The British fashion company,Burberry,is considering diversifying into the hotel business.Its optimal strategy is to:
A)Set up its own luxury hotel chain-that way it can appropriate all the profits from the venture
B)License its brand to an existing hotel operator-that way it can avoid the costs and risks of having to invest in all the resources and capabilities required by the hotel business
C)Stay away from hotels all together since this business is unrelated to Burberry's core fashion business
D)Establish a separate start-up company,Burberry Hotels,in which Burberry Group retains a minority equity holding

Question

Quizplus · Accepted Answer

Licensing its brand to an existing hotel operator allows Burberry to leverage its brand value while avoiding the significant costs, risks, and operational challenges associated with entering a new industry directly. This strategy enables Burberry to benefit from the hotel business without diverting too much from its core competencies in fashion.

The British Fashion Company,Burberry,is Considering Diversifying into the Hotel Business