Accounting in Business

Team 4

Hanan Al-Asiri
Hisham Al Dahmashawi
Rami Qaqish
Sanoj Varghese

Background
A UK based multi-channel retailer offering exciting, beautifully
designed, excellent quality clothing, footwear, accessories and home
products and a member of FTSE-100 index.
The NEXT retail chain was launched in February 1982 and the first
store opened with an exclusive coordinated collection of stylish
clothes, shoes and accessories for women. Collections for men,
children and the home quickly followed

Competition vs next

Marks and Spencer

Debenhams
Arcadia Group ltd

SWOT Analysis
S

Consistent revenue and profit growth

Multi Channel retailing enhancing
customer base
Focus on sustainabiity

Overdependence on the UK Market

Continued cost savings from internal

restructuring initiatives
Further expansion in emerging markets

Intense competition from global retail

giant
Rising labor wages in the UK
Surge in shoplifting affecting retailers'
cost

Financial Ratios

Next vs Competition
In the middle of Mainstream fashion market

PEST analysis
Political: UK, is a Member State of the European Union and fulfils stable
political surrounding which is the basis for long-term decisions upon which the
government has to act to achieve certain conditions. This has given NEXT PLC
a higher scope of economic actions. (Grin, 2009)
Economic: The current economic climate in the UK is unstable and this brings
short term volatility in NEXT sales which, in turn, make forecasting difficult. In
addition, the weakness of Sterling against the US Dollar and the Euro, the
main purchasing currencies, has brought further challenges to their buying
teams. (Next financial statement, 2009)
Social: presently, the UK population is high and this means a lot of customers
for NEXT Plc. On the other hand, sex education and rise in population of
career women have brought about drop in birth rate and so figures of NEXT
target group of 25 to 45 are declining.
Technological: Internet has given NEXT a lot of potential opportunities to

Next Proposed Strategy

Improve the companys overall financial performance and going-concern

(Insolvency)
Improve customer satisfaction
Improve employee satisfaction
Improve brand equity

Scorecard Example 1
Finance
Objective: Decreasing gearing ratio and improve and control cash
position (fluctuation)
Initiative:
1. Gradual decrease on dividend paid (investor runaway)
2. Decrease credit sales (potential risk of revenue drop)
3. Increase payables through negotiations with suppliers (free
financing) . Paid after 40 days instead of 19
Measurement:
4. Gearing ratio comparison (decrease)
5. Improved cash flow (stable)

Scorecard Example 2
Customer
Objective: Enhance customer satisfaction and experience

Reduce
Credit
Initiative:
1. Develop a sophisticated CRM to improve brand loyalty sales
2. Ecommerce and Virtual fitting rooms
Measurement:
increased customer satisfaction base on CRM
reports.

Scorecard Example 3
Learning & Growth
Objective: Increase brand equity
Initiative:
1. Improve employee satisfaction through training and incentives.
Measurement: Improve turnover rate and improve customer loyalty.

Scorecard Example 4
Implementation process
Objective: Monitor and control implementation of new strategy
Initiative: secure support from all functions (internal & external)
1. Outsource the online products delivery to a well established delivery
company.
2. Manage CRM through marketing department or affiliated partners

Measurement:
3. Delivery of new strategy roadmap and achieving milestones.

Responsible Business

Finance
Finance
Decreasing
Decreasing gearing
gearing ratio
ratio and
and
improve
improve and
and control
control cash
cash position
position

Measurement:
Measurement: %
% completion
completion by
by
Business
Business Unit
Unit

Implementation
Implementation Process
Process

Target:
Target: Internal
Internal Business
Business Units
Units

Monitor
Monitor and
and control
control
implementation
implementation of
of new
new strategy
strategy

Customer
Customer
Enhance
Enhance customer
customer satisfaction
satisfaction
and
experience
and experience

Learning
Learning &
& Growth
Growth
Increase
Increase brand
brand equity
equity

Measurement:
Measurement: Risk
Risk and
and Control
Control
Heat
map
Heat map

Target:
Target: Media,
Media, customers,
customers, &&
internal
audit
teams
internal audit teams
Measurement:
Measurement:
Savings
Savings

Sales per
Product
/Revenue

Sales Operating
Profit

Stock Building R&D

Budget / Cost of Sales
Sales per Product
/Revenue

Target:
Target: Stakeholders
Stakeholders
Measurement:
Measurement: %
% change
change in
in brand
brand
equity
(market
value
vs
book
equity (market value vs book
value)
value)

Earnings per share

Free Cash Flow

Learning
Learning &
& Growth
Growth
Increase
Increase brand
brand equity
equity

Finance
Finance

Implementation
Implementation Process
Process
Monitor
Monitor and
and control
control
implementation
implementation of
of new
new strategy
strategy

Decreasing
Decreasing gearing
gearing ratio
ratio and
and
improve
improve and
and control
control cash
cash position
position

Customer
Customer
Enhance
Enhance customer
customer satisfaction
satisfaction
and
and experience
experience

Q&A