Can cultures be managed within Organisations?

Burberry is a luxury brand that has experienced 160 years of British style. Founded in 1856 by Thomas Burberry, Burberry’s high quality and classic timeless design has been accepted and enjoyed by the majority of luxury brand lovers. 

2018 is a very important year for Burberry, because the management team has experienced great changes. First on July 15, 2017, the new CEO Marco Gobbetti took over Christopher Bailey, the original CEO and creative officer. Later, Riccardo Tisci, who worked at Givenchy for more than a decade, joined Burberry plc and become the new designer. In April 2018, plc appointed Gerry Murphy as the new chairman, replacing the John Peace who had worked in Burberry Plc for 16 years. At this point, Burberry completed the update of the company’s management group in the past year. The two old employees of Burberry are regarded as the “sinner” of the group that failed to reform rapidly trough the luxury market declined. After the formation of the new management team, Marco Gobbetti proposed a new strategic direction in November, aiming to push the Burberry to the higher-end luxury market.Before the brand complete innovation in 2022, the Burberry Group PLC expects revenue and earnings growth to stagnate in the next three years. As of December 31, 2018, Burberry’s retail revenue declined by 2%, with Asia Pacific growing 5% and the Americas down 1%.

In recent years, the Burberry Group PLC board led by John Peace has been criticized, and the move of CB as CEO and designer is unsatisfactory. In addition, the issue of share dividends has also caused dissatisfaction among many shareholders. Due to the instability of management personnel and the decline in revenue, the company announced that it will make a pay cut for management. The reduction is between 20% and 200% according to different bonus types. Prior to this, Christoper Bailey proposed a fiscal austerity plan in 2016, including closing stores with poor sales, reducing the number of products, and so on. To better control operational costs, streamline processes and promote teamwork efficiency, Burberry moved 300 positions to Leeds’ new business center, including finance, human resources, procurement and customer service teams. It is estimated that operating costs will be saved by £100 million by 2019.

The reduction in operating costs is undoubtedly a challenge for management group, and it is in a passive position. In addition to this, investors also showed their dissatisfaction. The two major shareholder groups believe that the creative director’s salary is too high and put pressure on the brand. The company executives can only give up the initiative and weaken the problems as much as possible. HSBC lowered Burberry’s stock rating to ‘reduction’ and pointed out that reducing costs can only protect short-term gains. Stocks rely on sales growth rather than cost control.

The rapid development of the contemporary information society, the traditional offline-based consumption can not meet the needs of the vast number of consumers, the biggest challenge of the luxury brand industry is the need to continue to innovate, always stand at the forefront of fashion, leading the new fashion trend. As a major obstacle for Burberry’s enterprise in this era, it is necessary to further enhance its position in the global fashion industry and make the brand become a tide brand! The way to stay motivated must first grow and reshape itself by preserving the traditional British culture to create a coveted luxury brand in the global fashion market.

Riccardo Tisci also modified the logo of the brand. The exclusive logo of ‘TB’ is based on the original letter of the brand’s founder Thomas Burberry. Among them, ’TB’ series printed T-shirts have become Burberry’s new main products. The overall design style has added street elements and face to younger consumer. The redesigned has attracted a lot of public attention. In addition to the original customer base, it has attracted the consumption of the younger generation and has led to an increase in sales. This phenomenon affirms the economic value of new designers for the brand.

To embrace new cultural practices, the company’s leadership must implement the company spirit to every employee, so that every employee can understand that the company should always adhere to the core design concept of advocating diversity and inclusiveness, and we need everyone to work together. Burberry creates a lifestyle brand, letting classics and fashion go hand in hand. Both style designers must exert their own ingenuity and fully reflect the value of the brand in concept and spirit. Improve internal cohesion, all staff are united and convey the connotation and temperament of Burberry, an extraordinary fashion brand, to millennials and mature generations, to the UK and the world.

References:

Burberry Corporate Website. (2019). Board of Directors. [online] Available at: https://www.burberryplc.com/en/company/board-of-directors/board-of-directors.html [Accessed 18 Mar. 2019].

U.S. (2019). Burberry parts ways with Bailey as new CEO refashions brand. [online] Available at: https://www.reuters.com/article/us-burberry-group-moves-bailey/burberry-parts-ways-with-bailey-as-new-ceo-refashions-brand-idUSKBN1D0155 [Accessed 18 Mar. 2019].

The Business of Fashion. (2019). Why Burberry Chose Riccardo Tisci. [online] Available at: https://www.businessoffashion.com/articles/news-analysis/riccardo-tisci-is-the-new-creative-director-of-burberry [Accessed 18 Mar. 2019].