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Strategic Analysis Report On Burberry
The organization scope and direction of development is what constitutes strategic growth. Resource and proficiency deployment, which enables an organization to gain a competitive advantage, also represent tactical planning. There will be keen analysis on the internal as well as the external environment with emphasis on the current market; it needs to consider some factors such as the availability of resources, business level strategy, its market position, and strategic management. The three PESTEL that should be considered by Burberry include exploring the external settings, the opportunities and threats facing the company as well as understanding the definition of the industry. Burberry should identify factors of success and then offer situational analysis. Opportunities are conditions in the setting that can be exploited and they help a company to achieve strategic competitiveness (Hill et al., 2014). The organization also faces various forces from the environs that will critically determine its success. The Porter’s five forces include the bargaining power of the power of suppliers, the threat of new entrants into the market, competitors in the industry, the danger that is posed by substitute goods and the bargaining power of consumers. Burberry should consider all these factors in their strategic analysis.
Question 1
Issue One
The first issue facing Burberry PLC is strategic brand management. The firm is operating in an environment which is characterized by stiff competition from other firms. The prevailing Global Trends are presenting a scenario where the company needs to come up with a strategy that would be instrumental in ensuring that they have a brand that is appealing to the customers. In particular, it is vital for the organization to diversify their brand as a way of ensuring that they have security on their operations. The inability to adequately maintain the company’s brand will be instrumental in endowing the firm with a competitive edge over other industry players in the long run. Brand management is a critical aspect for any business which seeks to remain relevant in the market despite the changing economic environment (Phan et al. 2011 p220). Consequently, the concept of brand management presents a significant strategic issue for Burberry PLC.
Issue 2
The second strategic issue faced by Burberry regards market positioning. The changing dynamics of the industry present a significant challenge for the organization. Over the years, different firms have penetrated the Fashion industry. Burberry has been in operation for over 10 years. In general, they are a key player, leading in the production of luxury brands. Despite the fact that the organization is enjoying a status of classic and luxurious brand, consideration should be made to the fact that the entry of other firms over the years presents a threat to marketing position of Burberry PLC. The company needs to continually address the issue of market positioning as a way of safeguarding their presence, while maintaining the market share in the fashion industry (Wigley et al. 2013, p260).
Issue 3
Finally, Burberry PLC is faced with the strategic issue of ensuring growth in all the sectors the organization is currently engaged. For example, the organization resorted to a strategy which focused on intensification of their non-apparel products enabling the customers to buy products in a fashion show through live-stream. The ability to expand and realize growth depends on diversification on other ventures. The firm is faced with the strategic task of ensuring growth and it should be achieved through engagement in various ventures. In particular, the company needs to take advantage of emerging opportunities and capitalize on them despite the challenges likely to be encountered. Consequently, the ability to ensure strategic growth is an issue which the company has to deal with as it continues with its operations (Wigley et al. 2013, p250).
Porters Five Forces
Threat of competitors is an issue that Burberry PLC must contend with. In general, it is critical to acknowledge that the firm is dealing in a product line which has a life cycle. The fashion products developed need to align to the prevailing trend. Currently, the key players of Burberry include Armani, Polo, Coach and Gucci. It is critical to acknowledge that they competitors are leading brands, both in the United Kingdom and globally (Moore and Birtwistle, 2004, p415). Thus, Burberry PLC has the mandate to ensure that they come up with a strategy that endows them with a competitive advantage despite the stiff rivalry they receive from other participants. The fashion products which are introduced into the market by the firm must meet the individual needs of customers.
PESTEL Analysis
Economic factors
The global economic crisis significantly affected the ability of customers to spend. The fact that the organization was dealing with the luxury items presented a challenge to the organization. Customers were at discretion not to spend on luxury brands since they could opt for local products. Consequently, the economic environment played a critical role in ensuring growth of Burberry PLC. The crisis resulted in increase in rates of unemployment. The effect was a reduction in the overall spending capabilities of the customers. Eventually, the ability of consumers to invest in luxury goods was severely hampered. With the reduction in the overall purchases, the market share for Burberry’s PLC products reduced drastically. Consequently, there was a decline in the demand for the luxury brands. Thus, economic factors are essential in determining the overall growth of the company since it impacts on the spending power of the people.
Internal factors that the organization needs to address regards the concept of streamlining operations within the firm. Burberry should develop a strategy that would promote the way the organization executes operations, taking into consideration the need to ensure sustained growth. In general, various factors must be taken into consideration to ensure the realization of success.
Question 2
Firms and businesses should understand how resources and capabilities are likely to affect their performance. Incomes form the productive assets of the firm and capability is what the organization can do. The internal resources and capabilities of a business are the primary determinants of sustainable competition and development. Successful exploitation of a firm also compels a company to its full growth. After making reforms, Burberry was able to recover following the 2008 crisis. A holistic view on the resources and the capabilities of Burberry reveals the hurdles that the enterprise has gone through until its current position. The company was able to stand once again and make profits in the fashion market, which is highly hypercompetitive. The retail resources gave the company its position that saw it create and increase the number of outlets. Assets and capabilities create value for the firm and they increase its position as opposed to competitors. Organizations can harness their financial assets in a manner that stimulates its strategic capabilities and competencies as well (Pearce et al., 1997).
Resources are an important component through which a business operates. Organizational resources come in different forms, which can either be tangible or intangible. The tangible assets of an organization comprise of the physical resources such as plant, labor and finance and are the easiest to identify. The non-physical resources also constitute things like information, trademarks, copyright and the reputation of an organization. The intangible resources however contribute more to the net worth of an organization than any other kind. The organization should organize its resources to get sustained competitive advantage. Burberry should therefore transform its resources to heterogeneous instead of perfectly elastic resources. From history, the main resources of Burberry are primarily the intangible assets. In the present times, Burberry was one of the leading luxury brands. In the past, Burberry has received Royal warrant twice. In the year 1955, Queen Elizabeth gave the royal warrant followed by the Prince of Wales in 1989. The company has gone on to build its reputation over the years until it received the British Fashion awards in 2010 for its unique design and innovation. Through proper planning and execution, Burberry can utilize its financial capabilities to achieve its goals and objectives. Burberry can obtain a sustainable advantage such that it results to increased value for its stakeholders (Hill et al., 2014).
The products being offered by the organization also constitute its greatest share of resources. The products of Burberry include the trench coats, the women’s wear as well as the sportswear. The company should also have a clear focus. When making expansions, the business must first consider its resource availability to ensure that it can match competition in the new markets. If an organization is able to make prior evaluation before venturing into new markets, it will avoid frustrations and protect its reputation. When offering a wide range of products, the company is able to compete with the opponents in the market. Through diversification, the business is also able to remain in operation for quite some time. A wide range of products also ensures that the business is protected and in the case of underperformance by one product, it can manage to sustain itself. Since Burberry is well established through the wide range of products being sold, they act as one of the biggest success factors of the organization (Pearce et al., 1997). The intangible assets of the company, such as the signs offered by the company also greatly contribute to the success of Burberry. Not many businesses are able to offer competitive products in the market for such a long. Since Burberry has got an acceptance from its already established market from the various outlets, it means that the company is consistent to its quality standards and the customers are satisfied (Hill et al., 2014).
The adopted brand management, product design and distribution which was developed to become one of its biggest abilities. Brand management ensures that the reputation of the organization is well protected. Despite the external forces such as competitor strategies, political influence and the substitute goods that have affected Burberry in one way, the company has been able to record increased profits after aligning the strategies with its long-term goals. Using Porter’s strategies, the company should offer reasonable value for its products at a low price. The low costs are then compensated by the workers’ wages and reduced operation costs. Also, differentiation is very vital for the success of any business. The company should offer unique products using the media that is widely accepted by customers. Most organizations achieve differentiation through customer service, innovation and improved quality for the firm (Moore and Birtwistle, 2004 p.90).
An organization should have competencies that are fundamental to its performance. Burberry should be able to articulate its benefits to the target customers in a way different from its competitors. Effective deployment of resources by a firm will influence and improve its performance. The organization should be able to perform by holding its values deep. Employers of Burberry, who relate with customers at all times should be highly considered (Li and Li, 2009 p.89). Once the organization has identified its strengths in the market, it can undertake the desired changes. Using Porter’s CFS, by through focus, differentiation and cost, the company should exploit the special needs of buyers in the region using their behavior. Also, the company should understand the market segments, utilize the client base that it enjoys in the region before exploring additional markets.
Blueberry PLC strives to improve the value chain by streamlining the entire operations within the organization for the attainment of identified goals and objectives. The firm has been successful in reclaiming the luxury goods market, endowing them with a competitive advantage.
Question 3
Burberry has adopted several strategies on its growth. Burberry has been able to receive several busts and boom periods due to its business strategies in the industry. The company has created promotional awareness that was referred to as shrewd strategies. Burberry also used the best medium available to create product awareness. The use of brand ambassadors, who used the products of the company as a market strategy was also employed. Burberry also used a target on the potential and the existing customers to access the product. In the long-run, the company was able to emerge as a leading business. The strategies used by the organization should be in line with the organization goals. Burberry can then make adjustments through constant evaluation to ensure that it does not stray away from the laid down objectives. Constant improvements through checks and organizations can ensure the business has realigned itself to the long-run strategies and ensure success. The major strategies that have been used by Burberry include rebranding, repositioning as well as communication. These strategies are taken with an aim of ensuring growth and expansion of the fashion outlet.
Rebranding is one of the strategies adopted by Burberry. For the case of Burberry, the company did not have to change its name. Among the changes made by Burberry include pricing and promotion strategy. These changes can take place because of administrative efficiency. Rebranding enables the company to maintain its equity in the market as well as adapt to changes taking place in the business environment with regard to customers (Bryson, 2011 p.678). After a fall in profits, the company sought means of reviving its position through the products offered. The aim was to change the perspective of the customer who constitutes an important part of the business. The company therefore cut the grey markets through which its products were sold in large scale and then offered at a cheaper price in external markets. Since the company is one of the most renowned outlets, there is need to establish consistency and avoid irregular pricing that may otherwise damage the reputation of the business. The company also sought to identify gaps in the industry which it could fill to as a means of reinvigorating its dying brand. As a strategy, the company resorted to tap on its key resources by creating products that were appealing to its customers, especially the millennial. The success of the rebranding strategy of the firm could be measured through evaluating the customer reception of the product. A product pyramid of the company reflects on the demand of the customers who have different financial capabilities. The chosen form of rebranding that was taken by Burberry is unique since the company did not have to change its name but rather reduce products that were cheaply sold to external markets at reduced prices (Pearce et al., 1997).
The repositioning by the company was aesthetic and tactical as they were implemented in a bit for growth. The company was then able to open outlets in other countries to reach its target customers. These establishments therefore enabled the company to venture into other product lines, with the outlets in USA that exported coats to Japan. The company manufactured uniforms for the service during the World War I, sportswear, men’s trench coats, women wears as well as children’s wear. Creation of new product lines through diversification was ones of the best strategies employed by Burberry (Hill et al., 2014 p.67). Since the company had already established its brand, more people could easily relate to what the company was offering. Despite the challenges that come with expansion, the company still able produced luxurious outfit wears, an indication that it still had interest in its customers. In 2000, the established a new store in Bond street, London that was located between stores that were still running such as Alexander McQueen and Vivienne Westwood. When repositioning itself, the business should ensure all its goals and objectives are aligned so that it cannot miss on any of them. By taking new positions is one way of tapping into the existing gaps in the markets. The position of the company is very vital to its growth. Accessibility of an organization by customers is the basis of growth. Strategic positioning is therefore crucial to ensure that all customers, regardless of their position and location get the products of being offered by the business (Rumelt, 2011p.89).
Communication between the company and its consumers is paramount. In particular, it can take place through product promotion, journals or magazines. Through the strategy of product promotion, the company is able to understand the manner in which its products are received in the market. Market surveys as well as post-sale services are very important to an organization’s growth. The company is able to understand the needs of the customers, and make possible adjustments serve to provide better services. In addition, Burberry organized a bi-annual fashion show that targeted to communicate product positioning to its customers. The shows had leaders who provided major updates and issued fashion magazines that provided customers with up-to-date information about Burberry as well as fashion trends. Burberry also released journals and magazines that were offered free to customers who attended the fashion shows. The customers are able to get the latest updates about the business such as the products being offered and the new releases as well as plans. Customers need to get updated regarding of the prevailing market conditions and the emerging trends. This will enable the firm to increase its profitability by accessing a wide client base and satisfying their ever increasing demands. Burberry, through its magazines and journals as well as product promotion was able to cover a wide market. Communication is a very important strategy for business growth.
The above strategies are management roles that should be handled internally. Through policy formulation and resource mobilization, the company can explore new markets that will enhance its growth. The management is also a key player when instigating the various media of communication. Additionally, the management should ensure that the proposed form communication is fully implemented before exploring additional channels. Thus, the management should support the various organs of Burberry and ensure that the business lines run effectively. Expansion of the business through creation of new business outlets lets the business utilize its resources in an effective way by utilizing its entire business potential. In its expansion efforts, the company should however ensure that it completely exploits its current market before moving into new regions (Kim et al., 2014 p.45).
By addressing the above strategies of Burberry, the business can achieve enormous growth and expand to new markets. This will ensure profitability for the organization. New markets also bring new challenges, thus increasing the levels of creativity and innovation for the organization when addressing these challenges. By encouraging cohesion by all the staff and unifying the operations of Burberry, the organization will be assured of further success.
References
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https://writepass.com/journal/2012/05/strategic-analysis-of-burberry-plc/
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