Analysis of Burberry’s industry andcompany strategyYouranalysis of the industry shouldexplore the forces that shape industry returns. These forces would typically include competitors, customers andsuppliers. The analysis should alsocritically explore Burberry’s strategy in the light of competitors’ plans.Burberry’sstrategyBurberry has five keystrategies: – Productfocus. Their focal point is on key product categories. They want to improvestore collections and make product offer less complex.- Productivespace.
Advance end-to-end retail disciplines to run retail output, through a several-yearretail superiority programme, which targets service improvement, customercultivation and investment in in-store activities.- E-commerceleadership. Carry on sector dominant innovation in rapidly growing channel.
– Operationalexcellence. Advance the performance of the most important processes, achievingsavings through procurement, improving inventory management and ongoing toinvest suitably in technology and information.- Inspired people.Making sure company has remarkably involved employees with abilities andpotential desired to deliver its goals, with a focus on upgraded worktechniques of working. Powerof customersPowerof suppliersMost of the Burberry’s fabrics, othermaterials and finished products are sourced and manufactured at the company’sowned facilities in the United Kingdom and through external supplier network,which is predominantly located in Europe. The company has been sourcing cottonfrom Peru for 30 years and they get cashmere from Mongolia.
Bargaining power od suppliers is moderatebecause there is a high number of them and it’s not difficult to change fromone supplier to another, which positively affects Burberry. If there were onlya few suppliers which dominated the industry that would reduce the Burberry’sbargaining power. However, changing suppliers is also risky because Burberryrisks getting lower quality.
Intensityof rivalryBurberrycompetes mainly within the category of accessible luxury as well asintermediate and unattainable luxury. Other brands in this category includeSalvatore Ferragamo, Prada, Louis Vuitton, Ralph Lauren, Christian Dior andMichael Kors.The british designeris one of the revolutionaries who are slowly changing the fashion system as wehave known before.
In September, a new fashion period began, with a number ofbrands, including Burberry, entering a new model that allows customers topurchase immediately after a fashion show. A bold move that only the biggestcompanies can afford is a wave of speculation about what can bring us in thefuture. A very different way of shopping and fewer opportunities for forgery. In the sameyear, Burberry was also one of the first fashion brands which got involved intodigital and social media, and they have fully embraced social media platforms.They streamed their fashion show on Facebook, Youtube and WeChat.
LVMH’sstrategy is to strive for excellence across all each activity blended with the dynamismand unique inventiveness of their teams. Their strategy is continual chase forquality in their products and distribution. Threatof market entryThreatfrom subsitutesThethreat of substitutes has three main factors: the price of substitutes, qualityof substitutes, switching costs for customers. It could be argued that thereare basically no substitutes for luxury products because each brand is uniqueand cannot be replaced with another brand. Therefore, although non-luxuryproducts offer the same function as most luxury items, there are importantdifferences in brand perception.
Another point of concern is the rise in globalshipping counterfeit goods from China. There are so called »Grade A«counterfeit products from China which are almost identical to real products andoften only experts can tell the difference between a genuine and fake product.Some consumers are not able to afford authentic items and tend to buy fake oneswhich are similar in quality but at a bargain price.
Nevertheless, the impact offake products on the luxury goods market is low due to counterfeit products notevoking the same kind of elite status that genuine luxury goods provide. (NUS InvestmentSociety, Consumer Industry report on U.S. luxury goods).
The greatest threat of substitutes is fromtheir competitors in the industry. Consumer swithcing costs are low and rivals’products quality is equal or superior. https://www.
com/business/2016/sep/24/burberry-reinvent-retail-from-catwalk-to-checkout-see-now-buy-nowhttps://www.researchgate.net/publication/304138881_Reshoring_A_strategic_renewal_of_luxury_clothing_supply_chains https://www.slideshare.net/MadhuMalesh/strategies-at-burberry(NUSInvestment Society, Consumer Industry report on U.S.
luxury goods)http://www.nusinvest.com/wp-content/uploads/2014/12/FA-Consumer-Industry-Report-on-US-Luxury-Goods-Sector-311214.pdf https://www.businessoffashion.com/articles/news-analysis/burberry-unveils-grand-plan-to-become-a-true-luxury-player http://money.cnn.com/2017/11/09/investing/burberry-stock-luxury-strategy/index.html http://www.iasdr2009.or.kr/Papers/Orally%20Presented%20Papers/Design%20Management/Luxury%20Brand%20Strategy%20of%20Louis%20Vuitton.pdf