An analysis of Burberry, a luxury goods company, using 6 different frameworks to help identify strategies, as well as a SWOT (TOWS) analysis to uncover potential improvements of the company´s performance. Emphasis is set on strategies concerning the business environment, international strategies and an evaluation of value created by Burberry for its customers. After the TOWS a recommendation will be given that has the potential to increase performance significantly if used appropriately.
The following analysis will be based around three areas: 1) the environment Burberry operates in 2) the value they add to the products and 3) the strategies Burberry uses to compete internationally. A PESTEL analysis will be the start to determine external factors of the environment influencing Burberry´s business, following up on that will be Porter´s 5 forces model, to examine what the forces that influence the company and its competitors. To analyse the strategic capabilities Burberry has, a VRIO and a value chain will be used to see which activities add value to for the consumer. Lynch suggest that the model for modes of entry and Porter´s 4 international strategies are a good way to evaluate a company´s international strategies, so those will be used in a combination for this report.
Burberry PLC is a manufacturer, wholesaler and retailer based in London, which operates in the luxury sector and is selling apparel and non-apparel products on high quality standards. The company has about 10.000 employees in over 500 stores around the world. Its revenue in 2016/17 was about £2,8 billion and its EBIT close to £400 million, making it one of the strongest companies in the UK. Because of its high status and quality, it received two royal warrants from Britain´s royal family over the years giving the company high prestige and backing up their operations. The sector of luxury goods is a fast-paced, highly competitive with strong names such as Gucci, Luis Vuitton, Prada and Hermes. Designs change fast and so does fashion. As most of the large luxury companies, Burberry operates mainly in Europe, the US and Asia. The wealthy areas of central Europe with its high living standard, the rising number of millionaires in China and India and the constant need of luxury in the United States give all prestigious companies reasons to expand and do business in those regions.
Table of Contents
- 1. Introduction
- 2. Strategic Evaluation of Burberry
- 2.1 Environmental analysis
- 2.1.1 Focused PESTEL analysis
- 2.1.2 Focused Porter's 5 forces
- 2.2 Analysis of Strategic Capabilities
- 2.2.1 VRIO analysis
- 2.2.2 Value Chain analysis
- 2.3 International Strategies
- 2.3.1 Modes of international market entry
- 2.3.2 Porter's 4 international strategies
- 2.1 Environmental analysis
- 3. TOWS-analysis
- 3.1 Burberry's Threat
- 3.2 Burberry's Opportunity
- 3.3 Burberry's Weakness
- 3.4 Burberry's Strength
- 4. Recommendation for Burberry's future
Objectives and Key Themes
This analysis aims to provide a strategic evaluation of Burberry, a luxury goods company, utilizing various frameworks. The evaluation will focus on Burberry's business environment, international strategies, and the value it creates for its customers. A SWOT (TOWS) analysis will be conducted to identify potential improvements in the company's performance, culminating in a recommendation for enhancing its future performance.
- Environmental Analysis of Burberry's market position.
- Assessment of Burberry's strategic capabilities and value creation.
- Evaluation of Burberry's international strategies and market entry modes.
- Identification of threats, opportunities, weaknesses, and strengths through a TOWS analysis.
- Recommendation for improving Burberry's future performance.
Chapter Summaries
1. Introduction: This chapter introduces Burberry PLC, a London-based luxury goods company, highlighting its size, global presence, revenue, and strong reputation within the highly competitive luxury sector. It emphasizes the company's historical significance and its position among major competitors such as Gucci, Louis Vuitton, Prada, and Hermès. The introduction establishes the scope of the subsequent analysis, focusing on Burberry's operating environment, value creation, and international strategies, outlining the analytical frameworks that will be used (PESTEL, Porter's Five Forces, VRIO, Value Chain, modes of international market entry, and Porter's four international strategies).
2. Strategic Evaluation of Burberry: This chapter delves into a comprehensive strategic evaluation of Burberry, examining its operational environment and strategic capabilities. The environmental analysis employs a PESTEL framework (with a focus on political and economic factors like Brexit and tourism) and Porter's Five Forces model to assess competitive pressures, particularly from substitutes (cheap imitations and high-street brands) and existing competitors (major luxury houses). This section lays the groundwork for understanding the challenges and opportunities Burberry faces.
Keywords
Burberry, luxury goods, strategic analysis, PESTEL analysis, Porter's Five Forces, VRIO analysis, Value Chain analysis, international strategies, market entry modes, TOWS analysis, competitive advantage, Brexit, tourism, luxury market competition, brand positioning.
Burberry Strategic Analysis: Frequently Asked Questions
What is this document about?
This document provides a comprehensive strategic analysis of Burberry, a luxury goods company. It uses various frameworks to evaluate Burberry's business environment, international strategies, and value creation, ultimately recommending improvements for future performance.
What frameworks are used in this analysis?
The analysis utilizes several key frameworks, including PESTEL analysis, Porter's Five Forces, VRIO analysis, Value Chain analysis, different modes of international market entry, Porter's four international strategies, and a TOWS analysis (SWOT analysis).
What aspects of Burberry are analyzed?
The analysis covers various aspects of Burberry's business, including its market position, strategic capabilities, value creation, international strategies and market entry modes, threats, opportunities, weaknesses, and strengths. The impact of factors like Brexit and tourism on the company are also considered.
What is the purpose of the PESTEL and Porter's Five Forces analyses?
The PESTEL analysis examines the political, economic, social, technological, environmental, and legal factors affecting Burberry's market position. Porter's Five Forces analysis assesses the competitive landscape, considering factors such as the threat of new entrants, the bargaining power of buyers and suppliers, the threat of substitutes, and the rivalry among existing competitors.
What is the role of the VRIO and Value Chain analyses?
The VRIO analysis assesses Burberry's resources and capabilities to determine their competitive advantage (Valuable, Rare, Inimitable, Organized). The Value Chain analysis examines the activities involved in creating and delivering Burberry's products or services to understand where value is added and potential areas for improvement.
How are Burberry's international strategies evaluated?
The analysis examines Burberry's international strategies, including the modes of international market entry it employs and the alignment with Porter's four international strategies (global standardization, international, transnational, and multidomestic strategies).
What is the significance of the TOWS analysis?
The TOWS analysis (Threats, Opportunities, Weaknesses, Strengths) identifies Burberry's internal strengths and weaknesses and external opportunities and threats. This framework helps to formulate strategic recommendations to leverage opportunities, mitigate threats, and improve performance.
What is the final outcome of this analysis?
The analysis culminates in a recommendation for improving Burberry's future performance based on the findings from the various frameworks used. This provides actionable insights for strategic decision-making.
What are the key chapters in this document?
The document includes chapters covering an introduction to Burberry, a strategic evaluation of the company (including environmental and capability analyses and international strategies), a TOWS analysis, and finally, recommendations for Burberry's future.
What are some key words associated with this analysis?
Key words include Burberry, luxury goods, strategic analysis, PESTEL analysis, Porter's Five Forces, VRIO analysis, Value Chain analysis, international strategies, market entry modes, TOWS analysis, competitive advantage, Brexit, tourism, luxury market competition, and brand positioning.
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- Marcel Strangmueller (Autor:in), 2017, Economic Strategies. Potential Improvements of Burberry, München, GRIN Verlag, https://www.grin.com/document/417203
