Burberry PESTEL Analysis | Business Teacher
Burberry Company not only operates in London but throughout the world. Different countries that Burberry operates require the organisation to abide by their domestic rules different laws, which may be unfavourable to the activities of Burberry (Gasparini, 2017). Some countries impose high tax rates on foreigners so that they can promote domestic production. High tax rates increase operating costs. Moreover, political instability disrupts the supply chains and stores. Burberry also faces steep competition due to cheap copies produced locally. Due to their luxury status, Burberry products are associated with prestige, yet they are unaffordable, which gives rise to cheap imitations.
Economic downturns affect how individuals spend money. When there is an economic downturn, the consumer prefers to purchase an affordable good to meet basic needs that to purchase a luxury, which many people can live without. Besides, Burberry Company is affected by local and international competitive brands (Gasparini, 2017). Most visitors to the UK purchase Burberry products, due to its status as an established English brand when they travel (Dekhil, Boulebech & Bouslama, 2017). A decrease in travel volumes leads to reduced sales and profits (Phau, Teah & Chuah, 2015).
Target customers of Burberry have different cultures and lifestyles as Weston (2016) affirms. For example, consumer dress codes vary. Different communities will prefer different products. Some people prefer reserved dressing, and others prefer skimpy clothes, and therefore Burberry has to put this into consideration when distributing goods. Furthermore, Gasparini (2017) notes that Burberry engages the community a lot in its activities as part of its CSR initiative. Burberry uses social media platforms such as Twitter, Facebook and Instagram to engage with customers and to collect information on customer experience with Burberry products.
Burberry uses the latest form of technology in advertising to reach out to its targeted end users. For example, Burberry live streaming allowed many consumers to purchase products online and get them delivered. Online shopping creates efficiency since every consumer in any part of the world can access products online without travelling. Additionally, Burberry’s fast delivery is considered by some customers luxurious, which gives the organisation a competitive advantage.
Burberry is strategically located and can avail products to its target customers easily. Additionally, Burberry products such as inner clothing, pants and socks are made from organic cotton wool that cannot harm the environment (Ahmed, 2014; Gasparini, 2017). Environmental factors such as terror attacks and hazardous effect on how Burberry carries out its activities. A natural catastrophe is hard to predict as no one knows when it will occur. Catastrophes disrupt the global stores and supply chains of the company which brings about huge losses. Due to increasing attacks, Burberry does not want to risk investing locations prone to attacks.
To ensure its success, Burberry must abide by legal laws of the countries within which it operates. Favourable legal laws have positive effects on the performance of Burberry, where unfavourable regulations can compromise the firm’s profitability. As Gasparini (2017) notes, the main legal regulations that influence activities of Burberry are labour laws and employment laws. Burberry must also patent its products to maintain the exclusive rights to produce and sell Burberry products. Patenting rights does not solve the problem of imitations but minimises their volumes.
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