Burberry Group Plc

Introduction

Burberry Group PLC, known as Burberry, is an international luxury fashion brand based in London. The company was founded in 1856 by Thomas Burberry and has been owned by Italian businessman Gobbetti since 2017. It operates through four segments: Retail, Licensing, Wholesale, and Others. Its products include clothing for men, women, and children; accessories; shoes; luggage; fragrance; eyewear; cosmetics; home furnishings; bedding; blankets, and throws. In addition to its retail operations, Burberry also sells products through licensing agreements with third-party retailers such as department stores (such as Selfridges), specialty boutiques (such as those operated by Browns), and department stores (Galeries Lafayette), multi-brand boutiques including Colette in Paris). This report evaluates the current state of risk management within Burberry Group PLC, highlighting areas that require improvement and providing examples of good practice.

Purpose of Report

This report aims to assess the risks that are likely to affect the future of Burberry Group PLC. The report will be prepared for a management committee and comprise a section on risk management, which will address how the company can manage its current and future risks. The report will address both the specific risks and threats that have been identified and a review of the effectiveness of their risk management strategies. The report will also contain an analysis of the key risks facing the company and how they may impact its performance.

Organizational Objectives

The company’s vision is to be a leading global luxury brand with an iconic British heritage and a strong international presence. The mission statement is to create world-class products that embody the spirit of Britishness. The company has identified four priority growth markets: China, India, Japan, and Korea ( Zozulya, Radomski, Boey, Lozanoski, Nathani, and Sheppard, 2015). These countries have been selected for their potential for growth and their ability to meet the company’s brand needs in terms of infrastructure, manufacturing capacity, and workforce skills. The company will also continue developing its presence in key European markets such as Germany, France, and Italy. It currently derives a significant proportion of its sales revenue. The organizational objectives of Burberry Group PLC are to:

1. Design and manufacture innovative luxury products available in multiple channels and locations worldwide;

2. Develop new brands and concepts within the luxury fashion sector;

3. Deliver exceptional customer experiences through retail stores, e-commerce, social media, and digital marketing;

4. Create long-term shareholder value by investing in brand development and growth opportunities for the business;

5. Operate a sustainable business model focused on optimizing efficiency, and reducing waste and emissions across our supply chain; ( Zozulya, Radomski, Boey, Lozanoski, Nathani, and Sheppard, 2015).

6. Maintain strong relationships with our stakeholders, including employees, suppliers, consumers, investors, regulators, and other stakeholders, based on mutual trust, respect, and transparency;

7. Ensure high levels of ethical conduct throughout the organization;

The Regulatory Context

The financial services sector is highly regulated. As a result, the regulatory context in which the Burberry Group plc operates and manages its risks is complex and multifaceted. The firm operates in several jurisdictions and is subject to different regulatory regimes.

Regulations

The first regulation is the Bribery Act 2010 (BA). This act makes it illegal to offer, promise or give someone anything with the intent to influence them or someone else to gain an advantage to commit fraud or another offense. It also makes it illegal for someone to accept such an offer or promise. The act applies to anyone working for or providing services to a business (including an individual). It is based on the premise that bribery can be used to good corrupt governance (Bribery Act 2010). The second regulation is the Money Laundering Regulations 2007 (MLR) (Sequeira, 2020). This law was introduced as part of efforts by the UK government to combat money laundering activities following the 9/11 attacks (Money Laundering Regulations 2007). The third regulation is the Data Protection Act 1998 (DPA). This law gives people specific rights regarding their data, such as access to information about them, correction of inaccurate records, and anonymity.

Organizations

The regulatory context in which the firm operates and manages its risks is defined by the (FCA) and the (PRA). The FCA is responsible for protecting consumers and promoting competition, while the PRA regulates banks, credit unions, building societies, insurers, and investment firms. The FCA has three objectives: protecting consumers, maintaining market integrity and confidence in the UK financial system, and promoting effective competition.

The FCA has several areas it focuses on:

●       Protects consumers and markets from harm, whether caused intentionally or not;

●       Conducts market research to ensure that consumers have access to products that meet their needs; Enforces(Sequeira, 2020)

●       Compliance with laws and regulations;

●       Helps to develop law by advising Parliament and government departments;

●       Promotes awareness of financial education.

●       Other organizations that provide regulations that apply to Burberry are those set out by the FSA and MHRA. The FSA regulates food safety, whereas the MHRA regulates medicines, medical devices, cosmetics, and veterinary medicines. Both organizations have similar aims but take a different approaches to achieve these aims:

FSA – Assisting consumers to make informed choices about food safety;

MHRA – Protecting public health by ensuring that all medicines, medical devices, and cosmetics are of acceptable quality, safe and effective.

Risk Assessment Method

Risk management is an important part of the organization’s strategy. A risk assessment matrix assesses threats by presenting an appropriate risk scoring matrix and outlining the risk acceptance threshold. The organization uses a risk assessment method called the Balanced Scorecard (BSC) as a framework for managing risk (Roberts, and Piller, 2016). The BSC has four perspectives: financial, customer, internal business process, and learning & growth. Each perspective is measured using a balanced scorecard with four strategic goals and three key performance indicators (KPIs). In addition, each goal has an associated weighting, which indicates its importance to the organization. The Balanced Scorecard allows the organization to identify and manage risks quantitatively. It also provides a mechanism to monitor the effectiveness of current strategies and identifies areas where improvements can be made.

Risk Scoring Matrix

The risk scoring matrix below shows the relationship between impact, likelihood, and potential exposure in terms of their potential impact on the organization’s performance over time. It also shows how each element is scored within each category based on its relative importance when assessing threats:

The organization has a defined risk assessment method that uses a risk scoring matrix. The following is the matrix:

-Impact: 0 to 5;

- Likelihood: 0 to 5;

- Consequences: 0 to 5.

The organization has set a threshold of 3 for each scale as below:

Impact (0-5) - A score of 0 means no impact on the business, such as low or no impact on revenue and profit. A score of 1 means some impact, but internal resources can manage it, for example, lost customers due to poor service ( A score of 2 means a significant impact on the business, such as lost customers due to poor service, which cannot be managed internally, or loss of reputation due to fraud(Stevenson, and Cole, 2018). A score of 3 means that there will be a major impact on the business, such as lost customers due to poor service, which cannot be managed internally and loss of reputation due to fraud which cannot be managed internally, and loss of reputation due to fraud which cannot be managed internally and loss of reputation due to fraud which cannot be managed internally and loss of reputation due to fraud which cannot be managed internally and loss of reputation.

The acceptance threshold is where management will decide what they are prepared to accept as part of their risk management process. For example, suppose the organization has set an acceptance threshold at 5 for impact (Stevenson, and Cole, 2018). This means that any threats with an impact score of 5 or above will not be accepted by management as part of their risk management process and will therefore not be mitigated by them either.

The risk acceptance threshold will be based on the value of assets at risk or potential loss from a potential threat. The organization has identified that it will not accept any threat with a score higher than 5 in terms of impact as this would cause significant damage to its brand image and reputation, which would have long term effects on sales revenue and profits due to consumer confidence being lost in the company products or services being supplied by them.

2.4. Recommended Templates for Risk Registers

Risk Register table for Threats (recommended template)

Risk Register table for Opportunities (recommended template)

Conclusion

In conclusion, this paper has presented a risk and opportunity assessment of The Burberry brand known for its iconic designs and high-quality products. The brand has expanded over the years to include dress coats, raincoats, sportswear, and accessories, including handbags and shoes. The regulatory environment in which Burberry operates is the UK’s Financial Conduct Authority (FCA). The FCA is the UK’s independent regulator of financial services. The company has adopted several policies and procedures to comply with regulatory requirements. The most important regulation that applies to the company is the Bribery Act which began in 2011. This legislation prevents organizations from paying bribes to secure business or political advantage anywhere globally. It also prohibits individuals from receiving or accepting bribes as part of their job responsibilities.

References

Moore, C.M. and Birtwistle, G., 2004. The Burberry business model: creating an international luxury fashion brand. International Journal of Retail & Distribution Management.

Ohkita, K., 2017. Coopetition through International Luxury Brand Licensing: Burberry in Japan. In Global Opportunities for Entrepreneurial Growth: Coopetition and Knowledge Dynamics within and across Firms. Emerald Publishing Limited.

McMaster, M., Nettleton, C., Tom, C., Xu, B., Cao, C., and Qiao, P., 2020. Risk management: Rethinking fashion supply chain management for multinational corporations in light of the COVID-19 outbreak. Journal of Risk and Financial Management, 13(8), p.173.

Pardal, MAMMDC, 2021. Equity valuation of Burberry Group Plc (Doctoral dissertation).

Power, D. and Hauge, A., 2008. No man’s brand—brands, institutions, and fashion. Growth and Change, 39(1), pp.123-143.

Roberts, D.L. and Piller, F.T., 2016. Finding the right role for social media in innovation. MIT Sloan Management Review, 57(3), pp.41-47.

Sequeira, M.A.B., 2020. Burberry, tisci and streetwear (Doctoral dissertation).

Stevenson, M. and Cole, R., 2018. Modern slavery in supply chains: a secondary data analysis of detection, remediation and disclosure. Supply Chain Management: An International Journal.

Zozulya, D., Radomski, D., Boey, E., Lozanoski, H., Nathani, A. and Sheppard, J., 2015. Burberry Group PLC.