"Burberry has been a precursor of fashion in UK (United Kingdom). The company has changed the structure if the fashion industry and was among the few who ushered in the idea of functional luxury. The brand has enjoyed a lot of success in the European market by introducing a lot of changes in the established notions of popular fashion. In the UK (United Kingdom) market, the company's an example of a very popular phenomenon that is called the Prole drift. This is phenomenon wherein the products, which are typically meant for the upper sections of the society become hugely acceptable among the lower echelons of it. This transition is quite rare and showcases the efficiency of the marketing machinery. It is important to mention that the company does not lose its original identity, but the identity gets a more refined outlook. Thereby, the product attains a wider spectrum of users.
The inception of Burberry was at Basing Stoke, England. Burberry functioned as an independent company until the year 1955, after which it was taken over by the Great Universal Stores. But, by the year 2005, the complete investment in the group was divested leading to the establishment of Burberry as an independent organization. The company always believed in the personal contact as far as the sales was concerned. This changed in the year 2006, when it first went online with its virtual stores. The product has had a lot of swings in the market. It has shifted from being a product that was adorned by the classes to a product that was widely used by all the football clubs. This led to the swelling up of the overall client base.
The Burberry brand has tried to revitalize the image by associating itself with a lot of the magazines like GQ, Esquire, Vogue and others. This was a conscious attempt on the part of the company to build exclusivity. The company operated a diverse product line; one that addresses all the consumer sections. It ensures that company penetrates across the cross section of the needs. They believe in the practical fashion. The brands that are operated by Burberry include Burberry Prosum, Burberry Black, Burberry Blue, Burberry Sport and Thomas Burberry. The marketing strategy has been niche as it tries catering to the demands of cross section which is inherently fashionable by nature. Burberry faces a tough road ahead. But, its history suggests it to be resurgent. With the spate of the recent market success, the company is well on its way to rewrite fashion. "
[...] It has an opportunity to expand its international operations into emerging markets like India and China. B) With the rising trend of e-commerce business, there is huge potential for the company to increase its profitability through the direct-to-customer segment. The company can increase the contribution of this segment to the revenue by increasing its online presence. ➢ Threats: A) The company's business performance is likely to be affected by the ongoing slowdown in the global economy. Due to recessionary economy, consumers are left with lower disposable incomes and tend to reduce their discretionary spending. [...]
[...] Burberry offers its products to the customer directly through its retail segment. During the fiscal year 2009-10, the company had 131 mainline stores, 262 concessions within department stores and 47 outlets under its retail sector. It also has digital commerce activities in 27 countries. (Datamonitor, 2011). ➢ Weaknesses: A) The company reported an inventory turnover ratio of 2.2 in the year 2010, whereas the industry average was 4.04. This indicates that the company has been witnessing fewer sales from its shelves compared to its peers in the same industry and huge stock up at its store level. [...]
[...] Burberry Group Plc has long-term dividend payout ratio of 40% of earnings per share. The company paid out dividend per share of twenty pence, i.e., CAGR of 17% (2007-2011). ➢ Society: Majority of companies after adopting scientific management has reduced emphasis on in-house and outside human capital as machines (Smith, 2003). The knowledge era emphasized the human capital importance for improving cutting edge technologies to enhance competitive advantage (Smith, 2003). In 2011, Burberry not-for-profit foundation distributed 2,500 iconic trench coats to affiliate charitable organizations across London, New York, Hong Kong and Seoul catering to the disabled youth population. [...]
[...] Finally, the divestment of Spanish operations and niche acquisition into fastest growing markets in Asia (i.e. China) has enhanced net cash in hand to £297.9 million (2008: net debt of £64.2 million) in 2011. Industry Overview Luxury apparel, footwear, eyewear and other accessories constitute the core addressable markets for Burberry Group Plc in the United Kingdom and worldwide. The company controls dominant market positioning across global luxury apparel and accessories marketspace with value share of 1.5% in 2010. |[pic] |[pic] | Source: Verdict Research (May 2011) United Kingdom luxury and accessories segment reached US$88.8 billion, with year-on-year growth of 1.2% in 2011 (Datamonitor, 2011). [...]
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