The instrumentality of political stability can have categorical affect on business and manufacturing. The manufacturing of Burberry products in China could potentially effect the price and cost construction if the constancy of the political environment deviates. Further, government policies can lead to restricted spending by consumers.

 

The Chinese government recently instated a new policy with regards to “gift giving” to state officials. This had a direct impact on Chinese product demand. “China's State Administration of Radio, Film and Television (SARFT) moved to ban advertising which encourages giving luxury gifts to authorities, raising concerns that further pain for the sector and other areas of the luxury goods market is imminent.” (http://www.cnbc.com/id/100445071) 

 

Further, the “Burberry Group continues to identify as a principal risk that revenues are increasingly dependent on consumers from the Asia region with a significant proportion of the sales to Asian consumers globally. Since the last Annual Report, the Asian trading environment is becoming more uncertain. In particular, there were disruptions in Hong Kong, a high margin market, resulting in a deceleration in comparable retail sales in Hong Kong in the second half of the financial year.” (http://www.burberryplc.com/documents/annual_reports/annual-report-2014-15.pdf)

 

 

 

 

The economic variables reflect the monetary status of the global economy, and how that will impact growth and sales. Levels of business, operational success, and development rates act as an indicator for future revenue.

“Retail sales made up 71% of revenue (2014: 70%); with 214 mainline stores, 213 concessions within department stores, digital commerce and 57 outlets. · Retail sales up 14% underlying: up 11% at reported FX. · Comparable sales up 9% (H1: 10%; H2: 9%). · New space contributed the balance of growth (5%). · Digital outperformed in all regions.” (http://www.burberryplc.com/documents/annual_reports/annual-report-2014-15.pdf)

 

“About 65% of Americas revenue came from retail, with double-digit comparable sales growth during the year evenly balanced between halves. Domestic customers still account for about 90% of transactions.” (http://www.burberryplc.com/documents/annual_reports/annual-report-2014-15.pdf)

 

Further, a net “14 mainline stores and concessions were closed during the year (13 openings and 27 closures), reflecting continued evolution of the store portfolio particularly in China and South Korea.” (http://www.burberryplc.com/documents/annual_reports/annual-report-2014-15.pdf)

 

 

 

 

The social factors represent the the brands association with the general public. This includes the brands demographics, public contribution, and appropriation of lifestyle and living conditions.

 

The Burberry demographic ranges from the progressive twenty-something to the conservative sixty-something. The highest customer volume is produced by the Asian market, and ranges from upper-middle to upper class. Burberry has also established numerous public contributions and has “continued to donate 1% of Group adjusted profit before tax to charitable causes around the world, totaling £4.6m in the year (2013/14: £4.6m), with the majority going to the Burberry Foundation (UK registered charity number 1154468), created to help young people realize their full potential. Since its launch in 2008, the Foundation has supported over 40 innovative youth charities around the world, directly and indirectly impacting the lives of over 150,000 young people. The Foundation continued to expand its bespoke employability program during the year, designed to help disadvantaged young people develop key workplace skills, confidence and aspirations. Over 100 young people participated in London, Castleford, New York, Hong Kong, Shanghai, Beijing, Chengdu, and Guangzhou.” (http://www.burberryplc.com/documents/annual_reports/annual-report-2014-15.pdf)

 

 

 

“To engage consumers with the brand, Burberry developed increasingly personalized and connected experiences across consumer touch points. Burberry again finished the year as one of the most followed luxury brands on social media, including over 16 million fans on Facebook, over three million on Twitter and over two million on Instagram.

 

Key partnerships also helped to strengthen the brand’s presence in flagship markets. Burberry was the first British luxury brand to partner with the French department store Printemps for its festive celebrations, taking over the atrium, windows and façade of its Paris flagship store with interactive displays and offering exclusive limited edition products.

 

Globally, digital commerce continued to increase in importance, growing 30% in the year at constant exchange rates. While this channel was dominated by the USA, the fastest growth rates were in Asia. Key structural changes in digital commerce included mobile which was gaining market share and shortened delivery times which were creating competition with physical stores. The growth of digital, both for sales and communication, had encouraged brands to increase their focus on their ‘omni-channel’ presence.” (http://www.burberryplc.com/documents/annual_reports/annual-report-2014-15.pdf)

 

 

 

“Burberry has a strong commitment to reducing its environmental impact globally and has an active program dedicated to reducing the impact of its supply chain and internal operations. All of the targets are based on the results of the 2012 independent baseline assessment of Burberry’s environmental impacts arising from materials, energy, water, chemical inputs and waste measured in CO2e. Focused on resource efficiency and mitigating climate change, all 15 environmental targets are owned and monitored by members of the Senior Leadership Team.

 

Burberry continues to invest in the design and quality of every product, and is committed to dramatically reducing the impact of its products. The brand remains committed to minimizing its environmental impacts.” (http://www.burberryplc.com/documents/annual_reports/annual-report-2014-15.pdf)

 

 

 

“Burberry focused on ensuring that its supply chain is sustainable and responsible. The Ethical Trading Program, explained further in the Burberry Impact section, continued to support labor rights in the supply chain. As a corporation they are consistent with efforts to promote fair and sustainable employment practices, Burberry was proud to have become the first luxury retailer and manufacturer to achieve accreditation as a UK Living Wage employer.” (http://www.burberryplc.com/documents/annual_reports/annual-report-2014-15.pdf)