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Innovation denotes the renewal of a product, service, or process through improvement or replacement. Schatzberg (2018) states that organizations mainly employ innovation to enhance their competitiveness. There is no singular definition of technology. People view technology in different ways depending on the application and context (Boddy, 2016). In general, technology entails using knowledge to creatively organize tasks performed by machines or people to meet the envisioned objectives.
Innovation is a vital element in the economic growth of the United Kingdom (UK). A lot of technology firms have been investing in the country. The country received over £10.1bn through investments made by technology firms, ranking as the third technology investment destination behind the US and China. The investment has supported the growth of the economy. In 2018, digital technology accounted for close to 8 percent of the countrys economy (Ismail, 2018). The economy also realized a substantial increase in job opportunities in the digital economy. According to Mathews (2019), the sector posted a significant increase in job opportunities by 40 percent between 2017 and 2019 when the industry employed close to 3 million individuals. Technology has contributed immensely to supporting the economy.
Innovation supports the development of new companies and the growth of existing companies. The expansion creates more job opportunities and provides room for the creation of other small companies. A good example that indicates the impact of innovation and technology is the NTT DATA case. In 2020, the UK government allowed the NTT DATA to invest an additional £68 million into the country (NTT DATA: Delivering innovative technologies from Tokyo to London, 2020).
The investment is expected to accelerate innovation through the creation of centers of excellence and other facilities. In addition, the outlay will lead to employment opportunities in the country for over 350 individuals every year. It will also facilitate the development of start-ups through providing necessary services and partnerships. The UK has also realized the growth of digital towns across the country. According to Ismail (2018), the UK has experienced the development of silicon suburbs and tech settlements as more digital tech businesses set up operations in smaller population centers.
Todays organizations are operating in a very friendly environment facilitated by innovation and technology. There are many platforms for sharing information and communication in a more efficient, easier, and faster way (Morrison, 2017). The COVID-19 pandemic has propelled the use of technology in communication and sharing information due to measures enacted by governments and individual organizations to reduce human contact. Social media tools and official platforms such as Microsoft teams, Zoom, and many more have made it possible for businesses to conduct their operations. Moreover, companies have embraced technology to enable remote working, ensuring that companies carry on their operations in the face of the pandemic.
Today people can order commodities regardless of where they are in the world, and the goods will be delivered to them directly. This has been made possible through technology and innovation. Technology has also helped organizations improve their data security through platforms such as cloud computing (Needle, 2015). Instant access to this information enables business entities to conduct their activities seamlessly and quickly.
Impact of Innovation and Technology on Next PLC Operations, Sales and Profits
Next PLC is a leading retail store company in the UK. The companys product offering includes clothing items and accessories, footwear, and beauty products also sell home appliances. Its business operations are divided into NEXT Online, NEXT Retail, NEXT Finance, NEXT Sourcing, NEXT International Retail, Property Management, and Lipsy. Next was established in 1864 by Hepworth Joseph. Its head offices are located in Leicester, UK (Next PLC, 2021). The company also operates franchises in other countries outside the UK. 2020 was a tough year for most businesses, including Next PLC.
The company suffered a great deal following the closure of its prime retail shops for over 20 weeks. The closure meant a dramatic blow to the companys operations. However, technology has helped the company in various ways. One is the role of technology in improving the companys online sales to bridge the gap in revenue and profits. Also, the company had invested in technology to enable customers both locally and from abroad to order goods. Before the pandemic, the companys online sales (including Finance) constituted over half of the companys sales revenue (Next PLC, 2021). In addition, having an established customer base in and out of the country presented the company with a great opportunity to recover business lost in the physical retail stores by servicing clientele online.
Next PLC annual report for the period ended 2020 notes that the company has realized a dramatic change in its business model, despite the effects of COVID-19. The company provided reference to 2005, when online sales were not well established (Next PLC, 2021). Table 1 below summarizes the dramatic change in online business by comparing the performance in 2005 to the projected revenues in 2022.
Table 1 above reveals a dramatic growth in the companys online business from 23 percent of the companys sales revenue in 2005 to the expected 71 percent. Moreover, Next PLC projects to earn over £1.3bn in 2022, from which it projects the profits to be around 28 percent (Next PLC, 2021). Online sales represent one of the fastest-growing segments of the company. To further illustrate the impact of online sales on the companys performance, Table 2 below shows the number of items that were available for sale in 2015/16 period versus the 2020/21 period:
The company indicates that as a result of the increase in items, the companys website has been vital in relevance and in reaching more customers. From 2019 to the present, the company has realized a 40 percent increase in customer base to 8.4 million owing to the greater appeal of the companys website and product range (Next PLC, 2021). The overall impact of the online platform can be evidenced by the increase in sales and profits generated from 2019-2021. The figures are summarized in Table 3 below:
In general, the figure in Table 3 above shows the growing relevance of technology in enabling growth in revenue and profits. Next, Plc realized a 10 percent growth in revenue; however, profits grew by 18 percent due to reduced costs in online sales. The figures demonstrate the contribution that innovation and technology can bring to any organization that adopts the modern way of doing business.
Importance of Corporate Social Responsibility for Next PLC
Corporate Social Responsibility (CSR) is a management strategy used by business entities to take care of environmental, social, and stakeholder concerns about business activities (Carroll, 2016). Companies present a CSR report to disclose actions undertaken to address internal and external matters important for business sustainability.
Corporate Governance is a set of measures, rules, and principles that influence the running of a company (Elewechi, 2019). In the UK, the Corporate Governance Code outlines the values of high-quality practices companies must comply with, particularly before listing in the stock market.
Corporate Governance was coined in the United States amid concerns about how business entities were managed. However, it gained traction in the UK from the early 1990s amid mounting concerns from investors. Institutional shareholders felt the need for company directors to be truly independent in representing different interests in the board of directors. The topic started by extensively covered by media houses in the country, making it a hot matter of national concern. The issue gained much attention during the Cadbury Committee proceedings (Elewechi, 2019). There was rising concern about the quality of corporate financial reporting and the auditors role in meeting the users expectations of company financial statements.
Therefore, in 1991, the London Stock Exchange put together members drawn from the Financial Reporting Council and the accountancy profession to form the Cadbury Committee 1991. The committee was mandated to look at the wider issues of corporate governance. The committee was tasked with particularly looking at the role of the executive and non-executive directors in exercising their powers to assess and report on company performance and fostering interaction between shareholders, the board, and other stakeholders. The Cadbury Committee presented its report, the Code of Best Practice, to the exchange in 1992 (Elewechi, 2019). The information opened doors for other committees that followed to support the work done by the Cadbury Committee.
In 1995, the Confederation of British Industry (CBI) set up a study group to look at directors remuneration connected with company performance. Later in the year, the group finalized its deliberations resulting in the Greenburg Report. In the same year, the Hampel Committee was formed to review the Cadbury Committee and the Greenburg Report. They finally proposed that a single code be developed by integrating the recommendations of all three committees (Elewechi, 2019). Therefore, in 1998, the Combined Code was produced and later adopted by the LSE.
The Combined Code put together principles of best practice for corporate bodies to use while constituting the board of directors and determining remuneration and role in guaranteeing responsibility and audit. Companies were required to implement strong internal controls to ensure the safety of shareholders investments. In addition, the directors were required to review the systems often to ensure their sustained usefulness.
Their compliance had to be outlined in the annual reports. In 1999 the Turnbull Committee produced a report detailing the operationalization of the Combined Code regarding operational, compliance, financial, and risk management reporting. The information has been improved severally in 2005 and 2014 (Elewechi, 2019). Other reports produced to support corporate governance include the Myners Report (2001, 2008), Higgs Report (2003), Tyson Report (2003), Smith Report (2003), revised 2008), Combined Code (2003, 2006, 2008), and many more.
CSR is a way for companies to benefit society while benefiting themselves. Through CSR, companies will be viewed positively in the public eye. Customers are more attracted to responsible entities. They will stick with the company due to their values and contribution to society and the wellbeing of others. Therefore, the companies will be more competitive and realize strong customer loyalty. In addition, CSR appeals to company stakeholders. Employees will be happier and feel more fulfilled, seeing that the company is positively impacting society. The employees will feel attached to the company and will stay longer and serve better. Investors also consider CSR before finally settling on whether to invest in a company (McGowan, 2019). In particular, socially conscious investors will support the company into longstanding future success.
Archie Carrolls Pyramid of CSR
CSR is quite complex given that it involves engaging different parties with varying interests at other times. However, due to its significance in business, organizations have to cope with the challenge. Archie realized the difficulty corporate entities encountered in CSR reporting and developed a pyramid that makes it easy for them to deal with CSR issues. The pyramid was designed in 1991 and covered four key responsibilities from bottom to top; economic, legal, ethical, and philanthropic responsibility (Carroll, 2016). The four responsibilities form the base or structure that assists in delineating and framing or characterize the landscape of businesses accountabilities to the social order of which it is a part. The aspects are discussed below;
Economic responsibility is the basic reason why corporate entities exist; to make a profit. The global economic systems appreciate the critical of businesses making profits, especially in the current highly competitive business environment. If businesses do not make profits, then they cease to exist. Carroll (2016) states that society expects a company to be profitable to sustain itself and give returns to investors or the owners as a reward.
The legal responsibility dictates that the corporate entity operates within the set rules, principles, and guidelines set by society. According to Carroll (2016), the rules ensure fairness in conducting business activities. Every business entity must comply with the laws and regulations enacted by the federal, state, and local governments. The products and services should meet minimal legal requirements.
Even though there is a thin line between law and ethics, ethical responsibility requires organizations to do the right thing and not cause harm or injury to others. It involves operating under no set of guidelines but being objective and fair on issues not covered by the law (Carroll, 2016). The goal is to show concern for others by doing what is morally acceptable. The company is expected to act with integrity, and their ethical conduct should exceed the ordinary obedience with business rules and regulations.
Philanthropic responsibility entails discretionary or voluntary actions undertaken by a company. It includes the desire to take part in social undertakings not required by law nor play any ethical role (Carroll, 2016). Actions of philanthropy include giving donations and gifts or engaging in voluntary community development. Even though companies sacrifice in order to give, they view charity as a concrete way to show their good citizenship.
Next, PLC is an international retailer whose operations have a bearing on different stakeholder groups. Therefore, the company seeks to have a positive impact. In fulfilling its economic responsibility, the company ensured that business operations were managed, especially in 2020 amid the COVID-19 pandemic, to remain profitable. According to Next PLC (2021), the company managed to generate a total sales revenue of over 2.37 billion pounds and a net profit attributable to shareholders of 290.6 million pounds.
On the legal front, Next PLC has shown compliance with various rules and regulations, especially on the United Nations Sustainable Development Goals (SDGs). Out of the 17 goals, Next PLC has met the criteria for nine purposes that touch more on its business and products (Next PLC, 2020). The company also trades by upholding international human rights principles in the Universal Declaration of Human Rights and the International Labor Organization.
The company has developed its own Code of Practice (COP) to ensure that ethics are upheld in its business dealings (Next PLC, 2020). The COP also forms the basis of dealing with suppliers. In fulfilling the philanthropic responsibility, Next PLC undertook various charity activities in 2020, including supporting over 400 registered charities. The company also contributed more than £3.4 million to charity organizations and diverted more than 330 tons of furniture to be used for charity purposes. Also, according to Next PLC (2020), the company helped raise more than £825,000 for charities from the sale of our environmentally friendly carrier bags in England, Wales, and Scotland.
Reference List
Boddy, D. (2016), Management: an introduction. 7th edn. Pearson Press.
Carroll, A. B. (2016). Carrolls Pyramid of CSR: taking another look. International Journal of Corporate Social Responsibility, 1(3).
Elewechi, O. (2019). Corporate governance in the United Kingdom. International Centre for Research in Accountability and Governance.
Ismail, N. (2018). Tech Nation 2018 report: UK tech expanding faster than the rest of the economy.
Mathews, T. (2018). Business operations: using technology to improve operational processes. Web.
McGowan, L. (2019). The importance of Corporate Social Responsibility for business.
Morrison, J. (2017). The Global Business Environment. 4th edn. Palgrave.
Needle, D. (2015). Business in context: an introduction to business and its environment. 6th edn. Cengage Learning.
Next PLC (2021). Next annual reports and accounts. Web.
Next PLC (2020). Corporate Responsibility Report.
NTT DATA: Delivering innovative technologies from Tokyo to London (2020). Department on International Trade. Web.
Schatzberg, E. (2018). Technology: critical history of a concept. Chicago and London: University of Chicago Press.
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