Good Company Profile Of New Look Group, Inc. Report Example

Type of paper: Report

Topic: Management, Workplace, Company, Employee, Business, Internet, England, Finance

Pages: 10

Words: 2750

Published: 2021/01/11


Management Report for Caifu Investments, Ltd.
1. Executive Summary:
The purpose of the report is to present to the Board of Caifu Investment Ltd. A management analysis of the New Look Group and the Next Store companies for the purpose of determining investment risks. General issues the garment industry is facing in the marketplace at this time are adequate working conditions for employees in the factories and lack of skilled mid-level managers (Textile Bulletin, 2014). Internally, the retention of employees with acquired skills if difficult as other opportunities lure the best workers away (PwC, 2015).

Annual Sales for 2014: £1528.8 million with a gross profit of £805.9 billion
(, 2015)

Operating Income: £179 million in 2008

Total Employees: 30,000 globally with 17,000 in the United Kingdom
Business Profile: Founded by Tom Singh in the Taunton, Somerset, United Kingdom in 1969, New Look Ltd. is a privately owned company that has become a fashion leader for clothing (NewLookGroup, 2015). There are approximately 1160 locations worldwide with headquarters in Weymouth, Dorset, United Kingdom. They merged with the fashion store MIM in 2000, but sold it to Main Asia Limited in 2014 (New Look, 2014). They were the highest ranked store for footwear in the United Kingdom in 2007, opening their online sales the same year; they were placed at the top of the Fashion Index in 2013 (New Look Group, 2013). In 2012, New Look brought distribution in-house with the Lyndale Distribution Centre.
The New Look Charity Foundation was created in 2009, demonstrating social responsibility on the part of the corporation. The company has a formal Code of Ethics that all product suppliers are required to sign.
The New Look Retail Group has only been the ultimate holding company since 2006 due to restructuring. The Board of Directors includes Chief Executive Anders Kristiansen; founder and Non-Executive Director Tom Singh; Non-Executive Directors Stefano Giambelli, Mike Garland, Erik Nyborg, Torsten de Santos, and Martin Halusa; Chief Financial Officer Mike Iddon; and Non-Executive Chairman Paul Mason.
Permira Funds and Apax Funds control the stock with 27.6 percent and 27.7 percent respectively. For 2014, there was a £53.6 million loss attributable to the owners of the company.

Company Profile for Next plc: Located in Enderby, Leicestershire, England, United Kingdom

Annual Sales for 2014: £3999.8 million (, 2015)
Total Employees: 52,533 in 2014 (, 2015)
Business Profile: Founded in 1982 in Leeds, West Yorkshire by Joseph Hepworth with affordable women’s wear and accessories, the company has since added menswear, home interior, and children’s clothing to their offerings (, 2015). With headquarters in Enderby, Leicestershire, England, United Kingdom, the company is public limited. There were approximately 700 stores in 2011The catalogue sales were introduced in 1988 with online options in 1999. Further additions have included flowers, a gift list service, and baby clothing. The Lipsy company was acquired in 2008.
For the year to January 2015, the sales from online and catalogues increased by 14 percent and retail sales by 5 percent. The stock price rose 14 percent with £572 million returned to stockholders. Next is a member of the Ethical Trading Initiative to promote standards in the product supply chain. Next started to excessively expand in 1981 and after seven years, was bordering on bankruptcy (Hosking, 1995). Chief Executive Davies was fired and 433 jewelry stores in the company were sold to bring the company solvent. The current Board of Directors for Next is Chairman of the Board John Barton; Chief Executive Lord Wolfson of Aspley Guise; Group Finance Director Amanda Jones; Group Operations Director Michael Law; Group Sales and Marketing Director Jane Shields; and independent Non-Executive Directors Jonathan Dawson, Steve Barber, Caroline Goodall, Francis Salway, and Dame Dianne Thompson.
A press release in January 2012 announced Next is demolishing the old store in Stafford and moving into a home fashion store combination in the vicinity; it states over 50 new jobs would be created (expressandstar, 2015). Entering into a partnership with another store may indicate innovative ways to lower costs, or a way to keep retail sales if a stand-alone store cannot remain solvent. The move could prove a deterrent to established name branding.
Ethical practices came under fire in 2009 when the company was accused of failing to pass on exchange rate savings to shoppers in the Irish Republic (Irish Times, 2009). In addition, Next was found guilty of breaking the Consumer Protection Regulations of 2000 in 2010 by charging for delivery costs even if the products were returned within seven working days (Streeter, 2010). In October 2014, the company was accused of paying below living wages and their reply was that there were 30 applicants for every position (Turner, 2014). In what was perhaps a reaction to the bad press, CEO Lord Wolfson announced he was giving his entire annual bonus for 2013 to the Next employees; the amount was $3.6 million and will come to the employees as about one percent of their basic salary (Farnham, 2013). Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, states that employees need steady wages and benefits, not a one-time bonus; he said he believed the move was done to increase public favor.
The company claims it has alliances with various public charitable trusts; Next also contributes toward the Wockhard Foundation for the free treatment for cataract patients in the United Kingdom.
2. SWOT Analysis

New Look Group

Strengths: Economic Scale, Firm Margins, Adaptable to Change, Industry
Knowledge, Reactive, Strong Corporate Social Responsibility
Weaknesses: Financial Barriers to Technological Advancement, Aggressive
Opportunities: Global Expansion, Volatility, Attitudes Toward Fashion Trends,
Threats: Limited Production Capacity Level, Barriers to Growth, Patents and
Copyrights, Production Technology, Pressure Groups, Trade Union
Next Corporation
Strengths: Global Distribution, Firm Margins, Diversification of Offerings,
Demonstrated Financial Growth, Industry Knowledge
Weaknesses: Excessive Expansion, Working Relationships, Weak Demonstrated
Corporate Social Responsibility
Opportunities: Global Distribution, Options for Partnerships, Maturity,
Threats: Poor Public Image, Trade Union Activities, Pressure Groups
3. Differences in Organizational Cultures:
Management styles have significant impact on economic drivers. A study conducted on Austrian companies found facility managers were responsible significantly for cost reductions, productivity increases, and cost drivers (Redlein, 2008). Economic drivers in a company go beyond financial measures and evaluate speed of response, product quality, customer satisfaction, brand preference, idea management, and employee satisfaction. All of these measures are dependent on effective management and leadership styles.
Organizational cultures are driven by management styles. The culture of an organization is a reflection of the working relationship between managers and employees and between co-workers (Robbins and Coulter, 2005). The problems found with the workplace environment for Next indicate an intense attention to detail and a stable base of operations, but focus on the people aspect of the organization seems poor. The result would be low levels of innovation and risk taking accompanied by a lack of employees working toward a goal as a team. Employees would feel little or no personal connection to the company with scarce knowledge of its history or success. The organizational culture would be weak as a result of uncoordinated management activities and the retention rate is poor on all levels. Communication within an organization of this type is based on the chain network, with the managers receiving information from above and below his level while dispensing information in the same manner (Carpenter et al., 2015)
Employees working at New Look appear to work in an environment the opposite from that of Next. While managers appear to function with an eye on detail, it would not the primary focus. Creating a pleasant workplace environment creates bonds between the employees and they work well in teams to creatively solve problems and present new ideas for the benefit of the company. Due to managers aggressively energizing the employees, risk taking activities are high. The strong culture present at New Look promotes significant employee retention rates; in fact, an aggressive campaign for referring friends and family to the company for employment would result in sufficient opportunities to fill vacancies with candidates already vested in the workplace by relationships. The positive organizational culture present at New Look would be the result of a management style that is dedicated to shaping a working environment that meets the needs of the company. The employees would feel a part of the business and its success would be their success. The communication style of the company is probably wheel network with information flowing through the manager to all areas of the group with some members exchanging information before relaying it back to the manager.
4. Comparison of Decision-Making Processes:
The culture at both companies influences the way managers make decisions concerning departmental operation (Robbins and Coulter, 2010). When risk taking is low within the company, managers plan strategies based on their own actions rather than on team efforts. Since managers accept the responsibility for the performance of unmotivated employees, they perform most of the tasks personally with little delegation. This perpetrates the lack of interest by staff members in the processes of the company. Lack of the ability to provide input or share in any success of the company results in poor employee job satisfaction and there is a revolving door in human resources to constantly find replacements. Next has external indicators that this is the type of management system in place. Claims of low employee wages and breaking trade regulations show a lack of respect for customers.
Low levels of employee input place the manager in this type of style in a solitary position when making decisions; he has few options to receive alternate solutions from other sources. Since a company operating in this way places such a focus on details, managers are overly concerned about going over budget; this increases pressure on activities to lower risks that could result in unexpected expenditures. Supervisor reprimands are expected in these circumstances. Managers also become critical of employee performance due to little innovative activity; ratings are based more on attendance and meeting quotas than on personal performance. Multiple rules and regulations on employee behavior and performance allow managers to find fault without effort. This affects customer service by creating poor employee attitudes.
Effective decision-makers are required to have adequate knowledge of the situation with strong feelings of responsibility for the outcome. They look for additional information from other sources and are selective in what data they use in their decision-making process. Operating in a detail-oriented culture causes many managers to become bogged down in facts and figures that do not necessarily contribute to an informed decision. The managers at Next may also be restricted by the lack of innovation in the culture and poor employee involvement. They may research the situation requiring a decision to the best of their abilities, but lack of input or ideas from other staff members would inhibit their ability to think beyond their own experiences. Operating in an environment with stress on details, managers rarely make decisions based on “gut instinct”; instead, they want to be able to justify and defend their decision with facts. The decision-making style encouraged for managers at Next may be based on facts in a rational, consistent manner. The result is a manager making decisions in an analytical way. Due to pressure on performance rather than results, there have been some indications of unethical behavior on the part of management in an effort to cover faulty decisions.
The decision-making process of the managers at New Look may also partially be a result of the organizational culture at the company. As teams strive for innovation and creativity, risk taking is high. Tasks performed by groups of employees working together result in a high degree of job satisfaction which is reflected in the high retention rate.
When following the decision-making process, managers at New Look may have multiple options for suggestions for ways to achieve results from a staff accustomed to giving input without fear of judgment. After assembling the information they feel is relevant to the decision, they may solicit input from staff members to allow insight to other options and more information. The responsibility for the outcome of the decision rests primarily with the manager, but is shared by the team who assisted in the decision-making process. Given the latitude to make a decision based on instinct, managers are comfortable with high risk taking. The general management style at New Look may be encouraged to be seen as unique, emphasizing innovation and creativity. The result is conceptual.
Managers at New Look may not overly concerned with going over their budgets because high levels of risk taking possibly result in overspending, but also may result in elevated returns. In the process evaluating employees, managers would praise results rather than methods (as long as they operate within the values of the company). With flexibility in operations, the employees would feel empowered and pass this on in terms of customer service.
5. Comparison of Corporate Social Responsibility
The New Look Group founded the New Look Charity Foundation in 2009; it has raised over £850,000 for various charitable activities since inception (, 2015). Among the charities supported are the Retail Trust, the Prince’s Trust, Children’s Hope, Weldmar Hospicecare Trust, and over 30 others. In addition, New Look requires all product suppliers to sign a formal Code of Ethics.
Next is a member of the Ethical Trading Initiative which is dedicated to promoting quality in their product supply chain. However, the company was found guilty of violations of the standards of the Consumer Protection Regulations of 2000 and received significant bad press whenThe Times newspaper published an article stating that in relation to the amount of profit Next generates, the standard of pay is insignificant (Turner, 2014).
6. Conclusions and Recommendations:
In evaluating the differences between New Look and Next, a number of characteristics must be taken into consideration. While New Look has more revenue produced, it is operating at a loss. However, Next has demonstrated questionable business practices and poor financial decisions. In regards to management style, New Look appears to be progressive and innovative, indicating a propensity for a positive corporate culture and attention to employee satisfaction that results in low turnover and company involvement. Next pays its employees less than the public feels it should, meeting only minimum standards, and has shown a disregard for job satisfaction. Customer service appears of less importance that revenue production and this type of priority-setting can prove disastrous in the long term for corporations placing high importance on branding.
In terms of sustainability, both firms have expressed they are committed to corporate environmental responsibility. However, New Look has established a foundation to address social injustice created by the garment industry. On the other hand, Next has shown a lack of any corporate social responsibility; according to articles in the press, the company actually has a disregard for human rights.
For the above reasons, the recommendation is to place investment capital in the New Look Group. Assisting the company to regain financial stability has a high possibility of increasing the worth of the corporation and a higher rate of return for Caifu Investments.


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