Burberry’s profits have not been meeting its shareholder’s expectations. Its sales growth has fallen from 30% to 20% in China, the largest luxury goods market.  Most analysts say that this slump in sales growth is mainly due to China’s economic slowdown, but shares in LVMH only went down by 4%, while Hermès sales in China has maintained the the same rate of growth.

Since Burberry has done terribly compared to its peers in the same environment, it is possible that its latest business strategy in is fundamentally flawed.  CEO of Burberry, Angela Ahrendts, has been fervently advocating the use of technology in Burberry’s marketing strategy.  Consumer habits have been shifting toward this direction, but it is questionable as to whether or not the luxury goods industry should also follow the technology trend.  Burberry products are very expensive, so buying one is quite a big decision.  It is very difficult as a consumer to make that decision without direct perceptual inspection of the real, tangible product. In addition to the lack of direct contact with the product, there is this inherent feeling of insecurity associated with digital transaction, making many consumers feel uncomfortable about paying large sums over the internet.

Upon the examination of consumer psychology, Ahrendts’ failure is due to the simple fact that most people feel more comfortable buying luxury goods in shops rather than online.

Work Cited:

“High-tech fashion: Burberry goes digital.” The Economist. N.p., n.d. Web. 1 Oct. 2012. <http://www.economist.com/node/21563353>.

“Sand in our stilettos: Burberry’s ‘Retail Theatre’ Concept.” Sand in our stilettos. N.p., n.d. Web. 18 Nov. 2012. <http://sandinourstilettos.blogspot.ca/2010/09/burberrys-retail-theatre-concept.html>.

During the past 10 years, China has become increasingly influential both politically and economically.  Many companies have taken advantage of the blooming Chinese market and the cheap labor, while others feel that China has been taking away too many opportunities. The United States and several European countries believe that China is more of a threat than an opportunity according to a study done by Transatlantic Trends.  China and the US have also been taking tough stances against each other in terms of economic policy.

However, surely no one can denies the contribution China has been making to support global economy.  After the global economic catastrophe of 2008, China put 4 trillion RMB into the market in order to ensure economic recovery, and managed to maintain an annual growth rate of more than 9%. This incredible growth rate helped many other countries regain confidence and bring up demand, thus leading to the eventual recovery of global economy in 2009.  Therefore, I think that the reason why some countries are viewing China more as a threat could be due to political reasons rather than economic reasons.

Works Cited:

“China contributes more to global economic recovery than US.” China.org.cn – China news, weather, business, travel & language courses. Web. 21 Sept. 2012. <http://www.china.org.cn/opinion/2012-03/26/content_24985353.htm>.

“Daily chart: Who’s scared of the dragon?” The Economist. Web. 21 Sept. 2012. <http://www.economist.com/blogs/graphicdetail/2012/09/daily-chart-11>.

The 2008 Wall Street crisis caused the world to experience the most devastating economic disaster since the 1930 Great Depression.  A significant cause of this crisis was due to defective mortgages (i.e. mortgages that did not contain all of the required documents) which created the housing bubble of 2006.  With little or no regard for the welfare of the general public, the companies writing high-risk mortgage loans eventually left people homeless and themselves penniless.

I believe that the basis of business ethics is the feeling of sympathy.  Only when people can feel sympathy for each other do the standards of ethics begin to take affect.  As Adam Smith said in The Theory of Moral Sentiments, humans have an inherent tendency to sympathize with others.  However, this is usually when the two subjects are closely related to each other or are directly observing the each others’ situation.  In the case of the 2008 economics crisis, a group of highly intelligent people manipulated the system unethically in order to maximize their profits, because their sense of sympathy during the process was reduced due to the complexity of the process itself.

Informative Video on the Wall Street Crisis: 29 Oct 2008 Wall Street Expects Collapse

Works Cited:

“Wall Street: Wall Street’s crisis.” The Economist – World News, Politics, Economics, Business & Finance. N.p., n.d. Web. 18 Nov. 2012. <http://www.economist.com/node/1088