Burberry Group Plc – Iconic British Luxury Brand

Executive Summary

The Burberry Group PLC is a multinational company based in the UK that was founded in 1856. The company is a renowned fashion house dealing with products such as sunglasses, fragrances, cosmetics, fashion apparel, and cloth distribution. Over the years, the company has spread its business activities across the globe and is known for its unique trench coat. Due to its long history of quality products, the Burberry Group is among the few companies in the UK with the Royal Warrant title. The company uses the wholesale and retail channels to distribute its products through the traditional and online platforms. By the end of the year 2013, the company had 421 stores in the UK. It experienced an underlying growth of 12% and space expansion by 7%. This paper presents the Burberry Group’s vision and management strategies in the dynamic UK fashion industry. Among the business strategies discussed include brand momentum, market innovation, and product excellence. Besides, the paper provides a Balanced Scorecard for the business in addition to a strategic plan to assist the managers in expanding and sustaining the growth of the Burberry Group PLC. The recommendation segment presents the best alternatives to support the company’s long term goal of business expansion.

Introduction

Founded in 1856, the Burberry Group PLC is a multinational company based in the United Kingdom. The company offers products such as sunglasses, fragrances, cosmetics, fashion apparel, and cloth distribution. This paper presents the Burberry’s management strategies in the dynamic UK fashion industry. Among the business strategies which will be discussed include brand momentum, product excellence, and market innovation. The paper provides a Balanced Scorecard for the business in addition to a strategic plan to assist the managers in expanding and sustaining the growth of the Burberry Group PLC.

Vision

The company has a vision of enhancing “consumer resonance and operate more effectively through exacting use of brand assets and coordinated action across the global organisation” (Burberry Group Plc 2014, par. 8). The vision has internalised the aspects of quality services, affordable products, and long culture of reliability.

Strategy

The business strategy of the Burberry Group functions within the parameters of brand momentum, market innovation, and product excellence. Under the brand momentum, the company has created an effective system for maintaining purity and product strength to position the Burberry brand as a market leader. As a result, the elements of beauty, digitalisation, brand recognition, and direct market interaction have become part of the company’s business culture. As indicated in the 2013/2014 financial report, the Burberry Group “finished the year as the most followed luxury brand on Facebook, with nearly 15 million fans. Total lifetime YouTube video views reached nearly 24 million and the brand’s combined Twitter following was over two million. Burberry was also the leading luxury lifestyle brand on Instagram” (Burberry Group Plc 2014, par. 11).

The company’s market innovation strategy functions on the pillars of actual market expansion through innovation, brand connection, and leveraging the content of its brands. As a result, the Burberry Group has been a market leader in digital engagement and outdoor investment to ensure that its stores are strategically located. During the 2013/2014 financial year, the Burberry Group “streamed live images of London scenes simultaneously throughout the Olympic period to prominent outdoor sites in London, Paris, Hong Kong, Los Angeles, and New York” (Burberry Group Plc 2014, par. 9).

The element of product excellence ensures that the company is in a position to create and maintain quality in its stores through continuous focus on core icons of heritage and innovative design. The product excellence strategy has been successfully implemented in the outwear apparel, male wear, and product hierarchy control. For instance, in the year 2013, the “investments in infrastructure saw increased product and marketing excellence in men’s outerwear, London and Brit. As the fastest growing product division, the male apparel represented 24% of retail/wholesale revenue” (Burberry Group Plc 2014, par.13).

Reflectively, companies “must rationalise their processes with the aim of cost reduction, rather than using cheap materials or processes at the expense of quality” (Eugene and Michael 2009, p. 27). Besides, the concept verifies risk proportions before informed decisions are made. This procedure is necessary in monitoring decision science and distribution of risk elements and forecasting into future swings in the economic climate market. The Burberry Group is a fundamental example of a company that has continued to embrace quality operations management model that supports communications culture, efficiency, and optimal resource use as part of an efficient and rational decision making.

The Burberry Group has a long term strategy of market expansion and development of the digital platform for its vertical integration strategy. As indicated in the 2013/2014 financial year, the Burberry Group has put in place a management team to facilitate the implementation of this strategy through the live feedback channel. This system tracks input and output ratio and measures the intrinsic efficiency of the employee and manager in line with set targets. Besides, the aspect of efficiency is introduced to ensure scarce resources are optimally exploited. The consideration of this strategy is based on the optimal gain from every decision that is made towards ensuring that the organisation continues to gain a competitive advantage in the market (Burberry Group Plc 2014). However, there are several lapses in the decision structure, especially for the implementation of the short production plans at the Burberry Group. Thus, the need for a Balanced Scorecard and a long term strategic plan presented below.

The Proposed Balanced Scorecard

Irrespective of a line of business, all companies need a strategic Balanced Scorecard. Reflectively, a Balanced Scorecard is a strategic component of management since it tracks and measures the performance of different business strategies against set goals and targets. Basically, a Balanced Scorecard may give an organisation clear picture of its business environment, performance, efficiency, and changes which should be implemented to ensure business sustainability (Bowden 2009). For the Burberry Group, there is an urgent need for a Balanced Scorecard to help the management team in fast tracking its long term business plan of expansion and improvement of the digital business platform. Thus, the proposed Balanced Scorecard will address the challenges currently facing the Burberry Group through setting business objectives, performance indicators, targets, and explicit action plan for each objective.

Balanced Scorecard for the Burberry Group

Since the Burberry Group operates in a dynamic and highly competitive fashion industry in the UK and across the globe, it is important to develop an explicit Balanced Scorecard that captures the company’s key success factors such as enhancing learning and innovation, internal business process, financial, and customer management (Bowden 2009). The proposed Balanced Scorecard in summarised in the tables below for each success factor.

Perspective: Learning and innovation.

Key success factor (objectives) Key performance indicator Target Summary action plan
Business environment improvement Performance of the decision science Emerging the supply chain and the marketing department
  • Streamlining the supply chain and marketing departments on the basis efficiency
Effective and organised workforce Performance of the employee review system Micromanaging the employee performance through a series of constructive trainings
  • Developing a series of employee training modules within the business scope
  • Outsourcing a training consultant or expert
Improving the digital business platform The number of recorded visits on the company’s online portal 30% of the private and corporate online visits within a month Recruiting a digital marketing support team as part of the workforce
Creating a flexible learning environment Proactive business model and workforce Efficiency in business reporting Outsourcing a training consultant or expert

Perspective: Internal business process.

Key success factor (objectives) Key performance indicator Target Summary action plan
Efficiency in the internal audit channel Improvement in the business development process and reporting Proactive internal audit reports Offering training on the required business process auditing and creating a secondary team to audit the reports generated
Micromanaging the audit and management units as dependent functions Optimal management reports Creating a rationale internal control system Offering mandatory training and performance review for the managers and auditors
Effective services with regards to actual and reported business activities The actual performance report against preset targets Continuously managed within the company’s decision making organ Reinventing the company’s approach towards customer’s expectation management
Micromanagement of the supply chain Effectiveness of the supply chain Smooth flow across the supply chain Automating the supply chain

Perspective: customer.

Key success factor (objectives) Key performance indicator Target Summary action plan
Stratification of different market segments Positive records of new and old customers in comparison to preset targets Micromanaging the different branding strategies to meet the demands of the customers Implementing the current strategic customer retention strategies such as offering attractive discounts and other after sales services
Management of customer demands The increase in number of positive compliments from customers Creating a sustainable customer base Offering persuasive and attractive services to customers through the current promotional channel
Customer satisfaction Frequency of same customers Creating a sustainable customer base Management of the customer loyalty programme
Feedback reporting Frequency of messages from customers Creating a feedback system for online and offline customers Outsourcing an IT company to develop and manage the feedback system

Perspective: Financial.

Key success factor (objectives) Key performance indicator Target Summary action plan
A sustainable financial management The business ethics and professionalism in reporting financial reporting Improving the performance ratios Creating a tight financial reporting channel
Improving the daily returns tracker The financial performance per day Constant growth in returns by a positive value Returns management system
Expanding the profitability Improvement in the annual profitability within the set target Growth in the profit margin after every three months of active business Stability of the performance ratios
Rationalised financial investment Proactive financial plans Success of the long term investments Financial planning system

Applying the Balanced Scorecard: The Burberry Group

The Burberry retail model targets consumers who form the majority of its market catchments. Since this target group frequent Burberry distribution store, the company will be in a position to conveniently direct the customers to their designated delivery points and stores without having to directly deliver, especially if the customer perspective is implemented (Williams 2007). The company should merge the strategy with advertisements since this group of consumers has access to social media. Due to exposure to information sources such as new papers, television, radio, and magazines, product announcement through these avenues will come in handy. The decision on the best product relies on information feedback after multiple exposures to different competing products. This approach will be successful towards dominance as it offers a variety of options to consumers, while at the same time, maximising benefits of economies of scale to the company (Kinney, Skaife, and William, 2007).

Product development entails the innovation process aimed at modelling the existing product or improving on it to balance with the changing preferences of the customers. Therefore, by embracing the internal business process and innovation, the Burberry Group will phase out of the current rigid system as preference change. As a matter of fact, Burberry Group is the leading company in the fashion industry in terms of design and innovation. The company is associated with new innovations and attractive designs that appeal to their customers across the world. Thus, through integration of the training and innovation elements within the Balanced Scorecard, the Burberry Group will benefit from this strategy in terms of market expansion. Specifically, through product development, the company will be in a position to optimally exploit opportunities available in the innovation market segment and gain a significant share in the fashion apparel market at the global level (Noreen et al. 2010).

Modelling the strategic map

Maintenance of the market status is dependent on the company’s strategic policies that are applied to reduce the cost of production. A company that effectively invests in a constructive research process stands a higher chance of discovering new opportunities that can be exploited (MacKay and McKiernan 2004). Therefore, this part of the paper will present a strategic map that the Burberry Group should use to micromanage the key elements in the proposed Balanced Scorecard. The strategic map is presented in the table below.

Modelling the strategic map

Quality improvement

In order to improve on efficiency in the strategic management within the Burberry Group, it is necessary to improve efficiency through balancing the control systems, structure, and scope of the strategic management system to ensure sustainability of the long term goal. In order to achieve a sustainable level of efficiency and flexibility, it is important to incorporate product positioning through value delivery, value addition, and creativity within the company’s business environment. Reflectively, these concepts are techniques and tools essential in the art of efficiency in strategic management. In addition, this process is inclusive of the scientific aspects such as a technical process of understanding the strategic operations and evaluation criteria in monitoring and managing the logistics behind the Burberry Group’s internal control. When the above regulators and tools are properly balanced, efficiency in the strategic management is within reach (Pearce and Robinson 2009).

The element of cost in the Burberry Group’s operations strategy will ensure efficiency in the use of resources to serve the needs of customers. On the other hand, the element of flexibility will make the internal business environment for the fashion business sustainable since establishment will be flexible to the changes in the supply and demand of the production factors. The element of speed is directly related to the output of each employee in the company. In addition, quality in service delivery among the employees will ensure profit maximisation and business growth (Proctor 2012).

Critical success factors are the necessary activities that determine achievement of different business strategies. Therefore, the Burberry Group should put emphasis on a few factors that immensely contribute to the success of the organisation. These few factors should be central to the future success of the organisation. Some of the critical factors include roles of the employees, new processes and technologies, organisational skills, and public interest objectives such as protection of minors among other factors. These factors change over time. This is because the business environment is dynamic. Therefore, the critical success factors may change from time to time so as to suit the changing business environment. There are four types of critical success factors. These are industry, environmental, strategy, and temporal critical success factors within the short term and long term strategic plans (Pearce and Robinson 2009).

Industry critical success factors result from the characteristics of the industry such as learning orientation and entrepreneurial management style in the industry. Strategy factors results from the competitive strategy of the business such as how the business position its product in the market. Temporal factors result from short lived internal organisational needs and variations such as changes in processes or management. When these factors are internalised in the proposed strategic plan, the Burberry Group will achieve its goal of business digitalisation and physical expansion (Peng 2004).

Managing the Balanced Scorecard and action plan

Key performance indicators (KPI) give a basis for monitoring the success of the critical success factors. Key performance indicators are measurements of success of the selected critical success factors. The key performance indicators are in most cases form the basis for preparing the Balanced Scorecard. Some of the key performance indicators include financial perspective, innovation and learning perspective, internal perspective, and customer perspective (Proctor 2012).

In the case of the Burberry Group, the decentralised system may incorporate planning, development, implementation, and discovery. Reflectively, the process captures status reports, organisation chart, and compliance requirements within a preset time period. Since operations management system determines the success of business decisions, the company should introduce a micro auditing unit for internal decision making rather than depending on macro market environment. As a result, the success benchmarking initiative will remain relevant during the process of implementing the strategic map.

Involving the employees

The strategic plan implementation team should create a systematic plan for communicating the changes to employees. The communication process should be within the Burberry Group’s organisation culture. For instance, continuous training should be organised to include communicating the changes before the actual training. The messages may be communicated through the company’s notice boards and official emails. Including employees in the strategic plan will increase its chances of success since employees will be part of the implementation agents (Peng 2004).

Explicit analysis of the Burberry Group’s strategy

Despite having this efficient operations management system, the company has not fully established a mechanism for monitoring progress at micro level and depends on macro auditing in decision making. Besides, the business has to deal with the risk of internal fraud and redundancy. In order to reverse this trend, the company should endeavour to create a decentralised decision support system (Peng 2004).

The topological structure of the Burberry Group consists of communication and operations management system which help in determining efficient performance and optimal resource use. Based on the credo emphasize, it stresses on ethical behaviour and customer satisfaction within accepted standards of moral obligation on the forefront, while the stakeholders at the bottom of the triangle. This was implemented with the view of long term benefits. The continuum of increasing the value of quality in operations of human beings lies in data, information, and knowledge. Based on the needs of customers, the management of the Burberry Group decided to come up with decision support system that could help in supporting a single contact point as the basis of the operations management model. Addressed in the company’s 2013/2014 financial year, it was identified to be the best strategy that would facilitate the company’s gain in long term operations (Burberry Group Plc 2014).

Recommendations

Product trade-off

The Burberry Group should ponder introducing trade-offs to its products in countries which do not have strict laws that protect the business. Countries like China do not have strict rules which protect business entities from being copied by competitors. In safeguarding its products’ brands and making sure that it is not imitated by the local firms, the Burberry Group should ensure that it introduces measures in its operative process that would make it distinct from any firm. The introduction of trade-offs should be applied while ensuring that the amount of revenue collected do not decrease (Williams 2007).

Vertical integration

The Burberry Group Company may partner which medium businesses retailing products similar to those of its competitors. This strategy will expand its market and make it easy for customers to access the products. The company may offer free delivery and series of discounts on the basis of the sales volume by these retailers. When properly implemented, the company is likely to counter its competitors’ strategy of reaching the customers through proxy retailers (Proctor 2012).

Product branding

Every household consists of potential customers of the Burberry since clothes are basic needs. Recent studies indicate that the majority of this population recognises the need for affordable, fashionable, and unique apparel. Thus, market expansion and digitalisation strategies may facilitate quick expansion. These strategies will steadily expand the company’s market in all the continents without having to incur the cost of renting retail premises. Besides, the company will be in a position to micromanage its operations from a single distribution point. The company should position itself to emphasize the difference between its products and those of its competitors. In order to diversify market operations, the company should continue to create multiple brands through its innovative team in order to keep the fashion business ahead of the other competitors (Williams 2007).

Conclusion

Burberry Group is a fundamental example of a business that has continued to embrace quality operations management model that supports communications culture, efficiency, and optimal resource use in its service delivery to customers. The business strategy of the Burberry Group functions within the parameters of brand momentum, market innovation, and product excellence. The business should invest more in technology and internal audit system to sustain its current operations management strategy. Through the involvement of the employees, the Burberry Group will be in a position to successfully implement the proposed Balanced Scorecard and strategic plan.

Reference List

Bowden, J 2009, “The Process of Customer Engagement: A Conceptual Framework.” Journal of Marketing Theory & Practice, vol. 17 no 1, pp. 63-74.

Burberry Group Plc 2014, About Burberry, Web.

Eugene, F., & Michael, C 2009, Financial management theory and practice, South-Western Cengage Learning, USA.

Kinney, J., Skaife, A., & William, C 2007, ‘The discovery and reporting of internal control deficiencies prior to S0X-mandated audits.’ Journal of Accounting and Economics, vol. 44, no. 1, pp. 166-192.

MacKay, B., & McKiernan, P 2004, “The role of hindsight in foresight: refining strategic reasoning”, Futures, vol. 36 no 3, pp. 161-179.

Noreen, E., Brewer, P., Peter, B., & Garrison, R 2010, Management accounting for managers, McGraw-Hill, London.

Pearce, J., & Robinson 2009, Strategic management: Formulation, implementation, and control, McGraw-Hill, New York.

Peng, M 2004, ‘Identifying the big question in international business research’, Journal of International Business Studies, vol. 35, no. 2, pp. 99-108.

Proctor, R 2012, Managerial accounting: decision making and performance improvement, Pearson Education, London, UK.

Williams, C 2007, Re-thinking the future of work: directions and visions, Palgrave, New York.