Marks & Spencer and NEXT Plc: Internal & External Strategy Analysis

This report provides a comparative analysis of the strategic approaches employed by Marks & Spencer (M&S) and NEXT Plc within the retail sector. The analysis commences with an examination of external strategy models, specifically utilizing the PESTLE framework to evaluate the political, economic, social, technological, legal, and environmental factors impacting both organizations. Furthermore, the report applies Porter's Five Forces model to assess the competitive dynamics within the industry, including the threats of new entrants, substitutes, and the bargaining power of suppliers and buyers, as well as the intensity of competitive rivalry. The report then transitions to an internal analysis, employing the SWOT model to identify the strengths, weaknesses, opportunities, and threats faced by each company. Finally, a financial analysis is also considered, to evaluate resource utilization and provide a comprehensive understanding of the organizations' strategic positions within the competitive landscape. The report aims to elucidate the key strategic decisions and challenges faced by M&S and NEXT Plc, offering insights into their respective competitive advantages and areas for improvement.

Comparing between
Marks & Spencer and
Next on the basis of
internal and external
analysis

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ...............................................................................................................................3
External strategy models.......................................................................................................3
Internal Strategy models.........................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic planning models, tools and methods are designed for increasing the support of
organisation through explicating a competitive-edge in market. The main role of strategic
planning tools is to formulate an effective action-plan for achieving organisational goals and
objectives with minimum use of resources. This report compare two organisation and they are
Marks & Spencer and NEXT Plc to understand and formulate competitive strategy. Moreover,
this report highlights on internal and external strategy models and it will also focus on
performing work with analytical techniques (Bolland, 2017).
MAIN BODY
External strategy models
External and inorganic growth undertake strategies that are used to enhance and improve
output or business reach. This also aids respective organisation to perform work with use of
resources that are developed outside the business premises. Along with this, resources are
obtained according to merger/acquisition and partnership with other organisation. PESTLE
model is formulated for understand of external strategy. So compare between two organisation is
mention as follow:
PESTLE Analysis
Basis Marks & Spencer NEXT Plc
Political Free trade is one of the most positive
aspects for modern day and it is
established between number of
countries. The major market and sales
of M&S products is obtained from UK.
So this is used to manage and perform
in local area with more efficiency. On
the other side, Brexit create problems as
decision to leave Europe directly
impacts on company operations
because it generate a loss of numerous
On the other side, political factor
plays an important role and there are
different factors exists which generate
challenges for NEXT Plc plc to
manage profits within a certain
market and country. NEXT Plc
management expose themselves in
different political system and
environment. So it create challenges
for management to manage work in
effective manner as retail market of

trade practices (Budge, Chin and
Minero, 2017). Thus, it generate
difficulty to perform work in
international market.
UK face heavy competition from local
and international organisation that
formulates barrier for company.
Economic Price is always recognise as an
important factor that is stated in retail
industry, as from last decades there are
numerous budgets generate problems
for organisation. With formulate budget
new clothing store generate challenges
for premium brands such as M&S. It
create complexity for organisation to
manage and perform work in
competitive market. So to encourage
customer's for purchase of products
M&S management offer them at lower
price.
Macro economic factor include saving
rate, interest rate, inflation rate and
many more. This determine that
aggregate demand and investment
within economy generate challenges
for organisation. This also states
authority of NEXT Plc plc control and
manage cost. With analyse of this also
states individuals to manage and
control task by monitoring as well as
controlling work with proper manner
(Chaplin and et. al., 2018).
Social-
CULTURAL
The term social-cultural and way to
perform things that is used by
organisation aids towards completion
of task through which individuals
understand and belief about value and
attitude through which customer's
perform their role in retail industry.
Demographics and skill level of
population define about increase in
retail industry to analyse and
understand about interest role.
Technological
factor
The firm understand about manage and
develop of roles through which task and
The speed of technology factor
facilitates and understand about

project are designed about develop of
operations system. This is used in
generating system and it aids
individuals for completion of work with
automation factor and it states about
development of factors through which
technology is completed with motive of
performing work according to current
technological aspects (Graham, 2020).
implement and generate of factors
through which individuals perform
work according to roles of industry.
With implement of effective
techniques this is understand NEXT
Plc plc complete project with use of
digital techniques and it engagement
in company operations.
Legal factor Legal factors which can affect the
marks and Spencer is that organisation
business can be affected by the changes
in the legal policies of the UK and the
fiscal policies of the UK affects the
production cost of the Marks and
Spencer
There are several laws which can
affect the Next plc and it's business
such as employment law which states
that the minimum wage that should be
paid to employees as these laws
increase the cost of production and
overall cost of Next plc.
Environmental
factor
Marks and Spencer focuses on
producing the products environment
friendly and focuses on reducing the
carbon emission in the production and
it helps in creating the goodwill as
environment friendly organisation
among the consumers. The another
point in this factor is doing fair trade as
it promotes the small retailers and
creates the healthy environment for the
business.
There are many environment factors
which affect the next plc as there are
different norms in the different
environment and next plc have to
consider the laws regulating air
pollution and waste management and
focuses on making the organisation
environment friendly and focuses on
making their products effective
(Morais and Franco, 2019).
Porter's five forces model
Five forces Marks and Spencer NEXT Plc

Threats of new entrants New entrants in the market
creates tough competition for
the existing firms. Marks and
Spencer has to new maintain a
reasonable price of the
products and should also
invent new variety of product
so that it can attract the
customer and Marks and
Spencer can earn more profit
as compared to other
organisation (Mulia, Azzahro
and Handayani, 2020).
New entrants bring threat by
way of new innovations, new
business practices, low pricing
mechanism, and unique
strategies. Next plc can fight
this threat and secure its
competitive edge by new and
innovative products and
building capacities. Next plc
focuses on the making strong
barriers in order to prevent
new players from entering the
market.
Threat of new substitutes Marks and Spencer as a
retailer has to focus on it if
customer will start buying the
substitute products then it can
affect the profitability of the
firm. Marks and Spencer not
only should sale the product
but also notice the demand of
the product so that they can
create variety in the product
and attract the customer.
Threat of substitution occurs
when similar product comes
with added value propositions.
This threat is visible high in
this industry due to presence of
multiple enterprises. Next plc
makes sure that their product
have quality and satisfies
needs and wants of the
consumers.
Bargaining power of suppliers Marks and Spencer needs to
build a supply chain with
multiple suppliers suppose if
prices of raw material is high
by one supplier it can switch
the another. Marks and
The bargaining power of
consumers in this industry is
high due to presence of
multiple players.

Spencer should also use
variety of raw material so that
they change the variety if the
prices are high of that material.
Bargaining power of buyers Marks and Spencer should
invent new variety of product
in the market this will reduce
the bargaining power of the
buyers and company can earn
profit out of it. More variety of
products will attracts more
customer also and it can also
give the competition to the
other firm in the market.
Generally, companies in retail
business have multiple
suppliers to make shifts easily.
So, threat in this respect is
lesser. Next plc focuses to
make the products more
quality so that consumers will
be attracted to the products and
services.
Competitive Rivalry Marks and Spencer should
build the variety in the product
instead of competing for the
same product in the market if
product will be different from
the other firms then there will
be more choices with the
customer and it will also
increase the demand for the
product in the market.
Next plc operate in a intensely
competitive industry and this
competition take toll on long
run profitability of business.
Next plc focuses on competing
with against the existing
players by analysing the
strategies of the competitors
and formulating own strategies
in order to achieve competitor
advantage (Paula and Silva,
2018.).
Internal Strategy models
Strategic management is one of the most popular method and it is used for operating and
running organisation which undertakes an analytical approach to perform all task according to

decided goals. This also aids both organisation to perform their work with minimum use of
resources and it support management to perform task by appropriate perspectives. SWOT is an
effective model and it is used for performing work with decided roles. This undertakes and
analyse about completion of task that is used to achieve opportunities according to first mover
advantage.
SWOT Analysis
This part of report covers the SWOT analysis of the Marks and Spencer and NEXT Plc PLC.
SWOT analysis helps in analysing the strengths, weaknesses, opportunities and threats for the
organisation and helps in formulating and implementing the strategies to tackle the issues faced
by the organisation. This is a internal analysis as it helps in analysing the internal resources and
how these factors affect the working of the organisation internally.
Marks and Spencer NEXT Plc
Strengths Marks and Spencer is very
well established in the market
and it has many partnerships
with different organisation in
the world. It has variety of
products which leads them to
the efficiency in competition
and boosting the profits of the
organisation. It is also a well
recognized brand which helps
in expanding the business and
consumer share in the market
(Van Calster, D'Argembeau
and Majerus, 2018).
NEXT Plc plc is the
organisation which believes in
the new product development
and in the today's market
dynamics innovation is the key
factor as it helps in boosting
the profits and creating the
goodwill in the market. NEXT
Plc plc have highly skilled
workforce which plays vital
role in achieving the goals and
objectives effectively and
efficiently and through their
strong supply chain and
distribution network which
helps them in maintaining the
efficiency and effectiveness.
Weaknesses The weaknesses of the Marks Weaknesses of the NEXT Plc

and Spencer is that it has been
stated that the sales of the
organisation is starting to fall
and it is affecting the
consumers perception resulting
in the lack of innovative ideas.
plc includes the costly
management of the inventory
and costly production units
which is affecting their overall
revenues. It is also researched
that the planning of their
finances is not effective and
efficient which results in the
downfall of the sales of the
NEXT Plc plc.
Opportunities The opportunities for the
Marks and Spencer is
providing their products to the
consumers through their online
portal and the expansion of the
business can help the
organisation in expanding it's
business and helps in boosting
the profits.
The opportunities which arise
for the NEXT Plc plc in the
market firstly is the low
inflation rates in the UK
environment and the needs and
wants of the consumer can
help NEXT Plc plc to develop
products according to the need
of consumers.
Threats The threats for the Marks and
Spencer can be analysed in
such a way that there are
organisations such as Marks
and Spencer, Amazon etc.
which are threats for Marks
and Spencer and in order to
gain competitor advantage
over the competitors .
Organisation have to focus on
implementing the strategies
The threats for the NEXT Plc
plc is that the organisation
doesn't use the latest
technology and the
competitors which have access
to the latest technology have
the upper hand against NEXT
Plc plc and and changing
consumer behaviour is also a
threat for the NEXT Plc plc
and lack of skilled workers

which can help them in
achieving the goals and
objectives effectively and
efficiently.
also a threat for the
organisation (Vortmann and et.
al., 2019).
Financial analysis
Financial analysis of the organisation helps in analysing the utilisation of resources and
formulating and implementing the strategies for the effective utilisation of resources. Effective
utilisation of financial resources helps organisation in improving the functioning and
productivity if the organisation (Wyszkowska-Kuna, 2020).
Marks and Spencer Next plc
The net debt of the marks and Spencer is
3,803.4 and the price to cash flow of marks and
Spencer is 5.76. Whereas price to book and
price to intangible book is respectively 0.96
and 1.11 these are the part of the valuation
ratios of the marks and Spencer in this year
quarterly. The profitability data of marks and
Spencer includes book value , tangible book
value and value share which is respectively
1.39, 1.21 and 0.5 . and the financial strength is
measured into the ratios which is quick ratio
and current ratio which is respectively 0.3 and
0.62 and the total debt to equity is 151.34% .
The net debt of the next plc is 2,120.9 and the
price to cash flow of next plc is 17.27.
Whereas price to book and price to intangible
book is respectively 25.15 and 28.33 these are
the part of the valuation ratios of the next plc in
this year quarterly. The profitability data next
plc includes book value , tangible book value
and value share which is respectively 2.67,
2.94 and 2.98 . and the financial strength is
measured into the ratios which is quick ratio
and current ratio which is respectively 1.86 and
2.46 and the total debt to equity is 637.62% .
CONCLUSION
This report helps in concludes that the internal and external analysis is very important for
the organisation as it helps in understanding the growth and current status of the organisation in
the market and it also helps in formulating the strategy and helps in planning the utilisation of

resources. This report concludes about the analysis of the Marks and Spencer and Next plc and
based on that analysis what steps should be taken by the organisation in order to make the
performance of the both organisation effective and efficient and it focuses on implementing the
strategy which helps in improving the performance and productivity of the organisation. This
report also covers their financial analysis as it helps them in understanding the utilisation of their
financial resources and how it can be managed effectively in the future. These internal and
external analysis helps Marks and Spencer and Next plc in analysing it's strengths and
weaknesses and how it can helps both the organisation in achieving the efficiency.
REFERENCES
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