Executive Summary STRATEGY This executive brief summaries and examines the operational environment of Next Plc.

The divers strategic choice made over time and proposes a recommendation following some evaluation of the industry strategies. Next position is analysed using the PESTEL and Porter`s five forces framework to evaluate the internal and external environment and the industry lifecycle. Next Plc successful factors includes the Next Directory online shopping which is highly innovative departments, financial strength, strong brand partnership through Lipsy, products quality with affordable prices. Next Plc internal capabilities are identified by its strategic capabilities in assessing them for competitive advantages in the VRIN. The SWOT framework analyses the opportunities and threats from the external environment strength and weakness of Next Plc (internal). The TOWS emphases the opportunities and strength Next has taken as advantage (so),( sw) to mitigate its weakness by using its strength and also minimising weakness to avoid threats. Next Plc strategic choices are analysed with the Ansoff matrix, showing the four directions pursued and the BCG shoeing the portfolio management of Next Plc business units. (SBUs). Next strategic directions and developmental methods are evaluated using the Suitability, Acceptability, Feasibility and Sustainability strategies proposed by (Johnson al2011). Next Plc applied strategies in terms suitability and acceptability will be alright. However a more feasible and sustainable will be application to gain its competitive advantage in its operational environment. 1. INTRODUCTION Next Plc is a specialty retailer on stylish clothing, footwear, accessories and home ware, and was founded by gentle men`s tailor Hepworth and son in 1864. Next Plc has operated for over 149 years with its brand name NEXT`` officially launched in 1982. Next directory catalogue, standard for online shopping which now has 3 million customers was also introduced 1988 with its next day delivery for home shopping on orders placed before 9pm by customers, but existed in 2001 (next 2011). Next plc operate mainly on three retail channels- Next retail, Next Directory and Next international through Lipsy partnership. Next plc has over 500 stores in UK and Ireland and 200 franchise retail outlets international.(www.next. Co.uk), Next Plc most recently is official clothing and home wear supplier to the London 2012 Olympics and Paralympic games. Next Plc will finally produce uniforms 4,500 technical officials, suits for the reception staffs, bed linen and other textiles for the athletes village. NEXT PLC STRATEGIC POSITION 2.1 THE EXTERNAL ENVIROMENT ANALYSIS OF NEXT PLC The external environment of Next Plc will be analysed with the PESTEL framework (see appendix 2.1). The attractiveness of Next as an industry will assessed with Porter`s five forces framework. (See appendix 2.2). This report shows the industry growth rate or attractiveness where new entrants will come and compete or likely face significant challenges. 2.1.1. THE INDUSTRY ANALYSIS Next Plc is in the clothing industry with major competitors like Marks and Spencer, Primark, Acadia and other smaller companies. Porter`s five forces frame analysis its attractiveness and for the critical successful factors( refer to 2.3) . in this context Next Plc competitors are refered to as the strategic group in the clothing industry. (Johnson et al 2011). ( see appendix 2.4) for Next Plc strategic groups.

2.1.2. NEXT PLC LIFECYCLE

Next Plc in the retail clothing industry is in its maturity stage, more standardised products, market share and cost efficiency are prominent in the industry. Despites failing sales in the industry, Next shares appreciated by 15% growth.(Goldman2012) 2.2. NEXT PLC INTERNAL ANALYSIS Next Plc internal capabilities analysis see (appendix 2.5)the internal capabilities are analysed by identifying the strategic capabilities for competitive advantage and (appendix 2.6) using the (VRIN) strategic capabilities analysis. The value chain which is Value, Rarity, Inimitability and Nonsubstitutability. (Appendix 2.7) shows the detail of the value chain. 2.3 SWOT AND TOWS Next strength and weakness are identified from the internal environment while the opportunities and threats points to the external environment. (see appendix 2.8). the TOWS are analysed in the ( appendix 2.9) showing the ( so) strengths and opportunities, (ST) using strength to maximise threats (WO)weakness and opportunities and the (WT) weakness and threats to maximise both . The SWOT and TOWS re illustrated in (appendix 2.10). 3. STRATEGIC CHOICE 3. 1. STRATEGIC DIRECTION

ANSOFF MATRIX

The Ansoff matrix analysis the strategic direction of Next Plc in the clothing industry and two of the four of the directions has been pursued, because Next is on its maturity stage. There are limited opportunities for Next Plc new market development in the Europe. Next products are standardised, so new products development may not be feasible. Using the Ansoff matrix of the (SUBs) to analyse Next Plc strategic position, in pursuing two of the directions, marketing penetration exist for Next Plc and stars are reduced in the clothing industry. Facts from the industry analysis show that, there is high competitive rivaltry and cost signal. It is relevant for Next to build more supplier, customer relationship and active participation in community development to increase market share. The market penetration strategy is to build strength against entry barriers. (Johnson et al 2011) 3.1.2. Market Development Strategy

The expansion of Next Plc products in international is for market development. Next Plc adopted its market development strategy by expansion into 50 countries including India, Indonesia and Sri Lanka. (See appendix 3.1.3) for products development see (appendix 3.1.4) for diversification.

3.2.1. BCG MATRIX

Fig.3.1: BCG Matrix

STAR: Next Directory can be referred to as the star because it has a highest potential of market share. Next Plc market penetration strategy is to bring meaningful growth to the star, that it will emerge cash cow. Stars are potential and profit oriented in the long- run. Herein investing or building more stores will deepen the market share. In essence stars will become cash cow as market growth slows down. QUESTION MARKS(?) Next Plc question mark or problem child ( Johnson et al 2011) is the Next international business unit with lowest revenue 76. 3 % sales (Next 2012). The question mark Next Plc is a growing business unit does not have market share (Johnson et al2011), hence developing it

into stars will require lot of capital base, which may fail but if properly managed will can become star. 3.2.3. CASH COW: Next Plc market penetration strategy is still pursued with its clothing, while the industry lifecycle analysis of the clothing is in the shakeout stage. Using the BCG matrix to analyses Next Plc, the clothing is the cash cow. (Johnson et al2011) describe cash cow as a business unit within a portfolio that has a high market share in a mature market but has low growth. 3.2.4. DOG: Ventura`s performance as one of Next Plc business unit is weak, static and declining considering the other business units where sales brought financial benefit to Next Plc. 3.3. COMPETITIVE STRATEGY

Fig 3.1: Strategy Clock

Next Plc competitive strategies in the clothing industry are credited to differentiation and affordable price of products with high quality to its customers satisfactions. Next uses its next day delivery home shopping strategy and strong brand in capturing increased customer. (See appendix 3.3.1). The hybrid strategy zone (Johnson et a2011) which is affordable price for quality clothing and differentiation is used for aggressive increase in market share. The hybrid zone has enabled Next Plc to enter into new market. 4.1. EVALUATION STRATEGY SUITABILITY: Next Plc market penetration on the Next Directory online is suitable and reasonably gaining market share. In evaluating the industry maturity, market or products development opportunities remain very slim, Next Plc uses its Next Directory online catalogue as its strength to increase sales by 32% (Next 2012) in essence Next Plc strategies are suitable. 4.2. ACCETABILITY: In assessing the acceptability strategy of expected performance outcome to meet stakeholders expectation, next adopted market development strategy, its 35% environmental control and new space of 15% are most acceptable .( see appendix 4.2.1). 4.3. FEASIBILITY: Next Plc capabilities strategy on market penetration and market development meets with stakeholders expectation. Next Plc acceptability strategy according to ( Johnson et al 2011) must pass through three stages, Risk, the predicted strategy to financially benefit stakeholders expectation and reaction from annual returns. In essence NextPlc adopted these strategies they are feasible. John Bortman(Next 2012) 4.4. SUSTAINABILITY: Every functioning industry strategy look at the short- term and long term benefits and the environmental impact, social and economic factors into consideration where the business operates. Next Plc market penetration and market development through the online shopping should be sustained. Next targeted 35% to preserve the environment from the baseline of 2007- 2015 , Next Plc has created equal economic opportunities (employment) without

discrimination for everyone in their operation centres( Next 2012) in terms of social factor Next has positive relationship suppliers, recruiting and retaining successful employees and donating to charity homes. CONCLUSION AND RECOMMENDATINS In conclusion, Next plc position was analysed, evaluation of the strategic choices and market development approaches were applied in its operational context. The report shows the environmental impact and how this has influenced Next Plc strategies choices in the changes in the environment to slow down sales of Next Plc. Next Plc has maximised its online shopping to increase profit margin. Next Plc products are standardised, so difference in price within the industry is insignificant. Finally Next Plc competitive strategy is differentiation, price, innovative ideas and technology which is used to achieve the value chain. Using the hybrid and focused differentiation as its competitive strategies. RECOMMENDATIONS Egbesu et al (2012) presentation recommends, that Next Plc should implement Sunday and evening delivery as a standard. There should be implement a live customer chart to enquire on the size and fit on the they are interested.(group work). Next Plc should invest in Nigeria which has a potential population range of 158 million people and design their products in the African style. Finally Next Plc should invest massively on all West African countries due declining sales in the UK. APPENDICES

Fig 2.1: Next Value Chain