Introduction
Luxury brand Burberry was founded in 1856 by Thomas Burberry, a 21 year old former
draper’s apprentice .When Burberry first introduced his brand, it was known for its
hardwearing, water-resistant and breathable fabric. Burberry developed a technique to
waterproof his yarn before wearing. This advanced material allowed Burberry to be the
main trench coat supplier to the British army. Today with a market capitalization of $10
billion, over 500 stores in over 50 countries and annual sales of over $3 billion the
company is one of the world’s biggest designer brands (burberryplc.com, 2013). Burberry
was able to keep pace with cutting-edge trends and shed its old-style status just a few years
ago to reach a top position within its industry.
This paper will attempt to draw on the resources and capabilities literature which fuelled
Burberry’s sustainable competitive advantage. The report will be divided into four parts.
The first part will analyse Burberry’s biggest core competence, digital innovation, which
was built on the company’s technology resource. Part two will focus on its second core
competence, unique and monumental campaigns which factor its long-standing reputation.
The third core competence is its distribution channels, specifically the retailing format,
which is closely associated the company’s financial resource. Part four will assess the
firm’s competitive advantages by using VRIN framework of Barney (1991) and
information from previous discussions.
Overview:
There are two types of resources which a company can possess, tangible and intangible.
Tangible resources consist of an organization’s physical assets such as labour and capital.
Intangible resources are non-physical assets such as information, reputation and
technology. (Johnson et al 2006). These resources contribute to the root system that
provides nourishment, sustenance and stability to the company’s core competencies
(Prahalad and Hamel, 1990). It is essential to identify core competencies because it is
difficult to retain these capabilities in a fluctuating economic environment and amidst
fierce competition. In the work of Prahalad and Hamel, the author’s example of how to
integrate the core competencies using architecture strategies based on a technologically
developing market has been effectively applied to Burberry’s case.
Digital innovation
According to Prahalad and Hamel, “Core competencies are the collective learning in the
organization, especially how to coordinate diverse production skills and integrate multiple
streams of technologies “(1990). Moreover, Christopher Bailey – Creative Officer of
Burberry said that “for brands, digital technology allows for a cohesive and consistent
point of view to be communicated in a way that is dynamic, inspiring and engaging”
