Background Information on Burberry

Burberry Group PLC is as a British fashion company that has its headquarters in London. It mainly deals with the distribution of trench coats and other fashion products. Other products that are offered by Burberry Group PLC include sunglass, fragrances, cosmetics, fashion accessories, and ready to wear outerwear. Since its creation in 1856 by Thomas Burberry, the organisation has been successful in pushing its products in both regional and global markets (Verma et al. 2016, 210). During its initial stages, the company majored in the manufacture of outdoor attire. However, Burberry Group PLC later moved to the high fashion market with its original product being Gabardine.

The brand had unique features as compared to other rival products, as it was both waterproof and breathable. In later years, the company introduced trench coats, scarves, and other fashion products to fit the interest of a diverse customer base in the high fashion market.  Until 1955, Burberry Group PLC was a family-controlled venture. Nonetheless, the company was reincorporated in the 1950s. It is worth noting that the firm is listed as the FTSE 100 Index in the London Stock Exchange. Moreover, the business has been successful in creating stores in more than 51 countries. The success of the organisation can be traced in the 1980s when it agreed with major manufacturers in the United Kingdom to create complementary products (Sun and Zhao, 2018, 370).

During this period, the organisation positioned itself as being a unique brand, thus attracting a positive reception in the globe. In 2006, the organisation adopted the use of different online platforms as a way of reaching a large client base. Embracing online platforms is regarded as being one of the strategies that have significantly transformed the operations of the group as well as increasing its revenue levels (Yang et al. 2017). Other than the use of innovative technologies, the organisation has been keen on engaging the services of experienced leaders. Not only have leaders such as Marco Gobbetti and Sir John Peace propelled the operations of the group to new markets, but they have also helped create a positive organisational culture.

Fashion is regarded as being one of the most critical aspects of human life as it allows people to express their opinions and identities. Nonetheless, the fashion sector is termed as being dynamic, hence the need to monitor the on-going market trends. The management of Burberry Company has in the past years been keen on ensuring that the operations of the organisation remain innovative and competitive in the market (Scutto et al. 2017, 190). The unique leadership approach used by the management has seen the company open more than 490 global outlets. In the 2017-2018 financial years, the company had revenues amounting to 2.8 billion Euros; which is increased as compared to the previous periods.

Burberry Analysis

Analysis of the Internal Environment: SWOT Analysis

Strengths

• The company is credited as having a reliable and quality brand. It has been successful in building a positive organisational reputation.
• The brand comes with distinctive elements, thus making it easy for the company to market its products as well as counter the threat created by other rival brands (Remy et al. 2016, 5).
• Over the past years, the organisation has been successful in increasing its global presence. The move has been effective in raising the revenue levels of the organisation.
• The organisation has elaborate distribution systems that are effective in the introduction of new products as well as venturing in new markets (Kawaf et al. 2019, 149).
• The brand has a royal warrant that helps in cushioning the organisation from the poor reception of goods.

Weaknesses

• Pricing of the brand is seen as being the major setback. The argument rests on the fact that products of the company are highly priced as compared to other brands.
• The company can further be defined as having a limited product line. The move implies that the organisation is not in a position to wholly meet the needs of customers. There is, therefore, an increased chance that customers may turn to other brands (Lueg, 2015, 350).
• In regions such as Asia and Latin America, the market is seen as being highly dynamic. This creates the need for the organisation to come up with innovative products regularly. However, such an undertaking may lower the profit margins due to high operational costs.

Opportunities

• The fashion industry is defined as being highly dynamic, thus implying that there are high chances that new trends will always emerge. As such, the organisation can take advantage of these factors to ensure that it is always in the leading position in the development of new fashion products.
• In recent years, many organisations are seen as embracing online platforms as a way of reducing operational costs as well as reaching a large client base. Adoption of online platforms will not only create better relations with customers but will also make it possible to push its brands in other markets (Macchion et al. 2015, 183).
• There is the option of engaging in mergers or acquiring local firms with the objective of countering the threat of domestic brands and operational costs. It is worth noting that mergers would mean that the company would have access to new distribution and marketing channels.

Threats

• Despite Burberry’s innovation levels, it is worth noting that the fashion industry has a high number of similar products due to imitations. Replications serve as the major setback to the long-term feasibility of Burberry operations (Macchion et al. 2017. 1025).
• There is also the risk from both local brands and well-established competitors. In some cases, rival brands offer similar products at lower prices, therefore, creating the risk of losing customers.
• Many restrictions seek to monitor the impacts of the company on the environment and its relation with employees. While this can be addressed through the adoption of a sustainable business model, there is the fear that it may significantly lower the profit margins of the business in the short run period (Hussain, 2018, 70).

PESTEL Analysis

1. Political Factors

The operations of Burberry Company are not restricted to London as the company has active ventures in other countries. It implies that it must wholly abide by the set of domestic and global regulations. Foreign laws and regulations may be proved to be unfavourable for the organisation, thus limiting its expansion initiative. In the case of the United Kingdom, it has a stable political environment that supports the creation of new businesses.

However, it is not always the case that the company would enjoy similar political stability in other countries. The case is typical in third world countries which are primarily seen as having undemocratic structures (Meraviglia, 2018, 470). However, countries with stable regimes, business support policies, and stable tariffs come in handy in supporting the growth of the Burberry’s brand. Lastly, the United Kingdom has positive relations with other countries, thus making it easy to engage in foreign trade relations with other global players.

2. Economic Factors

Economic trends have significant impacts on both investments and consumption levels. During economic downturns, there is often the risk of reducing consumption levels. Products offered by the company are usually not essential, thus implying that people may decide to live without them during economic stoppages (Fernie and Sparks, 2018). Economic growth further means that the firm would have access to better support services and infrastructures. While this is the case in the European markets, focusing on third world countries indicates that they have undeveloped economies.

Other than consumption trends, it is worth noting that economic factors cover elements such as taxation and other trade restrictions. As such, high taxation levels would have the effect of increasing the cost of doing business. Additionally, it would also make it necessary to raise the price of the products. Moreover, such a trend has adverse implications on the operations of the business as there are chances that customers may turn to other brands.

3. Social Factors

Currently, people are becoming more diverse with an emphasis being placed on the need to uphold the values of all groups. It is imperative to note that fashion is one of the approaches that is used to portray such values (Escobar-Rodríguez. 2017, 600). It implies that Burberry must be in apposition to offer brands that reflect the diversity of different groups. While some people have a preference for skimpy clothing, others may appear to be reserved. Contrary to the settings where the company only targeted on London-based customers, globalisation has led to an increase in the customer base.

On the other hand, many customers in Europe appear to be educated and have a high standard of living. It holds that they are well-informed and are likely compare the Burberry brand with other products in the market. It implies that the brand must be in a position to wholly meet the needs and tastes of all customers.

4. Technological Factors

Focusing on many businesses indicates that there is a growing demand for better technologies as a way of improving operational processes. In recent years, there has been significant growth in the number of companies that have online platforms. In the case of online marketing platforms, there is the view that they help to increase the competitive advantage of a business while also lowering its operational costs (Colucci et al. 2008, 135). The argument is based on the fact that online business marketing platforms are not restricted to time or geographical barriers. On the contrary, customers can order as well as pay for their products at any time of the day.

The United Kingdom can be regarded as being one of the countries with improved communication and technological innovations. These structures offer the needed support services in the growth of the business. However, there might be some restrictions in countries that do not have stable technological innovations. In such a setting, the company is likely to incur huge operational costs, thus lowering the profit margins (Bottani et al. 2009, 250).

Environmental Factors

There have been concerns about the high level of environmental pollution by business. This asserts that many organisations are only keen on maximizing their profit levels, but fail to put into consideration the social and ecological implications of their operations. It is this realisation that has led to the creation of stringent local and regional regulations. Burberry Company must be seen to conform to such rules as any violation may have substantial cost implications as well as tainting its public image.

One of the ways of dealing with this problem is the adoption of a sustainable business model (Rahman. 2018, 410). Unlike other businesses, such a model ensures that there is the incorporation of both social and environmental factors. The application of these models has the benefit of increasing the level of accountability as well as ensuring that all business operations are ethical. However, there is the danger that many regulations may curtail operations of the group as well as minimise the profit levels.

5. Legal Factors

To ensure that the organisation remains profitable in the long run, there is the need to guarantee that the organisation wholly abide by all the set regulations. Some of the areas that are covered by the law include the rights of workers, copyright laws, and environmental regulations. It is worth noting that the United Kingdom is one of the countries that have high regard for the law. Thus any violation of the law may have adverse implications on the operational process of the group.

Primary Activities and Two Support Activities in Porter’s Value Chain

Primary Activities

1. Marketing and Sales

The success of Burberry Company is based on the ability to push new products in the market as well as increasing the awareness levels of the existing brands. High competition levels mark the fashion industry, hence the need to come up with effective marketing and promotion methods. The organisation can adopt a competitive marketing mix where it offers its products at lower prices, and ensuring that they are of superior quality.

1. Operations

Under operations, there is a stress on the urge to reduce the level of wastes and operational costs. However, this can only be attained in a situation where there is the smooth functioning of all facets. Under the current setting, there is a growing emphasis on the need to adopt a sustainable business model and green energies (Boons et al. 2013, 6). These new changes are cited as being ideal in ensuring that a business does not have negative impacts on the environment.

 

Support Activities

1. Technological development

            Effective technologies offer critical support to any given business as it ensures that there is smooth communication, better coordination in product developments, and improved marketing capacities. The use of the Internet and social media platforms may prove to be of great aid in transforming the operations of Burberry Company. Such platforms lower operational costs of the fashion retailer and ensure that the company has a competitive advantage as compared to other market players.

1. Human Resource Management

            The human resource management concerns itself with ensuring that the workforce remains productive. The department is also charged with the role of guaranteeing that there are no conflicts of interest among concerned parties. Human resource management is thus vital in ensuring that the organisation adopts policies and measures that contribute towards the creation of a positive organisational culture.

The Role of IT in Helping Burberry to Gain a Competitive Advantage

The success of Burberry Company can be defined as being tied to its ability to reduce operational costs. While there are many ways through which the cost can be reduced, it is worth noting that the introduction of innovative technologies is the most effective approach. Information technologies cover many facets of the organisation, and, thus, ensure that there is the smooth running of all operations (Bocken, 2013, 490). Some of the areas that are covered include communication, product development, marketing, and other elements. The introduction of IT structures is often influenced by the need to ensure that there is a reduction in operational costs. One of the areas that can significantly be improved through the introduction of better technologies is marketing.

Under the current setting, there is a growing urge to using online stores as opposed to the Brick and Mortar stores. The shift can be linked to the fact that online stores come with high levels of flexibility as the organisation can cover other regions without the need for creating physical stores. Moreover, many of the leading global retailers in the fashion industry are seen as having adopted online business (Blázquez, 2014, 100). There is a significant reduction in the operational costs as online platforms have significantly reduced the number of staffs. It implies that saved costs can be channeled to other business operations such as moving to new markets.

The other benefit that is tied to the integration of the operations of the company with better technologies is that it would lead to improved communication with stakeholders. Unlike small organisations, large firms have significant challenges in sharing of information, thus marginalising some employees. However, the smooth functioning of an organisation requires that all parties are involved in decision-making processes, and also within the shortest time possible. Through technologies, there will be improved contact between the management, employees, and customers, thus contributing to the creation of a positive organisational culture.

Technologies can further be used to improve the operational processes of the organisation. The high levels of competition imply that the brand should engage in efforts that will see a reduction in the operational costs and enhanced product development (Avital and Singh, 2007). Through better communication and research technologies, the objective can be attained without causing delays in the functioning of the organisation. As such, the process will lead to the creation of products that conform to the on-going market trends, thus increasing the competitive advantage of the organisation.

On the other hand, improved technologies imply that there would be an increased ability to push new products in the market. One of the platforms that play an essential role in marketing activities is social media. Social media platforms such as Facebook, LinkedIn, and Twitter are instrumental in increasing the awareness level of a brand (Armstrong et al. 20150. Currently, many people are connected via social media platforms, hence making it possible to reach a wide group within a short period. Unlike other methods, it is worth noting that social media platforms are cost saving and allows for the incorporation of videos, images, music, and other media elements. In short, the adoption of better technologies is one of the ways that the organisation can remain relevant in the market.

References

Armstrong, G., Kotler, P., Buchwitz, L.A., Trifts, V., and Gaudet, D., 2015. Marketing: an introduction.

Avital, M. and Singh, B., 2007. The impact of collaboration and competition on project performance. ICIS 2007 Proceedings, p.89.

Blázquez, M., 2014. Fashion shopping in multichannel retail: The role of technology in enhancing the customer experience.International Journal of Electronic Commerce, 18(4), pp.97-116.

Bocken, N., Short, S., Rana, P. and Evans, S., 2013. A value mapping tool for sustainable business modeling. Corporate Governance, 13(5), pp.482-497.

Boons, F., Montalvo, C., Quist, J. and Wagner, M., 2013. Sustainable innovation, business models and economic performance: an overview. Journal of Cleaner Production, 45, pp.1-8.

Bottani, E., Ferretti, G., Montanari, R. and Rizzi, A., 2009. The impact of RFID technology on logistics processes of the fashion industry supply chain. International Journal of RF Technologies: Research and Applications, 1(4), pp.225-252.

Colucci, M., Montaguti, E. and Lago, U., 2008. Managing brand extension via licensing: An investigation into the high-end fashion industry. International journal of research in marketing, 25(2), pp.129-137.

Escobar-Rodríguez, T. and Bonsón-Fernández, R., 2017. Analyzing online purchase intention in Spain: fashion e-commerce. Information Systems and e-Business Management, 15(3), pp.599-622.

Fernie, J. and Sparks, L. eds., 2018. Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.

Hussain, T., 2018. Re-fashioning the garment industry: Exploring innovations for a circular economy. Clothing Cultures, 5(1), pp.61-86.

Kawaf, F. and Istanbulluoglu, D., 2019. Online fashion shopping paradox: The role of customer reviews and facebook marketing.Journal of Retailing and Consumer Services, 48, pp.144-153.

Kawaf, F. and Istanbulluoglu, D., 2018. Online fashion shopping paradox: The role of customer reviews and facebook marketing. Journal of Retailing and Consumer Services, 48, pp.144-153.

Kotler, P., Burton, S., Deans, K., Brown, L. and Armstrong, G., 2015. Marketing. Pearson Higher Education AU.

Lueg, R., Pedersen, M.M. and Clemmensen, S.N., 2015. The role of corporate sustainability in a low‐cost business model–A case study in the Scandinavian fashion industry. Business Strategy and the Environment, 24(5), pp.344-359.

Macchion, L., Moretto, A., Caniato, F., Caridi, M., Danese, P. and Vinelli, A., 2015. Production and supply network strategies within the fashion industry. International Journal of Production Economics, 163, pp.173-188.

Macchion, L., Moretto, A., Caniato, F., Caridi, M., Danese, P., Spina, G. and Vinelli, A., 2017. Improving innovation performance through environmental practices in the fashion industry: the moderating effect of internationalization and the influence of collaboration. Production Planning & Control, 28(3), pp.190-201.

Macchion, L., Moretto, A.M., Caniato, F., Caridi, M., Danese, P. and Vinelli, A., 2017. International e-commerce for fashion products: what is the relationship with performance?. International Journal of Retail & Distribution Management, 45(9), pp.1011-1031.

Meraviglia, L., 2018. Technology and counterfeiting in the fashion industry: Friends or Foes?. Business Horizons, 61(3), pp.467-475.

Remy, N., Speelman, E. and Swartz, S., 2015. Sustainable style: A new fast-fashion formula. McKinsey & Company, pp.1-6.

Rahman, M.S., and Mannan, M., 2018. Consumer online purchase behavior of local fashion clothing brands: Information adoption, e-WOM, online brand familiarity, and online brand experience. Journal of Fashion Marketing and Management: An International Journal, 22(3), pp.404-419.

Remy, N., Speelman, E. and Swartz, S., 2016. Sustainable style: A new fast-fashion formula. McKinsey & Company, pp.1-6.

Scuotto, V., Del Giudice, M., Della Peruta, M.R. and Tarba, S., 2017. The performance implications of leveraging internal innovation through social media networks: an empirical verification of the smart fashion industry. Technological Forecasting and Social Change, 120, pp.184-194.

Sun, L. and Zhao, L., 2018. Technology disruptions: exploring the changing roles of designers, makers, and users in the fashion industry. International Journal of Fashion Design, Technology, and Education, 11(3), pp.362-374.

Verma, V., Sharma, D. and Sheth, J., 2016. Does relationship marketing matter in online retailing? A meta-analytic approach.Journal of the Academy of Marketing Science, 44(2), pp.206-217.

Yang, S., Song, Y. and Tong, S., 2017. Sustainable retailing in the fashion industry: A systematic literature review.Sustainability, 9(7), p.1266.