Strategic Development at Burberry - Case Study Example

The Burberry company utilizes three channels to market and distribute its products to its customers. These include; wholesale, licensing, and retail marketing. In order to analyze factors that are outside the industry in which Burberry operates, Porter's five forces model may be utilized. The model identifies the nature of competition in the industry as well as areas of improvement for the company to be more profitable and competitive (Prakash, 2014).

1. Barriers to entry (High/Medium/Low)

The most common barrier that may be faced by new entrants includes; cost of entering this industry is very high given the fact that there has been new technological advancement. Secondly, Burberry tends to have a cost advantage and well-established channels for distributing its products. The cost advantage may act as a major entry barrier to the new firms. Further, Burberry has well-differentiated products such as; Trench coats that its competitors may not be able to emulate. However, the fashion industry tends to be very dynamic. This means that entry barriers are low and therefore, Burberry should work to increase internal and external strength to compete with new entrants more efficiently and effectively (Totallyan, 2011).

2. 
   Supplier Power (High/Medium/Low)

            Burberry Company needs to have numerous suppliers than it has currently. There is a need for the company to have numerous suppliers so that in case one supplier fails to deliver raw materials for manufacturing fashion products another supplier may be contacted. This may help to reduce losses emanating from prompt delivery of raw materials. In addition, having numerous suppliers may ensure that there is a seamless flow of products into the fashion market (Merrill, 2008).  

3. Buyer Power (High/Medium/Low)

            In this case, buyer’s power is relatively high in the fashion industry under which Burberry is operating. This is because the numbers of large players are increasingly making it possible for buyers to switch to brands produced by other companies. However, most of the new entrants do not have differentiated products as compared to Burberry Company. This provides Burberry a competitive advantage over its competitors because of customers' brand loyalty. In addition, the buyers are well informed about the products produced by Burberry. This tends to influence their power. Moreover, economic forces such as inflation may affect buyer’s power whereby, during inflation buyers' power tend to below as they become more sensitive to higher price changes (Kotler, Keller, and Lu 2009).

4. Substitutes (High/Medium/Low)

            The threat of Substitutes is relatively low in the industry where Burberry is operating. In this case, the threat of substitutes may be impacted by factors such as higher switching costs. The cost of switching from fashion clothes produced by Burberry to those produced by other companies may be very high. This may make customers unable to substitute and hence making the threat of substituting g to products produced by other companies to be substantially low (Merrill, 2008). 

. 
5. Competitive Rivalry (High/Medium/Low)

            The main Burberry competitors include; Polo, Armani, and Gucci Coach. The companies compete in three sections namely; men's wear, accessories, and women's wear. Gucci Has a higher competitive advantage over the other two companies in the accessory section. It has been reported that, unlike Burberry and Polo, Gucci charges low prices for its accessories. In addition, the company has more customers in accessories than its competitors. On the other hand, Polo has a higher market share for Apparel than Burberry however; its market value is lower than that of Burberry. Armani is another major competitor with Burberry, it has been reported that this company has a large market share in luxurious brands as compared to Burberry (Henry, 2011).