Strategic Management: Next PLC

This report discusses the strategic management of Next PLC, a well-known British retail company. It includes a PESTEL analysis, Porters five force model, and VRIO analysis to understand the external and internal factors affecting the company's performance. The report highlights the valuable resources, rarity, inimitability, and organized structure of Next PLC, giving them a competitive advantage in the marketplace.

Strategic management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
PESTEL Analysis...................................................................................................................3
Porters five force model.........................................................................................................6
VRIO ANALYSIS..................................................................................................................8
SWOT Analysis......................................................................................................................9
Value chain analysis.............................................................................................................11
Strategies for Next PLC company........................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Strategic management can be describe as a on going process which includes planning,
monitoring as well as analysing and evaluating need and requirement of organisation (Ansoff
and et.al., 2018). There are various factors that needs to be identified as well as analysed in order
to develop effective strategies. Strategic management will help in creating successful strategies
as well as plan for organisation. This will directly lead to gaining comparative advantage over
other rival companies. For this report chosen company is Next PLC. This is well known British
organisation that is performing it business function is multiple nations. Next Plc organisation is
dealing in retail sector and major products of this company is clothing, footwear, home products
as well as other fashionable accessories. This company is offering its products and services to
different part of the world and it headquarter is located at Enderby, England, United Kingdom.
This report will includes in depth detail about strategic management. It consist of posters five
force model and PESTEL analysis.
MAIN BODY
It is very important for Next Plc company to manage its strategies as well as develop
strategic plan in order to perform business function is effective and efficient manner. By
managing strategies, respective strategies will be able to gain competitive edge over other
companies. It is essential that this company is analysing its micro and macro factor for creating
strategies (David and David, 2013). This will help in identifying and evaluating the business
environment as well as take better business decisions. This will lead to ensure the company is
conducting organisational operations in such a manner that desired objectives could be timely
accomplished. There are various models and business concept that will help in organisation to
performing business activities in effective manner. PESTEL analyse and Porters five force model
will help in strategic management in effective manner.
PESTEL Analysis
This is considered as an effective framework that could by used by marketer in order to
perform business activities manner. It is essential for this company to identify and manage
external environment of in order to take better decision for organisation. PESTEL analysis
includes different factors such as political, economical, social, technological, environmental and
legal. There are various changes in macro environment which will lead to affect Next PLC

company as well as its operations. By identifying and analysing all factors of external business
environment respective company will be able to develop better strategies for growth and
development of organisation. PESTEL analysis in context of Next Plc is mention below.
Political factor – This factor play a crucial role in determining long term profitability of
business. Political factor is major concern with different types of rules and regulation that is
developed by political and government party (Hill, Jones and Schilling, 2014). It is essential for
respective company to follow all rules and policies for smooth functioning of organisation.
Political factor includes stability and instability of political party, level of corruption, taxation
policies, trade restrictions and many more. UK have stable government that is developing
different policies for growth of retail sector. This will lead to have positive impact on business
and its activities. There are various strict taxation policies which is affecting the performance of
NEXT Plc company is negative manner.
Economical factor – This macro factor of business includes inflation rate, interest rate,
foreign exchange, saving, GDP and many more. Economical factor will lead to have significant
impact over business as well as its performance. UK nation is one of those countries which has
continuously increasing GDP and high economic rates. This will lead to increase the
performance as well as productivity of organisation (Eden and Ackermann, 2013). This company
is dealing in retail industry and due to high economic growth rate of nation customers will be
able to expand on purchasing of high quality fashionable products. This factor will lead to
increase sales and profits of respective company.
Social factor – It is essential for organisation to analyse as well as evaluate various social
factors in order to increase performance of business. There are many social factors such as
attitude, personality, perception, belief, customs and many more. Next PLC company needs to
consider all of these social factor while taking business decisions. This company is providing its
products and services to different types of customers. It is important for respective business to
identify as well as analyse market trends. This will help in develop better and appropriate
products for satisfying needs to customers. It has been analysed that needs and requirement of
customers are continuously changing. This can have negative impact over performance as well as
sales of respective company.
Technological factor – It has been analysed that technology is growing very fast and this
will lead to have huge impact on business. Technological factor includes new and innovative

techniques in organisation that will lead to influence overall performance of company. UK
market area has one of the advance technology in the world that will directly lead to increase the
performance of organisation (Moutinho and Vargas-Sanchez, 2018). Next PLC company needs
to use high and innovation technology in its business process so that desired objective could be
accomplish on set time. This company needs to adopt recent technological trends as this will help
in gaining competitive advantage over other rival companies.
Environmental factor – There are various laws set by UK government for protection of
environment. It is significant for Next PLC company to follow all environmental rules in order to
protect it. Environmental factor includes weather, climate changes, environmental pollution,
recycling, waste management, endangered species, renewable energy and so on. Next PLC
company needs to conduct corporate business activities in order to full its responsibility towards
society. This will help in attract more and more customers towards organisation as well as
developing strong and positive market image. NEXT plc company is developing high quality
products for different climates so change in climatic conditions will not lead to have negative
impact over business.
Legal factor – There are many law and legislation developed by government for
performing business activities. Legal factor of external business environment will includes anti
trust law, discrimination law, consumer protection law, health and safety law, copy right or
patents, employment law and so on. Next Plc organisation is designing and manufacturing high
quality products. This is very helpful in satisfying needs and wants of customers. It is essential
for this company to copyright or patent its products (Lasserre, 2017). This will lead to providing
protection to the high quality of products of respective company. It is important for this company
to meet with the expectation and needs of employees in order to enhance business activities.
From the above analysis of different external factors it has be identified that there are
many positive as well as negative impact of macro factors on business. This will be very
supportive for Next Plc company as through this it will be able to take better business decisions
as well as achieve desired goals and objectives. PESTEL analysis will help respective company
to develop better business strategies in order to enhance performance as well as productivity of
company. It is essential that this company is using advance and innovative technology in its
business process. This will help in creating high quality products in effective less and time.

Porters five force model
This is an effective model that will help company to analyse its competitive forces. There
various factors or forces of external environment which will lead to have impact over the
business. Porter five force model will lead to identify all competitive forces that will influence
functions of organisation (Meyer, Neck and Meeks, 2017). This model is developed by Michael,
E. Porter in 1979 and the motive of introducing this model is to determine corporate strategies.
This will include key five competitive forces that is affecting industry. Porters five forces consist
of Bargaining, Threat of entry, rivalry among companies, bargaining power of buyers,
bargaining power of suppliers, threat of substitutes. All of these forces are mention below in
context of Next PLC organisation. Threat of new entry – New entry in industry will lead to have impact over the current
business which is dealing in fashion retail sector. This force of Porter's model will help in
identifying influence of new company in respective company. Next PLC organisation is
well established company that is offering its high quality products and services from
many years. It has developed its strong brand image which will lead to reduces the impact
of new entry on this company. This force will lead to have low impact over respective
business. It is essential that Next Plc organisation is developing effective strategies in
order to manage the challenges that occur due to new entry. Bargaining power of suppliers – There are numerous of suppliers that is providing raw
materials and other resources of companies. It has been analysed the purchasing power of
suppliers is relatively low in this particular sector. Next PlC company can purchase raw
material from different manage (Vogel and Güttel, 2013). So bargaining power of
suppliers will not lead to have major impact over respective company. Next PLC
organisation needs to build effective supply chain though multiple suppliers. This will
help in supplying manufactured products of this company to potential customers.
Bargaining power of suppliers is low force which will have less impact over Next Plc
company. Bargaining power of buyers – Next Plc company is offering its products and services to
wide range of customers. This is a multinational organisation that has potential customers
in different market area. Buyer play a crucial role in sales as well as profits of respective
company. It is essential that this organisation is developing products as per customers

needs and wants. It has been determined that buyers are very demanding and they want
best offer in less amount. Individual buyer will not lead to have huge impact on business
but larger number of customers will lead to increase in bargaining power of buyers. So
bargaining power of buyers are considered as moderate forces for Next PLC company. Threat of substitute – This force of porter's model includes that threat of company due to
presence of similar products. There are many companies which is offering same time of
products and services to customers (Simon, Fischbach and Schoder, 2014). This force
will lead to have impact over the decision-making as well as performance of respective
company. This organisation is developing unique and creative products for satisfying
needs and requirement of customers. This lead to attract more and more customers
towards Next PLC company. It has many loyal and potential customers which lead to
reduce the negative impact from the threat of substitute products. This force will have
moderate impact on business of Next Plc.
 Threat from industry rivalry – This is considered as one of the major threat to Next PLC
company. This organisation is dealing in highly competitive environment and tit has
many rival companies. Next PLC company has major threat from its rival companies and
its major competitors are H&M, ZARA and so on. Threat from rival among existing
competitors will have high impact over performance of this company. It is essential that
this company is developing effective and efficient strategies which will lead to have
competitive advantage over other rival companies. This will help in reducing the impact
over this threat from respective company.
Thus, it has been analyse that there are five major forces which will help in understanding
competitive position of this company. By analysing all forces of Porters five force model Next
PLC company will be able to develop better and effective strategies. This will lead to growth and
development of Next PLC company. Threat from new entrant and bargaining power of supplier
will lead to have low impact over business as its performance. Where as bargaining power of
buyers and threat of substitution of products will lead to have moderate impact on this company.
Next PLC company have major or high affect from threat from industry rivalry. It is important to
develop appropriate strategies as well as strategic management in order to conduct business task
in correct and effective way.

VRIO ANALYSIS
The analytical technique that is being utilised for evaluating resources of organisation for
attaining a competitive edge within the marketplace is referred to as VRIO Analysis. In context
of Next Plc, it will look into all the internal resources through which there sustainability within
the marketplace can be ensured.
Factors Valuable Rarity Inimitable Organized
Upscale comfy
environment
✔
Services ✔ ✔
Strong global
presence
✔ ✔ ✔
Employees ✔ ✔ ✔ ✔
Valuable:
 Upscale comfy environment – Next Plc is rendering their operations within every upscale
location in which individuals are competent for spending on clothing. There stores
renders upscale comfy environ for their customers by which they can enjoy shopping
either online or offline mediums (Certo and et.al., 2016). This implies that competency
of firm is valuable for generation of profits for them which is being clear by the fact that
they are largest clothing retailers in context of sales within UK.
 Services – This is the resource which is being delivered by Next Plc and is liable for
generation of value for firm. The firm is known for their high quality footwear, home
products and clothing which aids them to captivate ample number of individuals towards
their services.
 Strong global presence – This implies capabilities of Next Plc that has enables them to
render their services across the world. They have around 700 stores across United
Kingdom, Asia, Middle East and Europe.

 Employees – They are the major assets that are being possessed by Next Plc and they are
well trained which enables them to increase the organisational revenue through
generation of value for them.
Rarity:
Services – Products of Next Plc involves clothes, footwear and home products, they are being
developed by trained employees. Along with this, the employees are being provided with
adequate knowledge with respect to equipments on which they are working on. This enables
them to deliver impelling services to their customers.
Strong global presence – Next Plc is largest retailer within the market of UK and reason behind
this is the quality as well as trends which are being rendered by them to their probable
customers. The global presence makes it a rare resources.
Employees – They are trained specially so that can meet the expectations of their potential
customers and provide them designs before anyone else brings it within the market (Greco,
Cricelli and Grimaldi, 2013). This training is being provided to them by experts which
makes them to satisfy their probable customers.
Inimitable:
Strong global presence – Next Plc renders their services in different countries around the world.
For this, firm has made lots of efforts and have made their unique and competitive
positioning in marketplace.
Employees – They are resources of firm that are being acquired through effectual process of
recruitment and selection. Employees of Next Plc possess unique capabilities that cannot be
imitable by anyone else.
Organized:
Employees – They denotes the human resources which are present within the firm. They
generates values for individuals that are rare as well as are not imitable. These attributes
possessed by employees of Next Plc allows them to have competitive positioning within the
market.
SWOT Analysis
SWOT analysis can be describe as an effective tool which is used for strategic planning
of organisation. NEXT plc company needs to use this tool for understanding internal capabilities

of company as well as various opportunities in external market environment (Aguinis, Edwards.
and Bradley, 2017). This includes strengths, weakness, opportunities as well as threat of Next Plc
company. This tool will help in gaining compete in sight about the company as well as its
functions. By analysing SWOT this company will be able to understand its strategy that is
helpful in gaining competitive edge over other companies where as weakness needs to be
improve for enhancing business performance. SWOT analysis in context of Next PLC company
is mention below.
Strength – This is one of the leading company that is providing its products and goods to
large market area. Next Plc company have number of strengths that will helpful in getting larger
market share. It has successful business track records which includes its top quality products and
services. This company is conducting a proper market research in order to identify needs and
requirement of targeted customers (Karadag, 2015). This is helpful in developing strong market
image as well as attract large number of customers. Next PLC have highly skilled workplace that
is conducting business functions in effective and efficient manner. This lead to timely
achievement of desired goals and objectives of respective company.
Weakness – It is important for this company to identify its weakness in order to reduces
it. Weaknesses of Next Plc company will lead to have negative impact over performance of
organisation. The major weaknesses of respective company is its supply chain management. It is
lacking in managing its supply chain process as well as timely delivery of products to customers.
This company has poor financial management planning that is affecting activities of
organisation. Due to this weakness, respective company is not able to conduct business
operations in effective and efficient manner.
Opportunities – There are many opportunities in external market that will help
respective company to grow and develop its business. This company needs to use new and
innovative technology or techniques in market. This organisation should take advantage of
updated technology as this will help in conducting business activities in effective and efficient
manner. Next PLC employees are highly skills and capable to appropriately use advance
technology (Zhao. and et.al.,., 2017). By using updated and modified technology in business
operation this company will be able to gain competitive advantage over other rival companies.
This company should train its employees so that they can effectively manage various financial

resources as well as supply chain management. Training will help in enhancing the knowledge
of employees as well as their performance to conduct business task.
Threat – Next Plc company is dealing in highly competitive environment that is
considered as its major threat. There are many company in retail sector that is providing high
quality products and services to customers. High competition is market will lead to have negative
impact over sales and profitability of organisation. This company has also threat from various
rules and policies of political party. Changes in laws and legislation will lead to have direct
impact over business and its decision making.
Value chain analysis
This is one of the effective model that will help company to analyse its internal
capabilities. Value chain model in classified into two different parts such as primary activities
and supportive activities. This model will help in understand and determining internal
capabilities of company in order to converting inputs into outputs. There are different activities
of organisation that help in conducting business activities in effective and efficient manner.
Porter's value chain model in mention below in detail.
 Primary activities – This include various activities such as inbound logistics, operations,
outbound logistics, marketing and sales as well as services. All of these activities will
lead to have direct impact over business as well as its performance. It is essential for
organisation to effective conduct primary activities as this will help in achieving goals.
 Supportive activities – Supportive activities help in primary activities to perform
business task. It includes various activities such as firm infrastructure, human resource
management, technology development as well as pronouncement. All of these business
activities provide support to primary activities as well as attain set goals.
Strategies for Next PLC company
It is essential for respective company to develop effective and efficient business
strategies. As this will lead to growth and development of organisation as well as enhancing
organisational performance (Fisher and Oberholzer-Gee, 2013). For developing effective and
strong strategies Porter's generic models needs to be analysed. This model is developed in order
to build appropriate strategies in order to gain competitive advantage over other rival companies.
This includes cost leadership, differentiation and focus strategies.

Cost leadership – In this strategies respective company will try to increase its sales and
profits by cost leadership in organisation. Cost leadership strategies refers to those strategies in
which company is providing high quality product and services with comparative less price. This
will lead to enhance sales of Next PLC company.
Differentiation - This strategy refers to business plan in which it is providing new and
innovative products to customers. In this strategies respective company needs to identify its
customers requirement as well as provide completely new or creative product. This strategies
will lead to attract more customers towards business as well as gain competitive advantage over
other companies.
Focus – This includes cost focus and differentiation focus strategies. In this type of
business strategies respective company will be focusing on small number of customers (Chen,
Delmas and Lieberman, 2015). Next PLC is well established multinational company and it is
providing its services to larger number of customers.
Thus, Next Plc company needs to use differentiation strategies as this will be most
effective and efficient strategies for growth and development of organisation. Differentiation
strategies will lead to attract more customers and gain competitive edge over other companies.
CONCLUSION
From the above report it can be concluded that strategic management is critical process of
organisation. There are different factors that needs to be evaluated by company in order to
manage its business strategies. PESTEL analysis will be every effective is identity or evaluating
external factors of business. These factors will lead to have direct or indirect impact over
business. Porter five force model will help in gaining competitive in sight about business as well
as developing effective business strategies. SWOT analysis and VRIO is effective tools that will
help in understand internal capabilities of organisation. It is essential for company to develop
correct and appropriate strategies which lead to growth and development of business.

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