Next Plc's Strategic Management Plan: A Comprehensive Analysis

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STRATEGIC MANAGEMENT PLAN REPORT
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Table of Contents
Introduction......................................................................................................................................3
P1 Application of appropriate frameworks to analyse the impact and influence of the macro
environment on a given organisation and its strategies...................................................................4
M1 Critically analyse the macro environment to determine and inform strategic management
decisions..........................................................................................................................................6
P2 Analysis of the internal environment and capabilities of a given organisation using
appropriate frameworks...................................................................................................................6
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set..............................................................8
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organisation...........................................................................................................................9
M3 Devise appropriate strategies to improve competitive edge and market position based on the
outcomes........................................................................................................................................11
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organisation.......................................................................................................................12
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives.......................................................................................................................................14
D1 Critique and interpret information and data applying environmental and competitive analysis
to produce a set of valid strategic directions, objectives and tactical actions................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
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Introduction
The term business strategy is considered as a combination of all decisions that can be taken along
with the actions that are performed by any business for accomplishment of business goals and for
securing the competitive position within the market. Furthermore, it can be termed as the
backbone of a business as, this is a roadmap that leads to desired goals. Hence, the present study
focuses upon different business strategies of Next Plc organization of UK. it is a multinational
company of Britain that consists of footwear, clothing as well as retail products of home. It is
headquartered in United Kingdom, Enderby, England. It comprises over 700 stores and is termed
as largest clothing retailer through sales within United Kingdom (Nextplc. 2019). Mission of
the particular organization is to offer beautifully designed, exciting and quality home ware and
clothing products, which are well made, Safe and functional and to provide excellent value for
meeting the expectations of the customers.
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P1 Application of appropriate frameworks to analyse the impact and influence of the
macro environment on a given organisation and its strategies
Pestle analysis is considered as a strategic tool that can be applied for Next Plc for analysing the
external environment based on the concerned organization. Changes within the external factors
of environment are known to have a direct impact over the organizational culture (Priem et al.,
2018).
Figure 1: Pestle analysis
Source: (Jain et al., 2018)
Political factors UK is known to be a member state for European Union as well as fulfils a
stable surrounding of politics. These results in footing the determinations
of long run within which, authorities needs to accomplish several
conditions. However, this provided Next Plc with a high range of economic
actions. For instance, Next Plc is a government organization that
comprised of the budget cuts through UK government in economic times.
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This meant an overall spending through the customers that was suppressed
have been advanced in the recent years.
Economic
factors
The recent condition of economy within UK is considered to be unstable
and also brings volatility for short term within the concerned
organizational gross revenues. However, after the failure of Sterling upon
Euro and US dollar, the chief currencies of buying brought few challenges
to the company for instance, the purchasing squads.
Social factors The social changes consist of the potential for opportunities and threats
regarding the organization of Next Plc. For instance, the company has
realized that the young customers have been growing rapidly and are
captured through the online fashion. Hence, by buying lipsy, the company
could take the advantage of social changes within both fashion and
demographics for keeping up with the recent trends of fashion.
Technological
factors
Advanced technology and internet have provided the concerned company a
batch for possible chances for hiking the net incomes. This is due to the
clients as they can get online vesture in an easy way instead of holding for
going forth to the comfort related to places.
Legal factors The government of UK have increased the VAT through 17.5% to 20%.
This has affected the organization of Next Plc as, the pricing of products
increased for adding to the costs of higher operation.
Environmental
factors
Based on the annual report of Next Plc, a severe weather in the month of
December 2011 have conspired for hampering the sales which is
something that the organization did not envision. However, the concerned
company also recognizes current trends within governments and
consumers for demanding business regarding the reduction of carbon
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footprints. Hence, the organization has committed for reducing these
through minimising the recycling waste, packaging within their products,
and lowering the emissions of transport.
Table 1: Pestle analysis
Source: (Created by the learner)
M1 Critically analyse the macro environment to determine and inform strategic
management decisions
As per the annual accounts of Next Plc, the sales were declined within 2010 to 2011 as, the
operating profit was 8.5% in the last year and the turnover of group was up through 1%. Hence,
through the above discussion, it can be analysed that Next Plc have given effort for maintaining
its external factors so that, it might not impact the organization in a negative manner. In the
recent years, the company has been seen to achieve growth through the use of certain strategies.
The political factors of UK has led to an advantage for the particular organization as, customers
are known to spend for the company products (Ansoff et al., 2019). However, the legal factors
have given a great impact to the organization through the rise of VAT as, the price of the
products have also increased in a higher range. On the other hand, there had been some
challenges for the company due to the economic factors such as failure of US dollars and Euro.
This led to a concern for the organization in order to maintain the gross revenue. However, with
the help of the environmental factors, Next Plc recognised the recent trends for the younger
generation customers and importance of online marketing that helped the company to develop its
marketing strategies.
P2 Analysis of the internal environment and capabilities of a given organisation using
appropriate frameworks
The application of SWOT Analysis helps in identifying the organizational strategies that may
utilise for exploiting external opportunities and to counter threats (Petrovic and Kalata, 2019). It
also helps in building and protecting the strengths of Next Plc and in eradicating its weakness.
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Strengths Weaknesses Opportunities Threats
The concerned
organization
consists of a track
record for
developing new and
innovative products.
Next Plc has a higher
day of inventories in
comparison with the
other competitor
organizations. It is
making the
organization raise its
capital and to invest
within the channels.
This in turn may
impact the growth of
the company for a
longer term.
The core competencies of
the company can result in
success within the field of
other similar products.
For example, the research
of GE healthcare has
helped in developing
good machines of oil
drilling.
New technologies
that have been
developed by the
competitor
organizations or
rather the market
disruptor may act as
a threat for the
concerned company
for a long term
future.
Next Plc comprises
of a strong flow of
cash which provides
resources within the
company hand for
expansion of new
projects.
The percentage of net
contribution and
profitability ratio of
the particular
organization are
below the range of
average industry.
Moreover, the
financial planning is
not done in a proper
manner that may
impact the
organization in a
negative manner.
The development within
the market can lead to
dilution based on the
competitor’s advantage
and it enables the
concerned organization to
increase the
competitiveness in
comparison with the other
competitor companies.
Shortage based on
skilled workforce
within the global
market can
represent threat for
the company
regarding the steady
growths for profits
in context of Next
Plc within those
markets.
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The organization
has built an
expertise for
entering into new
markets as well as
making a great
success. Expansion
of the company has
helped to make new
stream of revenues
and to diversify the
risk of economic
cycle within the
markets where it
operates.
The organization is
not successful for
integrating firms
along with different
cultures of work.
Furthermore, in
comparison with the
other competitor
companies, it has
missed certain
opportunities for
forecasting product
demand.
As, the company is
known to invest in online
channels. There is an
excellent opportunity for
the company to drive its
advantage through the
increased sales. After
some years, the
organization may
leverage the particular
opportunity through
knowing the potential
customers and serving
their demands through the
use of data analytics.
The changing
behaviour of
customers for
buying products,
through the online
channels can act as
a threat for the
existing physical
infrastructure that is
driven by the model
of supply chain in
context of the
particular
organization.
Table 2: Swot analysis
Source: (Created by the learner)
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set
Based on the above swot analysis for the Next Plc organization, it also has certain limitations
according to the structure and internal capabilities of the concerned organization. As per the
structure of the company, it is positioned steadfastly in a mainstream manner of market. Some of
the factors and internal capabilities of the company can act as both weakness and strength in the
same time. For instance, change within the environmental regulations can act as both threat as
well as opportunity for the company as, it may enable for being within the level of playing field
(Fleisher, 2018). This can also result in being an advantage for the competitors in case it
develops the materials or products in a faster rate as compared with the other competitors. The
Swot analyses do not show the process to achieve competitive advantage and hence, it must not
be the end within itself. On the other hand, Swot analysis can lead the organization to
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overemphasize upon an internal factor for formulating strategies. However, there is an
interrelationship between the key external and internal factors which Swot analysis do not
reveals whereas, it can be vital for devising strategies. Thus, the above analysis have provided
evaluation window however, it has not given any implementation plan for strategic
competitiveness based on Next Plc.
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation
As opined by Gerard, (2018), the model of Porter’s Five Forces may be used for analysing the
industry within which, the concerned organization operates in context of attractiveness by the
potential of inherent profit. The information that is analysed by the particular model may be used
through strategic planners regarding Next Plc for making strategic decisions.
Figure 2: Porter’s five forces
Source: (Fjeldstad and Snow, 2018)
Threat of new entrants
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 The economies regarding the scale are difficult for achieving the industry within which the
concerned organization operates. This helps to make it easy for production of large
capacitates through consisting a cost advantage. Moreover, this makes the production much
more costly in relation with new entrants and eventually, the threats based on new entrants in
turn, acts as a weaker force.
 These assess for distribution networks is known to be easy for the new entrants that may
easily set up the channels of distribution along with coming to the business. This can be done
with the use of some retail outlets for selling the type of product. Hence, it can be easy for
the new entries for getting their products within shelves. Thus, all the respective factors make
the threats based on new entrants strong in the industry.
 However, Next Plc may take advantage of economies based on its scale in the industry
through fighting with the new entrants by keeping the cost in upper hand.
Bargaining power of the suppliers
 The suppliers within the particular industry where the concerned company operates, it has
been compared to the buyers. This denotes that the suppliers consist of les control upon the
prices and it also makes supplier’s power of bargaining a weaker force.
 The suppliers are known not to give a credible threat regarding forward integration within the
industry where Next Plc is found to operate. As a result, it also acts as a weaker force for the
bargaining power of the suppliers.
 However, the company may purchase raw materials through its suppliers within a lower cost.
In case, the cost of the particular product does not suit the company, it may switch the
suppliers as, it comprises of lower cost. This way, the concerned organization can handle the
bargaining power of its suppliers.
Bargaining power of the buyers
 Product differentiation in the industry is found to be high that denotes that the buyers are
unable to find any alternative organizations that can produce a specific product. The
particular difficulty for switching can make the power of bargaining for the buyers a weaker
force in the industry.
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 There are not any significant threats for the buyers for integrating backwards. This in turn,
makes the threat of bargaining the weaker force in industry.
 However, for handling this threat, Next Plc may focus within differentiation and innovation
for attracting more and more buyers. Quality products and product differentiation are termed
important for the buyers in the industry and the concerned organization can attract a larger
base of customers through focussing upon these factors.
Threat of substitution
 There are few number of substitute that are available for the particular products which are
produced within the operated industry of Next Plc. these substitutes are produced through
such industries that earns lower profit. Hence, it can be said that there is no such ceiling
within the maximum profit which organizations can earn. Thus, all the respective factors may
make threat of substitution act as a weaker force.
 For tackling this threat, the company can produce quality products through which, the buyers
may be able to choose such products that will provide a better quality with low price in
comparison with other substitutions.
Rivalry within the existing firms
 There are few competitors for the particular company in the specific industry where most of
the organizations comprised of a larger size. This indicates that the firms in the same industry
may not take any step without information. Through this way, rivalry within the firms can act
as a weaker force.
 However, for handling such kinds of threats, Next Plc must focus upon differentiating the
products as; the actions based on the competitors can have a lesser effect upon their
customers that can seek the unique products.
M3 Devise appropriate strategies to improve competitive edge and market position based
on the outcomes
Through analysing the above external and internal environment of the concerned organization,
certain strategies can be devised for improving the competitive edge as well as the market
position. Strategic advantages can be achieved through the execution of various activities by the
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challengers or rather by executing same activities in a different way which depicts the acceptance
of generic scheme (Levinthal, 2018). The strategies are mentioned below:
Cost leadership strategy: Next Plc can place itself ahead the pack through offering an attractive
pricing. For instance, the concerned organization and another organization that is Wal-Mart have
raised their forefront through the use of this strategy. In addition to the effectiveness of the
particular strategy, low pricing can be seldom a desirable process for the individuals.
Differentiation strategy: This strategy depicts branding, which is likely to use by most of the
organization for differentiating a company from other companies (Teece, 2018). With the use of
this strategy, a brand name can be assumed automatically portraying a status for the respective
product. The company can leverage this skill through increasing the visibility along with the
perception of the value for the company.
Operational effectiveness strategy: This denotes creating an innovative strategy for a particular
organization (Foss and Saebi, 2018). For instance, the concerned organization makes use of
certain style of leadership in a different way. This helps them to execute any work in an
innovative manner. Therefore, this is to create own system to do well and gain competitive
advantage.
Adaptability of competitive advantage: For adoption of competitive advantage, target market
needs to be analysed. This helps in identifying potential customers of the organization and
knowing their requirements and demands (Danner, 2019). This acts as a driver for economic
growth. For instance, the concerned organization has invested in online channels for marketing
their products as they came to know about the requirements of younger generation. This helps in
acquiring a market position and reputation of the company in a particular market.
P4 Applying a range of theories, concepts and models, interpret and devise strategic
planning for a given organisation
Based on the strategic planning of the concerned organization, resource based theory of
strategic management can act as an effective process for strategic advantage of the organization.
This theory contends possession of the strategic resources that can help the organizations to
provide a golden opportunity for developing a competitive advantage for the other competitors in
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