Question

Why did Burberry initially chose a licensing strategy to expand its presence in Japan? What limitations of the licensing strategy became apparent over time? Should Burberry have expected these drawbacks to arise? Was terminating the Japanese licensing agreement and opening wholly owned stores the correct strategic move for Burberry? What are the risks here? To what extent does internalization theory explain Burberry’s experience in Japan?

Answer 1

The main reason was that for 50 years Burberry  licensing arrangement with Sanyo Shokai generated them a revenue of  $800 M and the company need not spend money on developing its iconic brand in japan

Explanation:

Why did Burberry first license in Japan?

The main reason was that for 50 years Burberry  licensing arrangement with Sanyo Shokai generated them a revenue of  $800 M and the company need not spend money on developing its iconic brand in japan

What limitations of Burberry's licensing strategy became apparent over time? Should they have expected these drawbacks?

The most important factor was the pricing caused problems because the product of Burberry  was  priced  lower than the company charged in other countries

Was terminating the Japanese licensing agreement and opening stores the correct strategic move for Burberry? What were the risks?

Burberry had little /no choice left  but to end the agreement with Sanyo Shokai .Yes opening its own  stores in japan  was  the correct strategic move for Burberry . Burberry now assumes all costs and risks of operating in Japan.

To what extent does Internalization theory explain Burberry's experience in Japan?

We can say that  Burberry's experience is consistent with internalization theory  - while the company licensed its brand initially,it ended its licensing arrangement in favor of wholly-owned operations to gain better control over its brand and how it is was being used