Strategic Development at Burberry
Student Name: Madhumalesh Prakash
Student ID: A4036664
Submission Date: 4th November, 2011
Intake: MBA Batch 8A
Module Name: Strategic Planning
Module Code: SP
Assignment Title: Longitudinal Strategic Development Study Word Count: 4044
Table of Contents
1.Recent past to the present:3
1.3.Leadership and culture at Burberry4
2.The Strategic Position6
2.2.Industry and market structure and competitive conditions7 2.3.Strategic capability, Resources and Competences8
2.4.Financial situation of Burberry9
3.1.Business level strategic choice11
3.2.Corporate level strategic choice11
3.3.Direction and methods11
1.Recent past to the present:
Burberry, one of the famous designer brands in the world was started by a 21-year old draper’s apprentice, Thomas Burberry. This all started with a small outfitter’s shop in Basingstoke, Hampshire, England (The Telegraph 2011). Burberry gained popularity during the First World War when it won the contract to supply trench coats to the British army. Later on, Burberry was also worn by Humphrey Bogart in Casablanca, Audrey Hepburn in Breakfast at Tiffany’s and Peter Sellers in the Pink Panther. Burberry’s main mission was to sell Britishness to the world (Friedman 2011).
Burberry markets its products to its end consumers through three channels: Retail, wholesale and licensing. Burberry sources and markets its apparel and accessories worldwide with major markets in Spain, America and Asia Specific which accounts to 90% its revenue and emerging markets like China, India, Russia, East Europe and the Middle East (Annual Review 2010). The first product developed in 1880, which was responsible for Burberry’s success was Gabardine Macs- A breathable and waterproof fabric used for making of trenchcoats. In 1985, Burberry develops ‘Tielocken’, the predecessor of trench coat which was worn by army officials in Boer War. In 1914, in demand from War office Burberry introduced epaulettes and D rings to its products. In 1920, Burberry check was registered as a trademark, and is introduced as lining for trenchcoats (The Telegraph 2011). Later on, Burberry brand name began to appear on children’s clothes, personal products, watches, fragrances, bikinis, shoes and home wares. Burberry was bought by Great Universal stores in 1955. The brands popularity from 1940s to the 1960s had waned by the 1980s. Distribution was focused in small shops and few high market shops like Harrods. And shops like Neimen Marcus, Barney’s and Saks in USA sold only Burberry raincoats, not the other high profit margin accessories. In 2002, Great Universal store floated one third of Burberry, on stock market, raising £275 million and by 2005 Burberry was set independent (Marketing 2002).
1.3.Leadership and culture at Burberry
Atkinson explains organisational culture as reflecting and underlying assumptions about the way work is performed; what is acceptable and not acceptable and what behaviour actions are encouraged and not encouraged (Mullins 2005). Burberry’s culture is defined by core values like: to protect, explore and inspire, Democratic and meritocratic ethos, collaboration and connectedness, contributing to its communities through Burberry foundation. According to Drucker, leadership is the most important factor which determines whether a group or organisation will be successful (Rollinson 2008). Due to Asian crisis in Mid 1990s, Burberry started experiencing profit fall. It reported a £37 million drop in profits to £24.7 million in 1997, which prompted managerial rethinking and appointment of...