Burberry Shifts Its Strategy in Japan Burberry, the icon British turury apparel company best tneten for its histh Gahioe outweat, bas been operating in Japan for ncarly half a century. Unill recently, its branded products wete sold under a licensing agrecment with Samyo Stokai. The Japanese company had considerable discretion as to how it entilined the Burberry brand. It sold everything fom rolf bess to mininkirts and Burbern clad Barbie dolls in its 400 stores arovind the country, typically. at prices significantly below those Burbery charped for its highend products in the Unined Kinploun. For a long time, it looked like a pood deal for Burterry. Samyo Shokai did aff of the marke developencnt in Japan. peneratine tevenues of around $00 million a year and. paying Burberry $80 mallion in annual rogalicy payments. However, by 2007, Burberry's CLO, Anpcla Ahrendts. was becoming inereasingly dinsatisfied with the Japanese licensing deat and 22 other tite it in countries around the process of terminating licensees before kavine Burb. erry to run Apple's retail division in 2014. Her hand. picied successor as CFO, Chritsopher Bailey, who nose through the design function at Burberry, has continued to parsese this sratesy. In Japan, the license was terminated in 2015. Samo Sholai was reguifed to close nearly 400 licensed Barb. erry stores. Burberry is not pling up on Japan, however. After all. Japan is the worlds secondtargest market for trury goods. Instead, the company will now sell prod. octs through a limited number of whotty ouned stores. The poal is to have 15 to 50 stores in the mod caclusive locations in Japan by 2018, Tocy will offer only highend products, such as Burbern's clasic $1.800 trench cout. In general, the price point will be 10 times hipher than was common for mosi Buberry products in Japan. The company realines the mone is tikly and fully copects sales to initially fall before rising acain as it rebails its brand. but CEO Bailey argues that the move is absolutely neces: ary if Burberry is to have a celherent plobal beand inape for its lasury products. the world. In Ahrendis's view, the licensing deals were dileting Burbern's core brand imape. Lieknsees wach as Saryo Shotal were selline s vile rane of peodocts at a much lower price point than Bubberry charged for peod. marked. "ubigaity sill kill yov-it means that you're not really luxury anymote." Morconet, with an increaside number of customers buyies lerberry products online and on trips to Britain, where the lirand was coevidencl erry to tiphty coentrol its slobal brand image. Ahrendas was defermined to rein in licensees and is if mean taking a shortterm kit to sales. She starticd off Case Discussion Ouestleas 1. Why did Burberry inieially ch one a lichensine. 2. What limitations of the licensing strateng be carre appareat ener time? Soceld Burberry have copected these drrobacks to arise? 3. Was terminating the Japasene licensing apecinent and opening wholly coned soess the comect atra tegic mowe for Barticry? whut are the rids here? 4. To what catent does internaliration theory explain Burtherry's experience in Japan? Add submission