International Business Strategy for Burberry in the US Market

This report delves into Burberry's international business strategy, focusing on its expansion into the US market. It begins with an overview of Burberry, a renowned British luxury fashion house, and recommends the US as a target market. A PESTLE analysis of the US market is conducted, evaluating political, economic, social, technological, legal, and environmental factors. The report then explores how culture influences international business, utilizing Hofstede's cultural dimensions theory to understand American culture. Finally, it develops an international business strategy for Burberry in the US market, critically evaluating the approach and implementation tactics. The report highlights Burberry's adaptation to the US market, considering cultural nuances and strategic planning for successful market entry and growth.

International Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Company's overview and recommending country for its international trade and business. . .1
TASK 2............................................................................................................................................4
Culture is considered to influence the way international business is conducted....................4
TASK 3............................................................................................................................................6
Developing international business strategy for Burberry in US market.................................6
TASK 4..........................................................................................................................................10
Critically evaluating the approach to implement the tactic..................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
One of the core characteristics of modern world business is international trade and
commerce. It refers to exchange of goods and services across the global territories of the country.
Many big business houses has started investing their capital and resources in other than their own
domestic premises. This global activity has increased profitability of various multinational
companies and established brand image in the global market. The management of these big
business enterprises focuses on preparing international business strategy to acquire desired
results (Rugman and Nguyen, 2014). These strategies refer to plans that guide commercial
transactions taking place between entities in different countries. Business is whether small or
large must formulate international business strategies to function in the global economy. It helps
to build a broader customer base and prevent adverse effect of seasonal business swings in
domestic market. They develop strong working partnerships with foreign business people. Also,
it offers differentiated technology or know-how not available in foreign market. In order to
evaluate the impact of international business strategy operations of Burberry Group is taken into
consideration.
TASK 1
Company's overview and recommending country for its international trade and business
Burberry is a renowned British luxury fashion house providing its services since 1856. it
deals in fashion industry and headquartered in London, England. Thomas Burberry, founder of
this big business entity focussed on development of outdoor attires at an early stage (Tolstoy,
2014). Later it moved on to the high fashion market developing pattern based scarves, trench
coats and other fashion accessories. With the course of time consumption pattern and practices
have changed which made organisation to expand its product line. Presently, the company is
availing products such as fragrances, cosmetics, ready-to-wear outerwear, sunglasses and fashion
accessories. Its distinctive check pattern has become one of its most widely copied trademarks
(Knežević and Wach, 2014). It has branded stores and franchises around the globe that sells
through concessions in third party stores.
The company is listed on the London stock exchange and is constituent of the FTSE 100
Index. It has more than five hundred in over fifty countries with 10,851 number of employees
working in it. The main driver for Burberry's success has been its restructuring of its global
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business plan such as opening more stores in the Asia pacific region (Fainshmidt, White III and
Cangioni, 2014). In addition to global restructuring, sit has also focussed on improving non-
apparel sales to have a more balanced product line. It faces strong competition with privately
held luxury retailers such as Giorgio Armani, Prada and Gucci.
Burberry has its major operations in United Kingdom and with emerging need of
international trade and commerce. The management of the company is planning to expand its
operations across domestic territories. Therefore, it has chosen USA as its target market and now
it will evaluate that its market structure and condition (Hohenthal, Johanson and Johanson,
2014). The marketing team will conduct PESTLE Analysis of USA in this respect.
PESTLE analysis is a business tool for analysing external factors affecting an
organisation, individual or country's operations. It includes evaluation on grounds of political,
economic, social, legal and technological factors. Now, pestle analysis of US in context of
Burberry is as follows: Political: It is the third most populous country in the world with fourth largest total area.
US has a strong democratic set up and effective rule of law promoting international trade
and commerce (Papadopoulos and Heslop, 2014). The elections are organised in fair and
transparent manner in the country. People of the concerned nation enjoys massive
political and economic influence over both national and global policy making. Although,
its interventionist policies regarding the 'War on Terror' is highly criticised in the market.
It is so because these policies has given rise to increasing terrorist attacks in the country.
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Illustration 1: PESTLE Analysis of
USA.
Source:(Peng,2010)

 Economic: According to this parameter a nation's economic structure and wealth is
evaluated. The analysis is mainly based on inflation, interest rate, current and projected
economic growth rate (Wu, 2014). Burberry marketing team monitors impact of
globalisation and level of disposable income and income distribution of the country. US
is the largest economy in the world as it has well-developed economic system. It is
considered as most attractive nation for foreign investors. However, the increasing budget
deficit puts economic prosperity of the country at grave risk as the deficit currently
amounts to staggering 506 million dollar. Social: Another element of concerned analysis is the social condition of the company in
which it is operating. It signifies growth rate of population, age profile, health and social
mobility of the country (Zhou and Wu, 2014). Like other developed countries, US is also
facing challenge related to ageing population. This has given rise to the problem of
serious labour shortage and rising tax rates in the future. However, the country provides
the best health and education facilities to the people. So, Burberry will be able to hire
skilled and efficient professionals for its business entity. Technology:The cornerstones of US's economy are innovation and technology which
helps to grow it at greater speed. The concerned nation always welcome, adapt and apply
new technology to the economy. It has actively participated in enhancing and developing
technologies like nanotechnology, environmental and biotechnology (Kourdi, 2010). IT
fields is very well managed and operated by the country which has resulted in faster
communication and storage process. Therefore, it will be useful for Burberry to adopt
new techniques of producing modern apparel for concerned market. Legal: Now, considering legal framework of US economy it has framed many rules and
regulations related to consumer law, discrimination law, employment law, health and
safety law of the company. The legislation also focuses on providing trademark and
patent protection act (Meskendahl, 2010). Even if the firm or individual doesn't have
financial capacity to prosecute trademark or patent infringement they can register in the
court of law. In addition, incorporation of business entities is performed quickly, easily
and cheaply in the country.
 Environmental: It is yet another important that need to be studied by marketing team of
Burberry. The environmental factor focuses on demand of more and more green products
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in the economy (Barney, 2010). The government authorities and various voluntary
organisation make active participation in performing environmental based products in
favour of the country. They are working in order to reduce effect of global warming and
pollution in the economy.
TASK 2
Culture is considered to influence the way international business is conducted
One of the advantage attained by international trade and commerce is cultural
diversification. When international business transactions take place it results into exchange of
goods and commodities across global territories. Apart from commodities people are able to
exchange there ideas and belief with other country (Grant, 2010). Every civilisation or nation has
its own culture, belief, moral values and tradition which helps its native to grow and prosper.
Therefore, in order to retain these qualities these are transferred from one generation to another.
These moral values are also reflected in that country's business proceedings. The organisations
also form their own structure and culture and work accordingly.
Now, when the business takes place between two or more countries these cultural values
are exchanged. The business operations are certainly influenced by cultural diversity of different
companies. They ensure to make better use of these values, frame policies and agreements
accordingly (Nabi, 2010). As Burberry is planning to expend its operations in USA it will have
to understand their culture and beliefs. In order to understand this, they will make use of certain
theories and model.
Hofstede's cultural dimension theory
The theory was developed by Greet Hofstede and it is a framework for cross cultural
communication. Through this theory one is able to study the effects of society's culture on values
of its members. In addition, it describes how these values relate to behaviour using structure
derived from factor analysis. His work established major research tradition in cross-cultural
psychology and has also been drawn upon by researchers and consultants (Peng, 2013). It made
wider evaluation of several fields for research such as cross-cultural psychology, international
management and cross cultural communication. This has inspired number of other major cultural
studies of values as well as research on other aspects of culture such as social beliefs.
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Burberry needs to explore US culture through lens of 6-D model so that good overview
of deep driving factors of American culture can be made (Reis and Peña, 2011). Everybody is
unique although social control ensures that most people will not deviate too much from the norm.
Within every country regional cultural difference exist. The model posses six dimensions that
plays crucial role in determining national cultures of concerned nation. In context of USA, these
dimensions are described as follows:
Power distance index
In this type of dimension, inequality and power is perceived from the followers or lower
level. A higher degree if index indicates that hierarchy is clearly established and executed in
society, without doubt or reason (Vorhies and Morgan, 2014). In USA, power distance index is
comparatively low so that reflects that relationship between employee and employer is strong.
Individualism vs collectivism
It determines the extent to which individuals in the community are combined in the form
of groups. Individualistic is often related to his/her family. While collectivism considers society
as tightly integrated relationship tying extended families and others into in-group. USA adopts
individualism dimension in order to focus the degree of interdependence a society maintains
among its members (Abraham, 2012).
Uncertainty avoidance index
The society's tolerance for ambiguity is determined by uncertainty avoidance index. US
scores below average score in it as there is limited extent of approval for new ideas, novel goods
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Illustration 2: Hofstede's cultural dimensions theory.
Source:(Teece 2010)

and readiness to go for better and different. America is found more tolerant towards sharing of
ideas or opinions from varied individuals. Further, it permits freedom of expression.
Masculinity vs femininity
There is high masculine dimension and low score for feminine feature of cultural
environment (Hensmans, Johnson and Yip, 2013). It signifies that the society is driven by
competition, attainment and success. This value system initiates in childhood and lasts
throughout their life. While, on the other side there is less dominance of values in the society and
caring for others life.
Long -term orientation vs short-term orientation
Another parameter is associated with different time frames of the country that are its past,
present and future actions or challenges. USA scores normative on the fifth dimension with low
score as they prone to analyse new information to check whether its true. Americans businesses
evaluate the performance on short term basis with P&L statements being issued on quarterly
basis (Galbreath, 2014). This also drive individuals to strike for quick results within the work
place.
Indulgence vs restraint
Through this dimension they measure happiness, whether simple joys are fulfilled or not.
US scores well and above average in it the reason behind it is that people believe in one principle
that work hard and play hard. Although, there is one disadvantage that the state has waged a war
against drugs and is still very engaged in doing so, yet drug addiction in the state is higher than
in many other wealthy countries.
TASK 3
Developing international business strategy for Burberry in US market
Burberry is providing wide range of clothing and accessories in its domestic market. It is
popular for its trench coat available in the market. Queen Elizabeth II and Prince of Wales have
granted it Royal Warrants which have been maintained despite Burberry's closure of its factory
in Wales. Although, concerned business enterprise is planning to enter in international market
(Roumboutsos and Chiara, 2010). This will require proper planning and organisation of
resources in order to make better benefit out of it.
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The management of the company needs to make proper and detailed study of market
area. Most companies of any appreciable size deal with at least one international partner at some
point in their supply chain. Like in order to acquire marketing objectives of a product Burberry
make use of various strategies, policies and plan. In the same manner to make business
transactions successful in global market the concerned business entity will prepare its
international business strategy. It will require detailed study of market conditions, patterns and
practices taking place in the market (Elbanna, 2010). It will make use of Ansoff matrix model to
consider market development factor for concerned company. In addition, it will also conduct
value chain analysis for cited business organisation.
Firstly, the organisation will undertake Ansoff matrix model which is a strategic planning
tool that provides framework for managers, executives and marketers. Ansoff presented a matrix
that focused on firms present and potential products and market of customers (Augier and Teece,
2011). It provides four different growth strategies that are described as follows: Market penetration: According to this strategy the organisation grows by using existing
products and services in existing market. It increases market share of business entity in
current scenario. Here, marketers make use of policies like decrease in price, increasing
promotion and distribution support, acquisition of rivalries market and modest product
refinements. Market development: Burberry makes use of market development strategy that involves
expansion of concerned business entity in new market. It will ensure that Burberry will
release its products in some other market like of USA (Kourdi, 2010). The company will
make use of customer segmentation policy so that it is benefited by economies of scale. Product development: Another growth strategy according to Ansoff matrix is
development of new product in the market. Here, the company tries to create new product
and services in existing market to achieve growth. They will make investment in research
and development of additional products to acquire better result. Moreover, the companies
will acquire rights to produce someone else product. Diversification:It is considered as the most risky out of the above mentioned growth
strategies as it requires both product and market development in the economy. The
business firms can make use of concentric diversification, vertical integration and
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unrelated diversification. It is a strategy through which it starts or acquire business
outside the company's current products and markets.
Mergers and acquisitions used to enter US market
From the above model, Burberry's market team will determine what type of growth
strategy is beneficial for the business enterprise (Business strategy, 2014). It will provide
guidance about which policy will be beneficial to increase profitability of the company. They
will make optimum utilisation of resources that will not only satisfy organisational needs but
customers as well. Burberry will adopt market development strategy to make available its brands
in US market. The reasons behind adopting market development policy are:
 It will be easier to produce similar product with low cost of production. The company is
able to make better use of resources with the involvement of existing technology to
manufacture apparels and accessories.
 Burberry is famous for trench coats in the market that ultimately creates brand image in
the country. Product differentiation strategy will make it easier to differ Burberry's
products from other rivalries. It will focus on maintaining quality standards of the
products.
 The rules and regulations laid by USA government are favourable to the concerned
fashion house. The policies related to offshore manufacturing, service delivery, export
and import are flexible and lenient. This mechanism supports Burberry to make market
expansion of the company in US market. Apart, policies related to mergers and acquisitions will empower Burberry to include
certain small fashion enterprises into it so that operations can take place in much better
manner (Sanchez, 2016.). Theses policies will benefit concerned company to make better
utilisation of available resources.
Strategy for development of marketing, operations, human resources and product strategy
Further, the marketing team of mentioned organisation will also make use of value based
analysis to monitor operations, human resources and marketing policies. It is considered as
useful tool to create the greatest possible value for customers. The model help to understand
activities which the cited business firm to develop competitive advantage and creates shareholder
value. This is useful to separate the business system into series of value generating activities
referred as value chain.
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According to value chain analysis model, the activities of Burberry can be classified into
two group headings that are primary activities and support activities. The primary activities are
those concerned with direct production and delivery of goods and services. While the support
activities are not directly involved in production process. Although, these operations increases
effectiveness or efficiency of business operations (Hensmans, Johnson and Yip, 2013). Now, the
international strategy framed for mergers and acquisitions of Burberry will cover important
factors that are explained below:
Marketing
Firstly, the concerned business entity will prepare proper marketing strategies to gain
desired goals and objectives. Burberry is availing apparel, accessories, fragrances and sunglasses
in US economy. As it conducting mergers and acquisitions so it will undertake various marketing
strategies like online marketing, content marketing, public relations and advertising. The
marketing team will lead focus on making potential customers aware about its products through
extensive advertising through online and offline mode. For offline mode they will make use of
newspapers, magazines, radio and face to face communication (Teece, 2010.). While, for online
mode they will make use of social networking sites, mobile apps and official website of the
company to highlight its wide range of products and services.
Operations
The international business strategy of Burberry will also undertake proper planning of
operations used to manufacture products. The concerned organisation is famous to provide
quality products. Burberry will make use of the latest technology to acquire better results for the
company. Operational management sis the area concerned with designing and controlling the
process of production and redesigning business operations in the production of goods and
services. They will make sure that tangible and intangible inputs are properly used by merged
enterprises in order to gain desired result for the company
Human resources
The manpower is considered as fourth wheel to smoothly unction an organisation. The
concerned business entity will make use of that skilled and efficient professionals are hired who
have good knowledge about US market trends and patterns (Reis and Peña, 2011). As the
company is adopting merger and acquisition policy so it ill lead more focus on internal
recruitment and selection process. The existing employees are experienced and posses good
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