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Strategic Management of the Next PLC - Coursework Example

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The report intends to examine external and internal factors influencing next plc company. The research is to demonstrate the following: profit and loss summary, balance sheet, rivalry (existing firms), bargaining power of suppliers, threat of new potential entrants and threat of product diversity…
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Strategic Management of the Next PLC
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The present study would focus on Next as a UK based retailer offering exciting, beautifully designed, excellent quality fashion and accessories for men, women and children together with a full range of homewares. Analyzing the 2010 and 2009 financial reports of Next PLC it shows that the firm has been earning constant revenue and accordingly the profit for both the years has also increased by almost 21%. Accordingly, the firm has also increased its basic and diluted earnings per share. The basic earnings per share in 2009 and 2010 were 156 and 188.

5 pound per share. In 2010, the total assets of the firm stood at 1693.5 while in 2009, the total assets of the firm stood at 1760.4. In 2010, the total liabilities of the firm stood at 1560.1 while in 2009 the total liabilities were 1619.9. The total assets of the firm decreased by 3.8% in 2010 as compared to 2009; similarly the total liabilities also decreased by 3.8%. Next is a UK retailer whose principal activities are excellent quality clothing and home products. “The primary financial objective of the group remains the delivery of sustainable long term growth in earnings per share”.

The industries in which Next plc competes are mainly the departmental stores, the retail sector, the shoe and the apparel industry. While next plc has a number of competitors, its main competitors are Arcadia Group, ASDA group, Body shop, Marks & Spencer Plc etc. Arcadia group has more than 2540 stores operating only in the UK. The one year growth of the firm as on August 2010 has been around 33% while the increase in net profits has been around 11%. Body shop PLC has also declared 44.9% of its profits as dividend in the year 2010 while in the year 2009, 43.

9% has been declared as dividends. Comparing the two years 2009 and 2010, body shop’s assets and liabilities had grown by around 3.2% in 2010 as compared to 2009. Recommendations: Among its competitors Next Plc has suffered negative profits in the year 2010 as compared to the year 2009 but yet Next Plc has an established market in comparison to its competitors. “The Internal Analysis of strengths and weaknesses focuses on internal factors that give an organization certain advantages and disadvantages in meeting the needs of its target market” (Internal Analysis 2010).

The firm is recommended to increase its profits through increasing its sales. External analysis Rivalry (Existing Firms): There is no such rivalry between existing firms other than capturing the market share. External analysis consist of the Porters five forces in analyzing the firm which include the firm’s rivalry between the existing firms, the firm’s bargaining power among its suppliers, buyers. The threat of new entrants into the market and the threat of the product diversity are also included in Porter’s five forces.

“The industry forces take the form of competitive rivalry, barriers to entry, threat of substitutes, buyer power, and supplier power” (Lynch 2003). Bargaining Power of Suppliers: “Supplier power is increased if there is a high degree of rivalry between companies trying to obtain the supplies” (Porters Five Forces n.d.). The firm has a number of suppliers and in 2009 – 10 there were 463 suppliers while in 2010-2011 the supplier base has increased to 492. Next works directly with it suppliers and monitors the supplier’s progress.

The firm uses six tier rating system as a supplier management tool. Bargaining power of buyers Next Plc’s buyers are its retail customers. Next provides excellent customer service and lays high importance in maintaining good relation and

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