Nordstrom as an American Based Company - Case Study Example

Introduction

Nordstrom is an American based company that deal is the sale of luxury items and many other items within its inventory. Some of these items are clothes, shoes, accessories, jewelry, cosmetics, and fragrances. The company has opened and operates more than 349 stores in America and also outside the country in both Puerto Rico and Canada. The company is currently on the verge of expanding into Australia with this being their first store in the East. This paper shall, therefore, discuss some of the risks that might be associated with the firm opening up store in this region. Both internal and external factors that might be both opportunistic and risky shall be discussed. In addition to this, potential solutions to some of these problems that might affect the success of this investment shall be discussed.

Nordstrom is one competitive brand in the luxury retail industry. The company is constantly growing through the innovations that it has. By the use of subsidiaries such as HauteLook, Trunk Club, and Nordstrom Rack, the company can reach more of its target customers through the different services that they have to offer (Yahoo, 2012). To increase the company's profits more, the company has the option of opening up stores in new locations that have the potential of good demand and growth. The company plans on opening a store in Australia, making it the first store by the company in this region. This is, therefore, a challenge, especially it being a foreign territory with numerous elements being different in the way business is being carried out. The firm will have to come up with many ways to increase its odds of success as well as improve on its financial statement by the end of a financial year.

There are numerous activities that the company can begin with to improve its chances of success. The company can begin by having a proper evaluation of its internal environment while setting up shop. There are numerous risks in addition to opportunity when we look at the internal factor of the company. The internal environment begins from the management to the company's culture. These are some of the factors that will also have a direct impact on the financial estimates that will be given for beginning the company. The culture of Nordstrom is one that has a large effect on how the company will operate. Each year, the firm is known to cut off about ten percent of their least performing brand. This move can have a negative effect on the company since they might be introducing brands that are foreign to the individuals in Australia. When most people want to purchase items, they usually look for items that they have a history with. It will take a while for people to get used to the new brands that the firm has brought ashore. If the company keeps up with these routine, then it would end up closing shop due to the losses that it has incurred while trying to maintain its standards. The best way that the firm can help avoid such is by doing a feasibility study on their target market and finding out some of the brands that are common with the people as well as brands that are in the market but are not well known. This will create a 50-50 profit chance as the company will not only make itself known but itself too.

The employees are also a factor that has to be considered when wanting the business in this region to be successful. Since this is the first time the firm is setting up camp in this region, the company will be employing new workers who have no experience in what they do and do not know what is expected of them. To make them capable of performing at the standards that the Nordstrom operates in, they will have to be undertaken through a training program. Due to this, the company will have to put in some financial effort to make this possible (Van de Vrande, 2009). This will mean that the company will start spending on the employees even before they start working within the facility. The financial estimates will therefore increase rather than decrease their operational costs. This will, however, make it possible for the company to have the employees understand what the company expects of them as they begin this journey with them. The employees will also have enough time to understand the company policies that have been put in place to guide them in everything that they will be doing. As a way of reducing such extra costs spent on training, the company can choose to outsource some of their stores that are about to be closed as has been witnessed in the recent periods. The firm will need not to train the individuals as they will come knowing what is expected of them and how they should conduct themselves. This will reduce the cost that the company will have to use in the case of training new employees. In case new employees are employed in this situation, they can be assigned to the employees who have been working for the firm for a longer period so that they can be mentored as they continue with their operations.

The management is also an area of risk as well as opportunity. The management that would be assigned to this store can choose to introduce a new operational strategy. For example, they can introduce a strategy that would focus on the customers’ needs rather than the company’s wants. For this to be attained, the management will have to attend several training sessions as well that will cost the firm. Being that the store is far to the east, a new management will have to be selected. The company has to choices, either to transfer or promote some of its employees to manage this station or to conduct an interview for the management posts that are available (Van de Vrande, 2009). Having the financial estimates in mind, the best way that should be followed would be either by promoting of transferring some of the employees under management to start out the company. The only expenses that the company will be having with such a choice will be at a minimum since these individuals will go to work knowing what is expected of them.

External factors also have an effect whenever a company wants to open up shop. Since this is a new destination that is governed by a different government, Nordstrom will have to put into consideration factors such as taxes when choosing to price their items. If the tax rates in this region are high, it will mean that the company will have to increase the value of the items just to cover the gap that is brought about by the taxes. However, the firm can have a lower tax liability if they can manage to secure local brands that are in a position of supplying the store with the products that are needed by their target customers. Nordstrom will, therefore, spend little in availing goods to this tore rather than having to spend more on importing most of their products and having to increase their sales value to make up for the deficit. Not only will it chase away customers from their products but also increase the expenditure on goods. Being that Australia is a country that is politically stable, the company is likely to make more profit as the chances of the shop operating throughout the year without political interference is high. The country is at no crossroad with any country. Thus, it makes it possible for the country to get goods from areas outside the border. In case sourcing items from the west and Europe would become a problem, the strategic positioning of Australia will make it easier for the store to get items produced in China and its environs for a much lower price but of the same quality as those from other areas. Not only will this reduce the operational costs but also increase the profit that the business might get in case all these items are sold.

Since the economy of Australia is relatively stable, the investment of setting up shop in this region can be considered to be safe. The region is a development face and having the store set up earlier will help it gain a better ground and favor from the locals. However, with companies such as Best Buy and Walmart making a presence in this regions, the company faces a major threat of losing its customers. Online shopping platforms have also taken a step ahead of very interesting deals that attract more customers to their services. This means that the company has tight competition as it ventures into this market. The best way that it can manage to face out the competition is by setting up very attractive deals that will attract more customers to their items (Jarvenpaa, Tractinsky & Saarinen, 1999). The firm can also choose to improve the customer services that will attract more of their target customers.

Nordstrom performance in Australia is somehow dependent on the value of the US dollar and the Australian dollar. This is because if the dollar value increases, the company will have an advantage in accessing most of their products which might lead to the performance of the firm going 20% higher than what was projected. In such a scenario, the company can choose to invest more in the improvement of their services rather than choosing to expand their current store. This will make sure the customer get some of the best services even after the dollar drops. In the case where the financial performance falls short by 20%, the company will have a chance to choose a better strategy that can be rolled out to make sure that the deficit is made up. The firm can have the option if diversifying itself to keep up with the market needs.