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
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 Topics
This report aims to conduct a strategic evaluation of the luxury fashion company Burberry by applying six distinct analytical frameworks to assess its performance, competitive standing, and future prospects. The study investigates how external environmental factors and internal strategic capabilities influence the brand's ability to create value for its customers while navigating international markets.
- Application of the PESTEL and Porter's 5 Forces models to analyze the business environment.
- Evaluation of internal strategic capabilities through VRIO and Value Chain analysis.
- Assessment of international market entry modes and strategic positioning.
- Comprehensive TOWS analysis to identify strategic improvements.
- Development of actionable recommendations focused on market expansion and digital marketing strategies.
Excerpt from the Book
1. Introduction
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 (Burberry 2017). 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 (controlling over 50% of the revenue made in the sector) (Deloitte. 2017). 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. Due to its strong reputation and its history reaching back into World War I, Burberry has a strong customer base and is able to stand its ground in the sector.
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 (Johnson et al 2015, Thompson et al 2017). Lynch (2015 and Thompson (2017) 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.
Summary of Chapters
1. Introduction: This chapter provides an overview of Burberry as a luxury goods manufacturer and retailer, highlighting its market position and the competitive environment it navigates.
2. Strategic Evaluation of Burberry: This section utilizes PESTEL, Porter's 5 forces, VRIO, Value Chain, entry modes, and Porter's international strategy frameworks to analyze the company's business environment and strategic capabilities.
3. TOWS – analysis: This chapter evaluates the identified Threats, Opportunities, Weaknesses, and Strengths derived from the previous analytical frameworks.
4. Recommendation for Burberry´s future: This section synthesizes the findings to propose strategic improvements, focusing on marketing, product mix, and expansion into Asian markets.
Keywords
Burberry, Strategic Evaluation, PESTEL, Porter's 5 Forces, VRIO Analysis, Value Chain, International Strategy, Luxury Goods, BREXIT, Market Entry, TOWS Analysis, Competitive Advantage, Digital Marketing, Market Expansion, Brand Heritage.
Frequently Asked Questions
What is the core focus of this publication?
The publication focuses on a strategic performance analysis of the luxury fashion brand Burberry, examining its competitive environment and internal capabilities.
What are the primary themes covered in this report?
The primary themes include environmental scanning, internal strategic resource assessment, international market entry strategies, and performance-based improvement recommendations.
What is the main objective of the analysis?
The main objective is to identify potential improvements for Burberry's business performance by evaluating current strategies and leveraging untapped opportunities, specifically in the Asian region.
Which scientific frameworks were employed for the analysis?
The report uses six frameworks: PESTEL, Porter's 5 Forces, VRIO, Value Chain, Modes of International Entry, and Porter's 4 International Strategies, culminating in a TOWS matrix.
What topics are discussed in the main body?
The main body covers the political and economic landscape (including BREXIT), competitive pressures from luxury rivals and substitutes, internal value creation through logistics and marketing, and modes of global expansion.
Which keywords best characterize this work?
The work is characterized by terms such as strategic evaluation, luxury goods sector, market entry strategies, competitive advantage, and digital transformation in retail.
How does the report view the impact of BREXIT on Burberry?
The report identifies BREXIT as a significant source of uncertainty, particularly concerning trade barriers and the movement of goods between the UK and the EU.
What recommendation is made regarding digital marketing in Asia?
The report recommends that Burberry adapt its successful Western VR/AR marketing strategies for Asian platforms like QQ and WeChat to better connect with younger consumers in China.
Why does the report emphasize the non-apparel line for South East Asia?
The report suggests that due to the warm climate in South East Asian countries, consumer demand for traditional heavy apparel is lower, making products like timepieces and perfumes more strategic for growth.
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- Marcel Strangmueller (Autor:in), 2017, Economic Strategies. Potential Improvements of Burberry, München, GRIN Verlag, https://www.grin.com/document/417203
