Case Analysis Report

Assignment 2
Franca Lehfeldt

AD 655
Jung Wan Lee, PH. D.
Administrative Science Department
Boston University

INTRODUCTION

Where is our white space? What do we have that they do not? these questions
were the first thoughts of Angela Ahrendts, when she took over the CEO position of the
international luxury brand Burberry in 2006 (Amed, 2013). The task to identify the brands
fundamental culture, know as its DNA, was the first emerging question to answer, before
setting up strategies, aims and objectives for the international fashion company, operating
worldwide within a permanently rushing business environment, which is following trends
almost before they arise. This case analysis report aims to introduce Burberry as a global
operating luxury fashion brand, facing contemporary obstacles in order to stay competitive
within the international market, while focusing on maintaining competitive advantages and
increasing profit. In order to generate a clear overview and structure the report will firstly
introduce the company as well as its mission statement, its core business operations, its
prototype of customers and their value expectations and finally define Burberrys value
proposition towards its consumers. Applying a SWOT analysis in order to examine the
international business environment of Burberry pursues to present positive and if existing,
negative aspects for going global. Based on these findings, strategic management problems
facing Burberry in a path of going global will be described, followed by the exemplification
of competitive advantages that may occur simultaneously. Finally, the role of going global in
resolving potential issues, as identified earlier, will be discussed.

COMPANY OVERVIEW

What is the business?

Burberry was founded in 1856 by Thomas Burberry in a small town called
Basingstoke in England, its products back in time, were British mens outwear. The reputation
of the small and local business grew, when Burberry succeeded with the development of the
fabric called gabardine, a material that was resistant to tearing, was weatherproof but was
also breathable (Moore & Birtwistle, 2004). During the First World War, the company was
mandated to develop and produce the officers raincoats and designing them with functional
dimensions. The traditional and famous Trench coat was born, as a result of the British
military associations. The company became well known for its military production and after a
short period of time, its outwear was adopted by explorers, such as Captain Scott and Sir
Earnest Shackelton, who wore Burberry gabardine cloth on their expeditions (Moore &
Birtwistle, 2004). At the same time, the fashion label developed a retail and wholesale
business, the first store was established in 1891 in central London. Only a few years later the
first Burberry store was launched in 1910 on the Boulevard Malesherbes in Paris. Thomas
Burberry concentrated on indirect foreign market participation and started to supply retail
stockists in New York City, Buenos Aires and Montevideo (Moore & Birtwistle, 2004). After
successful operations over many years within the international market, Burberry was facing
alarming obstacles in 1997, the problem was typified by the fact that at this time the brand
was available in more than 60 stores in London but was not presented by the most powerful
retailers in the city, such as Selfridges, Harrods or Harvey Nichols (Moore & Birtwistle,
2004). The company that originally sold British outwears and especially the outdoor trench
coat produced a multifaceted range of women and men fashion but did not survive within the
highly competitive market of premium and luxury designer brands. However, it took until
2002, when Angela Ahrendts took over the position of the CEO and understood, that the
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company is British, everything we do has got to be quintessentially British, and that will be a
huge differentiator, and the outwear its what we are, it is our DNA (Ahrendts, 2002). From
2002 onwards, Burberry focused on a multi-level brand strategy based on six key brand levels
for women and men, containing clothes, shoes, handbags, accessories and beauty products.
All products are marketed and sold under the brand name and successfully provide the
company with maximum market coverage and a broad customer appeal. From 2002 onwards
the company became famous for its unique and revolutionary digital marketing and ecommerce approach and created new standards within the international market, as it will be
explained later on. Figure 1 shows the Burberry product / brand model (Moore & Birtwistle,

2004).

Who is the customer?

Before answering this question from a current point of view, it should be pointed out
that Burberry, due to its previously told tradition, benefits from a broad customer base of
Western Europeans who have known the company for years and committed a very honest
loyalty towards the brand. Furthermore, as the company was established in Great Britain and
mainly grew up in Central London a specific customer group called the European tourists
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still presents a significant percentage of shoppers for Burberry. This group consists of
European tourists who regularly visit London and associate the city with the style, tradition
and attitude of Burberry products. These customers can be clustered as wealthy, welleducated, middle aged and traditional Europeans, who do not represent the future business to
the company but a current core asset. Focusing on the future customers, Burberry redefined
and relaunched its brand in 2002 the management chose the target wisely, it would have been
one option to choose the middle-aged man who is likely to own an old trench coat as target
customer (Davis, 2014). If they would have decided to do so, it is very likely that 2% annual
growth would have continued to be the expected norm (Davis, 2014). However, Burberry
changed its target group and announced that they would create a brand, product and shopping
experience, targeting the Millennials. Ahrendts encouraged this decision with the words, most
of us are very digital in our daily lives now, Burberry is a young team, and this is instinctive
to us; to the younger generation who are coming into adulthood now, this is all they know
(Ahrendts, 2002). Furthermore, Millennials are characterized to be incredibly brand loyal,
with a raising attractive level of spendable income. As the companys financial reviews
indicated this target group pays dividends to Burberry since 2002 until today and is most
likely to do this for years to come (Davis, 2014). Further to the generation classification,
Burberry responded to those who are driving the growth of the global luxury industry, young
Chinese shoppers (McKinsey, 2011). These days 45% of Chinas high-end customers are
younger than 35, while in Western Europe only 28%, it will not take long until China will
present the world-wide most powerful luxury market (McKinsey, 2011). Burberry sees China
and the Millennials as the quint essential market for its products and plans to expand its
current 57 retail stores in mainland China by further 43 stores, offering the same shopping
experience online and offline (Phan, Thomas, & Heine, 2011).

What does the customer value?

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Customers of Burberry value a global reputation for excellence of luxury and high
quality fashion products. These aspects are based on a clearly defined company culture, of
delivering traditional British fashion combined with the latest trends of the industry, on a very
high service standard. The companys customers expect and value the professional high-class
service delivered by in-store employees as well as online. The brand represents a certain
statement of social status and belonging, wearing Burberry broadcasts the identity of a
wealthy and privileged lifestyle. Burberrys tradition and its international superior image, lead
to the customer value of extraordinary products and services.

What is the companys value preposition?

Burberry has constructed certain aspects that need to be fulfilled in order to present its
entire value preposition towards its stakeholders. The company focuses on the consistency of
its positioning as an international luxury brand, by providing superior online and offline
customer service and shopping experience. The employees are professionally trained within
the companys talent academy. All areas of the business define and set achievable goals and
standards in order to motivate the working environment. Every Burberry store provides the
identical corporate identity standards and respects the company culture in order to guarantee
the same shopping experience at any location to every customer. Burberry is the leading
fashion label regarding the e-commerce business and promises to provide exactly the same
online as offline shopping experience in terms of design and convenience. The company
believes in corporate social responsibility and invests in educational as well as environmental
organizations in order to contribute to a better future. At the same time all raw materials used
for the production of its products respond to a high level of production standards and are
regularly tested in order to deliver a superior, luxurious and unique product. Burberrys
overall goal is to exceed the expectations of its customers and respond to their needs and
wishes (Burberry, 2015).
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What is the companys mission statement?

Burberry is a luxury brand, which is recognized internationally with a worldwide
distribution network. The mission of the company is to maintain its integrity and vitality of
their brand, at the same time, continue to develop the business, which remains relevant to ever
evolving markets and consumer tastes (UK Essays, 2013). The mission statement firstly
emphasizes the status of the brand as it is right at the beginning defined as luxury brand,
which is recognized with a certain image and status within the international market, given that
the overall goal is to maintain this strong position. Research on Burberry shows the
importance of integrity and vitality, as the former CEO Angela Ahrendts underlined many
times in her speeches represents a core mission and the key to successful business operations.
As the brand redefined itself in 2002, by setting the digital advertisement and e-commerce
benchmark for the entire fashion industry and further, its mission statement includes the
relevance of development, growth and correspondence to the market and customer needs.
Burberry clearly knows its core competencies and current advance in terms of digital skills
and focuses on combining tradition and history with a modern approach to conquer future
markets.

INTERNATIONAL BUSINESS ENVIRONMENTS OF THE COMPANY

In order to provide a more presided investigation of the global internal and external business
environment of Burberry, a SWOT analysis will be applied. The model allows identifying the
strengths and weaknesses (internal approach) as well as the opportunities and threats (external
approach) of the company in order to determine its strategic management factors and
competitive advantages for going global.

Strengths
Brand Equity: The brand equity of Burberry, which consists of the monetary value of
the brand, its awareness, attributes and associations as well as its perceived quality and loyalty
is enormously strong. This is further presented through its latest financial reviews, as the
brand continuously increased its profits and left strong competitors behind with its numbers.
The company is defined as mega brand, which is worldwide known and physically
presented through 530 own stores within the international market.
Tradition, history and image: As earlier explained the brand is quintessentially
British and this factor offers a major differentiator towards its competitors as well as its
company DNA of coming from the outwear fashion that leaded to the core product of the firm
the legendary Trench coat. However, the image transfer works out perfectly well for
Burberry, supported by the official announcement and firms promise that every single Trench
coat that is sold by Burberry is still today truly made in Great Britain.

Strong employee commitment: The company did not always perform as successful
as it does since the year of 2002 when Angela Ahrendts took over the position of the CEO.
Nonetheless, Burberry provides a very small turnover rate in terms of its employees, which
clearly states the commitment and loyalty of the team towards the brand during successful and
less successful periods of time. The commitment and passion of its employees represents a
core strength of Burberry.
Loyal customer base: The customer segment of middle-agers as well as the
previously describe European tourists, are significant and highly loyal shoppers and supported
the brand through the last years. However, due to the successful digital marketing approach,
which focuses on the Millennials Burberry can provide a target group, which happens to be
incredibly loyal with an appealing level of income (Davis, 2014). Both customer segments
have a strong value for Burberry and save its dividends in the future.
Strong distribution channels: Burberry currently runs 530 stores worldwide and is
entering emerging markets with growth perspectives, such as Asia, Latin America and India.
Additionally, it is known as role model of digital marketing and sales based on its ecommerce approach. It decreased its cooperation with retailers and brought back as many
licenses as possible but remained strong in important flag shop retailers such as Selfridges
(London, UK).
Product customization:

As part of its perfectly applied e-commerce strategy,

Burberry was one of the first brands to offer customized luxury products to its customers.
Shopper can choose the color, print and personal initials on their scarf, handbag or jacked, this
offer turned out to be exactly what customers were looking for and gathered a competitive
advantage.
Strong social media base: As social media tools such as Facebook, Instagram and
Twitter are parts of the digital marketing campaign, Burberry managed to gain a significant
number of digital fans and followers. Only Facebook shows more than seven million
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followers of the company worldwide, who are interested and amazed by the latest fashion
news. Within todays international competition such a strong follower community presents an
asset to any company.
Network of retail and licensing: Referring to its long business operation history the
company owns and provides all necessary licenses regarding its productions and sales. After
cancelling many retail partnerships the firm still cooperates with the strongest and high
fashion offering retailers worldwide.
Brand association with international celebrities: Burberry was one of the very first
fashion companies that applied celebrity endorsement for its international marketing
campaigns. By choosing British celebrities, such as the actress Emma Watson, the firm
managed to stay authentic, following its own core believes and DNA.

Weaknesses
Limitation of customer base: Despite to the high-growth emerging markets, the
average income of the worlds population is way beyond the possibility to afford any kind of
product produced by Burberry. Very often the monthly rent or total income is less than the
price of a trench coat or handbag. Therefore, the luxury fashion industry is defiantly facing a
limitation of potential customers.
Retailer contracts from the past: In 2002 the companys major goal aimed to cancel
and buy back retailer rights in order to gain a higher status regarding exclusivity and
availability. However, they managed to sign new contracts with essential and luxury retailers
but they still try to reduce and limited past contracts that can damage the brands image.
No haute couture line: Burberry offers six mono-brands within its entire portfolio,
however even its most exclusive line, called Burberry Prorsum, is not a haute couture line
as the other high fashion and strong integrated brands, such as Chanel or Hermes, present.

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Production capabilities: As the international demand continuously increases the

production needs to be adjusted in order to meet delivery dates and consumer requests.
However, taking the first fashion line designed for children into consideration, Burberry did
not manage to respond to the raising demand. It took more than one month for the company to
extend its production and deliver the online purchases form its international customers. This is
a failure in terms of professional luxury service and can damage a companys image and
brand value.
Creative staging on fashion shows: Observing Burberrys fashion shows, it appears
that the presentation is very similar to its digital one. Music, models, colors and stage design
look similar to the online and offline shopping experience. However, competitors such as
Chanel leaded by its creative director and designer Karl Lagerfeld redefines itself almost after
every single fashion show. This issue can lead to a disadvantage towards its competitors and
public relation feedback.

Opportunities
High-growth emerging markets: Burberry is facing the age of globalization and
realized already that the most potential and future markets are located outside Europe and the
US. However, following the statistics and numbers, the future markets are Asia, Latin
America and India these markets offer great business opportunities in the future.
Millennial customers: As explained earlier, the millennial consumer segment is a
very profitable target group in terms of its spending behavior and income, especially from the
markets mentioned above. Addressing these consumers with the modern digital marketing
approach and offering them their needs and wishes can lead to future business and profits.
Going mobile: After the revolution of digital marketing as benchmarked by Burberry
itself, it is time to take digital marketing and e-commerce from the desktop approach to the
mobile approach. Consumers tend to use their smartphones more often than their laptops or
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tablets. Therefore the company needs to keep innovating its own created trend and apply its
digital performance to a mobile friendly usage.
Limitation of fashion show tickets: Tickets to a fashion show are always on high
demand and Burberry already decided to limited its physical tickets and direct the show to a
broader online community. Still, the exclusivity is a key to create further demand and can be
applied for future fashion shows.
Luxury-obsessed shoppers in emerging markets: Luxury goods are interpreted as
sign of wealth and social status this is even more the case in emerging market nations. People
identify each other by a certain look and add the feeling of social belonging to it. This offers
the opportunity of strong future sales.
Global expansion: Burberry announced to open further 30 stores outside Chinas
metropolitan cities and announced the expansion towards China mainland. This is only one
example and indicates the potential of the move to expand global.
Customization towards uniqueness and customer individualization: Finally a
major opportunity these days is the respondents to the social trend of customization. The
modern consumer requests its own personalized product, matching his own taste, wishes and
character. Burberry began to meet this trend at its very beginning and should continue to
expand it even more. Not only initials on a scarf but entire product designs can be based on
individual orders.

Threats
Digital Marketing is no longer a niche: When Burberry began to apply digital
marketing as its core marketing strategy and tool they redefined the range and outcome of
marketing within the fashion industry and were announced as role model by the Silicon
Valley. These days, it is not longer a niche, the entire world uses this approach and Burberry
has to come up with new trends and strategies in order to keep its position.
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Product production management: As underlined earlier, the company faces

problems regarding its product production when the demand increases unexpected. Therefore
delays of product delivery and availability can end in a damage towards the companys
professional and luxury image.
Suck in the middle: The brand of Burberry is for sure a high fashion and luxury one,
however, as the company is not as exclusive as labels such as Chanel or Hermes but not as
common as Tommy Hilfiger or Polo Ralph Lauren, it faces the risk to stuck in the middle.
Consumers might have issues to clearly categorize the brand, especially in emerging markets
where people are especially into the high-end fashion.

STRATEGIC MANAGEMENT FACTORS

Given the findings of the SWOT analysis, the next evaluation leads to the description of
strategic management factors that Burberry faces on its path to going international. One can
say that the major obstacles are represented by the acknowledged weaknesses (internal) and
threats (external) but might be prevented or warded using the firms strengths (internal) and
opportunities (external).
First of all the leadership team will have to deal with the challenge, which is at the
same time an opportunity, of the high-growth emerging markets, such as Asia, India and Latin
America and the resulting increasing demand. As pointed out in the SWOT analysis Burberry
already faced production and delivery difficulties and will need to find an answer for a stabile
and retrievable product delivery. One option would be to invest in further manufacturing
facilities in order to respond to future international business opportunities or to limit the ecommerce store to a realistic inventory in stock and deny pre-orders and purchases.
Furthermore a major challenge is to keep up the companys revolutionary image of
being the first mover of the digital marketing approach, as spotted previously, digital
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marketing is no longer a niche, as it is utilized and expected by international companies and

customers. Burberry is often named, as role model and the legend created by Angel Ahrendts
will last for a while, however the fashion industry is a very competitive and so to say
aggressive market where clients and rivals easily forget about yesterdays market leaders. The
most likely answer to this problem might be found within the opportunity section, investing in
mobile marketing would be a strategy to gain further competitive advantage.
This aspect, automatically leads to the next problem which the company might face
during its international expansion, that is the new and relatively unknown customer culture of
the targeted millennial consumers. This target audience is diffidently requesting a smartphone
optimized shopping experience, where the investment in mobile marketing would pay off
immediately, however, apart from their basic behaviors and spending habits, Burberry does
not know much about its future dividend payers. Data is handled, as key elements when it
comes to customer relationship management, however, there is no historical data available in
order to gain knowledge that could lead to international competitive advantages. Therefore
providing a perfectly mobile optimized shopping experience would lead on one hand to a
satisfied customer base and on the other hand offer the opportunity to collect essential
consumer data that can be transferred to updated customer relationship management,
matching the needs and demands of the millennial target group.
Finally the management has to decide where exactly it wants the brand to be
positioned within the international market of fashion labels. On one hand there is the high-end
fashion sector, which is presented by international strong brands such as Chanel, Gucci and
Hermes and on the other hand there are well-established international fashion labels such as
Ralph Lauren, Tommy Hilfiger and Tory Burch, which are definitely not competing with the
high-end fashion brands. Burberry is currently positioned in a gap between these two markets,
as its prices are less expensive compared to the high-end fashion market but more expensive
as the commercial brands. However, this gap can be turned into an international business
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opportunity and market niche, but at the same time the targeted millennial customers are so
called luxury brand obsessed and might therefore concentrate on the high-end designers. A
clear position towards one market field would therefore be recommended.

COMPETITIVE ADVANTAGES AND GOING GLOBAL

Concentrating in this section on the competitive advantages Burberry can archive from an
international expansion, the findings of the SWOT analysis are again essential elements to
start with. As presented in the strengths section (internal) the company provides a strong
value by its own brand equity, running 530 own stores worldwide takes Burberry up to the
Olympus of fashion mega-brands. Therefore, one can say that keeping this position and
rather expand it globally leads to a major competitive advantage. New entry brands have to
face certain obstacles in order to reach only half of Burberrys status, while others struggle to
keep it up in a successful way.
The history of the legendary trench coat is automatically associated with the name
Burberry and therefore creates a competitive advantage in this fashion sector that can be
expanded throughout all international markets. It is very unlikely that a customer would
purchase a trench coat from Gucci or Ralph Lauren if the consumer can afford one made in
Britain from Burberry. Having such a unique and strong product Burberry can easily develop
further lines of the traditional trench coat and position itself strongly within the global market.
Following the advantage of the traditional trench coat, the existence of an international
loyal customer base should be underlined. Given the fact that this group does not represent the
future target group of the company, this group of Western Europeans and so-called European
tourists, have been a very loyal and profitable customer base. Even if the future business is
identified in Asia, Latin America and India, currently this loyal audience supports
international sales and is therefore a strong competitive advantage within the global market.
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Burberry adopted or even invented one significant trend within the global society these
day, called product customization. As the company offers its customers to print initials on
their purchases or even choose their favorite color for any kind of product offered within the
portfolio, a global trend was exposed. These days, people worldwide believe in their personal
uniqueness and the desire to express themselves, with fur or without, vegan production
materials or own creations produced and available by Burberry is a massive competitive
advantage and allows the company to set benchmarks towards its global competitors.
As mentioned earlier, Burberry is the most innovative company in terms of digital
marketing and e-commerce strategies however, the company provides at the same time the
intangible asset of an enormous social media and network base. More than seven million fans
are following the Facebook activities of Burberry on their own desire and are happy to be part
of the community. This online community cannot be measured, but within the last years it
turned out that social media communities have a high influence on trends, peoples buying
behavior and commitment. Viral marketing and the social media base are core competencies
of Burberry and a strong international competitive advantage.
Lastly, it should be underlined that the company provides a strong and consistent
network of licensing and can therefore expand internationally way easier than start-ups or
smaller competitors. As the international market is already accessed this factor supports an
even further global approach by playing this advantage.

CONCLUSION

Finally, this case report supports and proves the international success of Burberry as one of
the worldwide leading fashion empires. The firms move to go global reveals not only the
identified business opportunities, but offers the company to expand its marketplace and
allows customers all around the world to fall in love with their fashion designs. The
16

companys investment in digital marketing as well as the core production within Great Britain
allowed the brand to position itself as modern, open-minded but at the same time traditional
and loyal towards its customers. By repurchasing retailer contracts and rights the company
succeeded to redefine its brand value and image within the international market and created a
name of recognition value with its 530 flag shops worldwide. Furthermore the companys
inspiring former CEO Angela Ahrendts managed to turn the firms culture into a diverse and
inspiring working place, with modern and open-minded standards and working techniques.
The current management continuous to apply the inspiring and positive working spirit she
introduced to Burberry. Given these facts, the leadership team of Burberry is able to make the
right decisions and apply the right strategies that enable the company to prevent, manage and
overcome challenges within the international market and focus on global growth.

References

Amed, I. (2013). Business of Fashion . Retrieved October 27, 2015, from Business of
Fashion : http://www.businessoffashion.com/articles/ceo-talk/burberry

Business Today. (2011). Business Today. Retrieved November 02, 2015, from Business
Today : http://www.businesstoday.in/storyprint/20187

Burberry. (2015). Burberry. Retrieved November 01, 2015, from Burberry:

http://us.burberry.com

Davis, S. (2014). Forbes . Retrieved November 01, 2015, from Forbes :

http://www.forbes.com/sites/scottdavis/2014/03/27/burberrys-blurred-lines
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Moore, C. M., & Birtwistle, G. (2004). The Burberry business model: creating an
international luxury fashion brand. International Journal of Retail & Distribution
Management , 32 (8), 412-422.

Phan, M., Thomas, R., & Heine, K. (2011). Social Media and Luxury Brand Mangement:
The Case of Burberry . Journal of Global Fashion Marketing , 213-222.

UK Essays. (2013). UK Essays. Retrieved November 02, 2015, from UK Essays:

http://www.ukessays.com/essays/marketing/burberry-is-a-luxury-fashionhouse-from-britain-marketing-essay.php?cref=1

Werdihier, J. (2009). The New York Times . Retrieved November 02, 2015, from The New
Yorl Times: http://www.nytimes.com/2009/11/10/business/global/10burberry

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