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Burberry Group Plc’s Balanced Scorecard Case Study


Organizational Overview

Introduction

Established in the year 1856, the Burberry Group PLC is a leading multinational corporation within the United Kingdom. The company has a series of products ranging from fragrances, sunglasses, fashion apparel, cosmetics, and cloth distribution. The company has had a very healthy financial performance in the last ten years. In fact, despite the global recession of the year 2008, the company has never made any loss for the last decade. This analytical paper presents the mission and strategy from a financial perspective to establish the sustainability of these strategies. The treatise presents a Balanced Scorecard and a resulting strategic plan for the company.

Vision

The company has a vision of enhancing “consumer resonance and operate more effectively through exacting use of brand assets and coordinated action across the global organization” (Burberry Group Plc, 2017, par. 8). The vision has internalized the aspects of quality services, affordable products, and long culture of reliability.

Strategy

The business strategy of the Burberry Group functions within the parameters of brand momentum, market innovation, and product excellence. Under the brand momentum, the company has created an effective system for maintaining purity and product strength to position the Burberry brand as a market leader. As a result, the elements of beauty, digitalization, brand recognition, and direct market interaction have become part of the company’s business culture. As indicated in the 2013/2014 financial report, the Burberry Group “finished the year as the most followed luxury brand on Facebook, with nearly 15 million fans. Total lifetime YouTube video views reached nearly 24 million and the brand’s combined Twitter following was over two million. Burberry was also the leading luxury lifestyle brand on Instagram” (Burberry Group Plc, 2017, par. 11).

Balanced Scorecard and Plan

The Proposed Balanced Scorecard

Irrespective of a line of business, all companies need a strategic Balanced Scorecard. Reflectively, a Balanced Scorecard is a strategic component of management since it tracks and measures the performance of different business strategies against set goals and targets (Pearce & Robinson, 2014). Basically, a Balanced Scorecard may give an organization a clear picture of its business environment, performance, efficiency, and changes that should be implemented to ensure business sustainability (Proctor, 2015). For the Burberry Group, there is an urgent need for a Balanced Scorecard to help the management team in fast-tracking its long term business plan of expansion and improvement of the digital business platform. Thus, the proposed Balanced Scorecard will address the challenges currently facing the Burberry Group through setting business objectives, performance indicators, targets, and explicit action plans for each objective from a financial perspective.

Since the Burberry Group operates in the dynamic and highly competitive fashion industry in the UK and across the globe, it is important to develop an explicit Balanced Scorecard that captures the company’s key success factors such as enhancing learning and innovation, internal business process, financial, and customer management (Pearce & Robinson, 2014). The proposed Balanced Scorecard in summarised in the tables below for each success factor.

Part 1: The Balanced Scorecard and the Financial Perspective.

Objective Measure (key performance matrix) Target Action
Sustainable financial management The business ethics and professionalism in reporting financial reporting Improving the performance ratios Creating a tight financial reporting channel
Improving the daily returns tracker The financial performance per day Constant growth in returns by a positive value Returns management system
Expanding the profitability Improvement in the annual profitability within the set target Growth in the profit margin after every three months of active business Stability of the performance ratios
Rationalized financial investment Proactive financial plans The success of the long term investments Financial planning system

From the above scorecard, the company should improve the daily returns tracker through implementing a sustainable financial planning system. For instance, there is a need to create a tight financial reporting channel to ensure that returns are tracked and proactively managed within sustainable levels. Maintenance of the market status is dependent on the company’s strategic policies that are applied to reduce the cost of production. A company that effectively invests in a constructive research process stands a higher chance of discovering new opportunities that can be exploited (Proctor, 2015).

Flexibility and the Customer Perspective

Burberry Group has been very successful in managing the customer perspective of business through market stratification, customer demand management, continuous customer satisfaction, and live feedback tracking. The company has strategies that are aimed at improving customer loyalty as part of market sustainability for proactive financial performance. This is achievable through implementing the current strategic customer retention strategies such as offering attractive discounts and other after-sales. Besides, the company has outsourced an IT company to develop and manage the feedback system to get accurate data on customer satisfaction and repeat sales (Williams, 2013). Some of the critical customer factors include roles of the employees, new processes and technologies, organizational skills, and public interest objectives such as protection of minors among other factors. There are four types of critical customer success factors. These are industry, environmental, strategy, and temporal critical success factors within the short term and long term strategic plan as integrated into the company (Eugene & Michael, 2014). The balanced scorecard for flexibility and the customer perspective is summarized below:

Objective Measure (key performance matrix) Target Action
Stratification of different market segments Positive records of new and old customers in comparison to preset targets Micromanaging the different branding strategies to meet the demands of the customers Implementing the current strategic customer retention strategies such as offering attractive discounts and other after-sales services
Management of customer demands The increase in the number of positive compliments from customers Creating a sustainable customer base Offering persuasive and attractive services to customers through the current promotional channel
Customer satisfaction Frequency of the same customers Creating a sustainable customer base Management of the customer loyalty program
Relationships with other objectives Sustainability in the financial management and general wellbeing of the company
Revisions (if any) to Part 1 Objectives
Objective/Module Measure Target Action
Strategic market segments Number of the new repeat customers against the same number before Strategic branding strategies Modification of the current customer retention strategies to become more holistic
Customer demand sustainability Current customer feedback against previous feedback Creating a sustainable customer base Offering persuasive and attractive services
Customer satisfaction Frequency of same customers after every two months Building a strong customer base Modifying the customer loyalty programs

From the above scorecard, it is apparent that the company should merge the strategy with advertisements since this group of consumers has access to social media. Due to exposure to information sources such as newspapers, television, radio, and magazines, product announcement through these avenues will come in handy.

Implementation and the Internal Business Process Perspective

The company’s market innovation strategy functions on the pillars of actual market expansion through innovation, brand connection, and leveraging the content of its brands. As a result, the Burberry Group has been a market leader in digital engagement and outdoor investment to ensure that its stores are strategically located. The element of product excellence ensures that the company is in a position to create and maintain quality in its stores through a continuous focus on core icons of heritage and innovative design. The product excellence strategy has been successfully implemented in outwear apparel, male wear, and product hierarchy control. For instance, in the year 2013, the “investments in infrastructure saw increased product and marketing excellence in men’s outerwear, London, and Brit. As the fastest growing product division, the male apparel represented 24% of retail/wholesale revenue” (Burberry Group Plc, 2017, par.13). The summary of the business process is presented in the scorecard table below:

Objective Measure (key performance matrix) Target Action
Efficiency in the internal audit channel Improvement in the business development process and reporting Proactive internal audit reports Offering training on the required business process auditing and creating a secondary team to audit the reports generated
Micromanaging the audit and management units as dependent functions Optimal management reports Creating a rationale internal control system Offering mandatory training and performance review for the managers and auditors
Effective services with regards to actual and reported business activities The actual performance report against preset targets Continuously managed within the company’s decision making organ Reinventing the company’s approach towards customer’s expectation management
Relationships with other objectives Creating a sustainable business environment for sustainable financial performance
Revisions (if any) to Part 1 and/or Part 2 Objectives
Objective/Module Measure Target Action
The proactive internal audit process Improvements in the financial reporting and internal process Auditing of performance and financial reports Training and facilitating of internal and independent audits
Continuous audit and management as dependent functions Optimal management reports Rationalizing internal control system Offering mandatory training and performance review for auditors
Balancing the actual and reported business activities The actual performance report against pre-set targets Implementing a planned channel of reporting Planning for each activity against company goals and visions

From the scorecard, it is apparent that the company is effective in managing its supply chain, balancing the internal audit functions, streamlining the factors of production, and fast-tracking major business activities. However, there is a need for sustainability management through employee performance reviews and proactive quality planning. These recommendations would go a long way in influencing the positive and sustainable planning of different human resource inputs, production materials, and efficiency in the general performance of the company. This approach will be successful towards dominance as it offers a variety of options to consumers, while at the same time, maximizing benefits of economies of scale to the company (Pearce & Robinson, 2014).

Strategy Mapping and the Learning and Growth Perspective

The Burberry Group has a long term strategy of market expansion and development of the digital platform for its vertical integration strategy. As indicated in the 2015/2016 financial year, the Burberry Group has put in place a management team to facilitate the implementation of this strategy through the live feedback channel. This system tracks input and output ratio and measures the intrinsic efficiency of the employee and manager in line with set targets. Besides, the aspect of efficiency is introduced to ensure scarce resources are optimally exploited (Noreen, Brewer, Peter, & Garrison, 2013). The consideration of this strategy is based on the optimal gain from every decision that is made towards ensuring that the organization continues to gain a competitive advantage in the market (Burberry Group Plc, 2017). However, there are several lapses in the decision structure, especially for the implementation of the short financial plans at the Burberry Group. The balanced scorecard for the learning and growth perspective is presented below:

Objective Measure (key performance matrix) Target Action
Business environment improvement Performance of the decision science Emerging the supply chain and the marketing department
  • Streamlining the supply chain and marketing departments on the basis efficiency
An effective and organized workforce Performance of the employee review system Micromanaging employee performance through a series of constructive training
  • Developing a series of employee training modules within the business scope
  • Outsourcing a training consultant or expert
Improving the digital business platform The number of recorded visits on the company’s online portal 30% of the private and corporate online visits within a month Recruiting a digital marketing support team as part of the workforce
Relationships with other objectives Improvement in the strategic learning approach for optimal performance of employees and general financial well-being of the company
Revisions (if any) to Part 1, 2, and/or 3 Objectives
Objective/Module Measure Target Action
Strategic planning improvement Performance of the decision making science for each set of action against the previous model Merging all business processes into a single decision chain Streamlining the decision making organ on the basis efficiency
The effective and organized workforce in terms of role allocation Performance of the employee review system as reported in the 360-degree feedback Continuous evaluation of employee performance through a structured performance tracker Creating a self-regulating performance tracker to measure actual and expected performance
Improving the input-output business platform The output for each bundle of inputs against the same previously The production cycle and the distribution network Introducing optimal performance tracker through quality control and assurance

In order to improve efficiency in the strategic management within the Burberry Group, it is necessary to improve efficiency through balancing the control systems, structure, and scope of the strategic management system to ensure the sustainability of the long term goal. In order to achieve a sustainable level of efficiency and flexibility, it is important to incorporate product positioning through value delivery, value addition, and creativity within the company’s business environment (Williams, 2013). Reflectively, these concepts are techniques and tools essential in the art of efficiency in strategic management. In addition, this process is inclusive of the scientific aspects such as a technical process of understanding the strategic operations and evaluation criteria in monitoring and managing the logistics behind the Burberry Group’s internal control.

Conclusion

Since the operations management system determines the success of business decisions, the company should introduce a micro auditing unit for internal decision making rather than depending on the macro market environment. As a result, the success benchmarking initiative will remain relevant during the process of implementing the strategic map. The business should invest more in technology and internal audit system to sustain its current operations management strategy, in terms of financial sustainability. Through the involvement of the employees, the Burberry Group will be in a position to successfully implement the proposed Balanced Scorecard and strategic plan.

References

Burberry Group Plc. (2017). About Burberry. Web.

Eugene, F., & Michael, C. (2014). Financial management theory and practice. New York, NY: South-Western Cengage Learning.

Noreen, E., Brewer, P., Peter, B., & Garrison, R. (2013). Management accounting for managers. London, UK: McGraw-Hill.

Pearce, J., & Robinson, D. (2014). Strategic management: Formulation, implementation, and control. New York, NY: McGraw-Hill.

Proctor, R. (2015). Managerial accounting: decision making and performance improvement. London, UK: Pearson Education.

Williams, C. (2013). Re-thinking the future of work: directions and visions. New York, NY: Palgrave.

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