Introduction
Industry: Clothing and Home Products Retail
Company’s Strategy: To offer high-quality clothing and homeware at an accessible price and build a long-lasting relationship with clients and shareholders through the support of sustainable development and the creation of value.
Porter’s Generic Strategies
The current paper investigates NEXT’s organizational strategy through the lens of two models – Porter’s Generic Strategies and Bowman’s Clock. The former presents three general approaches to achieving competitive advantage in the market – low-cost, differentiation, and focus (Ishlami, Mustafa and Latkovikj, 2020). The classification between low-cost and differentiation is crucial in this strategy since it governs the company’s business model. According to the theory, the organization should adopt only one of the two mentioned approaches and either lower the costs or introduce a differentiated product (Ishlami, Mustafa and Latkovikj, 2020). Moreover, the company should decide whether it is planning to focus on a specific segment in the market or implement industry-wide sales. As a result, the answers to these two questions reveal the organization’s strategy according to Porter’s Generic Strategies.
NEXT plc utilizes a low-cost approach and provides an industry-wide assortment of products. According to the company’s annual report, the primary purpose of the organization is to “create quality products at affordable prices,” implying the focus on the low-cost segment (NEXT plc, 2022, p. 74). This approach transparently reflects the low-cost generic strategy within Porter’s framework, establishing the general direction for the company. The model has an extensive number of advantages, including increased customer loyalty, reduced operational costs, and new opportunities for business growth (Fainshmidt et al., 2019). Furthermore, it is easier to implement than the model that emphasizes product differentiation (Fainshmidt et al., 2019). According to Fainshmidt et al. (2019), most companies try to combine low-cost and differentiation to a certain extent, creating a dynamic system of market segmentation. However, NEXT plc adopts exclusively a low-cost approach and provides a broad assortment of products in clothing and homeware.
From these considerations, NEXT plc does not focus on a particular market segment but adopts an industry-wide approach. According to the annual statement (NEXT plc, 2022), the company has implemented this model to improve its relationship with customers. Broad product choice, quality control, and client experience are three primary instruments that create value in customer interaction (NEXT plc, 2022). As a result, the industry-wide focus on clothing and homeware is a deliberate organizational strategy that supports the brand-customer relationship. Ultimately, according to Porter’s framework, NEXT adheres to the low-cost and industry-wide generic strategies.
Bowman’s Clock
Bowman’s Strategy Clock is the second relevant classification system of organizational development. It presents a diagram with eight distinct strategies based on their relation to perceived value and price (see Figure 1).
According to the chart, NEXT primarily belongs to the second category due to the emphasis on affordable prices for various demographic groups of customers. Thus, similar to Porter’s Generic Strategies, Bowman’s Clock demonstrates the general business model of NEXT plc through the lens of low-cost differentiation. At the same time, NEXT’s category might incline towards a “hybrid” classification since the company collaborates with various brands (NEXT plc, 2022). This approach is possible due to the organization’s positive reputation and broad scope of influence in the country.
Nevertheless, the representation of NEXT on Bowman’s Clock from Figure 1 does not reflect the objective evaluation. The second diagram of corporate responsibility within Bowman’s framework provides a more accurate illustration of NEXT’s strengths in the contemporary market (see Figure 2).
NEXT appeals to customers through the low-cost approach; however, the company also ensures the most beneficial corporate image through active sustainability efforts (NEXT plc, 2022). In this sense, increased perceived sustainability value (PSV) is one of NEXT’s primary strengths that allow the company to grow despite the lack of focused differentiation or risky margins. Ultimately, Bowman’s Strategy Clock of corporate responsibility presents an objective assessment of NEXT’s strategy with a focus on low prices and sustainability efforts.
Conclusion
The current paper has examined NEXT plc’s organizational strategy and business model, classifying the company based on Porter’s Generic Forces and Bowman’s Clock. Within Porter’s framework, NEXT plc adopts a low-cost and industry-wide approach to create a loyal client base and attract new customers through a broad diversity of products. Moreover, the analysis through Bowman’s Clock has revealed that NEXT’s sustainability efforts play a vital part in the company’s development and positive reputation.
Reference List
Arshad, A., and Yazdanifard, R. (2017) ‘Investigative synopsis of Sony Inc.’s strategic management issues/failures and how to overcome them’, International Journal of Management, Accounting and Economics, 4(9), pp. 917-936.
Fainshmidt, S. et al. (2019) ‘When do dynamic capabilities lead to competitive advantage? The importance of strategic fit’, Journal of Management Studies, 56(4), pp. 758-787.
Ishlami, X., Mustafa, N. and Latkovikj, M. T. (2020) ‘Linking Porter’s generic strategies to firm performance’, Future Business Journal, 6(3).
NEXT plc. NEXT plc annual report & accounts: January 2022. Web.
Weston, P., and Nnadi, M. (2021) ‘Evaluation of strategic and financial variables of corporate sustainability and ESG policies on corporate finance performance’, Journal of Sustainable Finance & Investment, pp. 1-17.