Executive Summary
Burberry is a multinational corporation that specializes in the production of apparel, accessories, and cosmetics. The company is famous for the manufacture and distribution of trench coats. Burberry has outlets in the United States, Asia, Europe, Australia, and Africa. It runs a promotional campaign dubbed “Burberry Bespoke”, which enables customers to design their trench coats via a digital platform.
The company uses social media and celebrity endorsement to market products across different regions. Burberry’s products are manufactured in different factories spread across Britain. Technological advancement and availability of skilled employees led to the company establishing its manufacturing plants in Britain. Burberry has a diverse workforce that comprises individuals from different nationalities, ethnic backgrounds, races, and religions.
It hires local people for casual and semi-skilled jobs in foreign subsidiaries. Allowing Burberry to operate in a country would create employment opportunities and supplement government revenues. Conversely, it would pose a threat to local textile factories. Hence, a government requires coming up with strategic measures to cushion domestic companies.
Company Description
Burberry Group Public Limited Company (PLC) is a British multinational that specializes in the production and sale of fashionwear. It is among the leading companies in the apparel and accessories industry. The corporation has its headquarters in London, England. According to Sah and Dadwal (2018), Burberry is renowned for the production and distribution of trench coats. It also distributes fashion accessories, cosmetics, ready-to-wear outerwear, sunglasses, and fragrances. Burberry was founded in 1856 by Thomas Burberry. Initially, the company majored in the manufacture of outdoor attire. Today, it has revolutionized its operations to target high-end customers in the fashion market. According to Sah and Dadwal (2018), Burberry created a unique fabric known as Gabardine, which was entirely waterproof and breathable. The company has multiple branded franchises and outlets across the globe. Moreover, it has signed deals with numerous third-party stores. Burberry has stores in Africa, the United States, Asia, Europe, and Australia. Currently, the company has over 500 stores around the world. In 2017, its global revenue was about £2.77 billion and had more than 10,613 workers (Sah & Dadwal, 2018). The company continues to enjoy stable development with economic analysts expecting it to grow by 4.54% in 2018 (Sah & Dadwal, 2018). The percentage growth may vary due to constant changes in the apparel and accessories industry.
Company’s International Strategy
The majority of Burberry’s stores are in the United States, Asia, and Europe. One of the main reasons the company targets these regions is high disposable income amid the target customers (Ohkita, 2017). Burberry has established big stores in Chicago, London, and Hong to reach wealthy clients and tourists. Moreover, high population growth in the regions guarantees the company ready market for its products. Burberry conducts research and development activities in London.
Apart from London hosting the company’s headquarters, the area is preferred since it facilitates the centralization of decision-making processes. Ohkita (2017) avers that Burberry’s competitive edge over rivals continues to decline as more sophisticated companies emerge. The company faces stiff competition from Gucci and Louis Vuitton. Other corporations that are gradually waging stiff competition include Hugo Boss, Dolce & Gabbana, and Ferragamo.
One of Burberry’s main strengths is its iconic fashion brand. Ohkita (2017) posits that the company’s brand is tantamount to British fashion. The global presence is another strength that enables it to reach a broad customer base. Burberry has invested in focused branding, allowing it to establish superior brand recollection and retention. The company promotes products through fashion magazines and websites (Steenkamp, 2017). It positions itself as a lifestyle brand. Apart from selling trench coats, Burberry markets stylish products like women handbags, men wallets, and cosmetics. The production of quality fashionwear has led to many customers opting to associate with the company.
Burberry uses a premium pricing strategy, which prevents it from serving many customers (Steenkamp, 2017). It only serves clients with high disposable income. The luxury and fashion segment comprises many product lines. Unfortunately, Burberry focuses on a few products, preventing it from exploiting the industry adequately. The company relies mainly on the Asian market, thus putting its survival at risk in the case of changes in consumer preferences in this region (Steenkamp, 2017).
The company’s global presence and superior brand will enable it to grow its market base and profit in the short-term. The rise in the number of companies in the apparel and accessories industry calls for diversification. Burberry should invest in an extensive product line if it expects to remain relevant in the industry for a long time.
Company’s Marketing Approach
Burberry has multiple outlets in the United States, Asia, and Europe. It prefers these regions due to the high demand for trendy fashionwear, particularly among the middle-class customers. According to Straker and Wrigley (2016), the majority of households in these regions have high disposable income. Thus, they are likely to purchase the company’s products. Appendix 1 shows the relative spending on luxury products by nationality (Straker & Wrigley, 2016).
The company runs a campaign dubbed “Burberry Bespoke” that enables clients to customize their products. Customers get an opportunity to select the fabric, style, material, and color of their trench coats. Moreover, the company offers specialized services to individual market segments. For instance, it utilizes Snapchat to interact and market fragrances to millennials. Customers are issued with a “snapcode” that allows them to access exclusive content. Burberry uses multiple channels to distribute products. The company has over 500 stores across the world (Straker & Wrigley, 2016). It distributes products via branded outlets and franchises.
Moreover, the company uses third party dealers to distribute products. Burberry has a website that applies to promote products. Clients can order products via the website and are later delivered to their homes. Burberry uses celebrity endorsement to market products in the United States and European markets. The company works with celebrities like Romeo Beckham, Charlotte Wiggins, Max Rendell, and Alex Dunstan among others (Choi, Chai, Nam, Yang, & Protoppa, 2014).
Conversely, the company uses a personal marketing approach in strategic locations like upscale shopping malls and airports in China. It also uses social media platforms like Sina Weibo, Kaixin, Youku, and Douban. The company has established a digital culture, which has been effective in promoting products and gathering consumer feedback (Choi et al., 2014). It uses a digital platform to relay unique contents that target different market segments.
Company’s Logistics Approach
Burberry has multiple factories spread across Europe. The majority of the company’s products are manufactured in the United Kingdom (UK). The increase in the desire to produce textile products in the UK has led to the company choosing this region. Moreover, the UK is technologically advanced regarding the apparel industry. Straker and Wrigley (2016) maintain, “The corporation uses the latest technology such as a cutting machine that can adjust its path to ensure that the famous Burberry check is not skewed” (p. 281).
It allows Burberry to manufacture quality products at a low cost. The level of manufacturing craftsmanship and experience amid the British workers is exceptional. The company has over 800 experienced men and women who help it to produce competitive merchandise. Burberry appreciates British manufacturing skills and intends not only to improve it but also to guarantee its survival. Thus, it has opted to retain manufacturing processes in the UK as a way to realize this objective.
Company’s Human Resource Management Approach
Burberry hires employees with superior artistic talents, passion for its brand, and industrial spirit. According to Giuliani and Macchi (2013), the company strives to recruit and retain a team of experienced workers. Thus, it encourages employee training and development as a way to equip workers with requisite skills. Giuliani and Macchi (2013) aver that Burberry hires workers based on their skills and experience.
It does not discriminate against candidates according to race, gender, nationality, age, sexual orientation, and religion. Burberry appreciates the significance of sourcing labor locally to minimize operations costs (Giuliani & Macchi, 2013). Thus, it offers employment opportunities to local people in the countries that it operates. Burberry works under the guidelines of the United Nations Universal Declaration of Human Rights and the International Labor Organization.
It endeavors to provide a safe working environment in all its outlets. Moreover, the company monitors its apparel and non-apparel suppliers to ensure that they do not exploit their workers. According to Giuliani and Macchi (2013), Burberry has initiated strategies to assist factories to improve human resource management across the supply chain. The primary objective is to enable plants to boost employee productivity and career growth.
Allowing Burberry to operate in one’s country would have significant impacts on human resource management. It would streamline the working environment for local vendors. No apparel and non-apparel suppliers would deal with the company without upholding high standards of human resource management. It would go a long way towards setting the standards for human resource management in the country.
Analysis
Multinational companies benefit host countries in various ways including improved investment and tax revenues. According to Giuliani and Macchi (2013), multinational companies offer employment opportunities to local people and facilitate the spread of technology and the distribution of capital. Burberry distributes products through stores and franchises. Thus, allowing the company to establish operations in a country would create job opportunities as many people would work in the outlets.
It would go a long way towards increasing household income for many families. Allowing Burberry to operate in a country would boost the financial infrastructure of a nation, thus facilitating social and economic development. Moreover, the company would add to the country’s exports and resultant foreign exchange. Multinational corporations’ proceeds are subject to state and federal taxes. Thus, the corporations serve as significant sources of revenues to the home government. Allowing Burberry to operate foreign subsidiaries would boost the income of the host country. It would enable the home government to offer social services to its people.
Burberry has been in the apparel business for a long time, thus amassing a lot of experience in the industry. Such knowledge would be invaluable to local textile industries. Permitting Burberry to operate in a country would help to transform the apparel industry, thus creating job opportunities. Local textile industries would borrow ideas from the company, which would enable them to improve their operations and to manufacture competitive products.
One of the primary risks of multinational companies to foreign countries is that they pose a threat to local businesses (Giuliani & Macchi, 2013). Burberry manufactures quality products and enjoys economies of scale. Thus, it is easy for the company to dominate the apparel industry in the host country, waging stiff competition against local manufacturers. Allowing Burberry to invest in a country may kill local textile industries, rendering many people jobless.
Some multinational companies are accused of taking advantage of weak labor laws in foreign countries to exploit workers (Giuliani & Macchi, 2013). They invest in countries without stringent labor policies and decline to provide healthcare benefits to workers. Even though Burberry operates under the guidelines of the International labor organization, it might take advantage of the existing local labor laws to boost its profit at the expense of workers. Hence, allowing Burberry to invest in a country may pose a risk to employees, especially those that are desperate to get jobs.
Recommendation and Conclusion
Allowing Burberry to invest in a country may help to revolutionize the local textile industry and create job opportunities. It may also assist to boost government revenues, thus facilitating the provision of quality social services. The government should weigh the benefits and risks attributed to the company before allowing it into a country. There is a need for the government to come up with measures to protect local industries.
The provision of incentives may go a long way towards protecting local businesses from losing their market share to Burberry. The company is renowned for observing human rights and efficient employee management systems. Nevertheless, there is a need for the government to introduce efficient labor policies that will protect employees and not scare away multinational corporations.
References
Choi, S., Chai, S., Nam, Y., Yang, S., & Protoppa, C. (2014). Success factors for luxury e-commerce: Burberry’s digital innovation process. International Journal of Information System, 4(1), 1-10.
Giuliani, E., & Macchi, C. (2013). Multinational corporations’ economic and human rights impacts on developing countries: A review and research agenda. Cambridge Journal of Economics, 38(2), 479-517.
Ohkita, K. (2017). Competition through international luxury brand licensing: Burberry in Japan. In S. Sindakis & P. Theodorou (Eds.), Global opportunities for entrepreneurial growth: Competition and knowledge dynamics within and across firms (Advanced strategies in entrepreneurship, education and ecology volume) (pp. 143-161). London, UK: Emerald Publishing Limited.
Sah, S., & Dadwal, S. (2018). Managing strategic change and ERP implementation under distinctive learning styles: Quantitative case of Burberry PLC. International Journal of Academic Research in Business and Social Sciences, 8(2), 188-214.
Steenkamp, J. (2017). Global brand strategy: World-wise marketing in the age of branding. London, UK: Palgrave Macmillan.
Straker, K., & Wrigley, C. (2016). Emotionally engaging customers in the digital age: The case of “Burberry love”. Journal of Fashion Marketing and Management, 20(3), 276-299.
Appendix
Appendix 1
