Strategic Analysis: Next Public Limited Company - Essay Example

Strategic Analysis: Next Public Limited Company By: Table of Contents Table of Contents 2 1 Business Overview 3 1.2 Business Model 3 2.0 Macro-environment Scrutiny: Pestle Framework 4 2.1 Political 4 2.2 Economic 5 2.3 Social 5 2.4 Technological 5 2.5 Legal 5 2.6 Environmental 6 3.0 SWOT Analysis 6 3.1 Strengths 6 3.2 Weaknesses 6 3.3 Opportunities 6 3.4 Threats 7 5.0 Strategic Commitment 8 8.0 Appendix 12 1.0 Introduction 1.1 Business Overview Next Public Limited Company, known as Next plc, is a fashion enterprise that opened its doors in February 1982 and has been making momentous inroads within the retail industry since then. As of 2014, the organisation had 541 functioning stores within UK and Eire and an additional 200 stores in operation from 40 different nations (Next plc, n.d). With 52,533, employees out of whom 28,568 are permanent, the organisation habitually aims towards making sure that it understands the demands of its customers and provide them with elegant and high-quality products, thereby guaranteeing value for their money. Apart from UK, Next plc has major operational bases in Sri Lanka, India, and China. 1.2 Business Model As of last year, the revenue of the organisation stood at GBP 3.7 billion while registering GBP 695 million in pre-tax profits (Next plc, 2014). Apart from its well-organised workforce, the operations of the enterprise mainly depend on its sound business model, which appreciates the input of all the stakeholders involved, including the customers and shareholders. Next plc assures its shareholders of extensive returns that come in the form of sustainable growth in earnings, shares and cash disbursements (Next plc, n.d). To the customers, the organisation routinely develops a broad range of classy products that gratify the needs of children and adults across both genders. Next plc has made it simple for its customers to make purchases, as they have the provision of making both online orders and payments. Most of the deliveries are often made within a twenty-four hour period, with the online platform serving customers in over seventy nations. Over and above, the administrators of the organisation run the business in a responsible manner, taking into consideration all the environmental, social, and ethical aspects of the market. The fluctuation of the global market makes it mandatory for businesses to be malleable and ready to adapt to alterations. These changes are routinely achieved in the form of business policies that are adapted by the management and employees of the entity involved (Bensoussan et al. 2013, pg. 317). The next segment of the essay aims to use various strategic tools to make sense of most of the methodologies employed by Next plc in an attempt to ensure that it habitually realizes its business objectives, and remains relevant for a considerable duration. 2.0 Macro-environment Scrutiny: Pestle Framework The pestle tool has often been appreciated across several industries because it provides businesses with the opportunity to understand the political, economic, social, technological, legal and environmental surrounding within which they function (Johnson et al., 2007). It is of great significance for Next plc to comprehend the environment within which it functions, for such an approach would ensure that the organisation incorporates ideal tactics within its business policies. 2.1 Political With over 500 retail stores operational in the UK, it is apparent that the country is one of the essential markets for the organisation. The decision by the UK government to be cautious about spending over the last few years and reduce budget allocations has prompted several consumers to monitor their spending habits as well, thereby preventing Next plc from realizing its full potential, since consumers prefer to cushion their income (Warner 2010, pg. 129). In like manner, fiscal policies enacted by various market nations have made it difficult for Next plc to bring the best out of its market (Plunkett 2013, pg. 52). Political instability and corruption in probable markets like South Africa have in like manner averted the organisation from exploring all available opportunities (Udale 2008, pg. 503). 2.2 Economic Commercial growth in various nations like China and India has turned productive for Next plc, as it has strengthened its market position within such economies (Plunkett 2013, pg. 59). That notwithstanding, the operations of the organisation have experienced challenges in commerce within different other markets due to frequent inflation and customer confidence in some markets already dominated by other foremost players. 2.3 Social In several communities, the middle-aged have often desired to be associated with a given class, and this has significantly aided the organisation in terms of trade. Similarly, Next plc has benefited because of the outgoing nature of the youths, who have the passion for being linked with the high-end way of life (Plunkett 2013, pg. 63). On the other hand, the organisation has found it hard to affirm its position within other markets due to lack of brand knowledge. 2.4 Technological Technology has brought mixed results for Next plc; for it has enhanced online commerce, thereby aiding it in expanding its client base, while easening the designing and manufacturing process (Plunkett 2013, pg. 67). That notwithstanding, the organisation has often been frustrated by the emergence of rogue websites that provide counterfeit products hence exposing the enterprise to fines and losses. 2.5 Legal In as much as Next plc appreciates the input of its employees, the organisation has been forced to adhere to strict labor laws enacted by various governments on substantial occasions, which determine minimum wages among other employment aspects (Plunkett 2013, pg. 71). Additionally, the consumer laws in some instances have made commerce fragile. 2.6 Environmental As is the case in various sections of the industry, Next plc has often adopted strategies that complement environmental regulations, a factor that often works to its advantage. This is because clients prefer interacting with organisations that demonstrate responsibility (Next plc, n.d). 3.0 SWOT Analysis Carrying out SWOT analysis is an imperative move in any industry, for it enables the players to come up with the ideal strategies of making through the competitive business environment (Bohm 2009, pg. 11). 3.1 Strengths Amidst the tough economic times, it is imperative to acknowledge the fact that Next plc has a competitive advantage provided by its exemplary financial performance. This has been attributed to its high turnover over the past five years and its ability to control its stock. The strong cash flow similarly gives the organisation an upper hand when it comes to navigating matters to do with shares and dividends (Scott 2012, pg. 37). The ability of Next plc to manage its online platform through the Next Directory properly has made matters simpler for the retail leader. 3.2 Weaknesses The fact that the organisation has most of its operations within UK, prevents it from venturing into further international markets. This aspect is often exploited by most of its local and global competitors such as Waitrose and Louis Vuitton. 3.3 Opportunities Next plc would no doubt get substantial returns in case it adopts the ideal strategies to help it exploit the global market (Scott 2012, 43). It is similarly of great significance to acknowledge that the organisation can collaborate with like-minded players to help it explore additional markets through its online platform. 3.4 Threats The major threat facing Next plc is increased competition from both local and international players within the industry as entities such as Versace and Marks & Spencer have been worthy contestants universally and locally (Seivewright 2011, pg. 327). Similarly, the organisation is faced with the challenge of navigating the employment sector due to the high cost of labor charged in various nations accurately. 4.0 The Porter’s Five Forces The porter’s five forces tool is a platform that provides businesses with the prospect of determining where power lies within an organization (Bensoussan et al. 2013, pg. 52). The tool would supplement the operations of Next plc by identifying where power lies within the industry and at the same time assess and strengthen its market position. 4.1 Supplier Power Progress in technology has made accessibility of the raw materials in the fashion industry rather simple. This implies that supplier influence on Next plc would not be excessive, for the organisation can change suppliers and get high-quality resources at an affordable cost. 4.2 Buyer Power Consumers play a significant role in determining the market position of all the players within the fashion industry. In as much as Next plc is known for its outstanding products, it is imperative for the organisation to ensure that it does not lose contact with the client base. Next plc can accomplish this by ascertaining that it provides the customers with value for their money. 4.3 Threat of New Entrants The dominance of players such as Gucci, coupled with the need for governments to attract investments makes it easy for new players to enter the fashion market. That notwithstanding, Next plc can counter such a move by working towards creating a global brand. 4.4 Threat of New Substitution Due to the presence of a substantial number of players in the market, it is apparent that wide ranges of products exist and that several entities are affected. Next plc can overcome such a move by guaranteeing that it is up to date with the trends. 4.5 Competitive Rivalry As is the case in other sectors of the economy, competition is extensive within the fashion industry. It is imperative for Next plc to ensure that it embraces strategies that complement its position within the market. 5.0 Strategic Commitment From the discussion highlighted in the section above, it is apparent that Next plc has employed the correct approaches based on the prevailing economic circumstances. It is imperative to acknowledge that the organisation has over time maintained profitability while at the same time constructively interacting with the customers, in an attempt to ensure that they continue providing the products of choice (Next plc 2011). Similarly, the organisation has managed their finances pretty well in the middle of inflation and the feasibility policies enacted by various governments (Next plc, n.d). It is apparent that Next plc will in the future continue adopting mechanism that aids it in its objective of becoming a reliable global brand. 6.0 Conclusion The above models have outlined some of the challenges that have averted Next plc over time from bringing the best out of the market. That notwithstanding, the organisation has recurrently adopted strategies that are not only beneficial to the shareholders, but to the clients as well, hence perfecting customer confidence. 7.0 References Bensoussan, B. E., & Fleisher, C. S. (2013). Analysis without paralysis: 12 tools to make better strategic decisions. Upper Saddle River, N.J., FT Press. Böhm, A. (2009). The SWOT Analysis. München, GRIN Verlag. Easey, M. (2009). Fashion Marketing. Chichester, John Wiley & Sons. Elliott, B., & Elliott, J. (2003) Financial Accounting and Reporting. Pearson Education Ltd. Gleyberman, A. (2010). Financial Report - Next Plc Feasibility Study of a new investment in Australia. München. Grant M. R. (2005) Contemporary Strategy Analysis. Blackwell Publishing Johnson, G., & Scholes, K. (2007). Exploring Corporate Strategy: Text and Cases. Prentice Hall; Harlow Kew, J. (2013). Human Resource Management in a Business Context. Wimbledon, Chartered Institute of Personnel & Development. Marketing Week. (2008). Analysis: Painful times for the Next Generation. Centaur Communications. Next PLC Annual Accounts. (2014). Next Annual Report and Accounts. Leicester. Next PLC Annual Accounts. (2013). Next Annual Report and Accounts. Leicester. Next PLC Annual Accounts. (2012). Next Annual Report and Accounts. Leicester. Next PLC Annual Accounts. (2011). Next Annual Report and Accounts. Leicester. Next PLC. (n.d). Business Overview. Retrieved from http://www.nextplc.co.uk/about-next/business-overview.aspx Next PLC. (n.d). Our History. Retrieved from http://www.nextplc.co.uk/about-next/our-history.aspx Pahl, N., & Richter, A. (2009). SWOT Analysis - Idea, Methodology, and a Practical Approach. München. Plunkett, J. W. (2008). Plunketts Retail Industry Almanac 2009 the Only Comprehensive Guide to the Retail Industry. Plunkett Research Ltd. Scott, P. (2012). Accounting for business: an integrated print and online solution. Oxford, Oxford University Press. Seivewright, S. (2011). Research and design. Lausanne, AVA Academia. Udale, J. (2008). Textiles and fashion. Lausanne, AVA Academia. Warner, A. G. (2010). Strategic analysis and choice a structured approach. New York, Business Expert Press. 8.0 Appendix Appendix 1 (Source Next plc) Appendix 2 (Source Next Plc) Read More