Analyzing Next PLC's Business Strategies and Market Position

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CONTEMPORARY DEVELOPMENT IN
BUSINESS MANAGEMENT
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Contents
INTRODUCTION...........................................................................................................................................3
TASK 1..........................................................................................................................................................5
MACRO ENVIRONMENT..............................................................................................................................5
PESTEL ANALYSIS.....................................................................................................................................5
PORTER’S FIVE FORCES............................................................................................................................7
MICROENVIRONMENT...............................................................................................................................10
TASK 2........................................................................................................................................................10
[Source: Reference for business, 2019].............................................................................................12
EVALUATION OF EFFECTIVENESS OF Next PLC RESPONSE.........................................................................15
AREAS OF IMPROVEMENT IN THE RESPONSE TO Next PLC.......................................................................17
CONCLUSION.............................................................................................................................................18
REFERENCES..............................................................................................................................................19
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INTRODUCTION
The contemporary development theory focuses on various aspects of business entities; it takes
into consideration various aspects of business like; organizational and individual behaviour,
strategies and plan. It studies in detail various factors affecting the business unit like; internal
and external factors affective the business, visions, missions and objective of a business. It also
proposes various changes to be made in the operations and functions to gain a competitive
edge in the market. And the Next PLC, has also emphasized on differentiation and focus
strategies to hold the current market share and also target the prospective clients (Mansour,
2016).
The Next PLC is the UK based one of the leading clothing and footwear supplier firms and it
uses both the online and offline firms for its business operations. It has about 700 stores across
the globe and it has noted the presence in Asia, Europe and Africa. It is also the stock market
listed company with considerable market share. It was founded by Joseph Hepworth in the
year 1864. Next PLC has three main divisions: Next retail, Next directory and Next
international. Next retail is a chain of more than 500 online stores. Next directory is online
clothing platform of Next and Next international has international clothing stores (Next PLC,
2019)
Since 1864 the business strategies of Next PLC has undergone several changes. Prior to 2007,
they used to sell only before the launch of their products but after that, they have invested
more in sales, advertisement and marketing to generate more revenue for their growth and
expansion. The primary objective of Next PLC is to serve long term benefits of their
shareholders. And the other goal of Next PLC is to manage the financial capital of an
organization in a secured manner. They also aim to deliver efficient product and services to
their client to earn the loyalty of their customers. But, presently with the onset of new e-
commerce companies with fast and effective delivery of products and services, the Next PLC
still holds the foremost position in the industry (Next PLC, 2019).
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For verifying the further development of a business entity in the current market scenario, this
report takes and analyses the working of Next PLC with the market mix communication in their
business functioning.
TASK 1
Next PLC still stands firms in the e-commerce industry by the leading place in the UK; it is due
to the fact that the participants of the company are shows immense loyally to Next PLC and
such strong loyalty offers several benefits to the organization. The Next PLC has adopted
various changes to its business structure and strategies with the advent of the internet and
many other modern technologies. These changes were accommodated by it very smoothly and
effectively and it will help the business of Next PLC in mid and long-term. It will also benefit the
organization's revenue generation positively (D’Agostino, 2018).
And considering the fact that the company has strong geographical spread across the globe,
that is the reason why many internal and external which affects the operations of the business
unit. It ultimately led to changes in decision making and long-term business strategies. The
explanation of the external factors those affect the functioning of business and their
importance is illustrated as follows with the help of PESTEL analysis and Porter’s Five Forces
Model (Analysis to Next PLC, 2015).
MACRO ENVIRONMENT
PESTEL ANALYSIS
PESTEL Analysis helps the business entities to analyze the external factors that affect the
functioning, operations, organizational behaviour and decision making. These factors are
explained as follows:
Political- Next PLC is one of the leading organizations of UK and working since 1864. It has
undergone several changes in its business and the surrounding political environment. The
political changes like Brexit and the issue of migration have affected the expertise. In addition
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to this, the laws of the land; trade law, employee's regulation law and other mandatory
legislations have affected the functioning of business (Chae et al., 2016).
Economic- the increased input cost; rise in the price of cotton, hike in inflation and increased
corporate tax has amplified the production cost. All these factors have reduced the profit
margins of a company substantially. And the other important economic factor that has
reduced the purchasing power in the UK is unemployment. But, at present, the current rate
cuts by BoE and the growth-supportive economic factors are affecting the business of Next PLC
positively (Jones et al., 2018).
Social- social factors in PESTEL analysis are: demographic, education level of population, the
culture of society and entrepreneurial attitude etc. the culture of a society affect the business
grow substantially. Next PLC is the online retailer of clothes and footwear. So, the education
level and class structure of a society influence the market and sales expertise of the Next PLC.
Due, the migration and globalization the society in the UK is becoming a multicultural society
and offering a different group of consumers to the Next PLC (Schivinski and Dabrowski, 2016).
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Figure 1-PESTEL Analysis
[Source: Kong, 2015]
Technological factor: new innovations and advances, as well as the changes in information and
communication technology, can all be considered as the technological factors that influence
the organization's business strategy. The advent of the internet and e-services has
smoothened the functioning of Next PLC substantially. Online financial services; the promotion
by using social media platforms, online delivery of services and e-bidding of raw material and
other online services has influenced the business growth of next PLC positively (Schivinski and
Dabrowski , 2016).
But at the same time Next PLC should also devise an effective strategy to remain in the
business due to the dynamic nature of technology-driven businesses (Mansour, A., 2016).
Environmental factor: Next PLC pledged to reduce its carbon foot print, recycle the waste and
mitigate the environmental impact due to various emissions during and post-production of
cloths and other products. According to the environmental impact assessment report, the
weather changes due to pollution and the rising level of carbon emissions have the sales of
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Next PLC. So, Next PLC should devise its strategy in a way, which has minimal environmental
damage (Jones et al., 2018).
Legal factor: Next PLC must abide by all legislation and governmental regulations which are
enforced by the national and local governments. It should follow the minimum wage
legislation and ensure to offer equal pay for equal work. Though, the Next has always been an
organization who follows strict rules in matters related to taxes. But, the recent tax evasions by
many MNCs have provoked the government of UK to harden the tax laws which affect the
functioning of many acquitted business owner like; Next PLC (Mansour, A., 2016).
PORTER’S FIVE FORCES
This is a comprehensive framework to evaluate and analyze the major forces that influence the
business strategies, model and decision-making of business units. It also tries to understand
the market forces and they are both; positive and negative impact on the growth and
operations of a business entity. The forces for Next PLC in the market as described as follows
(Jones et al., 2018).
The threat of new entrants: to arrive into a new market requires a lot of investment due to
the cost of production, sales and marketing of a product, to pay the taxes levied and the other
operational charges. And they also have financial risks due to the defensive attacks by the
prevailing companies. Next has a low threat of entrants due to its strong financial position and
it also has a wide-ranging idea of changing market situations. In the current market situation,
customers exhibit low brand loyalty. Their customer base has comprised the youngsters. And
these youngsters go for the products which are easily available and cheap (Mathooko and
Ogutu, 2015). This is a challenge for Next which is further intensified by the fact that their
product-portfolio is designed to cater to the needs of this part of the population only ( Kong,
2015).
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Product substitution: substitution means the availability of an alternative for the consumers; it
can be of a product or of a company. For instance, the Next if any consumer like a particular
product of next but he or she has cheap an attractive substitute available; then, he will go for
that. So, a product substitution means a customer decides to buy something and then changes
his any buy something else. It forces Next PLC to undergo for innovation and use the economy
of scale (Mansour, A., 2016).
Figure 2-Porter's Five Forces
[Source: Process policy, 2019]
The bargaining power of a customer: when the numbers of supplies are higher than the
number of producing units; it gave less power to the suppliers and consumers; as they very
fewer options are available. So, Next PLC has more control over prices. But in a retail market
where a consumer has more suppliers then their demand; they can easily switch to the other
options if they are not satisfied. And also the targeted group of the consumer of Next PLC has
strong purchasing power, access to technologies. So, Next PLC should observe the changing
market dynamics and devise a plan accordingly (Mansour, A., 2016).
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The bargaining power of a supplier: the power of supplier can be defined as the ability of a
supplier to have control over market prices of a particular product. If the numbers of suppliers
are low as compared to the demand then the supplier power is high. But, in case of Next PLC
the easy availability of low-cost labour, cheap and easily available raw material and the
demand is high in the regions; Asian countries, the Americas and in some African nations. But
the Asian trade giants made the products at a relatively lower cost and reduce the supplier
power of Next PLC considerably. So, Next PLC should find the other alternative powers to stay
in the market at a leading position (D’Agostino, 2018).
Rivalry among potential and current competitors: in the market where products are same in
the quality and available in more or less equal numbers; it is really challenging for Next PLC to
hold the current market share. It should also be noted that the rival of Next uses the
geographical and financial benefits available in the UK and then, they expand their business
operations in the other counties. So, Next PLC should also devise some effective plan in
response to such business strategies. It should also try to advance and diversify its business in
order to increase its consumer base (Gillespie and Riddle, 2015).
MICROENVIRONMENT
Employees- Employees of any organization are a strong asset of it. And they help the
organization in multiple ways. As they deliver their efficient skills and knowledge set to the
organization in the form of new product and services. Next PLC being in the business since so
long and enjoys a high level of loyalty from their employees. They also offer valuable services
to their subordinates. And the free flow of information and open communication earned the
best talent pool for Next PLC (Song et al., 2019).
Customers- Next PLC has a large customer base that uses their wide-ranging product portfolio.
And they are from different classes, age groups and different earning groups. The company
acts in a wide domain and offers a wide range of products and services to its employees. Next
PLC abides by all the rules and regulations and governments norms as a part of their corporate
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responsibility. They also provide valuable user experience and customer satisfaction with the
efficient delivery of services (D’Agostino, 2018).
Stakeholders- Next PLC has been present across the sectors and across the globe have a strong
global presence and many participants across the globe. These participants get benefitted by
valuable services of it and also contribute positively to the growth and development of Next
PLC (Owler, 2015).
TASK 2
Marketing is a vast business operation which includes production, supply, distribution,
exploration and expansion, estimating as well as advancement and communication. Marketing
mix can be defined as the model which incorporates various marketing techniques in order to
get a profitable and leading position in the market place. To put the product in the market
with the right strategies and elements is very important for an organization. And for it, the
organization uses several tools and techniques as: prepares an attractive advertisement.
Communicate its product and the underlying message effectively, and target efficiently the
perspective and prevailing clients. And Considering Next PLC, marketing is a vast and
important function of the organization’s business strategy (Chae et al., 2016).
This includes identification of the latest trends of clothes and footwear and other services,
approaching to the prospective population and having an agreeable relationship with them.
The structure of the communication mix is given as follows:
ADVERTISING
Next PLC utilizes the online and print media to communicate its business mission and objective
to its prospective consumers. Also, the organization is making a strong presence on social
media platforms and using various digital marketing strategies in an effective and fruitful
manner. Earlier, the company restricted its marketing and advertising through its dedicated
website only but with the changing trends and market dynamics it has started to promote its
products via other online promotion platforms also. But, the marketing team must take
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preventive measures to mitigate the risk involved in online marketing (Schivinski and
Dabrowski, 2016).
SALES PROMOTIONS AND DISCOUNTS
Sales promotion usually refers to the short-range attractions for the predominant or
prospective customers for promising to buy the products and services. The Next PLC
infrequently uses this policy of sales and operation and more explicitly the organization offers
special sales promotion campaigns. Besides, Next PLC is a part of many customer loyalty
programs and promotional campaigns (Mansour, A., 2016).
Figure 3-Marketing Mix Communication
[Source: Reference for business, 2019]
PERSONAL SELLING
Personal selling can be defined as the selling method which is a part of direct offering or
selling. This Segment of the marketing and communication mix requires extremely efficient
skill set. The marketing and sales section of an organization devises a workable plan and along
with this the supply chain management department and salesperson of the company
promoted its products according to the marketing strategies approved by a company. Further,
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the company tries to penetrate the new and small markets to increase their customer base
(Jones et al., 2018).
RELATIONSHIP WITH PEOPLE
Publicity or relation with the public is an important part of the communication mix of the
company because it significantly supports the overall business operations of the company.
Next PLC has online chat support and feedback mechanism as well as e-complaints resolution
platform to deal with the different issues of the public. So, it can be said that Next PLC
endeavours to execute every action that requires maintaining extraordinary public relations
(Mathooko and Ogutu, 2015).
Direct marketing is correlated with the sales and promotion where the Next PLC uses
interactive communication in transferring the communication message to the targeted
consumers. There are several strategies such as digital marketing, emails, social media
invitations, webinars, online and offline proceedings and many more by means of a direct
marketing plan. These undertakings save the enormous time and efforts of the company
because it directly transfers the message to the potential and current clients (Gillespie and
Riddle, 2015).
MOUTH TO MOUTH PUBLICITY
Mouth to mouth publicity is directly proportional to the quality of products and services; the
quality ensures the authentic and reliable employees and contented customers of a company.
Considering Next PLC, the organization has a prominent brand image in the market as the
company provides enormous services and products to their consumers’ pre and post the
purchase (Owler, 2015).
EVENT SPONSORSHIP
Event sponsorship can be defined as the process of endorsing some cause through any
occurrence or platform or through its products and services. Next PLC supports various events
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