STRATEGIC

MANAGEMENT
BURBERRY


SUBMITTED BY:
JAYSHREE BEHRA
MOHINI GAUTAM
NIKITA KHESKANI
SHAKTI PATEL
MFM-III


INTRODUCTION
Strategic development is concerned with the direction
and scope of an organization over the long term,
which involves: -

the development and deployment of its resources
and competencies, through which it achieves
competitive advantage in a changing environment.
BURBERRY
The presentation will further talk about U.K based luxury brand
Burberry strategic management. Burberry currently ranks at 51
st
in
FTSE 100 index with a market capitalization of over 6.5bn (Stocks
Challenge, 2012
BURBERRY
Establishment
21 year old,
Thomas Burberry
started small shop
in England in 1856.
The brand got
international
recognition in 1910
Popularity
Burberry gained
popularity during
the First World War
when it won the
contract to supply
trench coats to the
British army
Later it was worn in
movies like
Breakfast at
Tiffanys and
Peter sellers in
Pink Panther
Main Aim
Burberrys main
mission was to sell
Britishness to the
world
Restructure strategic
management
In 1998 profit
reduced from 62
million to 25
million.
The company had
to redesign its
strategic model to
regain its iconic
status
By the end of year
2011, the
companys profit
rose to 295.7
million and 1.5bn
in revenues


BURBERRY BUSINESS
Burberry markets its products to its end consumers
through three channels: -Retail, wholesale and
licensing.

Burberry sources and markets its apparel and
accessories worldwide with major markets in Spain,
America and Asia Specific which accounts to 90%
its revenue and emerging markets like China,
India, Russia, East Europe and the Middle East
PRODUCT LINE OF BURBERRY
1880 Gabardine Macs- A
breathable and waterproof
fabric used for making of
trench coats
1985: -tie locken trench
coat which was worn by
army officials in Boer War
1920: -Burberry check
was registered as a
trademark
1955: -childrens clothes,
personal products,
watches, fragrances,
bikinis, shoes and home
wares
STRATEGIC THEMES OF
BURBERRY
Leveraging the franchise.
intensifying non-apparel development.
Accelerating retail-led growth.
Investing in under-penetrated markets.
Pursuing operational excellence.

Product and excellence underpin this brand
momentum
Corporate
level strategy
Concern with overall
organizations. Decisions
like geographical
coverage, mergers and
acquisitions, and how
resources are allocated to
different parts of an
organisation
International expansion to
bring success in Burberry.
The results were profits soaring
to 162 million by 2005, a six
times increase since she took
over
Increase expansion with
franchise partners also.
Business level
strategy
How to compete successfully in
particular markets, which
product in which market, and
competitive advantage
Burberry focuses more on this
strategy because of one single
line.
Ahrendtss digital strategy
introduced social networking
site .
Thus, Burberry overcome the
recession in 2009
Organisational
level strategy
This level includes that how
different organisation deliver
effective allocation of
resources and people
PESTLE ANALYSIS OF
BURBERRY
Political
Burberry, sources 60% of its
raw materials from Europe,
which makes the group
strongly unaffected by
Chinese imports impacts of
Yuan/dollar de-pegging

Economic
During 2008 there was
economic deceleration which
was recovered back by
company in 2010.Burberry
needs to monitor the inflation
rates as it may directly effect
on the buying capacity.
Social
Britishness, Democratic
luxury positioning, Authentic
outwear heritage and historic
icons, which makes it so
popular among the people
Technological
Burberry was the first luxury
brand to live stream a fashion
show in 3D, social
networking sites and
artoftrench,com
Legal
Burberry faced a problem of
copycats, which infringed its
trademark
Environmental
Burberrys recycling partner
has converted over 130 tones
of samples and raw material
waste into car door insulation
INDUSTRY & MARKET STRUCTURE OF
BURBERRY
Burberrys industry structure is
:Entrepreneurial structure: -is organised
wholly around the chief executive.
Advantages of these structures are: they are
centralized, relatively less overheads and
simple lines of control.
America: -constitutes to 27% of the total revenue.
Europe: this includes the operation in Europe
excluding the Spanish operation and accounts for 34%
of total revenue
Asia-Pacific: including operations in China and
Japanconstituting for 33% of the revenue for Burberry.
Retail: This channel accounted for 64% of its total
revenue including 174 stores, 199 concessions with
departmental stores and 44 outlets, as well as digital
commerce across the world.
Wholesale: 29% of revenue for Burberry comes from
this channel. (including franchise)
Licensing: Remaining 7 % of revenue comes from
licensing, including royalty income
Burberry
strategic
capability
The brand is positioned as
democratic luxury and
britishness appeal to its
customers
Kate Middleton wore a
Burberry trench coat
during her coming out
phase of Princess-to-be
Burberry-an
intangible
asset
Burberry has a list of rich
intangible resources from
its 154 years past history.
Burberry was awarded
Royal warrant two times in
1955 by Queen Elizabeth
and Prince of Wales in
1989. in 2010 awarded for
design and innovation
Burberry-
competences
Digital 3d innovation
Social media
Website: -artoftrech.com
advertisements featuring
celebrities such as
Beckhams, Elizabeth
Jagger and Nicole
Appleton.
SWOT ANALYSIS
STRENGTH
Wide geographical presence (Revenue
Collection)

Diversified network

Strong Branding

Good advertising and brand presence in
Europe specially England

One of the biggest fashion houses in UK offering
clothes, perfumes, beauty products etc

Granted Royal Warrants by Queen Elizabeth
II and the Prince of Wales

Associations with international celebrities to
reach out to the customers

WEAKNESSES
Weak efficiency
Burberrys inventory turnover (2.2) is
low as compared to industry standards
(4.04).

Low resonance in certain
countries like Singapore
Due to Burberrys positioning it is very
much accessible in the high-street, and
has a low couture presence.

SWOT ANALYSIS
OPPORTUNITIES
Growth in Emerging
Markets
As seen from above, emerging
markets give people new wealth,
disposable incomes and fuel the
growth of luxury goods.

Rise in popularity of e-
tailing
Burberry, with its strong brand equity
has established its presence in online
retail format.


THREATS
Global economic slowdown
Given the financial problems Europe, as
well as the troubled America, global
economies have been impacted and
could lead to a slowdown

Changing consumer
preferences
The brand faces threat from other
competitive everyday brands in terms of
pricing as well as availability



PORTERS FIVE FORCES
ANALYSIS

INDUSTRY
RIVALRY
Take over
market share
for competitor
BUYER
Buyer power is not
strong
SUPPLIER
Distribution
hub changed
NEW ENTRANTS
Capital investment,economic
scale
SUBSTITUTE
PRODUCT
Competitor
apply

BARGAINING POWER OF
CUSTOMERS
(LOW)
Burberry check pattern became signature trademark for customers.
Burberry
check pattern
Segment to niche market and positioning its brand from young to old (25-
60)

The pattern changed the customer base from the soldiers to politicians,
celebrities and famous adventurers
Customers
Expansion of brand with licensing and franchising, spreading the brand all
over the world.
Thus, brand grew all over the world and customer base was spread all over
Brand was sold and flexible at different locations at different prices
depending on locations.
Licensing and
franchising
BARGAINING POWER OF SUPPLIERS
(MODERATE)
For leather, the company joined the BLC leather working group
Understand impact of tanneries and thus the brand invest in environmental
standards within the leather industry.
LEATHER
Increasing demand of Burberry trench coat results into increase in
suppliers all over the world
Burberry only sources fur from places which are very well known for
maintaining high standards of ethical treatment of animals.
FUR
Burberry previously used Uzbek Cotton as a raw material which was
imported from Uzbekistan cotton industry
After the news of child labour used by cotton factory they removed it from
supply chain.
COTTON
There is high bargaining power of suppliers in relation to leather and fur as
it is very demanding.
HIGH BARGAINING
POWER
THREAT OF NEW ENTRANTS
(WEAK)
It is defined as luxury brand and consider as fashion
icon status for niche people.
LUXURY
BRAND
Customers are loyal to brand as this brand shows
britishness i.e. the customers U.K culture in their
products
DEMOCRATIC
POSITIONING
Customers are buying product since their grand
ancestors so they have trust in the brand.
No threats to brand because their market is niche and
different
LOYAL
CUSTOMERS
COMPETITOR RIVALRY
(MODERATE)
Polo Ralph Lauren and Coach
Polo is more in apparel and coach into accessories
Price of polo is less than Burberry and also it is not into niche
segment.
Coach holds only 6% of market share in accessories which is less
than Burberry
LOW
COMPETION
RIVALRY
Armani and Gucci
Armani price is same as Burberry but holds higher position in luxury
brands than Burberry.
While, Gucci has more option and wide variety in accessories with
almost same price of Burberry
HIGH
COMPETION
RIVALRY
Burberry has adopted continuous fashion.
The brand keeps continuous check of Armani and Gucci and try to be
in their league.
BURBERRYS
VIEW
THREAT OF SUBSTITUTES
(WEAK)
Niche alternatives to retail of ready-made clothes.
Include buying directly from manufacturers,
especially with the growth of online sales.
Homemade and
couture clothing
A significant threat to revenues
Counterfeit
clothing
Individuals live in, coupled with the need for
individual and group identity, makes luxury retail
clothing essential to consumers.
Socio-political
environment
Hence,overall threat of substitute is weak.
CONCLUSION
With a key strategy of brand extension and its very British
image Burberry soon became popular in US and Asian
markets.

Burberrys adoption of related diversification had led to its
success.

The studies also shows the strategy should be adopted in
proper times by a lot of analysis and the success criteria needs
to be analyzed before executing any strategy.



RECOMMENDATIONS
Burberry can adopt focus differentiation by providing high perceived goods
with superior quality and new designs, which justifies the premium price.

Market penetration can be done by increasing the market share or by
developing competitive advantage or by growing the total market size.

Product development can be done by appointing new young designers and adding
value to the new products by famous celebrity endorsements.

The vertical integration can be done by acquisition of the textile industries
supplying raw materials or by acquisition of rival companies like Gucci.

Methods of Joint venture/ Alliance can be used for horizontal integration by
contractual relationship with high end sports car brand for the production of its
merchandises.

THANK YOU