“Burberry believes that to be a great brand, it must also be a great company”2. The company is constantly working to ensure business practices evolve in line with these principles (Protect,Explore and Inspire) by empowering its creative thinking culture for positive outcomes at all levels.3. I will give just few examples Under Protect Principle, Over 70% of Burberry Foundation employability programme graduates obtained employment or re-entered education Under Explore Principle, Over 750 audits, visits and trainings were conducted in the global supply chain Under Inspire Principle, 3,000 Burberry coats were donated to disadvantaged young people worldwide
Strategic Objectives, it is an organisation’s aim which will help to achieve its strategy successfully1. Burberry have used technology to keep all their markets globally on the same page 2. Burberry has put more focus on opening new stores in areas that suit the demographic of their customers
CSR, a self regulatory mechanism which help businesses monitor and ensure their engagement with the law, ethical standards and international norms. CSR helps to embrace business responsibility for their actions and encourage positive impactBurberry is socially responsible because they are maintaining well all of their 5 main aspects of CSR.I will explain only Two:People, Burberry raised the pay off at the Wales plant closure for Treorchy employees to maintain their reputation.Ethical Trading, – Stopped one of the handbag production in Chinese factory and Burberry is also a member of the Ethical Trading Initiative. )
On the Company Financial Performance I am going to talk on two ratios:Current ratio: Which is of current assets and current liabilities. It measures liquidity of the company. (It is the company’s ability to pay off its short term debts by selling their current assets) 1,72:1 this means that to 1 liability Burberry has 1.72 assets and would be able to pay off its short term debts. (that make Burberry a liquid company).2. Gearing ratio: Which is a financial ratio which demonstrates the degree to which the firms activities are funded by the owners fund versus creditors fund. It is recommended for company’s to have a ratio lower than 50%. Lower ratios show that most of their investments come from shareholders, this is safer for the company. This also means that a low proportion of their profits is used to repay loans and a large proportion is used to reinvest or pay shareholders.
Operating profit has risen year on year despite the recessionBetween 2005/06 and 2009/10 operating profits increased by SEK 10 million.The figures have been affected by cyclical factors ie weather, changes in fashion, as well as bigger factors ie climate change & factors in production companies.Figures may also have increased due to introduction of online shoppingExternal environment was the main determining factor on this year’s financial results, Operating profit decreased 12% to£181m, while diluted EPS declined 4% – both of these on an adjusted basis
On this slide I am going to explain Burberry’s Environmental stability using PESTLE AnalysisPESTLE stands for Political, Economic, Social, Technology, Environmental and LegalToday I will focus only on: 1. Tax: Change of Government, Law and Legislations, such as the hike of VAT from 17.5% to 20% or Spending cut on the wide scale of public sectors resulted into household less disposal income2. Economic:Global economic downturn led investors to loss confidence, investors they normally come to make money using resources and labour within the country, this situation cause more people to loss job
This Porter’s Five Forces diagram is used to illustrate Burberry’s attractiveness by analysing, Threat of new entrants, BuyerPower Threatofsubstitute, SupplierPower and Competitiverivalry
Today I am going to talk on just two forces which can analyse how competitive Burberry is: 1. Threat of new entrants (Low)Expensive to enter, and the brand is well established name2. Competitiverivalry(High) Sector is intense and highly competitive. High profit margins and worldwide recognition pushes each company further to outperform each other.
This diagram shows the competitive strategy currently adopted by Burberry using Porters Generic Strategy. The company is following Differentiation Focus Strategy, they innovate, design and produce high quality design/ brand to cater across celebrities, wealth people, loyal and some royal families' ages and lifestyle which is their strong base.Should offer goods with high perception, new designs and superior quality to be able to justify premium price Price gives Burberry’s customers psychological effect, consumers believe that a lower price for a brand means low quality
Using Ansoff Matrix we are able to see that, Burberry is currently using all growth vector components as you can see on the slide,But today I will explain only two:Market Penetration:By increasing the total market size and share using existing products to the existing market through digital advertisements (Face books Twitter, etc) they also use fashion show to promote enhance design innovation.2.Market developmentBy increasing inventory of products to the existing market to provide wide choice for their customers by using E-commerce and opening new storesaround theworld, both franchise, licensing and partnership. By being a market leader in digital innovation. Instead of trying to embed live personal shoppers or custom sound tracks into the online experience, Burberry is bringing the best elements of Burberry.com into the recently opened London store on Regent Street. The aim is to blend the online and offline environments to create a more immersive and intelligent brand experience.
The Company is currently using an internal (organic) method of growth which has been achieved by in-house expertise and skills for innovation and advertising its businessAlso by using variety means of networking such as website, face book and twitter to get to know their customers and increasing their retail shops
I will use SPACE Matrix toanalyse Burberry’s Strategic Position:The Company is in a strong position financially, there is no long term debts and shall be able to sell shares.Burberry is stable environmentally, it was quick to respond from environmental feedback by exploiting opportunities around disasters (refer to PESTLE analysis)The industry is attractive - strong (refer to the Porter’s Five Forces Analysis)The Company is Strong on the Competiveness position (Burberry is quite competitive against their rivals because of aggressive innovation processes (Fashion show streaming, website launch), advertising with superstars, etc)* The posture says what the company was doing or should be doing. Overall Burberry PLC adopts Aggressive posture because of Low gearing ratio, High current ratio and Sales are constantly increasing as well as Profit which enables the company to take full advantage of opportunities to exploit new opportunities (Entered Chinese Market, franchising and acquiring others) for expansion and technology advancements to improving and extend their product lines Focus on learning and innovation – Burberry foundation, constant employee training, suppliers audits, website, fashion show streaming.
1. BURBERRY COMPANY 1 TEAM: SET FOR LIFE-5 NAMES: 1. FAITHFUL ABEL 2. HEATHER MASON 3. ROKAS KASEVICIUSSTRATEGIC MANAGEMENT - M3N209277 Monday, 11 March 2013
2. Burberry Overview 2 Founded by Thomas Burberry in 1856 with the aim of producing innovative functional outwear. Invented water resistant material - gabardine An Iconic British global luxury brand By end of June 2012, globally had 196 retail stores, 207 concession, 48 outlets and 58 franchise Average turnover of past 5 years of £1,367,060,000 Sells apparel, non-apparel and luxury products Burberry (2012a) STRATEGIC MANAGEMENT - M3N209277 Monday, 11 March 2013
3. Burberry Core Values 3“The Company believes that to be a great brand, it must also be a great company”  Protect  Explore  Inspire Burberry (2012b) Burberry FoundationSTRATEGIC MANAGEMENT - M3N209277 Monday, 11 March 2013
4. Strategic objectives 4 Burberry’s five main strategic objectives: Leverage the franchise Intensify non-apparel Accelerate retail-led growth Invest in under-penetrated markets Pursue operational excellence Burberry (2012a)STRATEGIC MANAGEMENT - M3N209277 Monday, 11 March 2013
5. CSR Approach 5 Burberry focuses on 5 aspects of Corporate Responsibility  People  EthicalTrading  Community  Sustainability  Governance “Helping young people realise their dreams through the power of their creativity” Burberry (2012b) Burberry (2012c) Ethical Trade Initiative (2012) Financial Times (2007) The Guardian (2012)STRATEGIC MANAGEMENT - M3N209277 Monday, 11 March 2013
7. Burberry Finance 7 Burberry Five-year Summary Change in Pre Tax Profit of Burberry and Gucci 1000.00% 800.00% 600.00%Percentage 400.00% 200.00% Burberry Gucci 0.00% -200.00% 2007 2008 2009 2010 2011 -400.00% -600.00% Year STRATEGIC MANAGEMENT - M3N209277 Monday, 11 March 2013
8. PESTEL Analysis 8 Economic SocialPolitical/Legal Global economic People Tax downturn/ Recession Community Technology Environmental Environmental E-commerce Protection Law Networking Burberry, (2009) Campbell et. Al. (2011b)STRATEGIC MANAGEMENT - M3N209277 Monday, 11 March 2013
9. Porter’s 5 Forces Analysis 9 Threat of new entrants Supplier Competitive Buyer Power rivalry Power Threat of substituteCampbell et. Al. (2011c) STRATEGIC MANAGEMENT - M3N209277 Monday, 11 March 2013
10. Five Force Analysis-Burberry 10 Buyer PowerThreat of new entrants (LOW-MEDIUM) (LOW) . Most of wealth customers are. Well established brand name insensitive to price. High capital of investment . High rivalry. Expensive to enter. International trades Competitive rivalry (HIGH) The sector is intense and highly competitiveSupplier Power (LOW) Threat of substitution. Able to change supplier (LOW-MEDIUM). Uses variety of suppliers . Establish/known globally. Owns some suppliers . Unique brandSTRATEGIC MANAGEMENT - M3N209277 Monday, 11 March 2013
11. Competitive Strategy (Porters Generic Strategy) 11 Burberry follows Differentiation Focus Strategy Awarded two Royal warrants Won many awards for its design, such as 2010 British Fashion Award Use celebrities endorsement Leaders in CSR approachMindtools (2012) STRATEGIC MANAGEMENT - M3N209277 Monday, 11 March 2013
12. Strategic Direction of Development (The Ansoff Matrix) 12Market Penetration Product Development•Digital advertisement •Partnerships with•Fashion show promotions designers•Enhance design innovation•Communications •New collections every functions season • Expands product portfolioMarket Development Diversification•Market leader in digital •Uses digital and social innovation and e-commerce media to promote the brand•Global Company, new stores around the world, both •Search for opportunities franchise and licensing to enter new markets. Carlwestonmarketing (2012) STRATEGIC MANAGEMENT - M3N209277 Monday, 11 March 2013
13. Methods of Development 13 Internal Development External /Organic•Use in-house expertise and skills •The brand operates in the global luxury goods to advertise its business market - Europe, America and Asia Pacific•Utilise the existing skills for •Franchise with variety regions across the innovation world (emerging Markets) China, India, Russia, Eastern Europe and the Middle East•Use of variety means of networking such as website, •Signed a joint venture agreement with Facebook and twitter to get to its Japanese licensing partner to develop the know their customers distribution company’s international non- apparel products in Japan•Increase retail shopsSTRATEGIC MANAGEMENT - M3N209277 Monday, 11 March 2013
15. References 15 Burberry (20o9), “Full Annual Review” online at http://annualreview2009- 10.burberry.com/pdf/full_annual_review_2009_10.pdf [Accessed 7 November 2012] Burberry (2012a), “Full Annual Report” online at http://www.burberryplc.com/documents/fullannualreport/burberryar2012.pdf [Accessed 8 October 2012] Burberry (2012b), “Corporate Responsibility – Great Brand Great Company” online at http://www.burberryplc.com/corporate_responsibility/great_brand_great_company [Accessed 15 October 2012] Burberry (2012c), “Store - Foundation” online at http://uk.burberry.com/store/foundation/the-foundation/ [Accessed 15 October 2012] Burberry (2012d), “Full Annual Report” online at http://www.burberryplc.com/documents/fullannualreport/burberryar2012.pdf [Accessed 8 October 2012] Burberry (2012e), “Fashion Review” online at http://www.fashionreview.co.uk/burberry-fashion/ [Accessed 5 November 2012] Campbell, D., Edgar, D., Stonehouse, G. (2011), “Business Strategy: An Introduction”, 3rd edition, England, Palgrave. Carl Weston Marketing (2012) online at http://carlwestonmarketing.files.wordpress.com/2012/05/the_ansoff_matrix.jpg [Accessed 16 November 2012] Ethical Trading Initiative (2012) online at http://www.ethicaltrade.org/about-eti/our-members [Accessed 1 November 2012] Fame (2012) online at http://fame.bvdinfo.com/version2012104/Report.serv?_CID=47&context=2O1M83139O6RU3L [Accessed 8 October 2012] Financial Times (2007) online at http://www.ft.com/cms/s/0/6105ae9e-c92d-11db-9f7b-000b5df10621.html#axzz28d9RU1Tn [Accessed 3 October 2012] Financial Times (2009) online at http://www.ft.com/cms/s/0/107c276a-e75c-11dd-aef2-0000779fd2ac.html#axzz29Yhrxc5Y [Accessed 3 October 2012] Mind Tools (2012), “Porters Generic Strategies - Choosing Your Route to Competitive Advantage” online at http://www.mindtools.com/pages/article/newSTR_82.htm [Accessed 5 November 2012] The Guardian (2012) online at http://www.guardian.co.uk/business/2012/sep/18/burberry-handbag-chinese-factory-ethics [Accessed 3 October 2012]STRATEGIC MANAGEMENT - M3N209277 Monday, 11 March 2013