In-Depth Discussion And Evaluation Of Burberry Pestle Analysis

Question

Task: Prepare a report exploring the Burberry pestle analysis.

Answer

1.0 Introduction
The study is focused on exploring the concept of Burberry pestle analysis. According to Fildes et al., (2019), retail is considered as the process for selling the goods of consumers along with the services towards the customers by multiple channels based on distributions for earning profit. The present study on Burberry pestle analysis deals with the concept of retail practices and theories in relation to Burberry, UK, the fashion retail company. In the Mintel reports the UK clothing as well as accessories within the market is examined (Store.mintel.com. 2019).

Figure 1: Statistics of UK Retail Clothing and Fashion
Source: (Store.mintel.com. 2019)

As per the Mintel research report, the fashion and clothing market provide some of the extensive and comprehensive overview for the marketplace involving the information upon the market size and share of fashion and clothing (www.statista.com. 2019). As per the reports of Statista, the UK clothing fashion has grown steadily within the last few years through the market value of 63.6 billion Euros.

2.0 Introduction to the company 
Burberry Group seems to be the British House of luxury fashion which is headquartered in London, England. The major fashion house of the organisation is known to focus along with distributes for trench coats; fashion accessories; ready for wearing outwears; sunglasses; fragrances and cosmetics as well (Burberry.com. 2019). The company has been developed in the year of 1856 through Thomas Burberry. In the year 1891, the organisation established its first store in London. It consists of total revenue up to 2732.8 million within the year of 2018. 9,752 employees are known to exist within the organisation along with expanding within 51 countries such as US and similar other places as well. To operate in different countries the organisation use 11 languages and the website of the company is optimised for different devices. Several relevant sources are considered to conduct the Burberry pestle analysis. The company comprises of 498 stores along with a mission to provide each and every customer with the best value regarding their money within their shopping experience, providing best returns for money. The main offerings of the organisation incorporate fashion accessories, cosmetics, sunglasses, fragrances, sneakers, and outwears. In 2011, Burberry formed a joint venture with Fawad Abdulaziz Alhokair & co in Saudi Arabia and transferred 5 stores into joint ventures from franchise operations. The company had been listed on the London Stock Exchange in the year 2002. The current CEO of the organisation is Marco Gobbetti and the Chaiman is Sir John Peace. The organisation is committed in making itself the best workplace for its employees across different countries.

3.0 Key relevant changes within the macro environment
Macro environment seems to be the condition which can exist within the economy as compared with any particular region. Macro environment involves trends within gross domestic product (GDP); monetary as well as fiscal policy along with employment and inflation as well (Suhartanto et al., 2018). Thus, the relevant changes within the external environment of the respective organisation can be analysed through the use of Burberry pestle analysis. 

Burberry pestle analysis

Table 1: Burberry pestle analysis
Source: (Developed by the Learner)

4.0 Key relevant changes within the micro environment 
Burberry might build a competitive advantage for being sustainable within retail industry (Sit et al., 2018). The managers of Burberry might use this framework for analysing its micro or internal. 

Figure 2: Porter’s Five Forces
Source: (Anderson and Bolton, 2018)

Threats of the new entrants (Low)
Common barriers that are faced by Burberry involve cost for entering within the particular industry which seems to be very high due to technological advancement and advantage of cost (Pantano and Gandini, 2018). Burberry has a tendency to consist of cost advantage along with well established distribution of products and channels as well.

Bargaining power for the suppliers (Low to medium)
The respective organisation needs to consist of numerous suppliers as compared to its current suppliers. This might help Burberry if one supplier fails for delivering the raw materials regarding the manufacturing based on its fashion products. This can eventually ensure about having seamless flow within the products towards the fashion market. Thus, the bargaining power of the suppliers seems to be low to medium for the organisation. 

Bargaining power for the buyers (High)
For the present organisation examined to prepare the Burberry pestle analysis, the bargaining power based on the customers seems to be relatively higher due to the increase for larger players in the market where the customers can switch their brands (Cleophas et al., 2018). Nevertheless, the new entrants have been found to not differentiate within the products in comparison with the respective organisation. This in turn, has provided the organisation of Burberry with a competitive advantage for the competitors due to the brand loyalty of the customers.

Threats for the substitute services and products (Low to Medium)
The threat within the substitute product is known to be lower for Burberry as, for the present organisation; this threat might be impacted through factors like higher cost of switching. The switching cost through fashion clothes that are produced by Burberry for the other organisations might be higher (Holbrook, 2018). The fashionable clothes however, are inimitable, thus providing temporary competitive advantage to the company.

Rivalry within existing competitors (High)
The major competitors of Burberry are Armani, Polo and Gucci which is known to compete within three sections such as women and men wear along with accessories. Gucci is considered to consist of high competitive advantage against the two organisations for the section of accessories (Potdar et al., 2018). Polo consists of high share of market and lower value of market for its apparel section as compared with Burberry.

5.0 Strategies/ Tactics 
Based on the Burberry pestle analysis, four factors have been identified such as economical factor, social factors, technological factor and legal factor as well. All these factors are responsible for further growth and stability of the respective organisation. In addition to these factors, several long term strategies and short term tactics has been developed which are mentioned below:

What is the concept of Social factor in the Burberry pestle analysis?
Long term strategy: Based on the changing demands of the customers, the respective organisation can undertake highly personalised marketing. This comprises of advertisements of the organisation for not only being digital, rather being personalised as well which can be powered through increasing algorithms along with predictive models which can analyse transaction of data along with the trends of digital media (Sandberg and Jafari, 2018). For a proper execution of this strategy, a social media engagement theory can be undertaken which has been originally built being a model for interaction within the organisation and the customers. This model can focus upon the social interactions within the users which have been supported through the platform of social media which seems to be provided by the respective company. 

Short term tactics: The respective organisation can collect feedback of the customers for producing innovative and creative products within the market. However, considering study of Burberry pestle analysis it can be stated that as per the changing demands of the customers, the organisation can manufacture certain products through innovation. 

Technological factors
Long term strategy: The organisation can make use of advanced technologies such as virtual reality and use of cloud computation (Bili?ska-Reformat et al., 2019). Customers can shop through virtual reality and cloud computing can help the organisation in tracking the searches of the customers which can eventually help the company to produce products as per the ideas of the customers. For the successful implementation of this strategy provided in the Burberry pestle analysis the organisation can follow the theory of innovation diffusion. The theory was developed in 1962 by E. M. Rogers. The theory states in which way and what rate new technologies and ideas are spread. The organisation has to understand that the innovative ideas are spread through the process of diffusion and this process also helps in communicating the innovation to the members of a social system. So, this theory can be applied to enhance the innovative power of the employees for using innovative technologies in different processes of the company.

Short term tactics: The short term tactics obtained from the study of Burberry pestle analysis signifies that the organisation can make use of social media platform as its short term tactic. This may allow the company to compel with the presence of social media for increasing the visibility of the business. The platforms of the use of social media for the respective organisation can help in its marketing campaigns as well. 

Economical factors
Long term strategy: A long term economic strategy can be undertaken by the respective organisation which seems to have a rapid growth for economic consulting which includes application within the economic principles along with the methods for providing the clients some unique insights (Zhang et al., 2018). This also aims to address several specific problems along with enhancing a long term performance as well. For applying this strategy in Burberry it is important to understand the principles of the classical theory of economy. According to the theory there is a steady state in the GDP growth of every nation and deviations in the GDP growth results in the change of the population. The relationship between the GDP and the population and democratic pattern is important for the company for designing products and services based on the preferences of the customers.

Short term tactics: The organisation can market its new products through penetrative pricing strategy within the market. This can allow the organisation to set its product price initially at a lower level for rapid growth.

Legal factors 
Long term strategy: As per the evaluation of the case scenario of Burberry pestle analysis, litigation strategy can be undertaken by the organisation which can help in counselling one party for lawsuits that can intend in integrating the actions through anticipated events along with the reactions for achieving overarching goal based on the respective litigation. This might be a verdict. For applying the litigation strategy understanding of the theory of regulation is very important for the company. The theory of regulation states the reason behind the development of the laws and legislations. Additionally, the theory also incorporates the importance of stakeholders’ interests in a company and its relation to different regulations.

Short term tactics: Legal audits along with checking the compliance can be inherited by the organisation as a short term tactic (Hagberg and Fuentes, 2018). Legal audits can help in understanding the degree of compliance and enable the company to strategize further.

6.0 Recommendations 
Based on the above discussion on Burberry pestle analysis, there might be several recommendations for the respective organisation such as in the case of technological strategy, the organisation can undertake new media theory which helps in investigating both the new media and the social media (Suhartanto and Brien, 2018). This merger is responsible for creating a global and public sphere which is effective for changing the working ways along with connecting to the customers. On the other hand, strategic business model can also be emphasized by the organisation which can help in strategic planning for developing the operations to achieving the goals of the company. It has been identified from the Burberry pestle analysis that the organisation can follow different long term and short term strategies such as the litigation strategy, penetrative pricing strategy, highly personalised marketing strategy and others for the mitigation of the challenges faced from the external environment. However, there are some other strategies that the company can take in order to mitigate the external environmental challenges. Burberry can build strong relationship with the professional environmentalists for getting advice regarding the reduction of its carbon footprint. For dealing with the political challenges in the UK, the organisation must focus on the other international stores to enhance its performance.

7.0 Conclusion 
To conclude, the present study of Burberry pestle analysis has evaluated the aspects of retail practice and theories for the concerned organisation of Burberry. The macro and micro environment of the particular organisation has also been evaluated in the present discussion. From the analysis of the external environment of the business, it has been identified that Brexit is the major issue that is being faced by the company, however, economic and social changes also affects the financial outcome of Burberry. The analysis of the internal environment has revealed that there is a high competitive rivalry in the UK fashion retail market and this can lead to the decline of the market share of Burberry. Burberry can use long term strategies and short term tactics that have been mentioned in the above study. The company can also follow the recommendations to mitigate the challenges identified in its external and internal environment through Burberry pestle analysis, for its future development.

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Appendices
Appendix 1

Figure 1: Statistics of UK Retail Clothing and Fashion
Source: (Store.mintel.com. 2019)

Appendix 2

Figure 2: Global revenue of Burberry
Source: (Statista. 2019)

Appendix 3

Figure 3: Porter’s Five Forces
Source: (Anderson and Bolton, 2018)