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This paper aims to give the shareholders reasonable recommendations on buying, holding or selling Burberry’s shares. It takes account of the business strategy, and ratios from financial statements, presented in Part 2 and 3. We consider the competitive forces of Burberry using Porter’s five-force framework. Then, we analyse Burberry’s financial conditions comparing with LVHM and come to the conclusion that although the ROE is declining, Burberry has a better ratio of ROE than most of its competitors. Finally, we forecast the key index in Part 4 and then use different models on valuation of the firm in part 5. A conclusion can be made that Burberry’s share price will increase in the future, thus we recommend that Burberry’s shareholders can hold and buy more stocks to gain the yields from dividend and rise in stock price. Burberry’s Industry & Company Strategy Analysis Industry Analysis In the past five years, although the increase of consumers drives the emerging market to robust, the luxury market met a challenge of economies headwinds. The luxury price increases from 10% to 15% to control the devaluation of sterling, while some objective macro factors slightly worsen the performance of luxury business. Meanwhile, geopolitical concerns also impact GDP and the return of equity. Company Analysis Threat of New Entrants. The threat of new entrants to Burberry is relatively small. Burberry has established a potential entry barrier: a huge number of money has been designed to provide a sensitive supply chain, which can save time and cost to the maximum extend and satisfy the high quality requirements of production. Rivalry among Existing Firms. With the popularity of the internet business and the rising cost of shop, Burberry focuses on the electricity supplier and digital and plays a cost advantage. However, with other luxury brands have joined the digital army, Burberry’s pioneer advantage disappeared.On the whole, the luxury market competition is still fierce. Threat of Substitute Products. The threat of substitute products can have different results with different groups. For people who cannot afford luxury goods, the threat of substitute products is high, because the emergency of new brands with lower price, super imitation ability and fakes of luxury goods have caused great pressure on the existing luxury brands. Obviously, there are no substitute products for the loyal consumers of Burberry. Bargaining Power of Buyers. Burberry’s bargaining power of buyers is low. The consumption of Burberry for high-income group is higher than that for other groups. This group is highly sensitive to fashion and has a certain ability to consume. Bargaining Power of Suppliers. Burberry’s bargaining power of suppliers is low. This is mainly because Burberry take the way to obtain stable raw materials from the group internal factories and small order from external raw material suppliers in order to give full play to the competitive advantage and control the cost from the most primitive raw material link. In conclusion, luxury market has high barriers to entry. In addition, there is small bargaining power of buyers and suppliers.

Business Analysis and Valuation on the Burberry Group