Published by MBA Skool Team, Last Updated: January 26, 2020
PESTLE Analysis of Burberry analyses the brand on its business tactics. Burberry PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand.
PESTLE analysis is a framework which is imperative for companies such as Burberry, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.
The political factors in the Burberry PESTLE Analysis can be explained as follows:
Burberry operates, across the world and not just in London. Since it operates on a large scale in these countries, it needs to abide by the various rules and regulations laid down by the various countries. The higher the political stability in a country, the better it is for ease of operations. Brexit has left behind a uncertain environment, where the companies functioning in the country are under the dilemma as to what are the rules that will change, and what will be the effect of the same on their profitability, Investors has reduced their investments in these countries, since there prevails a uncertainty regarding the change in regulations. Burberry’s business is impacted by several political factors. The high tax rates imposed by certain companies on foreign goods has led to increase in the cost, leading to a lower profitability. In certain developing and underdeveloped countries, there are various first copies of the brand available, that further affect and disrupt the sales to some extent. These countries are the one’s where the rules and regulations related copying of products is lenient.
Below are the economic factors in the PESTLE Analysis of Burberry:
Since the brand produces, more in the elite range, the change in taxes, or the change in the US dollar valuation, will not affect its operations much.
The revenue from this range will remain stable over the years, unless some other factors affect the sale of its elite products. The middle range does get affected by the change in pricing. With increase in price, but lesser increase in the disposable income, will convince the consumers to shift more towards basic and affordable products in comparison to Burberry. Most people purchase Burberry, when they are on a vacation in London. The decrease in tourism may lead to a decrease in the sale of the product. The value associated with the products, will be demeaned if the utility or the quality of the product is compromised, or if the consumers find some other brand that is able to satisfy their needs in a better way. In order to stay competitive, the company needs to keep a tab on various aspects related to pricing, and discount, and vale associated to the product, and what the competition is doing.
Following are the social factors impacting Burberry PESTLE Analysis:
Burberry is a premium brand and is usually preferred by the affluent. Since the company realized the potential in the upper middle class customers, it has launched various mid range products to capture this segment. By satisfying the needs of these customers, the company wishes to expand, yet, in a sustainable manner. There are various different segments that the company operates in, encompasses diverse groups of people with different needs. The company needs to satisfy all their needs in order to stay competitive in the market. Different communities prefer different dresses, some prefer skimpy, some prefer reserved dressing, and Burberry takes care of all their needs. The company engages in various CSR activities, that have led to creating a change in the market and also have utilized the various social media platforms, to take feedback from its consumers, so that they can serve the society better.
The technological factors in the PESTLE Analysis of Burberry are mentioned below:
With changing trends, Burberry has managed to stay up to date. Various social media platforms that are utilized by the brand, to enhance its image, and improve sales. The company believes in working in synergy with the social media today will help one stay in the competition. If this feature of sales is missed, then it is only a matter of time, for a company to become obsolete. Online shopping is another aspect that Burberry focuses on. The use of various e-commerce platform to increase its reach, various social media platforms to generate reviews of its products, and the use of various analytics in order to predict the future trends based on the current scenario and need.
If the company is willing to stay in the market for long, it should focus on introducing AI into its retail segment, that may assist the shoppers with their shopping.
Following are the legal factors in the Burberry PESTLE Analysis:
Burberry operate across various countries and needs to needs to comply with various regulations. It needs to follow various labour laws and employment laws that prevail in these areas. If any of these laws are violated, the company has to face lawsuits from various stakeholders, and repairing the image of the brand once it has been tarnished is a difficult task. There are various anti-bribery rules, that exist across various countries that the company needs to follow. There rules are more prevalent in the United States and other European countries. These rules are less stringent in the developing countries, especially the ones in Asia. The quality related lawsuits are also filed by various customers, and are usually huge claims, that tarnish the name of the company. Burberry needs to keep a tab on the changing policies related o content of the products in various countries, in order to avoid lawsuits by its consumers.
In the Burberry PESTLE Analysis, the environmental elements affecting its business are as below:
The company has been working on various aspects of sustainability, and has recently its various science based sustainability targets it wishes to accomplish in the future. Burberry has committed to reduction of carbon emission and other green house gas emissions from the various manufacturing processes it carries out. It has targeted a 95% reduction by 2022 in its direct operations, and a 30% reduction throughout its supply chain by 2030.
These targets will facilitate Burberry function better in view of the Paris agreement. Another commitment that the brand made, is to switch to renewable sources of energy throughout its supply chain. With these attempts in place, Burberry is on its way to achieving success in the field of sustainability and thus contribute to the society in its own ways.
To conclude, the above Burberry PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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