Burberry Licensing Strategy to Expand Its Presence in Japan Case Assignment Please read this case and answers each questions, each questions need 50-75 wor

Burberry Licensing Strategy to Expand Its Presence in Japan Case Assignment Please read this case and answers each questions, each questions need 50-75 words. Due US pacific time, 5/1 CLOSING CASE
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Burberry Shifts Its Strategy in Japan
Burberry, the icon British luxury apparel company best
known for its high-fashion outwear, has been operating in
Japan for nearly half a century. Until recently, its branded
products were sold under a licensing agreement with
Sanyo Shokai. The Japanese company had considerable
discretion as to how it utilized the Burberry brand. It sold
everything from golf bags to miniskirts and Burberry-clad
Barbie dolls in its 400 stores around the country, typically
at prices significantly below those Burberry charged for
its high-end products in the United Kingdom.
For a long time, it looked like a good deal for Burberry.
Sanyo Shokai did all of the market development in Japan,
generating revenues of around $800 million a year and
paying Burberry $80 million in annual royalty payments.
However, by 2007, Burberry’s CEO, Angela Ahrendts,
was becoming increasingly dissatisfied with the Japanese
licensing deal and 22 others like it in countries around
the world. In Ahrendts’s view, the licensing deals were
diluting Burberry’s core brand image. Licensees such as
Sanyo Shokai were selling a wide range of products at a
much lower price point than Burberry charged for prod-
ucts in its own stores. “In luxury,” Ahrendts once re-
marked, “ubiquity will kill you—it means that you’re not
really luxury anymore.”* Moreover, with an increasing
number of customers buying Burberry products online
and on trips to Britain, where the brand was considered
very upmarket, Ahrendts felt that it was crucial for Burb-
erry to tightly control its global brand image.
Ahrendts was determined to rein in licensees and re-
gain control of Burberry’s sales in foreign markets, even if
it mean taking a short-term hit to sales. She started off
*Angela Ahrendts, “Burberry’s CEO on Turning an Aging British Icon into
a Global Luxury Brand,” Harvard Business Review, January-February 2013.
Sources: Kathy Chu and Megumi Fujikawa, “Burberry Gets a Grip on
Brand in Japan,” The Wall Street Journal, August 15-16, 2015; Angela
Hrendts, “Burberry’s CEO on Turning an Aging British Icon into a Global
Luxury Brand,” Harvard Business Review, January-February 2013; Tim
Blanks, “The Designer Who Would be CEO,” The Wall Street Journal Mag-
azine, June 18, 2015; G. Fasol, G., “Burberry Solves Its ‘Japan Problem,’ at
Least for Now,” Japan Strategy, August 19, 2015.
the process of terminating licensees before leaving Burb-
erry to run Apple’s retail division in 2014. Her hand-
picked successor as CEO, Christopher Bailey, who rose
through the design function at Burberry, has continued to
pursue this strategy.
In Japan, the license was terminated in 2015. Sanyo
Shokai was required to close nearly 400 licensed Burb-
erry stores. Burberry is not giving up on Japan, however.
After all, Japan is the world’s second-largest market for
luxury goods. Instead, the company will now sell prod-
ucts through a limited number of wholly owned stores.
The goal is to have 35 to 50 stores in the most exclusive
locations in Japan by 2018. They will offer only high-end
products, such as Burberry’s classic $1,800 trench coat.
In general, the price point will be 10 times higher than
was common for most Burberry products in Japan. The
company realizes the move is risky and fully expects sales
to initially fall before rising again as it rebuilds its brand,
but CEO Bailey argues that the move is absolutely neces-
sary if Burberry is to have a coherent global brand image
for its luxury products.
Case Discussion Questions
1. Why did Burberry initially chose a licensing
strategy to expand its presence in Japan?
2. What limitations of the licensing strategy be-
came apparent over time? Should Burberry have
expected these drawbacks to arise?
3. Was terminating the Japanese licensing agreement
and opening wholly owned stores the correct stra-
tegic move for Burberry? What are the risks here?
4. To what extent does internalization theory ex-
plain Burberry’s experience in Japan?
Design Elements: Implications (idea): ©ARTQU/Getty Images;
Problem (jigsaw): ©ALMAGAMI/Shutterstock; All Others:
©McGraw-Hill Education.

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