Business Agility and Luxury Companies Defense – Master Thesis

May 20, 2014Advisor: DEBANE Franck; Student: KOLLER Hannah

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Agenda

I. Introduction

II. Presentation of business agility concepts

III. Driving forces in the luxury market

IV. Agility providers in the case of Burberry

V. Constraints and opportunities

VI. Conclusion

“Too much time can only teach you what can go wrong, not what could be

transformative.”- Mark Gerson, American entrepreneur -

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

I. Introduction: The idea behind the thesis

Business Agility

- responsiveness,

competency, speed, flexibility, innovativeness -

Luxury Markets- symbolism,

high price and quality

standards, aesthetic

attributes, rarity, extraordinary

touch -

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Hypothesis: Luxury companies need and apply agility concepts.

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

II. Business Agility

How to predict the future?

1. Projection

2. Proactivity

3. Reactivity

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

90% of companies regard business agility as key success factor

PastPresent

Future

PastPresent

Future

PastPresent

Future

Strategic Plan

Modification of the strategic plan

Scenarios

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Measurable advantages regarding revenue growth, employee loyalty and decision-making effectiveness

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Strategic agility anchored in the business model

Resource Fluidity

Strategic Sensitivity

Leadership Unity

Doz and Kosonen (2008)

“Business agility =equal exploitation of

the three concept dimensions”

“Business agility =speed, with which the build-measure-learn

loop can be performed”

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Operational agility preserves anentrepreneurial spirit

Ries (2011)

III. Luxury Market

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Huge micro-economic potential due to digital revolution and increasing customer heterogeneity

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Luxury Market

212 billion - 2012 -

Current Market

Risk Level

Market Potential

- High fixed costs- Sensitive customers - Exchange rate volatility- Counterfeit

- Consolidated landscape- Niche designer emergence- Little room for differentiation- Luxflation

- Country to city focus- Digital revolution- Homo- to

heterogeneity

Luxury Markets are also not immune against macro-economic influences

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Luxury Market

212 billion - 2012 -

Current Market

Risk Level

Market Potential

China‘s triple-tax system

- political -

Product and trademark

piracy- economic -

Thrill-seeking society- social -

Mobile revolution

- technological -

Green movement

- ethical -

Customer health

regulations- legal -

IV. Burberry Case

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Burberry as global, traditional and publicly listed luxury company(Business Model Canvas)

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Key Partners- Suppliers

- Production site managers

- Wholesale partners

- Models & Fashion show

managers

Key Activities - Designing

- Supply chain improvement- Transparency

creation

Key Resources- Designer

- Unique material- Physical store

presence

Value PropositionQualitative:- Exclusivity

- Brand & Status- Design

Customer Relationships

Personal assistance

ChannelsOwn retail network

Customer Segments

Niche market:- Millennials

Cost StructureValue-driven:- High margin

- High fixed costs (own retail stores)- No economies of scale

- Little economies of scope (own production site)

Revenue StreamsAsset Sale:

- Europe (44%)- Americas (27%)

- Asia Pacific (24%)

Burberry’s turn-around in order to catch up on strong industry growth

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

2nd in „Top Most Innovative Companies in Retail 2013“ ranking

Strategic agility as turnaround enabler and future business framework

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

- Strong relationship between Bailey and Ahrendts

- Top team nomination- Continuous internal communication of

vision

Resource Fluidity

Strategic Sensitivity

Leadership Unity

- Spread of a liberal mindset- Increased customer proximity- Embracing all hierarchy levels

- Buy-back of licenses- Roll-out of a company-wide SAP system- New supplier acquisition

Little product-related agility due to business nature, but…

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Seasonal products

1919 1930 1946 1974 2005 2013

DesignPresentation

at Runway Shows

Collection Order Production Distribution

Customer Feedback

Unique products

… strong service-related agility.

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Service-related

The Art of Trench

+1st Runway Livestream

Burberry Acoustic

+Click & Buy Livestream

Bespoke Service

Burberry World Live

Customer 360

2009

20102011

20122013

Build Involve Measure

V. Constraints and Opportunities

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Constraints don’t keep luxury companies from enjoying agility advantages

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Constraints Opportunities

Customer proximity and engagement (BI)

Customer service

Streamlined retail operations

Company-internal, worldwide connectivity

Nature of business

Consolidated market

Scepticism towards IT returns

Vertical integration trend

VI. Conclusion:Companies never know what the future will bring!

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Thesis:Luxury

companies need and

apply agility concepts

Product-related agility

Strategic agility

Service-related

Strategic

Operational

Thank you for your attention.

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

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Appendix

I. Introduction II. Business Agility III. Luxury Market IV. Burberry Case V. Constraints and Opportunities VI. Conclusion

Creation of the

questionnaire (December

2013)

Networking at the EDHEC Forum in

Paris (January 2014)

Email with embedded

questionnaire (January

2014)

Follow-up call (January/ February

2014)

Increased search via personal and thesis advisor‘s

contacts, EDHEC Alumni platform

(January/ February 2014)

First email contact (without

questionnaire) (February through

April 2014)

Telephone interviews

(15-30 min)(February through

April 2014)

Primary literature – research method

1. Phase

2. Phase