Innovation Opportunities and Challenges for Burberry, Case Study Example

Introduction

Burberry is regarded as one of the British Fashion houses that was established in 1856 to sell fragrance, clothing and other fashion accessories. The organization has it’s headquartered in London, England. Originally, the firm was mainly focusing on the development of outdoor attire; however, it has changed to focus on high fashion market. For a long time, the organization operated as a single family business until 1955 when it was reincorporated. Presently, it is one of the highly coveted forms of business with numerous franchises and branded stores across the globe (Zozulya et al., 2015). The organization is listed on the London Stock Exchange and constitutes the top 100 best performing organizations. Based on these facts and other essential business researchers, it is believed that the organization has numerous innovation opportunities to continue performing and overcome the possible threats that may engulf its progress.

Innovation Opportunities

In its simplest, innovation is the application of technological, institutional, and human resource to make discoveries that will result in new practices, products, and institutions that are improved and efficient enhancing. The innovation model recognizes the need, articulates demand and finally implements the innovative solution. In Burberry, innovation has been majorly accelerated by the formal application of scientific approaches to promote the production of the products in the organization. Moreover, the process was seen as a process that emerged from the multiple extensions of forces from historical, economic, and social contexts.  Further, the improvement in the technological change resulted in positive platforms that promoted effective and efficient ways of production.  These approaches provided numerous opportunities for the organization to progress to its current status. Presently, the organization has adopted important systems and cycles that promote the progress of the firm.

Acquisition Synergy

Historical records indicate that the Burberry started rising and experiencing much influence when the stars of the modern world started wearing the organization brands in the 1970s and 80s. During that period, Burberry signed numerous agreements with the global manufacturers to produce several complementary products such as suits, sportswear, and trousers for men, women, and children (Philips, 2010, 180). These products were majorly designed under a strict control of the production department at the headquarters. The products were produced and distributed to the independent retail shops through the companies to the global community. The approach enabled the organization to achieve the global reputation and understanding among the increased number of users who adopted the products. It was a moment of flourishing as the company continued to make profits through its constituent organizations that were allowed to produce the complementary products. This trend enabled the firm to make a create stride in achieving globalization (Choi et al. 2014, 3).

Davila, Epstein, and Shelton (2012) noted that one such organization that has acted as a pivot for the production of the Burberry products is the Sanyo Shokai that partnered with the Mitsu to design and sell parallel suits and other fashion products under the license of Burberry brand.  These products were made due to the increasing number of the Japanese, as well as global customers (Godin, 2014, 20). It was noted that most of the tourists that have been visiting the land are fond of these products. Apart from the merger and acquisition, the organization has continued to continue expanding the business through its new flagship store in Tokyo Omotesando. This store is primarily aimed at helping in storing the surplus production of the organization products. Finally, the organization has continued to build a strong online market that helps to facilitate the products to the global consumers.

Unique and Strong Brand Products

The organization through its strong brand and production technique has offered a great opportunity for the realization of high sales by the increasing number of customers across the globe. In fact, the organization trench coat has been regarded as one of the iconic products. Moreover, the coat has been linked to Authentic British Heritage and its unique democratic location in the luxury arena. The string brand has promoted the organization to achieve a global recognition and iconic portfolio thus improving the sales over the decades. It is believed that this opportunity will continue to help the firm to realize the dream of meeting the demands of the global market in Europe, Spain, America, as well as other nations across the globe. As noted by Philips, (2010, 189) in his work, the organization further aims to promote the production of other multi-category competency and innovative outwears that will take care of men, women, and children.

Innovative Culture

Historical records indicate that since its institutionalization, the organization has continued to trend on innovative culture. The organization through its innovation allows customers to use their products freely from any geographical locations across the globe. Such positive culture has transverse through years to promote the realization of the organization’s dreams. In the year 2009, it was noted that the organization launched media campaign engineering both the blogging advocates as well as grassroots word of mouth to allow customers to upload photos while wearing the Burberry trench coats. The organization has further continued through its CEO to fun the culture of its luxury tech fashion to the global markets. It is also important to note that the firm through its successive leaders has been capable of maintaining its prestigious profile. All of them have managed to maintain the organization fragrance thus improving the organization profits over the years. These innovative cultural trends are expected to continue opening new opportunities for the organization progress (Rogers, 1983, 29).

Globalization Marketing Trends

Govindarajan and Trimble (2010) confirm that the provision of the organization e-commerce platform has opened new opportunities to help the organization to operate in both the regional and international markets. According to the organization report, it is recognizable that the firm has been actively involved in streamlining their operations towards meeting the international demands. Therefore, it actively decided to expand its online operations through constant advertising and media appeal to the increasing number of the global population. The organization has further continued to use the new media platforms to promote their products and open the other market avenues. This trend will help to promote the overall realization of increased sales in the global market (Moore, and Birtwistle, 2004, 415).

Challenges                                                          

High Level of Competition from the Rival Organizations

Despite its eminent efforts, the organization has continued to face stiff competition from other firms that are producing the same line of products.  The organization major competitors include Coach, Armani, and Polo. In comparison, most of these competitors have positioned themselves strategically to the market demands thus driving the organization devoid of the customers. Coach majorly deals in the production of luxury handbags, carriers and other luxury accessories that are critical to attracting the customers demand. Presently, the organization is estimated to command over 10% of the global market share (Huizingh, 2011, 11). Polo, on the other hand, has centered its operations towards the production of luxury clothing. In fact, it is estimated to capture the greatest part of the market share due to their relatively low price as compared to Burberry. Moreover, the Polo has offered a high-quality brand that is well adored by the majority of the consumers. Finally, Armani has majorly focused on a strong brand that has continued to maintain the luxury position in the market. This high level of competition has continuously shaken Burberry constant need to meet the global demand for Luxury products (Straker and Wrigley, 2016, 278).

Imitation

The organization through its strong management has noted with great concern the high number of counterfeit products that are produced by other firms. The trend is quite common in developing nations such as China and Nigeria. This move has made the organization products to lose their reputation in the global market as these counterfeit products penetrate through the markets. In most cases, these counterfeit products often fail to meet the Burberry standards of production thus limiting the progress and achievement of the organization goals and objectives. Christensen and Overdorf, (2000, 67); Mytelka, and Farinelli, (2000) in their work, confirmed that production of counterfeit products kills the morale and destroy the overall reputation of any firm in their quest to meet the global market standards. Therefore, this trend should be sealed to allow any substantial economic progress of the firm.

Political Instability

It has been noted that Burberry and other important luxury organizations have faced some political and economic instability in the some of the nations in which the organization operates. These countries include China, Russia, and the Middle East that have led to clampdown and other catastrophic effects on the marketing of the organization’s products. According to Van et al. (2009, 234), such continuous political and economic instability in these nations have further resulted in the reduction of sales of these vital luxury products.  Last year, the organization issued a stern warning on the slump on the retail sales of the products by 12%. Part of the reduction in sales was created majorly by the negative political and economic progress in these nations (Utterback, 1994).

Conclusion and Recommendations

It is notable that the organization has managed to provide numerous innovative measures to meet the increasing global demands for its products. Its strategies have provided to be some of the most excellent approaches to achieving its goals and objectives. However, it is notable that some of the challenges facing the organization are predominantly due to factors that are beyond the organization control and operations. These elements comprise of the political, stiff competition, and economic instability. Therefore, the organization should adopt other essential channels that will promote their product fabric in the more significant market and make them continue dominating the market. These approaches will majorly comprise of ways of dwelling in its innovative nature such as a merger, promoting the product image and luxury brand across all market segments. Nonetheless, against all the odds, the organization needs to continue in its quest of improving its reputation as the best luxury and durable brand in the market.

References

Choi, S., Chai, S., Nam, Y., Yang, S. and Protoppa, C., 2014. Success Factors for Luxury e-commerce: Burberry’s Digital Innovation Process. International Journal of Information Systems Management Research and Development, pp.1-10.

Christensen, C.M., and Overdorf, M., 2000. Meeting the challenge of disruptive change. Harvard business review, 78(2), pp.66-77.

Davila, T., Epstein, M., and Shelton, R., 2012. Making innovation work: How to manage it, measure it, and profit from it. FT Press.

Godin, B., 2014. Invention, diffusion and linear models of innovation: the contribution of anthropology to a conceptual framework. Journal of Innovation Economics & Management, (3), pp.11-37.

Govindarajan, V., Trimble, C. (2010). Making Innovation Happen. In The Other Side of Innovation (pp. 1-23). Boston: Harvard Business Review Press.

Moore, C.M., and Birtwistle, G., 2004. The Burberry business model: creating an international luxury fashion brand. International Journal of Retail & Distribution Management, 32(8), pp.412-422.

Mytelka, L. and Farinelli, F., 2000. Local clusters, innovation systems, and sustained competitiveness. UNU/INTECH Discussion Paper, (2005).

Phillips, J., 2010. Open innovation typology. International Journal of Innovation Science, 2(4), pp.175-183.

Rogers E. M. (1983). Elements of Diffusion. In Diffusion of Innovations (pp. 1-37). London: Collier Macmillan.

Straker, K. and Wrigley, C., 2016. Emotionally engaging customers in the digital age: the case study of “Burberry love.” Journal of Fashion Marketing and Management, 20(3), pp.276-299.

Utterback, J.M. (1994). Mastering the Dynamics of Innovation: How Companies Can Seize Opportunities in the Face of Technological Change. Boston MA: Harvard Business School Press

Wondolleck, J.M., and Yaffee, S.L., 2000. Making collaboration work: Lessons from innovation in natural resource management. Island Press.

Zozulya, D., Radomski, D., Boey, E., Lozanoski, H., Nathani, A. and Sheppard, J., 2015. Burberry Group PLC.

Huizingh, E.K., 2011. Open innovation: State of the art and future perspectives. Technovation, 31(1), pp.2-9.

Van de Vrande, V., De Jong, J.P., Vanhaverbeke, W. and De Rochemont, M., 2009. Open innovation in SMEs: Trends, motives and management challenges. Technovation, 29(6), pp.423-437.