Strategic Analysis of Burberry

The scope and direction of an organization’s development constitute strategic growth. Resource and proficiency deployment, which enable an organization to gain a competitive advantage, also represent tactical planning. A keen analysis of both the internal and external environment is required, with emphasis on the current market. This analysis needs to consider factors such as the availability of resources, business-level strategy, market position, and strategic management.

The three PESTEL factors that should be considered by Burberry include:

1. Exploring the external environment
2. Identifying opportunities and threats facing the company
3. Understanding the industry’s definition and structure

Burberry should identify key success factors and conduct a situational analysis. Opportunities are external conditions that can be exploited to help a company achieve strategic competitiveness (Hill et al., 2014). The organization also faces various external forces that will critically determine its success.

Porter’s Five Forces include:

1. Bargaining power of suppliers
2. Threat of new entrants into the market
3. Competitive rivalry within the industry
4. Threat posed by substitute goods
5. Bargaining power of consumers

Burberry should consider all these factors in its strategic analysis.

Issue One: Strategic Brand Management

The first issue facing Burberry PLC is strategic brand management. The firm operates in an environment characterized by stiff competition from other firms. The prevailing global trends create a scenario where the company needs to develop a strategy to establish a strong, appealing brand for customers.

In particular, the organization must diversify its brand to secure its operations. The inability to effectively manage the company’s brand could jeopardize its competitive edge in the long run. Brand management is a critical aspect for any business seeking to remain relevant in the market, despite economic fluctuations (Phan et al., 2011, p. 220). Consequently, brand management presents a significant strategic issue for Burberry PLC.

Issue Two: Market Positioning

The second strategic issue faced by Burberry involves market positioning. The changing dynamics of the fashion industry pose a major challenge for the organization. Over the years, new firms have entered the luxury fashion sector, intensifying competition.

Burberry has been in operation for over a decade, and it remains a key player in the luxury brand market. However, despite its classic and luxurious reputation, the entry of new competitors threatens Burberry’s market position. The company must continuously address market positioning to safeguard its brand presence while maintaining its market share in the fashion industry (Wigley et al., 2013, p. 260).

Issue Three: Business Growth and Diversification

The third strategic issue for Burberry PLC is ensuring growth across all business sectors. For instance, Burberry introduced a strategy focused on expanding its non-apparel product segment and allowing customers to purchase items through live-stream fashion shows.

Burberry’s ability to expand and achieve sustainable growth depends on diversification into new ventures. The company must capitalize on emerging opportunities, despite potential challenges. Ensuring strategic growth is an essential issue that Burberry must continue addressing (Wigley et al., 2013, p. 250).

Porter’s Five Forces and Competitive Landscape

Burberry PLC must contend with the threat of competition. It is critical to acknowledge that the fashion industry operates within a product life cycle, meaning that fashion trends continuously evolve.

Burberry’s key competitors include Armani, Polo, Coach, and Gucci. These brands are leaders both in the United Kingdom and globally (Moore & Birtwistle, 2004, p. 415). Thus, Burberry must develop a strategy that allows it to maintain a competitive advantage, despite intense rivalry.

Fashion products introduced by Burberry must align with customer preferences, ensuring they remain appealing and innovative.

PESTEL Analysis – Economic Factors

The global economic crisis significantly affected consumer spending patterns. As Burberry specializes in luxury products, economic downturns pose a major challenge to its sales.

During economic crises, customers opt for affordable alternatives, reducing demand for luxury brands. This trend has a direct impact on Burberry’s market share and profitability.

The economic downturn also led to higher unemployment rates, decreasing consumers' purchasing power. As a result, demand for Burberry’s premium products declined, affecting overall revenue generation.

Economic factors are, therefore, essential determinants of Burberry’s long-term growth and sustainability.

Internal Factors and Organizational Strategy

Burberry must streamline internal operations to enhance efficiency and profitability. The company must develop strategies that optimize business processes to ensure sustained growth.

Various internal factors must be considered to ensure long-term success. These include:

• Operational efficiency
• Workforce productivity
• Supply chain management
• Sustained innovation

By addressing these internal factors, Burberry can achieve a competitive edge while ensuring continued market relevance.

Resource and Capability Utilization

Firms and businesses must understand how resources and capabilities impact performance. Income comes from productive assets, while capabilities define what the organization can achieve.

Burberry’s internal resources and capabilities are the primary determinants of its sustainable competition and growth. The successful exploitation of firm resources is crucial for expansion and profitability.

Following restructuring efforts, Burberry recovered from the 2008 economic crisis. A holistic evaluation of Burberry’s resources and capabilities highlights the challenges it has overcome to achieve its current market position.

Burberry successfully reclaimed its presence in the hypercompetitive fashion market, largely due to its strong retail resources and strategic expansion of outlets.

Tangible and Intangible Resources

Organizational resources exist in tangible and intangible forms.

Tangible Resources

• Physical assets – Stores, factories, and supply chains
• Labor force – Skilled employees and management teams
• Financial assets – Capital investments and revenue streams

Intangible Resources

• Brand reputation – Established luxury identity
• Intellectual property – Trademarks and copyrights
• Customer loyalty – Repeat clientele and strong market presence

Intangible assets contribute more significantly to Burberry’s net worth than physical resources. Burberry’s historic achievements further enhance its brand prestige, increasing its market valuation.

Through strategic planning, Burberry can leverage its financial capabilities to achieve organizational goals and stakeholder value (Hill et al., 2014).

Conclusion

Burberry must continuously adapt its strategic planning to maintain market leadership. By addressing brand management, market positioning, and growth strategies, the company can achieve long-term success.

By optimizing resource utilization and supply chain efficiency, Burberry can expand globally while maintaining profitability and market dominance.

References

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