Sample Assignment On Strategic Management of Next PLC Company

STRATEGIC MANAGEMNT
(STUDY OF NEXT PLC)
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Table of Contents
Introduction................................................................................................................................................3
TASK 1.......................................................................................................................................................3
About company.....................................................................................................................................3
Vision ....................................................................................................................................................4
Mission .................................................................................................................................................4
Objectives .............................................................................................................................................4
TASK 2.......................................................................................................................................................5
PESTLE Analysis .................................................................................................................................5
SWOT analysis......................................................................................................................................6
Strategic mapping..................................................................................................................................8
TASK 3.......................................................................................................................................................9
Relationship between their current strategy and history and Company's strategic capabilities............9
TASK 4.....................................................................................................................................................10
McKinney 7-s model ..........................................................................................................................10
Value chain analysis............................................................................................................................11
TASK 5.....................................................................................................................................................12
Analysing and evaluating the resource implications...........................................................................12
Management of change.......................................................................................................................13
Conclusion ..............................................................................................................................................14
REFERENCES.........................................................................................................................................15


INTRODUCTION
Strategic management is a very crucial component for business organizations primarily, because
of reason that it is a process through which enterprises can sustain and succeed in the market by way of
accomplishing their goals and objectives. It lays down the basis on which organization can attain
success and prolong its very existence in the market (Gagliardi, 2013). Present research assignment
consists of an evaluation of strategic management in terms of its importance for Next Plc, a leading
firm in UK retailing industry.
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Further, the report consists of a thorough external environment analysis of the retailing industry.
Herein, preference has been given in assessing the internal and external environmental analysis while
using PESTLE (Political, Economic, Social, Technological, Legal, and Environmental) analysis
Porter's five forces for the organization. Along with this, an evaluation also has been made to assess
competitive advantage of companies other than Next Plc, i.e. its competitors. Furthermore, internal
analysis of the enterprise also has been made in the present report. At last, relationship between current
strategy of firm and its history, along with assessment of company's strategic capabilities is discussed in
the report.
TASK 1
About company
Next PLC is the leading retailer of UK that was founded in 1982. The business entity largely
deals in clothing section or variety of cloths for men ad women, footwear and home product. In
addition, the corporate entity also deals in range of shoes and some accessories (Jeyarathnam, 2008).


Sooner, it has introduced range of collection for men, women and children as well as home equipment.
At present the company has more than 500 stores in the UK and Ireland. Along with this, there are 200
franchised stores all over the world. The entity has remained second largest clothing retailer in UK
after Marks ad Spencer. The company is involved in online business from where it offers range of
products to market customers. In this line, NEXT Directory which is a home shopping catalogue and
website is introduced by the entity. In online market, overall 4 million active customers have been
witnessed for the company who are taking services around 70 countries. The mentioned entity is also
involved in other business somewhat designing cloths for women. The company is having business
namely NEXT Sourcing which designs and sources the branded products. Next group include Lipsy,
which is known for designing and selling ow branded cloths for younger women's. The company listed
in London Stock Exchange (LSE: NXT.L) and has been see as the member of FTSE 100 Index. In Last
year i.e. 2015, it has earned sales of 4.0 billion against the profit of profits of 782 million (Dovey,
2011).
Vision
The vision statement of company shows its commitment to offer quality fashionable clothing,
auxiliary and furnishings for a reasonable price. The vision of corporate entity is to become number
one retailer of UK and to provide innovative and unique products to people for increasing the life
standard. The business entity has developed community whereby individual can found products
lifestyle on daily basis (Landrum, Howell and Paris, 2000). Having a clear vision, the company has
arranges its activities. In Next Plc, one can found proper communication in the stated objectives.
Mission
Mission statement of Nest Plc play an effective role in creating market image in the eyes of
internal and external customers. The mission of corporate entity is to become natural choice retailer
for fashion in entire UK market. The company wants to aware with the fashion needs and expect style,
of people so that best and quality product can be provided to remain competitive. With an aim of
meeting the needs of customers and exceed customers' expectations Next Plc designs its products. The
organization delivers Brand values as it is committed to ensuring ethical practices. The organization
believes that no-one should be harmed through business practices (Perrott, 2011). Additionally, the
entity is focused towards operating a responsible and successful business, providing superior service to


customers, involving the interest of shareholders. The company respect its employees, suppliers,
community and the environment to gain sustainable practices.
Objectives
Corporate objectives are to be design before commencing sustainable practices in the
marketplace. The mentioned entity designs objectives in line with the mission and vision of company
and is fully devoted to achieve desired marketplace through attaining objectives. The business
objectives of Next Plc are explained in following points :
To design the best quality of products
To meet the fashion needs of customers
To boost customer shopping convenience, through refurbished store and online presets
To gain higher market share in UK and Ireland. The company has set the objective to increase
10% market share ion UK till 2020.
To increase the sales by 20% by the year 2020 (Birkinshaw, 2004).
To meet the expectation of customers
To come up with innovation in Fashion market
To design the products being fully comply with all legislation
To reduce the negative impact on the environment by offering information a how to dispose of
products correctly
The corporate entity need to adopt strategic management through which above stated objectives can be
achieved. This shows the management approach adopting changes ad including modifications within
business processes of Next Plc (Gibson, 2012). The organisation is also in need of taking strategic
approaches so that improvements can be bring out in business practices.
TASK 2
PESTLE Analysis
The business environment of an organization keeps on changing with the period of time. There
arises need for a company to undertake strategic planning in an organization in an order to meet with
such changes. Next Plc being a retail organization uses PESTLE framework for evaluating the volatile
and changing working environment. The central idea behind the same is to analyse the impact of


external forces which is affecting the working of Next.
Illustration 1: PESTLE framework

(Source: Heckroodt, 2014)
PESTLE Analysis of Next Plc

Political It is operating in UK, Next has to follow European Union and therefore
government act are required to be addressed.
With the hard economic times in UK, the spending and budgets had affected the
customers spending. This ultimately affected the operations of the Next Plc.
Economic High inflation and rise in cotton price affected the financial strain to the
organization.
Low wages growth also affected the consumers demand (Abrams, 2013).
Social Change in demographic, social mobility, change in fashion and lifestyle are some
of the social factors affecting the business of Next plc.
With the growth in taste and preference of younger generation, the demand


changed rapidly and work became more challenging for such organizations.
Technological New development and inventions brought about a great change in field of
Information technology.
Next Plc influences with developments such as mobile, internet, mobile phones
etc.
Legal The increase in VAT from 17.5% to 20% by UK government is one such legal
transformation that affects business of Next Plc .
With the increase in labour rates, Next Plc started spending more on wages.
Environmental At times of severe weather conditions, sales of Next Plc hampered and operating
costs increased.
Company is committed to provide customers with the products making reductions
in carbon footprints.
SWOT analysis
Another framework which provides an analysis of the internal working of an organization is
SWOT method. This is a tool which measures the strengths and weaknesses of NEXT Plc and will also
evaluate the external opportunities and threats (Managing Leisure: An International Journal: Call for
papers. 2007).


Illustration 2: SWOT framework
(Source: SWOT Analysis. 2015)
SWOT Analysis of Next Plc

Strengths Weaknesses
Next Plc operations are reflecting good sales with Being pound as expensive currency, the inland
profits outcome. shops are more profitable as compared to Next.
It has the largest home shopping Website in the As per analysis, there is fall in its profit margin.
market of clothing. They produce more formal clothes than casual.
It has been successful in establishing its brand.
It utilizes good methods of advertising and
promotions.
Opportunities Threats
The benefit of large shops is ripened by the There is tough competition in UK's retail industry.
customers. Therefore, expansion is one such Next targets the people aged from 25 to 45 years.
opportunity. The competitors such as Marks and Spencer,
With the online shopping, sales can be enhanced. Sainsbury, John Lewis etc are performing
The expansion of new target market can be excellently (Wagner, 2004).


approached
Strategic mapping
Strategic mapping is considered as a primary stage where the organization defines the strategic
goals for achieving the organizational objectives. The strategic mapping of Next Plc has been provided
with respect to its organisational objectives achievements. There are four determinants which have
been expressed in respect to the strategic management. The central idea behind the same is to analyse
and evaluate the fund need, customer demand, internal processes of the businesses and aspects of
growth and learning in the organisation. The finance is the biggest requirement and is important in
analysing the fulfilment of project achievement (Sadler, 2003).

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The utilization of appropriate fund requirement is made to evaluate the management of business needs.
In Next Plc, need, demand and desire of customers are highly taken care. There are so many factors
such as product development, up gradation etc that affects working on internal businesses processes.
This is made by identifying the loopholes and working on them to achieve the desired outcomes. At
Next Plc, the aspects of decision making, communication, leadership, working environment etc are
taken care so that, working can become more effective and efficient. The core objective of this retail
organisation is to provide goods and services with better quality and quantity. This is to gain the
advantage of competitors. The company has a policy of initiating better learning outcomes which is
made by creating operational effectiveness and quality control techniques. Next Plc has a policy of
working to train its manpower towards learning and growth.
Porter Five forces


Porter's Five forces model is used to assess the external environment of business entity. The
section herewith deals with the Porter five force analysis for Next Plc. Here, is the Porter Five forces
for Next Plc:
Threats from New entrance: The corporate entity has high threats from new entrance in UK
clothing market. The organization has achieved sustainable practices in British retaining market.
However, some of new competitors who are entering the market can be a big threat to Next. There are
various big level companies who are entering into market due to less regulation, capital, knowledge
(Quinton and Harridge, 2003) . This have been become a threat to the company, nonetheless, business
entity has opportunities for brand posture through competitive offerings.
Competitive rivalry: There are number of clothing retailers in UK which represents the high
rivalry between Next Plc and other retailers. The biggest competitors of Nest Plc are Marks and Spence
and ASDA. These companies are facing competitive due to price, quality and services of products. In
this regard Next Plc is facing moderate rivalry for maintained good quality and services and it has not
been a big issue for business.
Bargaining power of customers : Customers are foremost stakeholders of business who have
interest in business and its practices. The customers of retaining industry are price sensitive as they
look for better quality at reasonable prices. As there are many competitive for Next Plc so it becomes
crucial to add value, like label, style, price or quality to products so that customers can be attracted. In
lack of such elements in products, customers can switch to other competitive brand (Polumbaum,
2001). Hence, Bargaining power of customers is high for next Plc.
Bargaining power of Suppliers: Suppliers are the internal stakeholders of company who proved
raw materiel to the business entity. In UK retailing market, there are lot of suppliers but their influence
over Next Plc is limited. Due of huge availability of supplier existing can be easily replaced by other
one in case of unsuitable policies. The bargaining power of suppliers for Next Plc is relatively low.
Substitute products: The organization has low treat from substitute products as it deals in branded
product and no one can provide same quality at the reasonable prices (Foss, 2007). All the product
offered by company are patented so it can be said that substitute threat is not a big issue in the clothing
retail market for NEXT.


TASK 3
Relationship between their current strategy and history and Company's strategic capabilities
The major aim of company is to attain the growth of business and to achieve desired market
share. In regard to attain the objectives of business, corporate entity has designed various strategies that
has provided extraordinary results to Nest Plc for succeed. Many of authors have revealed that today's
competitive world depends largely upon strategy formulation and their implementation. In this aspect,
Next Plc is focused towards current competitive strategies to achieve objectives.
In 2008, the corporate entity has introduced Lipsy for 17millio which deals with designing party
wears and other designer cloths for women and young girls (Kastberg, 2013). In order to appeal
younger women consumers, it has used range of retail, internet and wholesale channels. Formally, the
company was using only traditional channels for selling its products such as retail stores but now it has
approached towards online marketing. For this, company has introduced NEXT Directory which is a
home shopping catalogue and website. The major aim of introducing the online website is to attract
more and more customers towards products and providing the shopping convenience to them. As
business entity deals with range of products for men and woman so it has started initiating proper
market segmentation so as to aware with needs of customer and offering them products (Williams,
2009). The organization is committed for creating innovation in marketplace for which is has taken
further steps such as NEXT's catalogue/e-commerce arm, NEXT Directory, etc. Nevertheless, many of
other competitors have also adopted such channel to increase their profits. The corporate entity aiming
at providing clothing for Men, ladies and Children. The product of company are highly trendy and are
sold at moderate prices. It has been viewed that, Next Plc has achieved biggest 69% of revenue in 2000
from which 96% of accounts for UK market. In this manner, the mentioned entity has gained sufficient
marker share in UK that is the biggest aim. In addition, company is ranked number one in high street
category and well known for offering mail order facility between the age group of 20-40 age.
The corporate entity is capable providing range of quality products to its customers. It has been
witnessed that company initiates for innovative products (Jeffs, 2008). A big part of company's earning
goes for research and development that enable company to come up with innovation. The organization
is capable of good cash generation compared to their rivals and this increased case is used for opening
new stores and renovating old stores. The corporate entity has been seen capable of expanding online


sales via NEXT Directory as the sales has been increased. To the point of view of strategic aspect that
company is capable of controlling costs and budgeting conservatively to sustain growth. It enables to
keep the cost down and providing low cost ad reasonable branded product to the customers. The
earning per share for the company has been increased from last years that shows shareholder are
provided with increased divided. In addition, measurement of a firms profitability and shareholder
return represent that business is earring profits continuously. There are various expansion project in line
that represent future growth for company.
TASK 4
McKinney 7-s model
The model mentioned above presents 7 internal elements that are crucial to be brought together
for achieving success. The model is used for improving the performance of business and examine the
effects of future changes. Following points represent seven elements that are linked together for
achieving success in future for Next Plc :
Strategy- These are the most crucial part of business practices that are in line with the vision,
mission and corporate objectives. The business entity needs to design effective strategies for
developing products ad making innovations and regular innovations.
Structure- The mentioned business entity adopts hierarchical organizational structure that has
made in combination of unique philosophy (Friday and Friday, 2003). The employees in the
organization are respected and everyone has assigned with responsibilities. The company believes that
everyone in equally important in successful completion of business process.
System- Next Plc adopts an effective system as well as practical approach for assigning the work
to employees. It has HR department who is responsible for maintaining good relations with employees
and between management and employees. The organization believes if the employees are satisfied that
they will make the customer satisfied. The finance department is responsible for arranging funds and
investing into profitable projects.
Shared values- The business entity is following value system for serving products to customer
and treating with employees (Getting and keeping a competitive edge. 2014). The community and
interest of stakeholders is respected to be successful in the marketplace. In addition, the company has


core values of working with great people and in team while making work fun, innovation.
Style- The Woking style of Next Plc employees is unique that attracts talent pool from all around
the world. The company has standard policies for completed the works however the employees are
allowed to work in their best possible manner to attract customers.
Staff- The employees working at Next Plc are highly skilled and all of them contributes for
making the best efforts for making more successful. The management focuses towards providing
training to the employees in the areas in which they are lacking behind. In addition, the organization
motivates people to provide quality service to the consumers so that customer loyalty can be achieved.
Skill- The workplace of Nest Plc is filled up with Skilled people and those people are specialized
in their functional area (Saloner, Shepard and Podolny, 2001). This is all due to effective recruitment
and selection procedure. Along with this, it focuses towards training ad development of employees.
Value chain analysis

The concept of business management has an aim of developing the concept of value chain. The
value chain analysis of Next Plc has been shown in consideration to its works, business operations and
activities. They are stated as follows:
Primary Activities
Inbound Logistics: The inbound activities of the Next Plc is inclusive of choosing the finest
quality of goods and services. They procure goods from the suppliers whom they have tied very
securely. They are then transported from one place to their main stores. There are then,
packaged and storage has been provided to its retails stores (Cabrey and Haughey, 2014). The
distribution process is undertaken very properly.
Operations: Next Plc is working in many parts of UK and have number of retail stores working
which are licensed. According to its annual report, the company generates good total revenue.
Outbound Logistics: There is very less interference of the intermediaries in making the product
sells in the market. The company generally offers sales to formal wear in respect to clothing.
Marketing and sales: These are the most vital function which are carried out with an objective
of effective promotion functions. The company offers good investment in its advertisements and
promotional activities. The core work lies in making effective marketing base. This is made by


identifying the high level of quality in addressing market activities when ever new product is
being launched at the market place.
Service: this is the most crucial aspect which is required to be taken (Planning and Executing
Change Effectively. 2015). Acknowledging the customer and the associated services are the
important things which are required to be made in respect of knowing customer loyalty and
expectations.

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Support Activities
Infrastructure: This is the most important factor which is required to be maintained in an order
to maintain good and effective complement of the Next Plc. In similar fashion, the emphasis is
given on good designs of stores in an order to attract customers.
Human Resources Management: The manpower is the biggest asset to workforce. The
employees of Next Plc are motivated by providing incentives and benefits. This in return helps
to reduce the employee turnover and make them efficient and effective in working.
Technology development: The concept of using tactics for assessing technology is made in
using internet, mobile phones etc in an order to facilitate workings by its manpower (Heckroodt,
2014). The company has online portal which helps in online shopping, receiving feedbacks and
suggestions. Any change in the latest technology are accessed for ripening the benefit by Next
Plc.


TASK 5
Analysing and evaluating the resource implications
According to the study provided in the above cases in respect of Next Plc, several things have
been analysed. There has been provided an analysis and evaluation of the resources implications of the
research made so far. It is recommended to take into account the areas which are supported by the use
of several models. There is need to analyse the impact as well. It has been reflected that in context to
make decisions, an overview of the consequences are based on the decisions made. The significance the
impact analysis is to understand the negative impact of the change and its management in the
organization. This is a structure base which provide the appro0raches which the Next Plc followed for
proposed changes. The crucial decision is need to take which refers to ideas undertaken for carrying out
the project. It is recommendable to use small desk exercise to conduct the solution for team work. In a
crux, it has been determined that certain determinants are considered to make the need of resources
need fruitful. Therefore, it is suggestible to make use effective use of resources such as allocation of
funds requirement, proper utilization of physical and manpower resources to ripen the benefit of long
and short term objectives achievement.
Management of change
Next Plc paves greater significance to the strategic management and planning. They believe the
fact change is inevitable and thus an organisation should be well prepared with the aspect of change.
According to Lewins, change is needed to be managed by exercising the change model and its
applications. Next Plc relay on same by using following steps of Lewin's change model stated as
follows:


Illustration 3: Lewin's change model
(Source: Planning and Executing Change Effectively. 2015)
Unfreeze According to this stage, Next Plc undertakes the activities which demand change. The
realization has been developed to undertake the activities which needs to be reforms. There are
several organisations, where before implementation of change aspect, there essentially arises need
to prepare the associated resources with the preparations to accept the transformation.
Change As per this stage of change model, it has been analysed that at this unfreeze stage, as name
suggest, the existing things are set back to the earlier models. This is the stage where efforts are
employed to make the changes resolved. New ways are developed to being creative and innovative
changes to do work in an organisation. For example, employees at Next Plc are made aware about
the uncertainty issues and prepare them to work for accepting the changes.
Refreeze According to the change model, this transformation is brought about shaping of change in
an individual. This is made by infusing new processes and procedures that means Next Plc is ready
to refreeze. This stage ensures that changes are used all the time and are incorporated into the
working and operations of the business. After having a new sense of firmness, people of the Next
plc starts feeling confident and comfortable with the transformation.


CONCLUSION
Strategic Management is the most important part of an organisation. Every company has to plan
some objectives or goals for carrying out the effective work performance. As per the research provided
by considering an organisation from retail industry, strategic planning of Next Plc has been made.
Firstly, an understanding of the environment scanning has been provided in respect of understanding
the aspect of external forces. The strategic analysis helps to identify the competitive advantage of this
retail industry. Lastly, the determination of the key elements of strategic management has been made by
knowing the change and the factors which are considered by this retail organisation in handling the
associated changes.

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REFERENCES
Journals and Books
Abrams, J., 2013. Managing Sport Business: An Introduction. Managing Leisure. 18(1). pp. 92-93.
Birkinshaw, J., 2004. Strategic management. Cheltenham, UK: Edward Elgar Pub.
Dovey, D., 2011. Managing Risk in Sport and Recreation. Managing Leisure. 16(3). pp. 243-244.
Foss, N., 2007. Strategic belief management. Strategic Organization. 5(3). pp. 249-258.
Friday, E. and Friday, S. S., 2003. Managing diversity using a strategic planned change approach.
Journal of Management Development. 22(10). pp. 863 880.
Gagliardi, D., 2013. Next generation entrepreneur: innovation strategy through Web 2.0 technologies in
SMEs. Technology Analysis & Strategic Management. 25(8). pp. 891-904.
Getting and keeping a competitive edge. 2014. Strategic Direction. 30(1). pp. 20-22.
Gibson, D., 2012. Game Changers for Transforming Learning Environments, in Fayneese S. Miller
(ed.) Transforming Learning Environments: Strategies to Shape the Next Generation (Advances
in Educational Administration. 16. Emerald Group Publishing Limited. pp. 215 235.
Jeffs, C., 2008. Strategic management. Los Angeles: SAGE.
Jeyarathnam, M., 2008. Strategic management. Mumbai: Himalaya Pub. House.
Kastberg, G., 2013. Separation and reconnection episodic organizational arenas in the strategic
process. Journal of Strategy and Management. 6(3). pp. 212 228.
Landrum, E. N., Howell, P. J. and Paris, L., 2000. Leadership for strategic change. Leadership &
Organization Development Journal. 21(3). pp.150 156.
Managing Leisure: An International Journal: Call for papers. (2007). Managing Leisure, 12(4), 299-
300.
Perrott, E. B., 2011. Strategic issue management as change catalyst". Strategy & Leadership. 39(5).
pp. 20 29.
Polumbaum, J., 2001. Book Reviews : Gender and the South China Miracle: Two Worlds of Factory
Women.
Quinton, S. and Harridge, S., 2003. OnLine Wine Strategic or Tactical?. International Journal of
Wine Marketing. 15(1). pp. 34 43.
Sadler, P., 2003. Strategic management. Sterling, VA: Kogan Page.


Saloner, G., Shepard, A. and Podolny, J., 2001. Strategic management. New York: John Wiley.
Wagner, C., 2004. Enterprise strategy management systems: current and next generation. The Journal
Of Strategic Information Systems. 13(2). pp. 105-128.
Williams, K., 2009. Strategic management. New York. N.Y: DK Pub.
Online
Cabrey, S. T. and Haughey, A., 2014. Enabling organizational change through strategic initiatives.
[PDF].Available through:< http://www.pmi.org/~/media/PDF/Publications/Enabling-Change-
Through-Strategic-Initiatives.ashx>. [Accessed on 24th June 2015].
Heckroodt, S., 2014. Should management move beyond PESTLE? [Online]. Available
through:<http://www.usb-ed.com/content/Pages/Should-management-move-beyond-
PESTLE.aspx>. [Accessed on 24th June 2015].
Planning and Executing Change Effectively. 2015. [Online]. Available through:<http://www.web-
books.com/eLibrary/NC/B0/B58/047MB58.html>. [Accessed on 24th June 2015].
SWOT Analysis. 2015. [Online]. Available through:<http://www.investopedia.com/terms/s/swot.asp>.
[Accessed on 24th June 2015].


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STRATEGIC MANAGEMNT

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Illustration 1: PESTLE framework

PESTLE Analysis of Next Plc

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SWOT Analysis of Next Plc

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Value chain analysis

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