Strategic Management Report: Analysis of Next PLC's Strategy

This report provides a comprehensive strategic management analysis of Next PLC, a prominent UK retailer. It begins with an overview of Next PLC, including its vision, mission, and objectives. The report then delves into an external environment analysis, utilizing PESTLE and Porter's Five Forces frameworks to assess the competitive landscape. Internal analysis includes the evaluation of strategic drift, strategic capabilities, and the application of the Business Canvas Model and McKinsey 7-S model. Furthermore, the report examines Next PLC's marketing mix and resource implications. The analysis provides insights into Next PLC's competitive advantage, strategic decisions, and overall performance within the UK retail market. The report concludes with an evaluation of the findings and recommendations for future strategic directions.

Running head: STRATEGIC MANAGEMENT
Next PLC
Strategic Management
11/15/2018

STRATEGIC MANAGEMENT 1
Table of Contents
Introduction................................................................................................................................3
Task 1.........................................................................................................................................3
Overview of Next Plc.............................................................................................................3
The vision of Next Plc............................................................................................................4
The mission of Next Plc.........................................................................................................4
Objectives of Next Plc...........................................................................................................5
Task 2.........................................................................................................................................6
External Environment Analysis.............................................................................................6
PESTLE Analysis...............................................................................................................6
Competitive Analysis of Next Plc. (Generic Competitive Strategy).....................................7
Porter 5 Force Framework.....................................................................................................8
Buyer’s bargaining power..................................................................................................8
Supplier’s bargaining power..............................................................................................9
New Entrant Threat............................................................................................................9
The threat of Substitute Product.........................................................................................9
Competitive Rivalry...........................................................................................................9
Task 3.........................................................................................................................................9
Strategic Drift.........................................................................................................................9
Alignment of Company’s Vision and Mission with the market demand.............................10
Strategic Capabilities of Next Plc........................................................................................11
Business Canvas Model.......................................................................................................12
Task 4.......................................................................................................................................13
McKinney 7-s Model...........................................................................................................13
Strategy............................................................................................................................13
System..............................................................................................................................13
Shared Values...................................................................................................................14
Staff..................................................................................................................................14
Structure...........................................................................................................................14
Skill..................................................................................................................................14
Style..................................................................................................................................14
Marketing Mix of Next Plc..................................................................................................14

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Product.............................................................................................................................14
Price..................................................................................................................................15
Place.................................................................................................................................15
Promotion.........................................................................................................................15
Task 5.......................................................................................................................................15
Analysis and evaluation of Resource Implication................................................................15
Conclusion................................................................................................................................16
References................................................................................................................................17

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Introduction
Strategic management is very vital constituent for the business mainly due to the reason that
it is a procedure, by which organization can survive and thrive within the industry through the
approaches used for achieving their objectives and goals. It sets some basic requirements on
which businesses can achieve success and extend its survival in the market (Ansoff, 2016).
This report is grounded on the assessment of strategic management in relation to its
significance for Next Plc., a foremost company in United Kingdom retailing industry.
Further, the report will be comprised of a detailed external analysis of the United Kingdom's
retailing industry. Here, priority will be provided to the evaluation of the external and internal
environment by using PESTLE analysis and porter five forces framework for the company.
Along with this, an assessment will also be performed to recognize the companies'
competitive advantage other than Next Plc., i.e. its rivals. Besides this, internal analyses of
the organization will be included within the discussion of this report. In the end, the
association between the present strategy of the company and its antiquity, along with the
valuation of the strategic capabilities of the company will be deliberated.
Task 1
Overview of Next Plc
Next Plc. is one of the prominent retailers of the United Kingdom that was established in
1982. The business majorly deals in the sector of clothing with a different range of clothes for
women and men, home products and footwear (Next Plc., 2018). Additionally, the business
entity also runs its operations in different variety of accessories and shoes. Very sooner, the
organization has established a variety of collection for children, men, and women along with
home equipment. Presently, the business has around 500 stores in Ireland and the United

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Kingdom. Besides this, it has around 200 franchised stores across its group (Next Plc., 2018).
Next Plc. is placed at the second position in terms of biggest retailer of clothing in the United
Kingdom after Marks and Spencer. The entity is also involved in an online business where it
provides different products to the target audience. In this line, Next Plc. has established a
catalogue of home shopping and website under the name NEXT Directory. The entity has
around 4 million active consumers on its online market who are availing the services from 70
nations (Reuters, 2018).
The vision of Next Plc
As per the vision statement of Next Plc., it is committed towards providing quality stylish
clothing, auxiliary, and fittings at an affordable price. The vision of Next Plc. is to attain the
number one position in the United Kingdom’s retailing industry and to offer unique as well as
innovative products to the customers in order to enhance the living standard (Next Plc.,
2018). The business has established a space within the industry where people can get their
lifestyle products on the regular basis.
The mission of Next Plc
The Next Plc. statement of mission performs an essential part in enhancing the market image
in the mind of external and internal customers. The mission of Next Plc. is to be the usual
choice for fashion in the whole market of United Kingdom. The business desires to be
updated with the needs of fashion and people expectation regarding different styles such that
quality and best products could be delivered in order to stay competitive in the market. With
the motive of fulfilling, the customer needs and go beyond their expectations Next Plc.
Company creates its products (Next Plc., 2018). The company delivers Brand values as per
its commitment to confirm ethical practices. Along with this, the business wants that no one
should be harmed due to the practices of business. In addition to this, it is concentrated
towards running a liable and prosperous business, offering best service to consumers, and

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benefits to the shareholders. All the employees and suppliers of the company are treated
equally in order to attain sustainable practices.
Objectives of Next Plc
The objectives of the business need to be framed before the commencement of the justifiable
practices in the market. The Next Plc. frames its objectives in line with the vision and mission
of the business and it is completely dedicated towards attaining preferred place in the market
through achieving objectives. The objectives of the company are defined in the following
points:
To fulfil the customer’s fashion needs
To attain a higher share in Ireland and the United Kingdom's market. The business has
framed the objective to increase market share by 10% until 2020. (Next Plc., 2018)
To meet the customer’s expectations
To create a product with the best quality
To increase the consumer shopping accessibility, through the renovated store and
online pre-sets
To enhance 20% sale by 2020 (Next Plc., 2015)
To diminish the adverse influence on the environment by providing information
regarding the ways to disperse of goods properly
To offer innovative products to the customers

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Task 2
External Environment Analysis
Source [(Sodry, 2018)]
PESTLE Analysis
Political – Politics influence both customers and producer in different ways. A stable political
environment is a foundation for lasting decisions within the country. The UK as the European
Union's member meets their prerequisite. The administration is intended to perform in a
defined political structure in order to attain the settings of the European Union and this offers
a higher possibility of economic movements to the Next Plc. (Fern Fort University, 2018).
Another benefit of the European Union is the opportunity of open goods transfer. This
supports Next Plc. to vend its products in diverse European nations. There is absence of trade
barriers that magnify sales and offer an opportunity for direct participation within the
operations of foreign market.
Economic – Economic drifts are very essential for the entity and that they are largely based
on the politics' of the government. Investment in the European countries for Next Plc. is very
fruitful because of the currency of British presently exceptionally strong. However, company
needs to monitor properly the influence of exchange rates (Fern Fort University, 2018).

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Social – Recently, there has been a considerable increase in the trends of fashion, where
Asian customers for fashion brands are increasing. With the rise in the aspiration and income
level, affordable brands are working to meet the demands of the customer of being trendy and
chic (Fern Fort University, 2018).
Technology – In every part of the industry, advanced technology is creating excessive
inroads to order to enhance the quality of life and speed up the manufacturing quality. The
entry of new media and age of internet disclose huge possible opportunities for Next Plc. to
increase profit. Some of the businesses in the UK have started providing online-orders where
the consumer can define his/her desire and measurements, and direct it at the production
place. After 48 hours, the customer gets their package (Fern Fort University, 2018). With the
help of this technique, businesses can instantly react to the alterations in the behaviours. Few
of the social networking sites such as Facebook offer a means of education and information
that helps Next Plc. to advertise its offerings.
Legal – Same like other companies, Next Plc. should also ensure with the legal standards that
are enforceable in an authority. Considering the Next Plc. the case, it is very complex because
it has to comply with the European as well as the United Kingdom's law (Frue, 2018). Few of
the regulations that influence Next Plc. in the United Kingdom are Minimum wage legislation
and Equal opportunity legislation.
Environment - The physical environment is the main concern for the businesses working in a
given countrywide market, it considers how the business prevent the physical environment
with its operations and the influence it has on the business. Generally, the physical
environment in which Next Plc. operates in the United Kingdom market can be considered as
gentle in comparison to the different regions in the world that deals with natural disasters like
forest fires, hurricanes, and earthquakes (Frue, 2018).

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Competitive Analysis of Next Plc. (Generic Competitive Strategy)
Next Plc. offer its services in the market of UK where it deals with intense competition from
the rivals such as John Lewis Partnership, Marks & Spencer, and Debenhams (D&B Hoovers,
2018). The increasing competition is affecting the business of the company that could be
observed in the declining profit margins. However, the company is bringing different trendy
fashion for the customers in order to attain a competitive advantage against its competitors.
The competitive advantage helps a business in creating superior services and products from
other available choices to the customers. In order to create a competitive advantage a
business needs to be clear about the determinants i.e. benefit, competitor, and target market
(Porter, 2011).
The Generic Competitive Strategy is a practice intended to deliver businesses with a strategic
plan to strive and attain an advantage in the market. GCS is dependent on three strategies i.e.
differentiation, focus, and cost leadership. All three strategies possess a diverse mechanism
for attaining success (Amadeo, 2018). Businesses in the industry might not select the similar
strategy as per their objective and products. Next Plc. has adopted a differentiation strategy
according to which it offers better services to the customers than anyone else in the industry.
An entity can attain differentiation by offering high quality and unique products. Next Plc. is
offering trendy and unique clothing for the children, men, and women in the market in order
to attain a competitive advantage over its competitors (Craft, 2018). Besides this, it deals in
other products such as home appliances, shoes, accessories, etc. in order to be diversified and
to attain a larger market share.
Porter 5 Force Framework
Porter Five Force model is said to be an approach used to define how a market is competitive,
and thus how profitable it can be for a company. There are five forces within the framework

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i.e. the buyer's bargaining power, supplier's bargaining power, competitive rivalry, substitute
threat, and new entry threat (Schwarzinger, 2012).
Source [(Professional Academy, 2018)]
Buyer’s bargaining power – Buyers are the essential stakeholders of the company who
possess an interest in the business and its activities. The buyers in the retailing industry are
price sensitive because they look for enhanced quality at affordable prices. As the market
possesses many competitors, it makes it very important for Next Plc. to add value, style,
quality, or label to the product such that buyers can be attracted. In the absence of these
elements, there are huge chances that customers switch to another competitive brand. Hence,
the buyers bargaining power is high (Fern Fort University, 2018).
Supplier’s bargaining power – Suppliers are the company's internal stakeholders who
provide raw material to the company. In the United Kingdom market, there are different
suppliers but their effect is very limited over Next Plc. Because of the huge obtainability of
the suppliers, another supplier in case of an undesired condition can switch them (Fern Fort
University, 2018).

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New Entrant Threat – The businesses in the United Kingdom's market possess high threat
from the new entrants. Next Plc. has attained a justifiable position in the retailing market, but
there are new entrants who can be a big threat to the company (Fern Fort University, 2018).
The threat of Substitute Product – The Company possesses low threat from the substitute
products because it offers branded products, hence it could be said that the threat of substitute
product is not a key issue in the market of cloth retailing for Next Plc.
Competitive Rivalry – There are different retailers of clothing in the market of the United
Kingdom who signifies the rivalry between Next Plc. and other retailers. ASDA and Marks &
Spencer are the biggest rivals of Next Plc. These businesses are dealing with competition
because of service, price, and quality (Fern Fort University, 2018). Considering this, Next
Plc. is experiencing a moderate level of competition in terms of service and quality, which is
not a big problem for the company.
Task 3
Strategic Drift
Strategic Drift is said to be the notion of strategic management that talks about the response
of companies while moving towards an altering environment. Diverse circumstances and
unanticipated challenges are common aspects that can take place anytime when dealing with
the strategic change in the business. Strategic drift is the circumstance when a company fails
to result in the probable strategic consequence (Sivalingam, 2018). It has been considered as
the reason for which administration of the company loses concentration from the strategic
plan and involves in a different activity that is less important.
Next Plc. has faced a strategic drift within the business, in the year 2016. The retailer zoomed
up the manner it places together its fashion range in order to compete appropriately with the

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competitors like H&M and Primary, and Zara, which take only some weeks in place of
months to carry clothes from the stage of designing to the stores. However, the chief
executive of Next Plc. i.e. Lord Wolfson, self-confessed the push, which in few situations
saw judgments provided in three days in place of three months, directed to faults that resulted
in a tough situation that was faced by the company in 2016. It had also resulted in declining
of the profit margin of the business (The Guardians, 2017).
Alignment of Company’s Vision and Mission with the market demand
Next Plc. has its stores and online business across UK, Europe, and Asia, which has offered it
a key advantage in terms of making sales and earning revenue. However, this aspect is a
challenge in consideration of strategic planning. It is essential to understand that will the help
of strategic planning it is very easy to execute the strategies and objective in a proper way
(Bloomberg, 2018). However, due to international business operations of the company, it is
hard to create a market plan. The effect of globalization and passion can be simply
readdressed to the company's strategic planning. It stops them to run their operations in a
proper manner. Barriers are common issues in the business. Because of high corporate level,
it becomes very tough to maintain an eye on every part and it raises a challenge in the
distribution and management of the resources for Next Plc.
Any business that neglects the issues of resource wastage needs to deal with huge problems
within the industry it operates. It can influence the effectiveness of the company and a kind of
change can be observed on the earning ration of the business. Next Plc. has to deal with
problems of strategic planning but except this, all the aspects are under the control of the
company. An extra alteration in the opinion and demand of the consumer is considered as a
factor that can affect the strategic planning. The vision and mission of the company reflect its
values and determination that affects the buying decision of the company. The vision of Next
Plc. is to become the top retailer in clothing by ensuring the quality of its products, which