Burberry Julie Mitchell Hillary Murray Sarah Kozsan Tim Barba Matt Murmello
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Burberry
Julie Mitchell
Hillary Murray
Sarah Kozsan
Tim Barba
Matt Murmello
Executive
CompanySummary
Profile
• Organizational Structure
• International Management
– Strategy
– Culture
– Policy and Procedure
• Metrics
Company Profile • The faces of Burberry • History behind the trench coat • Future plans
Organizational Outline Source: Burberry. “Board & Board Committees.” Burberry.com. Burberry, n.d. Web. 21 Nov. 2013.
International Management Strategy • Diversification of Stores • Product Line • Social Media • Customer Service
International Management Chart
Job Responsibilities and Compensation
Job Title Responsibilities Number Yearly
of Salary
Managers
Design Managers Oversee fashion research and 3 $110,000
design team activities
Marketing Managers Oversee marketing 3 $110,000
techniques specific to that
region
Operations and Supply Chain Oversee operations and 1 $ 90,000
Manager production schedules, etc.
Customer Resource Manager Develop firm’s relationship 1 $ 90,000
with new customers and
foster established
relationships
Human Resource Manager Set policies for the region, 1 $ 95,000
oversee hiring and training
new employees
Information Technology Managers Oversee routine maintenance 2 $100,000
of electronic systems
Corporate Affairs Manager Bridge the gap between 1 $100,000
Burberry corporate managers
and regional managers
Strategy and Finance Managers Provide financial advice, 2 $115,000
handle financial reports and
portfolios
Store Architecture Manager Oversee store front design, 1 $85,000
tailored to each region
Regional Research Manager Perform necessary research 1 $85,000
to learn about important laws
in specific region of business
Cultural Differences, Britain and France
Cultural Factor Britain France
Main Religion Christianity Roman Catholic (83%–88%)
Education Literacy Rate: 99% Literacy Rate: 99%
Five stages of education: early Five stages of education:
years, primary, secondary, kindergarten, primary school,
Further Education, and Higher middle school, high school,
Education vocational high school
Economic GDP (2012) per capita: GDP (2011) per capita: $35,000.
$38,514.46 (currency: euro)
(currency: pound sterling)
Politics 3 parties: conservative, labor, 2 opposing parties: left-wing
liberal democrats and right-wing
Family A rise in the number of single- Family is the backbone of
person households. French identity and community
People are generally getting life.
married later and many women Couples marry later and wait
do not want to have children longer to have children
right away.
Concentrate on their jobs and
put off having a baby until late
thirties
Class Structure Underclass, working, middle, Highest, middle, lower
upper
Official Languages English French
Natural Resources/ coal, petroleum, natural gas, coal, iron ore, bauxite, zinc,
Geography tin, limestone, iron ore, salt, uranium, antimony, arsenic,
clay, chalk, gypsum, lead, silica, potash, feldspar, fluorospar,
arable land gypsum, timber, fish
Challenges to doing Business in France 1. Starting a business 6. Paying Taxes 2. Construction 7. Trading Across Borders Permits/Electricity 8. Enforcing Contracts 3. Registering Property 9. Resolving Insolvency 4. Getting Credit 10. Culture * 5. Protecting Investors
Culture and Competition
Culture Competition
– Take great pride in their nation Paris is home to many high-end
and government fashion houses.
– Offended by any negative • Chanel
comments about their country
• Christian Dior
– Embody romance and passion
• Louis Vuitton
– Embrace style and sophistication
• Hermes
– Understated elegance in clothing
– Sophisticated, professional,
fashionable
– Not overly fussy or complicated
– Nice dresses, suits, long coats,
scarves, beretsEmployee Rights
• Workers posted to work in France from other countries are
covered by French employment legislation
- Important for Burberry to recognize (especially with
managers)
• Laws regarding: employees' hours of work, including overtime, and
particular restrictions for night workers and young workers
• Employees are entitled to:
– Minimum rest breaks (hours of rest between ending and
starting work)
– Weekly rest periods (subject to certain exemptions, Sunday is
a non-working day and forms part of the statutory weekly rest
period)
– Maternity leave
– Paternity leaveInternational Management Policies • Consistency • Working conditions • Focus on growth
Product and Organization Structure
Burberry Beyond • 3 pillar program identifying values worth more than money 1. Burberry Impact 2. Burberry Engage 3. Burberry Invest
Burberry Impact
“leveraging our creative thinking culture to
inspire sustainable action”
• People – Total compliance
• Product – Reductions at the regional level
• Process – Reduce energy consumption
• Property – Improved construction practicesBurberry Engage
“Harnessing the passions and talents of
Burberry associates”
Time volunteered by Burberry AssociatesBurberry Invest
“Supporting and inspiring the next generation of
creative thinkers”
• Donations – The Burberry Foundation which is
partnered with 32 other charities affecting
75,000 kids
• Coat drive
• Burberry Create – training meant to develop
young kid’s mindsWorks Cited
• Ahrendts, Angela. “Burberry’s CEO on Turning an Aging British Icon into a Global Luxury Brand.” Harvard Business Review.
Jan. – Feb. 2013. Web. 10 Nov. 2013.
• Burberry. “Annual Review 2012/13.” Burberry.com. Burberry, n.d. Web. 21 Nov. 2013.
• Burberry. “Board & Board Committees.” Burberry.com. Burberry, n.d. Web. 21 Nov. 2013.
• Burberry. “Company History.” Burberry.com. Burberry, n.d. Web. 21 Nov. 2013.
• “Burberry goes digital: A British fashion giant is banking on technology to lure back customers.” The Economist. 22 Sept. 2012.
Web. 10 Nov. 2013.
• Conti, Samantha. “Christopher Bailey Begins to Build His Burberry.” WWD.com. 14 Nov. 2013. Web. 10 Nov. 2013.
• Gordon, Kathy, Ian Sherr, and Joann S. Lublin. “Apple Taps Fashion CEO as Retail Magic Fades: Burberry’s Angela Ahrendts
Brings Flair for Minimalist Style, Love of Tech.” Wall Street Journal. 15 Oct. 2013. Web. 10 Nov. 2013.
• Luthans, Fred, and Jonathan P. Doh. International Management: Culture, Strategy, and Behavior. New York: McGraw-Hill Irvin,
2012. Print.
• Vogue. “Burberry.” Vogue.com. Vogue, n.d. Web. 10 Nov. 2013.2013
Matthew Murmello, Sarah Kozsan, Julie Mitchell,
Hillary Murray, and Timothy Barba
Stonehill College
12/5/2013Name: Burberry
Location: London, United Kingdom
Company Annual Revenue: €1,999 Million (“Year to 31 March”) (Burberry Annual Review 5)
Number of Employees: 10,000 (Ahrendts)
Type of Business: Clothing Industry and Retail
Executive Summary:
Burberry is a British luxury fashion house that distributes clothing and fashion
accessories and licenses fragrances. Founder Thomas Burberry was a famous clothing designer
and created the company in 1856. Burberry today is a very successful multinational corporation
that has stores all over the United Kingdom, Europe, North America, and parts of Asia. Burberry
is great at diversifying their stores, having multiple product lines, and great customer service.
This allows the company to continue to expand internationally.
In this case France is an optimal location for Burberry to grow in. The cultures of the two
countries are very similar, and France is a hot spot for high end fashion. However, there are some
challenges that Burberry could face while expanding. Firstly, there are certain permits that would
be required. There are also different tax laws in France than Great Britain. It is difficult to
receive credit in France as well. France already has a number of high end fashion stores such as
Chanel and Louis Vuitton. These factors all contribute to increased costs and are barriers to entry
for Burberry.
To combat the challenges that lay in front of Burberry, the company has created different
international policies and procedures to help achieve success abroad. Since labor laws are
different in France, Burberry has created a policy that protects foreign workers who are
vulnerable to exploitation. They do this by regularly checking up on factories and stores to make
sure everything is in order.This has led Burberry to great financial success. To measure success in other terms,
Burberry has created a three pillar system designed to identify values worth more than money.
Burberry Impact, the first pillar, covers four key areas which are people, product, process, and
property. To help these key areas Burberry regularly checks in on factories and stores to keep
workers, environments, and processes safe. Burberry Engage is the second pillar. This pillar
enables and encourages employees to use their other talents to help better the company. Lastly,
Burberry Invests, is the last pillar. This pillar has Burberry donate to different charities or invest
in various programs around the world to better young kids or other various aid organizations. All
of these things help Burberry be a strong presence in the high end fashion market.
Company Description:
Burberry was established in 1856, by an esteemed clothing designer by the name of
Thomas Burberry (Burberry, “Company History”). The company’s iconic emblem represents
Thomas Burberry’s perseverance and image to establish a luxurious clothing line that has
bourgeoned within the past few centuries (Voguepedia, “Burberry”). Burberry’s iconic emblem
represents a knight in shining armor on a horse, while holding a pendent bearing the word
“Prorsum”, when translated from Latin means “forward” (Voguepedia, “Burberry”). Thomas
Burberry produced his legendary clothing line by first manufacturing a trench coat that was
influenced by a type of linen vestment that was mainly sported by farmers and herdsman within
Great Britain (Voguepedia, “Burberry”). The features of this trench coat were later patented by
Thomas Burberry in 1888 under the name of gabardine (Voguepedia, “Burberry”). Gabardine is
a water-resistant and durable cotton trench coat (Voguepedia, “Burberry”). Since the company’s
inception it has expanded its product line from their high quality trench coats to other luxury
goods (Burberry Annual Review 29).In recent news, Burberry’s Chief Executive Officer, Angela Ahrendts was recently hired
to become Apple Inc.’s “senior vice president of retail and online stores” (Gordon, Sherr, and
Lublin). During her seven year term as CEO of Burberry Group, Angela Ahrendts revitalized
the company’s “image with more-subtle designs and understated offerings, after the brand's
famous beige, black and red plaid had become a bit frayed due to overexposure” (Gordon, Sherr,
and Lublin). Angela Ahrendts will withhold her position as CEO through the middle of 2014,
but will then be replaced by the company’s Chief Creative Officer, Christopher Bailey (Conti).
Bailey will take on both his current position and CEO of Burberry next year (Conti).
Christopher Bailey has already outlined future plans for Burberry once he takes the
position as the company’s new Chief Executive Officer. Christopher Bailey had promoted Luc
Goidadin “to the new position of chief design officer” (Conti). Christopher Bailey described Luc
Goidadin’s duty as “chief design officer”, to not only supervise Burberry’s design department,
but is also required to present Bailey with progress reports, enabling him to still be connected
with the innovation of new designs (Conti). Also, Bailey has already established “a new
company-wide organizational structure” (Conti). According to Samantha Conti in her article,
“Christopher Bailey Begins to Build His Burberry”, she stated that the company “will be
streamlined into three distinct pillars: design, product and communication; regions, and
operations and finance, with existing senior executives taking on additional responsibilities”
(Conti). Since Christopher Bailey has been a designer for Burberry for a few years now, it is
understandable that he wants to focus on those three pillars to facilitate in building up this iconic
brand (Conti). For Bailey to perfect these three pillars he needs to know that he will have the
support and overwhelming assistance from the company’s senior managers (Conti).Burberry’s Organizational Structure:
Source: Burberry. “Board & Board Committees.” Burberry.com. Burberry, n.d. Web. 21 Nov.
2013.
International Management Strategy:
For many multinational corporations (MNCs), developing an international management
strategy allows them “to keep track of their increasingly diversified operations in a continuouslychanging international environment” (Luthans and Doh 272). Burberry is one multinational
corporation that continues to expand their products not only domestically, within the United
Kingdom, but in parts of North America, Asia Pacific, the Middle East, etc. (Burberry Annual
Review 22). Since Burberry is a highly accomplished company within the retail industry it is
idealistic that it would like to introduce its luxuries and brand into a new market when the
opportunity arises. In order for Burberry to jump at the opportunity to open its doors in another
European country, the company would need to develop and implement a solid international
management strategy (Luthans and Doh 268). When constructing an international management
strategy for Burberry, we need to consider numerous approaches and principles that will allow
for the business to flourish within their target market (Luthans and Doh 272).
According to Fred Luthans and Jonathan P. Doh, in International Management: Culture,
Strategy, and Behavior, they stated that “strategic management is the process of determining an
organization’s basic mission and long-term objectives and then implementing a plan of action for
pursuing this mission and attaining these objectives” (271). Since the international management
strategy is critical, it is imperative to determine which levels of management are going to
construct this long-term plan of action (Luthans and Doh 271). Two levels of management are
capable in acquiring this project, being senior (CEO, COO, etc.) and/or lower levels of
management (Luthans and Doh 271). Logically, members of senior management within a
multinational corporation have the upper hand when creating the international management
strategy, but there have been cases in which all levels of management are equally involved in the
decision making process (Luthans and Doh 271). After reviewing Burberry’s Annual Review
from 2012 to this current year, it is evident that the company’s senior management crew has the
final say in how they forecast business success. As members of senior management are brewingnew strategies, they need to keep in mind Burberry’s brand image, merchandise, marketing, real-
estate, as well as technological improvements (Burberry Annual Review 29-30).
According to Fred Luthans and Jonathan P. Doh in International Management: Culture,
Strategy, and Behavior, they stated that “MNCs often invest in advanced industrialized countries
because they offer the largest markets for goods and services” (285). Burberry continues to open
new store locations throughout Europe, probably in response to recognizing new fashionable
trends and high tourist attractions. The company has seen a “13% increase in average space
growth”, because Burberry is purchasing and investing real-estate within London, countries
within the Eurozone, Milan, etc. (Burberry Annual Review 36). Numerous branches withhold
Burberry’s international management strategy tree, but one reason for why Burberry is
diversifying their retail market is from the unique lines of clothing and accessary products they
offer their customers. Fortunately, it is not highly uncommon for an extravagant clothing
company with a stature similar to Burberry to accumulate a large percentage of their revenue
from one article of merchandise (Ahrendts). Unfortunately, the company in recent years has
partially deviated from marketing their most famous line of clothing since its inception; the
trench coat (Ahrendts). According to Burberry’s Chief Executive Officer, Angela Ahrendts in
the article “Burberry's CEO on Turning an Aging British Icon into a Global Luxury Brand”, she
stressed that “outerwear represented only about 20% of our global brand business” (Ahrendts).
Burberry’s trench coat is an extremely liquid asset that is steeped with history (Ahrendts).
As previously mentioned the trench coat was designed by Thomas Burberry and manufactured at
a facility in Castleford (Ahrendts). Instead of outsourcing the labor and raw materials needed to
assemble these trench coats overseas, Burberry should keep up with tradition by producing the
trench coats in Great Britain (Ahrendts). According to Burberry’s Chief Executive Officer,Angela Ahrendts in the article “Burberry's CEO on Turning an Aging British Icon into a Global
Luxury Brand”, she stated that “we would reinforce our heritage, our Britishness, by
emphasizing and growing our core luxury products, innovating them and keeping them at the
heart of everything we did” (Ahrendts). Recently, Burberry shut down factories in New Jersey
and Wales, in order to predominately focus on manufacturing these trench coats in Castleford
(Ahrendts). As a result of this transformation, Burberry was capable of tripling their “global
workforce to nearly 10,000, adding more than 1,000 jobs in the UK over the past two years
alone” (Ahrendts). Burberry should keep their identity polished within the clothing industry, as a
company that continues to develop quality made trench coats in Great Britain, allowing them to
reinforce their company’s cultural norms, as well as sharing the story with customers from
producing a luxurious product (Ahrendts). Manufacturing trench coats in house will hopefully
result in an upward trajectory of new jobs within the United Kingdom, amongst “end-to-end
product development and production” (Burberry Annual Review 42).
Burberry’s “product excellence” is greatly influenced by the company’s “intensive focus
on design innovation, quality and core heritage icons” (Burberry Annual Review 30). The
company’s collection of outerwear, mainly being the trench coat, is credited towards
approximately “50% of mainline apparel sales” (Burberry Annual Review 30). The success of
trench coat sales is predominately due to monthly fashion displays, as well as, notoriety during
the 2012 Summer Olympics in London (Burberry Annual Review 29 - 30). Throughout the
Olympics, the company wanted to partner the durability of their trench coat to meteorological
conditions, by streaming “live images of London scenes simultaneously throughout the Olympic
period to prominent outdoor sites in London, Paris, Hong Kong, Los Angeles and New York”
(Burberry Annual Review 29). If Burberry wanted to open a shop in France, one way for themto convey the message as to why the French should buy their trench coat is by filming a video
portraying a businessman walking out of Chanel after attending a sales conference. The video
would depict the French businessman wearing a Burberry trench coat to keep him dry from a
typical rainy day in France. This form of advertisement may lure the attention of other French
businessmen and businesswomen to buy a Burberry trench coat.
Social media persists to be a major factor in how Burberry markets the trench coat, as
well as, various other products. Social media is extremely versatile and the ease of convenience
welcomes many viewers to become part of the fashion experience. The company continues the
“extension of its reach through marketing innovation, leveraging brand content to engage and
connect global audiences” (Burberry Annual Review 29). Social media has greatly facilitated in
how first time buyers, avid shoppers, and brand loyalty customers connect with Burberry outside
its stores internationally. During this year, Burberry launched its S/S13 operation, introducing
the company’s spring and summer line of clothing through captivating photos and models
wearing trench coats to promote the celebration of seasons (Burberry Annual Review 29).
Promotional awareness and advertisement for the S/S13 operation was dispersed
throughout search engines such as YouTube, Facebook, Twitter, and Instagram (Burberry
Annual Review 29). It is worth mentioning that “the women's-wear A/W13 show was streamed
live on Twitter for the first time, allowing followers to embed the show stream in personal
newsfeeds” (Burberry Annual Review 29). Burberry is currently the leading “luxury brand”
follower on Facebook with about 15 million viewers, along with being “the leading luxury
lifestyle brand on Instagram” (Burberry Annual Review 29). Also, Burberry released a short
film to introduce this year’s new clothing line, which ranked in approximately 1.7 million
spectators (Burberry Annual Review 29). Even though social media has facilitated in expandingthe promotion of the Burberry brand, the company needs to not only maintain their stance as the
number one follower on Facebook and Instagram, but create luring ads and videos that will
enhance their positioning power on Twitter and YouTube (Burberry Annual Review 29).
Hypothetically speaking, if Burberry wanted to create a video targeting men and women between
the ages of 25 to 35 years old with a working salary, they would want to utilize these four
popular search engines, because this specific age group is familiar with how these types of social
media work.
As with any company, one of the most crucial aspects of an international management
strategy is continuously providing quality service to customers in any which way possible.
Providing quality service and selling luxurious products goes hand in hand. Burberry takes great
pride in delivering superior service and getting to know their customers through a service center
(Burberry Annual Review 36). The company built an addition on their “customer focus” part of
the international management strategy by “the opening of a new service centre in Shanghai”
(Burberry Annual Review 36). This particular service center is equipped to support “Burberry
customers 24/7 by phone, email, live chat in 11 languages and via a dedicated customer service
Twitter account” (Burberry Annual Review 36).
Burberry feels that one way for a customer to fully immerse themselves in the buying
power of this luxurious brand is with the ease in assistance of technology (Burberry Annual
Report 42). Burberry has become an extremely technology savvy company within the last few
years, in ways that “enable the rapid delivery of consolidated data such as product details,
customer and transaction information to front-end applications, including the development of an
iPad-enabled digital catalogue for showrooms” (Burberry Annual Review 42). This is just a
taste of how the company incorporates technology into their rules of running a business, but aperfect example of how a Burberry store incorporates technology into their daily routine is
astonishing. In 2012, Burberry opened a brand new outlet on Regent Street in London
(“Burberry goes digital”). When customers enter the store adjacent to the door stands a 22 foot
tall monitor that displays an array of pictures of Burberry’s newest clothing line (“Burberry goes
digital”). Also, apparels are usually fitted with a radio frequency identification (RFID)
instrument, which enables the customer to “flash clothes in front of interactive screens to see
how a handbag detail or raincoat lining is made” (“Burberry goes digital”).
Overall, Burberry is focused on the “quality imperative” of the international management
strategy, because they want to ensure that investing a certain percentage of money in technology,
social media, real-estate, and more will inhibit the company to build their brand internationally
(Luthans and Doh 275). Utilizing this valuable information will allow Burberry to further
develop an international management plan that enables the company to successfully operate and
diversify their operations in France.
With this information Burberry can construct a pie chart depicting which areas of service
the company should focus heavily on when implementing their plan of action. Since Burberry is
in the clothing industry it is understandable that the company should focus greatly on
functionalities, including the marketing, assembling, etc. (Burberry Annual Review 29 – 30).
However, Burberry should also take into consideration diversifying their market and investment
(Burberry Annual Review 36).International Managment Strategy
20%
Functional
20% 60% Diversity
Economic
International Management Chart
According to International Management: Culture, Strategy, and Behavior by Fred
Luthans and Jonathan P. Doh, it is extremely important for multinational corporations to
organize their operations effectively in order to compete in the international arena. “For all
MNCs following this strategic route, a number of basic organization structures need to be
considered” (Luthans and Doh 316). In many cases the design of the organization structure will
be similar to the one used by the domestic parent company. “However, significant differences
may arise depending on the nature and scope of the overseas businesses and the home office’s
approach to controlling the foreign operation” (Luthans and Doh 316). The most important
aspect of the organization is that it allows the subsidiary to “respond to specific concerns, such as
production or technology or the need for specialized personnel” (Luthans and Doh 316). Finally,
the overall goal of the organization of the subsidiary should be “to meet the needs of both the
local markets and the home-office strategy of globalization” (Luthans and Doh 316).
One way for a firm to first enter into international markets is through the creation of a
subsidiary. “A subsidiary is a common organizational arrangement for handling finance-related
businesses or other operations that require an on-site presence from the start” (Luthans and Doh316). With manufacturing firms, it is common for them to export their locally produced goods or
services, and because there is little to no competition “the firm can charge a premium price and
handle sales through an export manager” (Luthans and Doh 317). If it is a narrow product line,
the export manager “usually reports directly to the head of marketing, and international
operations are coordinated by this department” (Luthans and Doh 317). “If the firm has a broad
product line, and intends to export a number of different products into the international market,
the export manager will head a separate department and often report directly to the president”
(Luthans and Doh 317). By using the export approach, the firm can “reduce the risk and size of
investment in establishing significant international operations while at the same time testing the
size of international markets” (Luthans and Doh 317).
The export strategy previously discussed works well only if the company has little
competition and is “using international sales only to supplement domestic efforts” (Luthans and
Doh 317). When the sales overseas begin to increase, there is pressure for the firm to setup on-
site operations and there is also pressure to keep up with the increasing competition.
“Establishing foreign manufacturing subsidiaries can help the MNC deal with both of these
pressures” (Luthans and Doh 317). “Each foreign subsidiary is responsible for operations within
its own geographic area, and the head of the subsidiary reports either to a senior executive who is
coordinating international operations or directly to the home-office CEO” (Luthans and Doh
317).
“If international operations continue to grow and require more control, subsidiaries
commonly are grouped into an international division structure” (Luthans and Doh 317). This
international division structure “handles all international operations out of a division that is
created for this purpose” (Luthans and Doh 317). This is important and useful for aninternational company because it makes the CEO less responsible for monitoring what is going
on overseas. “Instead, the new head of the international division coordinates and monitors
overseas activities and reports directly to the CEO on these matters” (Luthans and Doh 317).
Burberry recognizes the importance of the international division structure. “The grouping
of international activities under one senior executive ensures that the international focus receives
top management’s attention” (Luthans and Doh 318). By structuring the unit this way, it also
“allows the company to develop an overall, unified approach to international operations, as well
as a cadre of internationally experienced managers” (Luthans and Doh 318). While this approach
does have a few drawbacks, Burberry will put measures in place in order to ensure that this
strategy succeeds for their company. For example, because this structure separates the domestic
and international managers, there is the risk of having “two different amps with divergent
objectives” (Luthans and Doh 318). Burberry plans to combat this by having a unified set of
values that are important to both the home division and the new international divisions. It is
important to Burberry that the domestic and international managers communicate effectively and
work together to maintain the brand image that Burberry wants to portray.
Burberry’s business is structured by channel, region and product division, and then is
supported by the core corporate functions. The core corporate functions at Burberry are design,
marketing, store architecture, supply chain, customer resources, information technology, human
resources, corporate affairs, and strategy and finance. To account for and incorporate all of
Burberry’s core corporate functions, the French division will be organized in the following way:Compensation
Job Title Responsibilities Number Yearly
of Salary
Managers
Design Managers Oversee fashion research and 3 $110,000
design team activities
Marketing Managers Oversee marketing techniques 3 $110,000
specific to that region
Operations and Supply Chain Oversee operations and 1 $ 90,000
Manager production schedules, etc.
Customer Resource Manager Develop firm’s relationship 1 $ 90,000
with new customers and foster
established relationships
Human Resource Manager Set policies for the region, 1 $ 95,000
oversee hiring and training
new employees
Information Technology Managers Oversee routine maintenance 2 $100,000
of electronic systemsCorporate Affairs Manager Bridge the gap between 1 $100,000
Burberry corporate managers
and regional managers
Strategy and Finance Managers Provide financial advice, 2 $115,000
handle financial reports and
portfolios
Store Architecture Manager Oversee store front design, 1 $85,000
tailored to each region
Regional Research Manager Perform necessary research to 1 $85,000
learn about important laws in
specific region of business
Company International Management and Issues:
It is important to look at how motivation and leadership must vary from culture to culture
when working with a multinational corporation. If a company is going to open a new division in
a region different from their home region, then they must first take into account the differences
in that region’s culture compared to the home culture. The text defines motivation as “a
psychological process through which unsatisfied wants or needs lead to drives that are aimed at
goals or incentives” (Luthans and Doh 422). Motivation is closely related to the performance of
your employees, and while the process can be the same from culture to culture, the goals and
objectives may be different. Different things motivate different employees, and culture often has
an impact on the motivation factors. For example, “while workers in some countries may be
lured into attractive jobs provided by MNCs through relatively good salary compensation and the
promise of upward mobility, many have become impatient from the lack of institutional follow-
through in various dimensions” (Luthans and Doh 448). The most important thing for
international managers to do is “to put together a motivational package that addresses thespecific needs of the employee or group in each region where an MNC serves” (Luthans and Doh
448).
The new division of Burberry will be opened in France. Since Burberry is a British
company originally, it is important to look at the cultural differences between the two regions in
order to make sure the new division is successful:Cultural Factor Britain France
Main Religion Christianity Roman Catholic (83%–88%)
Education Literacy Rate: 99% Literacy Rate: 99%
Five stages of education: early Five stages of education:
years, primary, secondary, kindergarten, primary school,
Further Education, and Higher middle school, high school,
Education vocational high school
Economic GDP (2012) per capita: GDP (2011) per capita:
$38,514.46 $35,000.
(currency: pound sterling) (currency: euro)
Politics 3 parties: conservative, labor, 2 opposing parties: left-wing
liberal democrats and right-wing
Family A rise in the number of single- Family is the backbone of
person households. French identity and community
life.
People are generally getting
married later and many women Couples marry later and wait
do not want to have children longer to have children
right away.
Concentrate on their jobs and
put off having a baby until late
thirties
Class Structure Underclass, working, middle, Highest, middle, lower
upper
Official Languages English French
Natural Resources/ coal, petroleum, natural gas, coal, iron ore, bauxite, zinc,
Geography tin, limestone, iron ore, salt, uranium, antimony, arsenic,
clay, chalk, gypsum, lead, potash, feldspar, fluorospar,
silica, arable land gypsum, timber, fishThere are many challenges to starting a business in France. According to an article
published by the TMF Group, there are ten specific challenges that should be looked at before
doing business in France:
1. Starting a business: “France ranks 27th in the world for starting a business, according
to the World Bank and International Finance Corporation”
2. Dealing with construction permits and getting electricity: takes “an average of 184
days to obtain and requiring a number of procedures to be completed. Companies
must obtain an urbanism certificate, a building permit and a compliance certificate, as
well as getting the required approval for opening a site and connecting it to water and
electricity works”
3. Registering property: “Owing to the historic nature of most French towns and
vicinities, registering property can be a long-winded and complicated procedure”
4. Getting credit: difficult to achieve in France. “France is home to a robust and
contemporary financial system, but ranks 53rd in the world for ease of getting credit,
highlighting the importance of having local help”
5. Protecting investors: “Common law countries have the strongest protection when it
comes to outside investors (both shareholders and creditors) whereas civil law
countries have the weakest protection”
6. Paying taxes: “President Francois Hollande recently announced plans to cut capital
gains tax to attract business investment to France and restore damaged relations that
resulted from corporate tax hikes. Businesses are required to make seven tax
payments per year and taxation can take a significant chunk of money from company
earnings”7. Trading across borders: “It takes 11 days to import and nine to export, requiring two
documents which can take between three and five days to prepare”
8. Enforcing contracts: “France has a modern legal system which is well equipped to
enforce contracts in good time. It takes an average of 390 days to enforce contracts,
which is well below the OECD average of 510”
9. Resolving insolvency: “Resolving insolvency is a streamlined procedure in France,
although the recovery rate is a little lower than the OECD norm”
10. Culture: “Adapting to French business culture is important when considering cross
border moves. Formality is important and the French are extremely proud of their
language. Their passion for good food and wine should be observed, and businesses
which appreciate differences in etiquette, approach and style in business are most
likely to succeed”
Specifically for Burberry’s new division it is important to look at number 10, culture. As
a British brand it is necessary for Burberry to understand that France has its own culture and own
brands and designers that it is familiar with. Because of this, there is also going to be a lot of
competition for Burberry. France has a very high-fashion culture in some areas, so Burberry will
be competing with other high-end designers such as, Chanel, Louis Vuitton, and Hermes. Along
with competition, France has many cultural values that are different from those of Britain. “The
French take great pride in their nation and government and are typically offended by any
negative comments about their country. Visitors, particulary Americans, often interpret their
attitude toward foreigners as rude” (“French Culture”). While women are becoming more
prominent in the family life and in business, France is still most a “male-dominated culture”
(“French Culture”). The French “embody romance and passion,” and they also “embrace styleand sophistication” (“French Culture”). These are two things that can be used to Burberry’s
advantage when designing and offering products in France.
As for any company starting a division in a new country, it is necessary to also look at that
country’s employee rights laws. One law that is important for Burberry (due to its international
aspect) is that “workers posted to work in France from other countries are covered by French
employment legislation” (Carley). There are also laws about stating rules about “employees'
hours of work, including overtime, and particular restrictions for night workers and young
workers” (Carley). Another law in France states that employees are entitled to “minimum rest
breaks, hours of rest between ending and starting work, and weekly rest periods” (Carley).
Burberry must also recognize that “subject to certain exemptions, Sunday is a non-working day
and forms part of the statutory weekly rest period” (Carley). France supports not only maternity
leave, but also paternity leave, which is something that not all countries are accustomed to
implementing (Carley). These are just a few laws about employee rights that France has created
and Burberry must be sure to follow all of them when creating this division there.
International Management Policies
When it comes to luxury brands, Burberry is a household and classic name, coming out
of its historical roots in England, started as a company in 1856 (Burberry). “The very name
Burberry may reek of tradition and those timeless standards of quality that the British do best,
but the company has, since its founding, been a real force for innovation” (Burberry). However,
despite the traditional nature of the products and how the style can easily translate to any
country, Burberry was having some trouble expanding around the world. “With its rich history,
centered on trench coats that were recognized around the world, the Burberry brand should havehad many advantages” (http://hbr.org/2013/01/burberrys-ceo-on-turning-an-aging-british-icon-into-a-
global-luxury-brand/Ahrendts). However, instead the CEO at that time stated how the British
managers for the company that flew into meetings from around the world, were not even wearing
Burberry themselves. This left the company only growing at about 2% a year, back 7 years ago
when Angela Ahrendts first took the position as Burberry’s new CEO.
In starting the problems that Burberry faced, Ahrendts addressed where she believed the
company was going wrong when she took the position as Burberry’s CEO. “The company had an
excellent foundation, but it had lost its focus in the process of global expansion” (Ahrendts). One
of the main points that she made and acknowledged that the company had was how it was not
offering the same products everywhere in the world, and needed to get back to its staple products
of Burberry trenches and clothes, and focus on offering the same thing everywhere. Instead of
relying on the company’s staple products, it was instead offering kilts, dog accessories and she
states that “There’s nothing wrong with any of those products individually, but together they add
up to just a lot of stuff – something for everybody, but not much of it exclusive or
compelling”(Ahrendts).
When she came into her new role as CEO of Burberry, Angela Ahrendts decided that she
needed to revamp the company and bring it back to the model that made it famous and popular in
the first place, focusing importance on the traditional luxury, rather than lose its market share in
the luxury world as a result of straying too much from its traditional image. While discussing
previous global brands that she had worked for and admires she says, “From Apple to Starbucks,
I love the consistency – knowing anywhere in the world you can depend on having the same
experience in the store or being served a latte with the same taste and in the same cup. That’s
great branding” (Ahrendts). When she took control of the company, she decided that this iswhere her main focus would lie on making the company better – creating a consistent brand
image for Burberry across the world.
An important aspect of ensuring that all of the brand’s products are consistent on all
levels Ahrendts’ job was also to ensure that management was the same on all levels around the
world as well. In order to have a consistent brand, management of the company and each sector
of the company around the world must be consistent as well. “Great global brands don’t have
people all over the world designing and producing all kinds of stuff. It became quite clear that if
Burberry was going to be a great, pure, global luxury brand, we had to have one global design
director” (Ahrendts). In hiring Christopher Bailey, this designer, as the head designer for the
entire worldwide brand, it centralized power and made Burberry more consistent across the
world. This then gives the company back the consumer awareness and liking of the product, and
gives Burberry more market share that it may have lost when the company was not as
centralized.
International Management Procedures
As part of the Corporate Responsibility section of Burberry’s website, it lists the Code of
Conduct and other rules, regulations, and procedures that must be followed by the country
worldwide. Being that it is a global company, one of the most important parts of this lies in the
company’s Ethical Trading Policy and its Foreign Contract Worker Policy. Companies that have
global reach and businesses must make sure that they decide how they wish to operate when
hiring employees in other companies – whether they will follow their home country’s rules and
regulations or those of the country it is doing work in. For example, it is illegal in somecountries to utilize child labor, but in others it is legal, so that company must make decisions on
differing laws such as this, as to how they will react and operate.
Burberry states under its Foreign Contract Workers Policy that this policy is “specifically
intended to protect workers who may be potentially vulnerable to the exploitation regrettably
existent in certain flows of international contract labour” (“Ethical Trading Process”). The
company has many other policies along the same line and goes on to state that it regularly audits
and checks up on factories and international distribution centers to ensure that all operations are
to the international standards that the company has set for itself and its management. Burberry is
also a full member of the Ethical Trading Initiative and has its own Ethical Trading team. These
teams train employees to make sure everyone is on the same page around the world and then
updates senior managers on the company’s status. “The Ethical Trading team and the Ethical
Trading Initiative (of which Burberry is a full member) have delivered training to many of
Burberry’s sourcing and product development team leaders and teams on Ethical Trading
awareness and purchasing practices” (“Ethical Trading Process”).
When it comes to employees, Burberry places full attention on them and wishes to
maintain their well-being in order to ensure better productiveness and brand quality. “Burberry
recognizes that its people are its greatest asset and constantly strives to attract the best talent
worldwide, to provide meaningful development opportunities at all levels and to reward and
recognize high performance” (“Our People”). The company’s website goes on to explain the
makeup of the company and the people who work there, being that there are around 10,000
associates from over 100 countries that work in the different continents. The global management
team is 37% female as well and there is a focus on finding diversity in the workplace. “The
Burberry Leadership Council supported the development of 75 high potential associates towardsbecoming next-generation leaders through international networking opportunities, global strategy
off-sites, mentoring from senior executives and leadership training workshops” (“Our People”).
The previous statement shows how much the company cares about and values its employees,
knowing that without them, the brand would not be as strong.
Impact on International Management Activities and Practices
The policies and practices that Burberry has in place for the international stage of the
company are there to effectively ensure that the company is the same no matter what country one
is in. Burberry consumers wish to be able to go into any store around the world and feel that it
exudes the same feeling of luxury, no matter where they are. These practices and policies ensure
that this happens. In making sure that management is the same or follows the same rules around
the globe, this then ensures that the global products have the same feel to them as well. This
unity among those who work for the brand then makes it feel like more of a luxury brand to
consumers who then find more value in the products that Burberry has to offer.
Other policies, activities, and procedures that the company has set in place make sure that
people continue to find value in the brand going into the future. Despite how it is illegal in some
places around the world, many consumers are turned off by the fact that companies utilize child
labor or other things of the like when operating in different countries around the world. By
stating that the company will not operate through such means, even where it is legal, Burberry
retains the consumers that it more likely than not, would have lost, had consumers found out that
the company operated in such a way.Flow Chart
Chart 1.
This is the organizational structure of how Burberry’s management is set up. Each
person reports to that person who is above them on the chart. This then translates around the
globe in each country’s operations.
Chart 2.
http://fashionandpower.blogspot.com/2010/03/burberry-brand.html
This second chart shows the organizational structure of the brands that Burberry has to
offer. At the top is its Couture line which does not have as wide of a reach as to who can buyand access these products. The accessories that are at the bottom of the triangle are those that
consumers have more access to buying. In fitting with this set up, management is set up the
same way. There are many more people who work at the bottom levels of management that
report directly to the Board and the CEO who are at the top. Each Burberry location and store
has associates who speak to their managers, who speak to regional and district managers, and
this just goes up the chain/the pyramid until it reaches the company’s board and/or the CEO.
Metric Report & Success Measures
While researching the Burberry Company, there have been several noticeable things that
have stuck in accordance with the company’s metrics and success measures. Firstly one of the
most important features to this company is the “Burberry Beyond” initiative which
“encompasses all activities relating to Burberry’s commitment to driving positive social, cultural,
and environmental impact globally.” (Burberry Beyond) This program consists of three pillars
which are Impact, Engage, and Invest and all focus on employee well being in addition to the
environment.
Burberry Impact covers four key areas which are people, product, process, and property.
As a company, Burberry takes their employees well being and rights very seriously and requires
their suppliers to obey local labor laws in addition to Burberry’s own policies. Burberry takes to
the next step and has increased training and supplier visits in 2013 to 839 which is up 11% from
last year. In accordance of taking care of people, Burberry also emphasizes the importance of a
healthy environment. With the help of a very detailed environmental analysis within the
company, Burberry was able to discover some of the most harmful pollutants frommanufacturing were coming from their tanneries. In response, Burberry worked closely with the
tanneries and focused on reducing the amount of pollutants they were giving off. This small
example exemplifies the how much Burberry cares about both its company and environment and
continues to show that affection with their process and property by utilizing the idea of
sustainability for the future. It is not often you see a business so focused on anything else but
money – however the issues previously mentioned prove that not all businesses just look at the
bottom line for a measure of success.
Burberry Engage is the second pillar which leverages “core business competencies and
individual talents in the communities where associates live and work remains the key objective.”
(Burberry Beyond) in other words, Burberry promotes their employees to use their other talents
to help improve a community in whatever way they can. Sustainable communities across the
globe are a key part of Burberry’s plan and they continue to make an impact each year they
operate.
Finally the third pillar is Burberry Invest which relates to the financial support Burberry
provides in their communities worldwide. Actions include charitable donations, scholarship
opportunities, coat drives, and various programs for young kids to try and spark an interest in
design and creativity. Burberry is one of the most successful and most recognizable brands in the
world and they continue to improve on the flaws they can control. Of course money is important
as well but the focus when expanding the business to different parts of the world doesn’t lie so
much with the monetary value as it does with these three pillars. In turn, if we establish these
three pillars in any new venture or community the money will follow, it has proven time and
time again and as long as Burberry decided to stay in business they will continue to make a lot of
money and more importantly make an impact on human lives and the environment.Works Cited
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Conti, Samantha. “Christopher Bailey Begins to Build His Burberry.” WWD.com. 14 Nov. 2013.
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Gordon, Kathy, Ian Sherr, and Joann S. Lublin. “Apple Taps Fashion CEO as Retail Magic
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