Managing International Business: Burberry - Assignment Example

Business Strategy Contents Task 4 A 4 B 5 Task 2 6 A 6 Pest analysis 6 Porters 5 forces 7 Swot 8 B 8 Task 3 9 A 9 B 11 Task 4 12 A 12 B 12 C 14 References 16 Task 1 A Burberry is a London based luxury fashion house. It was founded in the year 1856. Trench court is the most famous product of Burberry. It is listed with London stock exchange. Burberry has good balance of distribution consisting of retailing, wholesale and licensing. It is having worldwide presence and is having more than 9000 employee around the world. It recorded £1,998.7 million revenue in 2013 while net income was £259.2 million in 2013. Burberry is also having very suitable vision statement which states that the company is having pure brand vision. It is connected very closely and united with cross cultural collaboration and also encourage creative thinking and intuitions. Burberry has very clear cut vision regarding giving back something to society. Its vision statement shows that company gives lots of importance to different CSR activities. According to the mission statement of the company it is very clear that it gives lots of importance to disciplinary matters of execution. Constant evolution is also a very integral part of the company. Its mission statement shows that the organization focuses on maintain good balance among its all different channels of distribution. Thomas Burberry was the founder of the company. The concern is performing very well in the London stock market the company is giving dividend continuously for the last seven years. Share price of the company is also very high and is having a very reach history and heritage in luxury fashion industry. The goal is to have a sustainable and profitable growth in long run for having a consistent growth in increasing the brand value and position in the market on a constant basis. It is well known to achieve its goals been set for achieving the excellence in operations and also in the market by providing best quality and designs for the customers from last many years. These goals of the company is basically been set based on the future plans by the company and having a forecast for the future to become globally known good fashion brand in the fashion industry. To achieve these goals the company has set up some of basic objectives to achieve on a constant basis. The objectives are generally been set for achieving short term things. It focuses a lot on coming up with latest designs and good quality dress materials for the customers for every season in every individual country. The objective is been set to gain financial stability in future to gain long term success in business operations across the globe. Thus there is a small difference between the goal and the objective of Burberry as objectives are the one based on which the company will be able to achieve its goals in long term future. It looks to perform and fulfil its objectives on an efficient way to make sure that they stay on line for achieving the goal in long term. B Here in this part of the business strategy BCG Matrix of Burberry will be done. The matrix is having four different dimensions. All those dimension of the matrix will be discussed. Stars: These are the products of Burberry which is having high market share and high market growth. All the non apparel products of the company are recently having very high growth and market share. Now the whole product category increased by 10%. Especially large leather items have recorded a god growth of almost 30%. These star products fared very well in Asian market. Cash Cows: These are the products of Burberry which are having high market share but low market growth. Burberry is having very high market share of their women wear. But their growth in this section is very slow and low. Question marks: These are the products of Burberry which is having low market share but market growth is very high. Children wear is growing by impressive 37% but the revenue is only 5% from this product. The company’s children wear is having high potential in the market. Dogs: These are the products of Burberry which is having both low market share and growth. Men’s wears of Burberry are this kind of products. Men’s wears of the company are losing their market share and their market growth is also declining heavily. These kinds of products of the company are eating up more money to earn very little profit. Task 2 A Here in this section of the strategy organizational and environmental analysis will be done with the help of Pest analysis, Porters 5 forces and Swot analysis. Pest analysis The company operates in many countries including different developing markets. All these countries have different laws, regulations, taxation, accounting standards and environmental rules. It faces serious problem in developing countries where copyright law is very poor. Unstable government and civil unrest is a serious political in stability in different foreign country (Coleman, 1988, pp. 123-127). The company earns lots of sales from its customers travelling internationally or in domestic market. As the economy grows disposable income of people also grows and they can purchase more and more products of the corporation. Social factors of different countries are very different from one another. The company is having presence in almost every continent in the world. Cultures and life styles of each and every country are different. It has recognized the factor very well (Shapiro and Glicksman, 2004, pp. 133-136). Introduction of technology has increased the effectiveness of the company. Advertising and marketing has changed with modern change technology. Uses of internet and television been increased significantly. It has made different products more and more attractive. Porters 5 forces The company faces high buying power from customers. There are lots of options for buyers. Buyers can shift from one brand to another brand very easily. Switching to another brand is very easy. Power of suppliers is very low. Different raw materials which are required are very easily available in the market. It does not depend very heavily on a single supplier or a group of suppliers. There are lots of options for the company (Fitzroy and Herbert, 2007, pp. 156-162). Competition in the industry is very high. As there are other very reputed brands are present in the market. All those brands are having very high brand equity. Some of the very serious competitors are Louis Vuitton, Prada and Ralph Lauren (Reuvid, 2012, pp. 145-152). Threat from new entrant is low. The industry needs significant investments and distribution channels. It is very difficult for any new entrant to invest so much of many and taking that much of risks. Threat from substitute products is high. Any luxury brand purchase means discretionary spending is involved over there. Innovation and creativity is regular in this industry so the company faces high threat from substitute products. Swot The company is having great brand image and reach history and is having superior quality of product design and is also having huge global presence. It is having a very exclusive luxury market (OaShaughnessy, 1995, pp. 167-171). Huge growth is creating huge pressure on supply chain management. Limited target market is a serious weakness for the company. The product segmentation is weak in case of men’s. Experience in supply chain management is also a big weakness for the company (Coade, 1997, pp. 178-182). Developing markets are having huge growth opens lots of opportunities for the company. It can develop new products. E commerce can provide huge opportunity. Global financial slow down can be a big threat and competitors are also very huge threat for the company. B Every company has got certain number of stakeholders. They are the members who help in the growth of the company and also move along with the organization to have their own growth. Stakeholders for the Burberry Group Plc. include many commodities like the social community, employees which include the fashion designers, the models, makeup artists and other crew members, the shareholders, customers, suppliers etc. Burberry Group Plc. look to provide good quality latest design fashionable clothes to the customers on regular basis to enhance the style statement of the customers and also provide them with good quality dress materials at an affordable rate (Wright, 2006, 65-74). This way it also helps them in building their social status in the society. It is involved in many corporate social responsibility activities to help in the improvement and growth of the society. It does follow all the rules and regulations that are been set by the government of that particular country and also pays the taxes in time helping the government to also develop (Burberry Group Plc., 2014). The suppliers do play a vital role in the fashion industry for all the companies. Burberry Group Plc. looks to set good and long term relationships with the suppliers so that they can avail good quality goods and materials on constant basis and there is not conflict between the company and the suppliers. The employees in all the forms are been take special care by providing all the good facilities to them on a constant basis so that they and their family can lead a happy and comfortable life. The stakeholders do also help in the growth of the company (Burberry, 2012, pp. 4-6). Task 3 A Here in this section Ansoff matrix of Burberry will be discussed. Market penetration strategy is a strategy where the company would penetrate in the existing market with the help of existing products. Winning more and more customers and up grading the distribution channel plays very important role for Burberry (Kozami, 2002, pp. 90-97). The company peruse its current users heavily. It has under gone £50m cost efficiency program to penetrate more into the existing market. It has increased manufacturing process. It has maintained very close relationship with existing customers. It also helped to earn more from the existing market. Market development means opening new market with existing products. It has done its market development in China, Middle East and India and has used all distribution channels like retail, licensing and wholesale to optimize all opportunities. It added 20 new stores in Emerging Markets. Among them 13 store were situated in China and 6 stores were opened in Middle East. In North America also it has developed new market. Burberry opened its joint venture in Japan where accessories market is the largest in the world. Product development strategy means launching a new product in existing market. This helps the company to maintain consumer awareness, increase profits and drive growth. It focuses on less penetrated non apparel products to their existing markets. It would help the company to strengthen its position in the existing markets. It faces medium risks from these strategies. Non apparel products are very hit for the company for consecutive three years. Diversification will lead to selling new products in new market. The company has great history of entering new markets and introducing new products. It achieves great benefits from an array of product and brand diversity. It has helped to enhance more and more consumer attention. Risk is high for the strategy as the company has to find a right balance of new product and place. It poses threat as Burberry is deviating from its core competency which is to make apparel. But the return they are getting from this strategy is very high. B According to me diversification strategy will be good for Burberry. It will help Burberry to create new market and will be able to earn more revenue out its new products. It must use this strategy and should go for limited growth. Diversification associates lots of risks with it. Burberry must diversify very professionally and in cautious way for its limited growth. It would certainly minimise the risk associated with the strategy. It should eye for limited growth to minimise the risk of diversification. If the company eyes for substantive growth it has to diverse more and more in that case that diversification will be very much risky. To avoid that much of higher risk it must eye for limited growth. Diversification needs lots of investments. The company must invest in a very calculated manner. It is good for Burberry to go slow but steady. It has to come up with market research before coming up with any new product (McLoughlin and Aaker, 2010, pp. 123-129). It has to do extensive research before opening business in new market. Burberry has to recognize the consumer buying behaviour of new place. It has to analyse the demand of the product and must launch according to that. Reckless diversification can be very counterproductive. Limited growth is the only way by which Burberry can grow but risks are limited. Diversification is having its own elements of risks. Limited growth strategy will cap the risk to a certain limit. Burberry is earning good revenue out of its non apparel products. It shows that company is getting success with this product diversification. These kinds of well calculated diversifications are advisable. It may not give substantive growth to the company but risk will be less and the organization will enjoy a limited but steady growth (Hill and Jones, 2009, pp. 65-69). Task 4 A Burberry uses the strategy of diversification to attain limited growth in its business operations. It has made serious attempts to diversify into non apparel fashion products and explore new markets with such products on continuous basis to get a good amount of sustainable growth in its business operations. The strategy has many roles to play in the limited growth of the company as it provides new opportunity to explore on continuous basis and also increases the product line for the company. This does hold responsibility in improving the brand awareness in new markets thus increasing the number of customers for Burberry (Pride and Ferrell, 2011, pp. 34-42). As a result of this Burberry gets a good increase in the number sales and thus the revenue of the company keeps increasing on a constant basis. This strategy will also help the organization to achieve its goal of becoming a well known fashion brand in the global market and get a huge competitive advantage over the competitors in the same industry. This strategy of diversification into new markets with new innovative and creative products does provide a huge range of opportunity on a constant basis. This will help the company to have a limited growth but a sustainable growth without any stoppage and thus the organization will be able to achieve its goals in a successful manner. With this kind of strategy Burberry can also become one of the leaders in the fashion industry. His will not only help in the growth but the stakeholders of the company will also be benefited from this strategy in a huge way. B The resources needed for the implementation of this kind of strategy are of huge numbers. First of all the major requirement is the market analysis report of the new market based on which the market situation of the particular location can be analysed on a good way. This analysis report will help the company in getting a good idea about the customer’s perception and also their preference. It will help them to provide products that are liked by the customers thus achieve good customer satisfaction level. Next requirement will be the data about the buying behaviour of the customers and also the factors that influence the customers to buy products. The customers liking and buying behaviour will help the company in knowing which new product it needs to develop for launching in the selected market (Kotler, 2001, pp. 34-45). The amount of technology development in the location is also very crucial as it will help in deciding the type of promotional activity that the company needs to do. The political and the legal rules and regulations of the government are also to be analysed to understand the political situation in the country and to decide whether it is feasible to enter the market or not. A good market survey should be done to understand the needs and demands of the customers on a constant basis so that the company is able to focus over that particular direction and look to provide the product that is been liked by the customers and meet their expectations. The resources also needed will include the information regarding the transport facilities found in the market which will affect the overall supply chain of the company. The effective transport system will help the company is successfully distributing the materials in the new location. The resources information will help the company to plan in a proper way so that it can be able to enter the new market in an efficient and effective manner and also be able to capture a good share of market even by entering new market with new products. C The Gantt chart clearly shows that the way the company can plan its activities to enter a new market and also develop a new product and launch that new product in a new market. The overall activities will successful end and Burberry will achieve its objective of successfully exploring new market by the end of 2 years. By then it will start to create a good impact of its presence in the new market and also be able to attract most number of customers on a constant basis (Clark, 2012, pp. 76-84). Activities Months   1st-3rd month 4th-7th month 8th -11th month 12th-15th month 16th-18th Month 19th-22nd month 21st-23rd month 24th month Market Survey & Market analysis                 New product & Company Testing development                 Sample Providing & Feedback                 promotional activities                 Distributional channel                 Product distribution along the channel                 Customer feedback                 Achievement                 References Burberry Group Plc.. 2014. About Burberry. [Online]. Available at: < http://www.burberryplc.com/about_burberry>. [Accessed on 2 June 2014]. Burberry. 2012. Annual report 2011/12. [Pdf]. Available at: < http://www.burberryplc.com/documents/full_annual_report/burberry_ar_final_web_with-urls_indexed.pdf>. [Accessed on 2 June 2014]. Clark, W. 2012. The Gantt Chart: A Working Tool of Management. India: Nabu Press Coade, N. 1997. Managing International Business. London: Cengage Learning EMEA. Coleman, W. D. 1988. Business and Politics: A Study of Collective Action. Toratnto: McGill-Queens Press. Fitzroy, P. and Herbert, J. M. 2007. Strategic Management: Creating Value in a Turbulent. New York: World. John Wiley & Sons. Hill, C. and Jones, G. R. 2009. Strategic Management Theory: An Integrated Approach. New York: Cengage Learning. Kotler, P. 2001. Marketing Management. London: Prentice Hall. Kozami, A. 2002. Business Policy and Strategic Management,2e. New Delhi: Tata McGraw-Hill Education. McLoughlin, D. and Aaker, D. A. 2010. Strategic Market Management: Global Perspectives. Madrid: John Wiley & Sons. OaShaughnessy, J. 1995. Competitive Marketing: A Strategic Approach. New York: Routledge. Pride, W. and Ferrell, O. 2011. Marketing. Stamford: Cengage Learning. Reuvid, J. 2012. Managing Business Risk: A Practical Guide to Protecting Your Business. New York: Kogan Page Publishers. Shapiro, S. A. and Glicksman, R. L. 2004. Risk Regulation At Risk: Restoring A Pragmatic Approach. New York: Stanford University Press. Wright, R. 2006. Consumer Behaviour. Stamford: Cengage Learning. Read More