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

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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).

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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 ÂŁ4.0 billion against the profit of profits of ÂŁ782 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

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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 TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324

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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

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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).

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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).

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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.

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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.

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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 ÂŁ17millio 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 TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324

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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 firm’s 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 TOLL-FREE NO: +44 2038681671 WHATSAPP NO: +44 7999903324

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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

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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.

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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 Lewin’s, 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:

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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.

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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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