Economic Strategies. Potential Improvements of Burberry

Project Report from the year 2017 in the subject Business economics - Business Management, Corporate Governance, grade: 73, Queen Margaret University, language: English, abstract: 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 Pds. 2,8 billion and its EBIT close to Pds. 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.