Issues in Global Business Burberry 2012 Essay Example | Topics and Well Written Essays - 2000 words

Issues in Global Business Burberry 2012 - Essay Example Small portion of the study discusses the impact of Profit before Tax on strategic buyback decision of Burberry. The company needs to expand their global franchise operation in order to decrease value chain cost. The study will focus on globalization strategy of Burberry Group plc in terms of retail distribution network. Report shows that direct control strategy of the company will help them to push total market capitalization in near future. Hybrid matrix structure of Procter and Gamble has been recommended for future growth Burberry Group. Hybrid matrix diagram will help the company to set up strategic business units in Asia and Latin America. Table of Contents Table of Contents 3 Case Statement 4 Strategy Analysis 5 Financial Perspective 5 Leverage Control 6 International Growth Strategy 8 SWOT Analysis 8 Porter’s Five Forces Analysis 9 Strategic Theme 11 Conclusion 11 Recommendation 12 Reference 14 Burberry Burberry Group plc is a renowned global luxury brand. The company i s headquartered at London, England. Burberry Group plc was established by Thomas Burberry in the year 1856. The brand specializes in offering apparel and leather goods. Burberry Group plc offers products through diversified distribution network complemented by retail channel, wholesale, licensing channel and digital platform. The company has achieved a total revenue growth of 7% in the year 2011. Burberry has created a digital platform named as â€Å"Burberry World Live† in order to enhance their web visibility. Intraday market capitalization of the London based company is $5.3 billion while they maintain a profit margin of 12.1 % on category sales (Yahoo Finance, 2012). Case Statement Burberry Group plc has recently announced that they will directly operate in beauty and fragrance category. The company has no plan to continue license relationship with their partner Interparfums SA. Fragrance and beauty has been categorized as fifth product division for Burberry Group. The ot her four categories are accessories, women apparel, men apparel and children apparel. Angela Ahrendts (Chief Executive Officer of Burberry Group plc) has stated that they took the decision of direct control in order to achieve greater control over product portfolio of fragrance and beauty category. The CEO believes that the company has significant opportunities to drive growth from fragrance and beauty products and the move will also leverage infrastructure & upward integration of value chain. Direct operation of the company for fragrance and beauty categories will start from 1 April 2013. Burberry Group took the decision for following strategic objectives. Achieving greater brand control Increase penetration in opening price point categories The company will pay all total Euro 181 million for ending license relationship and ?71m of total amount will be used for recognising exceptional items The London based company will earn a adjusted profit before tax or PBT in financial year 201 3/14 and from FY 2014/15 the PBT will accelerate Retail and wholesale contribute 90% of total business for the company hence they will design diversified retail channels for their fifth product category (Burberry Group plc, 2012) Strategy Analysis Burberry has purchased the perfumes selling license from Interparfums SA by paying ?142m. Stock analysts believe that the company is pushing harder in the perfume and cosmetic segment in order to