In February 2014, Burberry's chief executive officer Angela Ahrendts is preparing to hand the reins of the English luxury fashion company to chief creative officer Christopher Bailey. Under Ahrendts and Bailey's partnership, in place since 2006, Burberry's revenues have tripled to more than two billion English pounds, and operating profits have more than doubled. Ahrendts has led Burberry to become a brand that once again stands for luxury and that has a strong global and digital footprint. Yet the leadership change is met with skepticism. Is Burberry's current strategy also the right one for the future, and can Bailey continue Burberry's transformation?
Swot Analysis of "Burberry in 2014" written by Anita Elberse includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Burberry's Ahrendts facing as an external strategic factors. Some of the topics covered in Burberry in 2014 case study are - Strategic Management Strategies, Manufacturing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Burberry in 2014 casestudy better are - – increasing government debt because of Covid-19 spendings, there is backlash against globalization, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, increasing commodity prices,
wage bills are increasing, cloud computing is disrupting traditional business models, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Burberry in 2014 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Burberry's Ahrendts, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Burberry's Ahrendts operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Burberry in 2014 can be done for the following purposes –
1. Strategic planning using facts provided in Burberry in 2014 case study
2. Improving business portfolio management of Burberry's Ahrendts
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Burberry's Ahrendts
Strengths Burberry in 2014 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Burberry's Ahrendts in Burberry in 2014 Harvard Business Review case study are -
Diverse revenue streams
– Burberry's Ahrendts is present in almost all the verticals within the industry. This has provided firm in Burberry in 2014 case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Successful track record of launching new products
– Burberry's Ahrendts has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Burberry's Ahrendts has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Operational resilience
– The operational resilience strategy in the Burberry in 2014 Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Innovation driven organization
– Burberry's Ahrendts is one of the most innovative firm in sector. Manager in Burberry in 2014 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Burberry's Ahrendts is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Burberry's Ahrendts is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Burberry's Ahrendts is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Burberry in 2014 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Burberry's Ahrendts is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Anita Elberse can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to recruit top talent
– Burberry's Ahrendts is one of the leading recruiters in the industry. Managers in the Burberry in 2014 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Burberry's Ahrendts
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Burberry's Ahrendts does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Burberry's Ahrendts has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Burberry's Ahrendts to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Burberry's Ahrendts has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Burberry in 2014 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Burberry's Ahrendts in the sector have low bargaining power. Burberry in 2014 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Burberry's Ahrendts to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Burberry in 2014 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Burberry in 2014 are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Burberry in 2014 HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Burberry's Ahrendts has relatively successful track record of launching new products.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Burberry's Ahrendts supply chain. Even after few cautionary changes mentioned in the HBR case study - Burberry in 2014, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Burberry's Ahrendts vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Burberry in 2014 HBR case study mentions - Burberry's Ahrendts takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
No frontier risks strategy
– After analyzing the HBR case study Burberry in 2014, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Products dominated business model
– Even though Burberry's Ahrendts has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Burberry in 2014 should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Burberry's Ahrendts has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Burberry in 2014, it seems that the employees of Burberry's Ahrendts don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High cash cycle compare to competitors
Burberry's Ahrendts has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Increasing silos among functional specialists
– The organizational structure of Burberry's Ahrendts is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Burberry's Ahrendts needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Burberry's Ahrendts to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Burberry's Ahrendts has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Lack of clear differentiation of Burberry's Ahrendts products
– To increase the profitability and margins on the products, Burberry's Ahrendts needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Burberry in 2014 | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Burberry in 2014 are -
Using analytics as competitive advantage
– Burberry's Ahrendts has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Burberry in 2014 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Burberry's Ahrendts to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Burberry's Ahrendts to increase its market reach. Burberry's Ahrendts will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Learning at scale
– Online learning technologies has now opened space for Burberry's Ahrendts to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Burberry's Ahrendts can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Burberry's Ahrendts is facing challenges because of the dominance of functional experts in the organization. Burberry in 2014 case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Building a culture of innovation
– managers at Burberry's Ahrendts can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Developing new processes and practices
– Burberry's Ahrendts can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Burberry's Ahrendts can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Burberry's Ahrendts can use these opportunities to build new business models that can help the communities that Burberry's Ahrendts operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Burberry's Ahrendts can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Burberry's Ahrendts can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Burberry's Ahrendts to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Burberry's Ahrendts to hire the very best people irrespective of their geographical location.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Burberry's Ahrendts in the consumer business. Now Burberry's Ahrendts can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Burberry in 2014 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Burberry in 2014 are -
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Burberry's Ahrendts.
Shortening product life cycle
– it is one of the major threat that Burberry's Ahrendts is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Burberry's Ahrendts will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Burberry's Ahrendts with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Burberry's Ahrendts can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Burberry in 2014 .
Consumer confidence and its impact on Burberry's Ahrendts demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Burberry's Ahrendts in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Regulatory challenges
– Burberry's Ahrendts needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Technology acceleration in Forth Industrial Revolution
– Burberry's Ahrendts has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Burberry's Ahrendts needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High dependence on third party suppliers
– Burberry's Ahrendts high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Environmental challenges
– Burberry's Ahrendts needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Burberry's Ahrendts can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Burberry's Ahrendts business can come under increasing regulations regarding data privacy, data security, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of Burberry in 2014 Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Burberry in 2014 needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Burberry in 2014 is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Burberry in 2014 is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Burberry in 2014 is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Burberry's Ahrendts needs to make to build a sustainable competitive advantage.
