects major business
decisions of Burberry in context of labour costs, inflation rate, unemployment level,
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income of the consumers etc. the market for Burberry products will not gain returns in a
poor economic condition as it caters to high end customers (Bryson and et.al., 2018).
 Social factors: The socio-cultural factors such as beliefs, tastes, lifestyles, preferences,
perspectives, traditions, latest trends and even social media affects the purchase decisions
of customers. For example, trench coats are not considered fashionable in tropical
countries so people will not buy it. Fashion trends highly impact the designs that
Burberry will produce end-users (Perera, 2017).
 Technological factors: The presence of RFID technology for in store retail function,
innovative automated and AI systems in logistics and warehousing can improve
functionality and operations of the clothing brand.
 Legal factors: Employee legislation, copyright and patent issues, digital privacy rules and
consumer protection laws have to be adhered to by Burberry as it can lead to hefty fines
and penalties (HU and XIANG, 2019).
 Environmental factors: Clothing brand impact the environment due to production of
synthetic clothing, therefore Burberry has to indulge in sustainable goals to maintain a
goodwill, such as, reduction of carbon footprint and water recycling for cloth production.
Stakeholder Analysis
The primary stakeholders of Burberry who are impacted by company’s decisions and operations
and their significance is as follows:
 Customers: The end users that purchase and utilise the high-end products and clothes of
Burberry are to be managed closely as the business anticipates, stimulates and influences
market demands.
 Suppliers: They perform the supplementary role in the supply chain. All the relevant
supplies such as fabric and clothing raw materials are purchased from them at lower
purchase costs (Abalkhail, 2019)
 Employees: They play a central role in the operations, management and growth of the
company as they carry out their job roles.
 Shareholders and investors: These parties are financial support of the company and
therefore have to be kept informed at all times.
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 Community: the community is involved in decisions regarding environment and
utilisation of resources while being aware about how socially and economical company is
impacting the society.
 Media: Media houses report about the activities of the company periodically applying
their own view and perspectives and representing company to community and public.
 Government: They create all rules, policies, tax regulations according to which company
has to adjust its corporate and business strategy (BURBERRY, 2017).
High
POWER
High power Low interest
(to be Kept Satisfied)
 Suppliers
 Employees

High power high interest
(to be Managed Closely)
 Customers
Low power Low interest
(To be continuously Monitored)
 Community
 Media
High interest low power
(To be Kept informed)
 Government
 Shareholders and investors
INTEREST
Low High
LO 2
P2 Internal environment and capabilities of Burberry.
Strategic capability is the competency of the fashion house Burberry in harnessing major
capabilities, resources and skills in order to get competitive and sustainable advantage for
improving the value of the clothing brand over a period of time. Strategies can be developed for
dealing with risks, competition, consumer behaviour through utilisation of existing and potential
strengths and resources of Burberry and application of tactics and strategies. A resource-based
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strategy identifies assets of the company, its existing resources and capabilities to employ
rivalry-based advantages and employment of assets inclusively as its distinctive capacities.
Value chain Analysis is adopted for identification of main support functions and
activities that provide value addition to the ultimate end product and for decision-making of
operational costs, diversification, product development and differentiation, increasing prices etc
(Geraldes, da Costa and Geraldes, 2020).
Infrastructure: Burberry has an extensive organisational structure with various departments
of finance, operations, designing, legal and management.
Human Resource management: Valuable and inimitable employees with high skills and
competencies in context to fashion designing, marketing and customer support etc.
Technological development: RFID technology in the stores, automated supply chain system,
warehouse management system, technology for connecting with consumers (Ohkita, 2017)
Procurement: Appointed agents in multiple countries, various vendor and suppliers of
different categories.
Inbound
Logistics
Third party
contractors,
in-house
production
Operations
Economies of
production,
seamless
operations,
inventory
management
Outbound
Logistics
Contracted
agents, e-
stores,
licensed
sellers, local
and
international
shops
Sales and marketing
Celebrity
endorsements, social
media marketing, TV
advertisements.
Service
Customer
feedback and
after sales
support for solvi
ng queries
VRIN: This framework determines the strategic capabilities of the clothing
company in terms of is foundational values and capacities that help it in becoming
successful and gaining competitive advantage. The four elements that are determined are
value, rarity, inimitability and non-substitutability.
V Internal network for distribution in developed and emerging economies, experiences of
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expansion, Robust marketing techniques and brand value, market research techniques.
R Use of progressive technology, using innovative harvesting methods, unique product
portfolio, unique designs, economies of scale
I Human resources of Burberry, research and development of new product, organisational
culture, controlling costs (Geraldes, da Costa and Geraldes, 2020).
N Brand recognition and equity, emotional and loyal affliction with consumers.
Mckinsey’s 7S framework
This framework was established to understand the strategic direction of the company on the basis
of seven elements of style, shared values, structure, systems, strategy, skills and staff.
Shared values: The core values of Burberry are based on three elements that are protection,
exploration and inspiration which encompass its brand value and vision. The shares values
include the idea of sharpening the marketing position in fashion industry and achieve growth and
popularity over a sustainable period of time (Silvano, 2020)
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Strategy
Skills
Staff
Styles
Systems
Structure
Shared
Values

Skills: The brand of Burberry has continually focussed on improving the skills of the staff
members where the existing employees get effectively mentored and coached regarding various
job roles and luxury craftsmanship. Approaches for nurturing the core skills that distinguish it
from other high fashion brands is focussed upon. Things like interaction with customers,
interpersonal skills, technical skills and operational skills are highly nurtured within the company
(BURBERRY, 2017).
Style: The leadership style and approach of the present CEO is a participative style of leadership
that takes into account opinions and ideas from all level of employees and stakeholders and
assure the return of company’s prestige into the market which is recently underperforming in
international market. The current style of leadership has brough higher levels of participation and
collaboration encouragement and motivation instead of fierce competition among the staff
members.
Systems: Various systems within the company function in tandem for the aim of gaining
advantage for the Burberry’s brand. This includes mitigation systems, risk determination systems
that are initiated with the goals of provision of platforms in meeting the demands from the end-
users or consumers. The HR systems work for ensuring that the company reflects diversity and
competencies. The payroll systems in the company assures that the employees are effectively
manged in context of remuneration while the input system ensures high level of security
(Gökdeniz, Kartal and Kömürcü, 2017).
Staff: More than 10,000 employees work in the company across various global locations.
Different human resources strategies that are used to mange them are talent management
techniques, effective recruitment and selection, rewards and recognition, performance appraisals
and succession planning.
Strategy: The corporate, business and brand strategy is built on foundational pillars of
distribution, digital, communication and product. Burberry is continuously changing its product
offerings to attract new luxury markets and including innovation.
Structure: Burberry follows a matrix organisational structure where multiple cross business and
functional units are present. At times many employees in the organisation have to report to more
than one manager or team leader as the linearity in the company no longer exists (BURBERRY,
2017).
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LO 3
Porter’s five force Analysis
Porter’s five force model helps in the competitive analysis of the different aspects that help
in clearly identifying that how Burberry is positioned. This can be done in following manner:
 Existing Rivalry (High): Currently, Burberry is positioned very strongly in the clothing
market but the existing rivalry in this industry is very high because of the competing brands
such as Gucci, Hermes International, Louis Vuitton etc. (Abalkhail, 2019). They have also
captured and maintained their target market and positioning extremely well.
 Bargaining power of Suppliers (Low): The bargaining power that suppliers of Burberry
hold is comparatively low because the company can easily shift over to next best supplier.
The clothing industry has a lot of suppliers that are ready to negotiate their prices thus
making this as a threat of lower calibre.
 Bargaining power of Customers (High): The customers have a high bargaining power
because they have multiple options of clothing brands amongst which they can easily
choose. In case, the prices of Burberry increase or if their quality is not satisfactory, then the
customers can easily switch over to the competitors.
 Threat of Substitute Products (Moderate): The threat pertaining to the substitute products is
moderate because it is not easy to replace the clothes of Burberry brand with others (Ge and
Li, 2019). The kind of fashion trends that they follow within the given prices without
compromising on their quality makes it difficult to create substitute of their products.
 Threat of New Entrants (Low): The potential threat of new entrants is comparatively lower
for Burberry because they have successfully established a brand name in the clothing
industry. It is difficult to make that market positioning when the company is just a new
entrant in the market.
Ansoff’s Growth Strategy
The Ansoff’s Growth Matrix helps in evaluation of growth strategies where the existing or
new products that can be launched by the company in new or existing markets for the company
(SECTOR, 2018 ). In context of Burberry, the Ansoff’s growth matrix can be analysed in
following manner:
 Market Penetration: Here Burberry can further penetrate the existing market with the
current products that they have developed where they should focus on increasing their
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sales by targeting wider levels and expanse of customers. Here they can try to increase
promotional and distribution efforts for the customers or can even enter into mergers and
acquisitions with its competitor companies.
 Market Development: The market development strategy involves venturing into new
markets but with existing products only and Burberry can engage in this by expanding
themselves into new regions and countries and into new customer segments as well
which will give them additional opportunities (Marekera, 2017).
 Product Development: The product development strategy involves introduction of new
products into already existing markets. Here Burberry needs to do extensive research and
development regarding the changing fashion trends and requirements of the consumer so
that they can identify some new line or sector and expand accordingly.
 Diversification: Diversification is the riskiest expansion option where Burberry would
launch new products in entirely new markets and this in turn can affect the company
positively or negatively. The option is to choose between related and unrelated
diversification of the products.
The best strategy is to compare all the options and to prudently identify and choose the best
option amongst the four strategies. In the current context, it can be clearly said that the best
growth options for Burberry is to choose the market development strategy where the company
can venture into new markets with their existing products (Waziri and et.al., 2015). This is
because the reach of the Burberry brand is very limited and there are huge international as well
as regional expansion options which the company can easily adopt and excel in.
LO 4
P4 Strategic planning
Strategic planning is the procedure of providing strategic direction to the company. Management
of Burberry applies various strategic tools and techniques to conduct its strategic planning in
precise manner.
Porter’s Generic Model
The Porter Generic model helps in analysing that how a company can gain competitive
advantage by adopting appropriate strategy for its products and services and the scope that they
have.
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 Cost leadership Strategy: Under this strategy, the aim is to increase the profit margin by
reducing the cost charged on the products as compared to the prices that are being
charged by the remaining competitors of the industry (Izni and Wandebori, 2020). On
another hand, market share also increases when profits are lowered which in turn further
increase the chances of profits.
 Differentiation Strategy: Here, the aim is to increase the attractiveness that the products
and services presented by Burberry have over its competitor’s products. Here focus is on
improvement of functions, features, quality, and support etc. of the products and increase
marketing as well so that ultimately higher market share can be captured (Marques,
Ferreira and Guedes, 2017).
 Focus Strategy: This is the third strategy where the companies i.e. Burberry in the
present case concentrate on developing a niche market where the company targets a
selective portion of market in such a manner that it becomes less attractive to its
competitors. This can be done in two methods i.e. Cost Focus and Differentiation focus
strategy. Under cost focus, emphasis is on reduction of cost in a targeted market segment
to earn greater market share. On the other hand, in differentiation focus, emphasis is on
presenting distinguished products and services so that strategically differentiation can be
created in a selective market.
Out of all the three strategies, the best strategy would be to choose the differentiation
strategy and differentiation focus strategy where Burberry should aim to not just present a
unique characteristic of their products that is irreplaceable amongst the customer segment but
should also focus on creating a niche market (Yılmaz and Kumkale, 2019). This will give a
competitive and strategic rise to Burberry in such a manner that company will be able to create a
unique selling point of its products in the market. This is the ultimate manner in which company
can take strategic advantage because already, the company has been able to capture a large
amount of market share with their trending styles and correct pricing methods. Therefore this can
prove to be advantageous option for company.
Bowman Strategy Clock
It is most commonly famous as bag of strategies because it encompasses various strategic
options which company can apply as per the market situation. Strategies are mentioned below:
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