Assignment G:Strategic Group Map ( you may use outside sources for this assignment only)
How to Create a Strategic Group Map?
- Identify the top rivals in your industry; try to identify at least five of them. As you do your research on them, create individual profiles for them focusing on the services they offer, the impact they have on the market, who benefits from their business, and their strategic direction.
- Then identify the factors that have helped you succeed. Is it the quality of your product or service? Is it your strong customer service or the support of your loyal customers?
- Next, select the top two factors that drive success for your business. These become the variables used for the axes of the map. There should be no correlation between these variables. They could include the product price, geographic coverage, product-line breadth, or quality.
- Plot the firms in the industry that you have identified on the two-variable map you have created.
- Firms that are placed on the same strategy space should be allocated the same strategic group.
- Draw circles around each strategic group. The size of the circles should vary based on the size of the group’s respective share of total industry sales.
Final Project Case Study Worksheet
Each assignment should have its own page (s).
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Assignment A: Describe the General Environmental Factors that Effect on Your Company’s
Industry
And /or is it a
Trend
Demographic
Sociocultural
Political/Legal
Technological
Economic
Global
Threat
Opportunity
✓
✓
✓
Technology – Nordstrom,like any other company is constantly fighting the war against cyber
security threats advancement.The company has implimented as couple of information
technology systems for instance the electronic payment methods,customer data collection and
transfer is also done electronically.Any breach in these systems would cause a collapse of the
system which will cause a disruption in transactions.Fighting cyber attacks is a very challenging
cause as it involves third parties who might be targeted due to their ease of access.There is also
a huge cost when trying to sove these cyber security challenges.If we encounter an interruption
or deterioration in critical systems or processes or experience the loss of critical data, which
may result from security or cybersecurity threats or attacks, natural disasters, accidents, power
disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or
electronic break-ins or third-party or other disruptions, our business could be harmed both in
the short-term and over a longer period. Depending on the severity of the failure, our disaster
recovery plans may be inadequate or ineffective. These events could also damage our
reputation, result in increased costs or loss of sales and be expensive and time-consuming to
remedy. (Nordstrom, Inc. and subsidiaries 15)
Economic factors – Factors affecting the economy of a country will have an effect on the sales
of the company.The nature of this business is such that it is affected by the consumer
spending.Revenue will therefore be lost when a country is in an economic crisis.Buyers will tend
to spend money on basic needs and avoid luxurious expenditures. A downturn in economic
conditions, currency fluctuations, inflation, increased unemployment and bankruptcy rates,
changes in fiscal stimulus and other external market factors has had and could have a
significant adverse effect on our business and stock price. (Nordstrom, Inc. and subsidiaries 17)
Global factor – Besides having their inhouse produced merchandise, the company also vends
merchandise that has been sourced from other companies both locally and internationally.The
company also has a market base globally and it relies on this market to grow its revenue.any
global factor affecting the market for instance the Ukraine and Russia war would have a
negative impact on the company. Nordstrom Rack purchases merchandise primarily from the
same vendors carried at Nordstrom and also serves as an outlet for clearance merchandise
from the Nordstrom banner. We plan to expand our offerings of the most coveted brands we
carry, as well as source from new vendors, to ensure we have the selection our customers
want. (Nordstrom, Inc. and subsidiaries 7)
Assignment B: Porter’s 5 force model
State the “industry” that the company is competing in one paragraph with proof from the
10K.
Nordstrom has been a renowned fashion retailer in the United States that has beeb offering
appealing clothes, accessories, and shoes for all the genders in all the age groups. The company
was founded in the year 1901 and has been in operation since then.Being in the fashion
business, the company has several outlets across the country and has also ventured into the ecommerce environment.The company offers shipping services for their online purchased
products.The company is also listed as a public company on the new york stock exchange. “We
offer an extensive selection of high-quality brand-name and private label merchandise for
women, men, young adults and children focused on apparel, shoes, beauty, accessories and
home goods. No matter how customers choose to shop, we are committed to delivering
superior service, product and experience, including alterations, order pickup, dining and styling,
to make shopping fun, personalized and convenient.” (Nordstrom, Inc. and subsidiaries, 7)
1. Name of Threat – The Company is facing the threat of entrants.
2. Degree of Threat ( H-M-L) – This is a medium threat to the company.
3. Is it a threat or opportunity based on the resources/capabilities of the firm. Please
explain your answer
The company stands to gain more over the new entrant competitors.This is an
opportunity for the company to take advantage of its long standing history to get an edge
over its competitors who are just getting into the business.The companies capabilities put it
above its competitors as the nature of business is capital intensive,the company owns a
couple of propeties despite it also being in debt.The company would dispose off its
properties to deal with any financial situation that may arise due to the uncontrollable risk
factors.The company has a total of around 8250 square feet of owned buildings on its
owned land as per the january 2022 report.(Nordstrom, Inc. and subsidiaries 19)
1. Name of Threat – Industry competition
2. Degree of Threat – Moderate
3. Is it a threat or opportunity based on the resources/capabilities of the firm. Please
explain your answer.
The company is facing a threat of big brands entering their niche market.The company has
to therefore spend on advertisements and endorsments of their products in order to edge
out competition.Many of their competitors are signing startups as their major distributors
leaving the company with less merchandise to distribute. “The retail environment is rapidly
evolving. Customer shopping preferences continue to shift, including to digital channels,
and increasing expectations for faster delivery of product. In addition, the retail
environment is under significant pressure from non-traditional retailers, including the
pressure from the emergence of rental and recommerce companies. We regularly compete
with other international, national, regional and local retailers, including internet-based
businesses, omni-channel department stores, specialty stores, off-price stores and
boutiques, which may carry similar lines of merchandise. Digital channels continue to
facilitate comparison shopping, intensifying competition in the retail market, and
marketing digitally is controlled by a few key platforms. If we fail to adequately anticipate
or respond to customer behavior and expectations, or changing market dynamics, we may
lose market share or our ability to remain competitive, causing our sales and profitability to
suffer” (Nordstrom, Inc. and subsidiaries ,13)
1. Name of Threat – The power of suppliers
2. Degree of Threat – High
3. Is it a threat or opportunity based on the resources/capabilities of the firm. Please
explain your answer
This is a big threat to the company that is looking to grow its supply base.The company relies
majorly on its suppliers who either produce goods and ship to its customers or ship the goods
to its distribution shops.This leaves the suppliers with more power to control the company
activities and ultimately control the company revenue. “We are continually expanding and
enhancing our Supply Chain Network facilities and inventory management systems to support
our omni-channel capabilities and provide greater access to merchandise selection and faster
delivery. We select locations and customize inventory allocations to enable merchandise to
flow more efficiently and quickly to our customers. Nordstrom online purchases are primarily
shipped to our customers from our fulfillment centers but may also be shipped from our
Nordstrom stores, distribution centers or omni-channel centers. Nordstrom in-store
purchases are primarily fulfilled from that store’s inventory, but when inventory is
unavailable at that store, it may also be shipped to our customers from our fulfillment
centers, distribution centers, omni-channel centers or from other Nordstrom stores”
(Nordstrom, Inc. and subsidiaries ,9)
1. Name of Threat – Consumer power
2. Degree of Threat – Moderate
3. Is it a threat or opportunity based on the resources/capabilities of the firm. Please
explain your answer
The company being a retail business, the power of the buyers has an impact on the overall
revenue of the company.So many fashion houses have come u and so many have used the
power of social media to gain the fashion market share.This leaves Nordstrom at the
receiving end since they have no control over the buyer.Any intention to change the market
price would result in shiftingof the buyers and would result in a drop in revenue. “We operate
in a highly competitive business environment. We regularly compete with other
international, national, regional and local retailers, including internet-based businesses,
omni-channel department stores, specialty stores, off-price stores and boutiques, which may
carry similar lines of merchandise. Our specific competitors vary from market to market.”(
Nordstrom, Inc. and subsidiaries ,10)
1. Name of Threat – Substitutes threat
2. Degree of Threat – Low
3. Is it a threat or opportunity based on the resources/capabilities of the firm. Please
explain your answer
In the fashion business, products vary in price range.For every high end product, there is a
substitute to it that sells at a much lower price.The originality of a product does matter
only if it is affordable.Low priced generic products have come up as subsitutes to the less
affordable products making more consumers to prefer the less priced products.This is an
opportunity to the company since it has majored in products across a wide price range.
“This includes serving customers on their terms by providing a seamless digital and physical
experience, offering compelling, curated and quality products across a range of price
points, and by strategically partnering with relevant and limited distribution brands, all in
top markets.” (Nordstrom, Inc. and subsidiaries 10)
Conclusion of Porters Five Forces
Assignment C: Barriers to Entry Chart
Yes or No
Explanation
Economies of Scale
No
Product Differentiation
YES
With the many supply chains, Nordstrom is said to
have economies of scale as it is able to serve
customers from a wider geofraphical area due to
location of stores, delivery and shipment services
as well as its supplier stores aiding in the shipping
and distribution of their products.”We are
continually expanding and enhancing our Supply
Chain Network facilities and inventory
management systems to support our omnichannel capabilities and provide greater access to
merchandise selection and faster delivery. We
select locations and customize inventory
allocations to enable merchandise to flow more
efficiently and quickly to our customers.
Nordstrom online purchases are primarily shipped
to our customers from our fulfillment centers but
may also be shipped from our Nordstrom stores,
distribution centers or omni-channel centers.
Nordstrom in-store purchases are primarily
fulfilled from that store’s inventory, but when
inventory is unavailable at that store, it may also
be shipped to our customers from our fulfillment
centers, distribution centers, and omni-channel
centers or from other Nordstrom stores.
Nordstrom Rack online purchases are primarily
shipped to our customers from our fulfillment
centers and distribution centers, but may also be
shipped from our Nordstrom Rack stores. Both
Nordstrom and Nordstrom Rack selectively use
vendor dropship to supplement online offerings,
which are then shipped directly from the vendor to
the end customer.” (Nordstrom, Inc. and
subsidiaries 10)
The company deals in similar products as its
competitors.The company mainly relies on quality
and the high level of service to maintain its
customer base otherwise there can be a shift in
customer preferences at any point in time. “We
operate in a highly competitive business
environment. We regularly compete with other
international, national, regional and local
retailers, including internet-based businesses,
omni-channel department stores, specialty stores,
off-price stores and boutiques, which may carry
Capital Requirements
Yes
Switching Costs
No
Distribution Channels
No
similar lines of merchandise. Our specific
competitors vary from market to market. We
believe the keys to competing in our industry are
what will always matter most to our customers:
providing compelling product and outstanding
service, both digitally and in stores, backed by
people who care. This includes serving customers
on their terms by providing a seamless digital and
physical experience, offering compelling, curated
and quality products across a range of price
points, and by strategically partnering with
relevant and limited distribution brands, all in top
markets”( Nordstrom, Inc. and subsidiaries ,10)
In order to run a retail business and a dropship
retail business to be specific,a lot of infrastructure
has to be implimented for instance the
information system has to be in plae,the digital
payment systems e.t.c.This is not a one time
investment rather a recurrent budget that has to
be accounted for.”We market our brands and
distribute our products through a variety of thirdparty publisher and platform channels. Our ability
to market on any given platform or channel is
subject to the policies of that party. We are
dependent on the interoperability of our products
with popular mobile operating systems, such as
Android or iOS, websites, networks, technologies,
products and standards that we do not control.
Additionally, mobile operating systems and
websites have identifiers within their platforms
that advertisers use to deliver personalized and
targeted advertising, requiring users to “opt-in”.”(
Nordstrom, Inc. and subsidiaries 16)
When transferring from Nordstrom’s product to
the company’s competitor a customer would not
incur any of the additional costs as a result.It is
the client’s choice to move on from Nordstrom to
another retailer.
The company has suppliers across the entire
country who also double up as
distributers.Besides, the company has widespread
distribution stores across the nation and also
relies on online disribution and different shipping
Cost Advantages
Independent of Scale
No
Government Policies
Yes
avenues.The company has a variety of options to
choose from to reach its customer base.
Nordstrom has a financial advantages which a
potential competitor would not match easily
unless willing to take a big risk.Some of the cost
advantages that the company enjoys over its
entrant competitors are the learning experience
that the company has had since its launch, the
company has invested in a working technology
that serves its purpose, the company has bought
and leased several distribution centers across the
entire states.
The company is subject to statutory laws that ay
affect its revenue collection. “We are subject to
certain laws, litigation, regulatory matters and
ethical standards, and compliance or failure to
comply with or adequately address developments
as they arise could adversely affect our reputation
and operations.
Our policies, procedures and practices and the
technology we implement are intended to comply
with applicable federal, state, local and foreign
laws, tariffs, rules and regulations, as well as
responsible business, social and environmental
practices, all of which may change from time to
time. Our and our vendors’ compliance with these
requirements and/or changes to them may cause
our business to be adversely impacted, or even
limit or restrict the activities of our business. In
addition, if we fail to comply with applicable laws
and regulations or implement responsible
business, social, environmental and supply chain
practices, we could be subject to damage to our
reputation, class action lawsuits, regulatory
investigations, legal and settlement costs, charges
and payments, civil and criminal liability,
increased cost of regulatory compliance, losing
our ability to accept credit and debit card
payments from our customers, restatements of
our financial statements, disruption of our
business and loss of customers. New and
emerging privacy and data protection laws may
increase compliance expenses and limit business
opportunities and strategic initiatives, including
High Fixed Costs
YES
High Exit Barriers
YES
customer engagement. Any required changes to
our employment practices could result in the loss
of employees, reduced sales, increased
employment costs, low employee morale and
harm to our business and results of operations. In
addition, political and economic factors could lead
to unfavorable changes in federal, state and
foreign tax laws, which may affect our tax assets
or liabilities and adversely affect our results of
operations. We are also regularly involved in
various litigation matters that arise in the
ordinary course of business. Litigation or
regulatory developments could adversely affect
our business and financial condition.”(
Nordstrom, Inc. and subsidiaries 18)
The infrastructure that has been put in place by
the company is costly for instance the purchase or
leasing of the distribution stores and the
improved protection policies against cyber attcks.
The company being a public traded company has
a corporate responsibility of protecting peoples
stock.It has a responsibility of commitment to the
investors and would therefore not easily get out
of business.
Assignment D: Value Chain Chart
Value chain activity
Primary Activity:
How does your company create value
for the customer? What challenges does
it have in its value chain?
Strength or Weakness
Inbound logistics (distribution
facilities, material control
systems, warehouse layouts)
Nordstrom
has
many
significant Strength
distribution facilities in the USA used to
receive, store and distribute. The
distribution facilities are in Upper
Malboro in Maryland, Gainsville in Florida,
Elizabethtown in Pennsylvania, Dubuque
in Iowa, Portland in Oregon, Ontario in
California, San Bernardino in California,
Riverside in Carlifornia, Cedar Rapids in
Iowa and Newark in California and many
others across the country. The
haeadquarters of the company are in
Seattle, Washington where the offices are
both leased and owned space. The
company has distribution facilities in
Canada with majority based in Toronto,
Canada. (Nordstrom 10-K, 20).
Weakness
Nordstrom depends on third parties for
production, supply and delivery of goods.
Disruption in the supply chain could lead
to losses in terms of sales and increased
costs as expenses. Time is critical in this
arrangement as any slight delay may
interrupt the operations of the company.
(Nordstrom 10-K, 15).
Operations (efficient work flow
design, quality control systems)
Nordstrom is a luxury department store
based in the USA with its headquarters in
Seattle, Washington.
Nordstrom Rack is a premier off-price
destination with an industry-leading offprice digital presence, offering in-demand
product and a treasure hunt experience
at compelling prices. Nordstrom Rack
includes the following digital and physical
properties:
•NordstromRack.com website and mobile
application
•240 Nordstrom Rack stores in the U.S.
•two Last Chance clearance stores
Strength
Outbound logistics
(consolidation of goods, efficient
scheduling, finished goods
processing)
Nordstrom Rack purchases merchandise
primarily from the same vendors carried
at Nordstrom and also serves as an outlet
for clearance merchandise from the
Nordstrom banner. We plan to expand
our offerings of the most coveted brands
we carry, as well as source from new
vendors, to ensure we have the selection
our customers want. Currently,
NordstromRack.com offers both a
selection of Nordstrom Rack merchandise
and limited-time flash sale events on
fashion and lifestyle brands, which
formerly existed on HauteLook.com prior
to the first quarter of 2021 when it was
consolidated into NordstromRack.com.
As a business, one of our key advantages
lies in our ability to leverage an
integrated network of physical and digital
assets across both Nordstrom and
Nordstrom Rack banners. This creates
flexibility and convenience for our
customers, no matter how they choose to
shop – online, through our apps or in
stores. This omni-channel platform is our
differentiator, providing customers with
four times more product available for
next day pickup, the ability to pickup or
return orders to any store location
regardless of purchase origin, and our
suite of personalized services.
(Nordstrom 10-K, 7).
Nordstrom has efficient distribution
channels for consolidation of goods,
efficient scheduling and processing of
finished goods.
Nordstrom is a leading destination for a
breadth of products across brands, styles
and prices complemented by unmatched
services and experiences. Nordstrom
includes the following digital and physical
properties:
•Nordstrom.com website and mobile
application
Strength
•Nordstrom.ca website
•TrunkClub.com website
•94 Nordstrom stores in the U.S.
•six Nordstrom stores and seven
Nordstrom Rack stores in Canada
•seven Nordstrom Locals
Nordstrom Rack is a premier off-price
destination with an industry-leading offprice digital presence, offering in-demand
product and a treasure hunt experience
at compelling prices. Nordstrom Rack
includes the following digital and physical
properties:
•NordstromRack.com website and mobile
application
•240 Nordstrom Rack stores in the U.S.
•two Last Chance clearance stores
(Nordstrom 10-K, 7).
Owning and leasing of real estate
properties possess a risk to potential
losses and liabilities.
We own or lease the land, buildings and
equipment for all of our Supply Chain
Network facilities, stores and corporate
locations and are therefore subject to all
of the risks associated with owning and
leasing real estate. In particular, the
value of the assets could decrease, their
operating costs could increase or facilities
or stores may not be opened as planned
due to changes in the real estate market,
demographic trends, site competition,
and dependence on third-party
performance or overall economic
environment or may be constrained as a
result of the COVID-19 pandemic. We are
also potentially subject to liability for
environmental conditions, exit costs
associated with disposal of a store and
commitments to pay base rent for the
entire lease term or operate a store for
Weakness
the duration of an operating covenant. In
addition, the invalidity of, or default or
termination under, any of our leases may
interfere with our ability to use and
operate all or a portion of certain of our
facilities, which may have an adverse
impact on our operations and results.
(Nordstrom 10-K, 17).
Marketing and Sales (motivated
sales people, innovative
advertising & promotion,
effective pricing, proper ID of
customer segments &
distribution channels)
Nordstrom spends a lot of money to run
advertisements on their porudcts to
reach the target market.
Strength
Advertising production costs for internet,
magazines, store events and other media
are expensed the first time the
advertisement is run. Online marketing
costs are expensed when incurred. Total
advertising expenses, net of vendor
allowances, of $300, $283 and $299 in
2021, 2020 and 2019 were included in
SG&A expenses.
(Nordstrom 10-K, 46).
Service (ability to solicit
customer feedback & respond)
Nordstrom has improved customer
service, digital commerce platforms, and
digital services to get customer feedback
and respond.
Second, we are increasing engagement
with customers by offering express
services such as order pickup, returns and
alterations at additional convenient
locations. (Nordstrom 10-K, 7).
We have a fair and reasonable approach
to returns, handling them on a case-bycase basis with the ultimate objective of
making our customers happy. Almost all
merchandise can be returned by mail or
Strength
at any store location. We have no formal
policy on how long we accept returns at
Nordstrom stores, Nordstrom.com or
Nordstrom.ca. (Nordstrom 10-K, 8).
Weakness
Our customer relationships and sales may
be negatively impacted if we do not
anticipate and respond to consumer
preferences and fashion trends or
manage inventory levels appropriately.
Our ability to predict or respond to
constantly changing fashion trends,
demographics, consumer preferences and
spending patterns significantly impacts
our sales and operating results. We must
effectively manage our merchandise mix
to curate an assortment that offers
newness and greater selection at various
price points.
(Nordstrom 10-K, 13).
Secondary (or support):
Procurement (win-win
relationships with suppliers,
reduced dependence on single
supplier)
Nordstrom has a good relationship with Strength
suppliers and uses the same vendors.
Nordstrom Rack purchases merchandise
primarily from the same vendors carried at
Nordstrom and also serves as an outlet for
clearance
merchandise
from
the
Nordstrom banner. We plan to expand our
offerings of the most coveted brands we
carry, as well as source from new vendors,
to ensure we have the selection our
customers
want.
Currently,
NordstromRack.com offers both a
selection of Nordstrom Rack merchandise
and limited-time flash sale events on
fashion and lifestyle brands, which
formerly existed on HauteLook.com prior
to the first quarter of 2021 when it was Weakness
consolidated into NordstromRack.com.
(Nordstrom 10-K, 7).
Global economic conditions
Nordstrom and their suppliers.
affect
The majority of our revenues, expenses
and capital expenditures are transacted in
U.S. Dollars. Our U.S. operations
periodically enter into merchandise
purchase orders denominated in British
Pounds or Euros. From time to time, we
may use forward contracts to hedge
against fluctuations in foreign currency
prices. As of January 29, 2022, our
outstanding forward contracts did not
have a material impact on our
Consolidated Financial Statements.
Our Canadian operations are comprised of
the Nordstrom.ca website, six Nordstrom
stores and seven Nordstrom Rack stores.
Our Canadian operations enter into
merchandise
purchase
orders
denominated in U.S. Dollars for some
portion of our inventory. As sales in
Canada are denominated in the Canadian
Dollar, gross profit for our Canadian
operations can be impacted by foreign
currency fluctuations. As of January 29,
2022, activities associated with foreign
currency exchange risk have not had a
material impact on our Consolidated
Financial Statements (see Note 1: Nature
of Operations and Summary of Significant
Accounting Policies in Item 8.)
(Nordstrom 10-K, 36).
Technology development (state
of the art hardware & software,
innovative culture & qualified
personnel)
Nordstrom has invested in technology
development to maintain operations
effectively and keep a healthy
relationship with the customers.
As a business, one of our key advantages
lies in our ability to leverage an
integrated network of physical and digital
assets across both Nordstrom and
Nordstrom Rack banners. This creates
flexibility and convenience for our
customers, no matter how they choose to
shop – online, through our apps or in
stores. This omni-channel platform is our
differentiator, providing customers with
four times more product available for
next day pickup, the ability to pickup or
return orders to any store location
regardless of purchase origin, and our
suite of personalized services.
(Nordstrom 10-K, 7).
The company is at risk of losing vital
information due to potential security
breaches.
Even if we take appropriate measures to
safeguard our information, network and
environment from security breaches, our
customers, employees and business could
still be exposed to risk.
We and third-party provider’s access,
collect, store and transmit sensitive and
confidential Company, customer, and
Strength
Weakness
employee data and information, including
consumer preferences and credit card
information, all of which are subject to
demanding and constantly changing
privacy and security laws and regulations.
A number of jurisdictions where we do
business have enacted or are considering
new privacy and data protection laws
which impact our responsibilities with
respect to this data, such as the California
Consumer Privacy Act and the California
Privacy Rights Act. In addition, the fact
that the substantial majority of our
corporate employees working remotely
has resulted in increased demand on our
information technology infrastructure,
which can be subject to failure, disruption
or unavailability and increased
vulnerability to cyberattacks and other
cyber incidents.
(Nordstrom 10-K, 14).
Human resource management
(effective recruitment, incentive
& retention mechanisms)
Nordstrom provides a healthy working
environment for employees. The
company also offers benefits and
compensation for employees.
The health and safety of our customers,
employees and communities is something
we take very seriously. At the onset of the
pandemic, we worked quickly to close our
stores, find new ways to support and
protect our teams and customers and
keep our employees informed throughout
a tumultuous period.
When our stores reopened, we
implemented robust health and safety
measures designed to keep our teams and
our customers safe, including social
Strength
distancing, mask wearing, hand washing,
sanitizing and daily health screenings. We
also installed health advisors in each store
location,
fulfillment
center
and
distribution center to support our
employees and keep them informed. We
continue to adjust our approach to health
and safety in keeping with Centers for
Disease Control and Prevention and local
jurisdictional guidance and are prepared
to make changes as the situation
continues to evolve.
The pandemic also underscored the
importance of supporting our employees’
mental well-being in addition to their
physical safety. We continue to offer a
variety of mental, emotional and physical
wellness resources to support our
employees.
To support our goals to retain and attract
talented employees, we review our
benefits and compensation approach
annually.
Benefits: We offer a range of benefits to all
employees upon meeting eligibility
requirements, including health care,
wellness programs, financial/retirement
plans and time away. Throughout 2021,
we provided a short-term disability paid
benefit for employees with a confirmed or
presumptive COVID-19 diagnosis, high- Weakness
risk employees and employees who had
first degree exposure. We also provided
paid time off to quarantine following
potential COVID-19 exposure in the
workplace, and vaccination pay for
employees to receive both doses of the
COVID-19 vaccine. In addition, we
increased our focus on well-being by
activating a multi-year strategy to bring
our people new resources and tools to
support total well-being including mental
health support.
Compensation: We regularly review our
pay in the markets in which we operate to
ensure we are competitive, and update
accordingly throughout the year.
(Nordstrom 10-K, 9).
If we do not effectively attract, retain,
train and develop talent and future
leaders, our business may suffer.
We rely on the experience of our senior
management,
who
have
specific
knowledge relating to us and our industry
that is difficult to replace, to execute our
business strategies and objectives. We
have succession plans in place and our
Board of Directors reviews these
succession plans. If our succession plans
do not adequately cover significant and
unanticipated turnover, the loss of the
services of any of these individuals, or any
resulting negative perceptions or
reactions, could damage our reputation
and our business.
(Nordstrom 10-K, 25).
General Administration
(effective planning systems to
establish goals & strategies,
In our ongoing effort to enhance the
customer experience, we are focused on
providing a seamless retail experience
Strength
access to capital, effective top
management communication,
relationships with diverse
stakeholders)
across our Company. We invested early in
integrating our operations,
merchandising and technology across our
stores and online, and in both Nordstrom
and Nordstrom Rack banners. By
connecting our digital and physical assets
across Nordstrom and Nordstrom Rack,
we are able to better serve customers
when, where and how they want to shop.
We have one Retail reportable segment
and analyze our results on a total
Company basis, using customer, market
share, operational and net sales metrics.
Conclusion: In terms of primary activities, operations and marketing give Nordstrom a
competitive advantage over other retailers. Smooth operations ensure that efficiency is
achieved when delivering products to the consumers. Every business increases sales due to its
marketing strategies and this is the same case for Nordstrom.
In terms of supporting activities, Nordstrom has a competitive advantage achieved by having
strong human resource management and general administration. The company reviews its
benefits and compensation annually to retain and attract talented employees. Effective
planning within the company gives it a competitive advantage over other companies in the
same industry.
Assignment E: Firm’s unique resources and capabilities
TANGIBLE RESOURCES
Financial
Cash, Capacity to raise equity,
Revenue, Sales, Gross margin
At the end of 2021 and 2020, $39 and $30
of the ending gross unrecognized tax
benefit related to items which, if
recognized, would affect the effective tax
rate.
Physical
Land, buildings, offices and
equipment
There was no material expense for interest
and penalties in 2021, 2020 and 2019. At
the end of 2021 and 2020, our liability for
interest and penalties was $7 and $4.
We file income tax returns in the U.S. and
a limited number of foreign jurisdictions.
With few exceptions, we are no longer
subject to federal, state and local, or nonU.S. income tax examinations for years
before 2012. As of January 29, 2022, we
believe it is reasonably possible
unrecognized tax benefits related to
federal, state and local tax positions may
decrease $39 by January 28, 2023, due to
the completion of examinations and the
expiration of various statutes of limitations
(Nordstrom 10-K, 61).
As of January 29, 2022 and January 30,
2021, we believe there are certain foreign
net operating loss carryforwards and
deferred tax assets that will not be realized
in the foreseeable future. As such,
valuation allowances of $28 and $24 have
been recorded as of January 29, 2022 and
January 30, 2021. In 2021 and 2020, the
valuation allowance increased $4 and
decreased $17.
(Nordstrom 10-K, 60).
The aggregate fair value of restricted stock
units vested during 2021, 2020 and 2019
was $50, $44 and $65. As of January 29,
2022, the total unrecognized stock-based
compensation expense related to
nonvested restricted stock units was $61,
which is expected to be recognized over a
weighted-average period of 28 months.
(Nordstrom 10-K, 57).
We lease the land, buildings, or land and
buildings for many of our stores, office
facilities and Supply Chain Network
facilities. We also lease equipment and
have service contracts including
transportation agreements and warehouse
agreements where we control identified
assets such as vehicles, warehouse space
and equipment and therefore represent
embedded leases.
Technological
websites, digital platforms, and
technology systems
Organizational
Customer satisfaction
Employee loyalty
INTANGIBLE RESOURCES
Human
Experience and capabilities of
employees
Managerial skills
Customer Services
(Nordstrom 10-K, 48).
Our website address is Nordstrom.com.
Our annual and quarterly reports on Form
10-K and Form 10-Q, current reports on
Form 8-K, proxy statements, our
executives’ statements of changes in
beneficial ownership of securities on Form
4 and amendments to those reports filed
or furnished pursuant to Section 13(a) or
15(d) of the Exchange Act are available for
free on or through our website as soon as
reasonably practicable after we
electronically file the report with or furnish
it to the SEC. Interested parties may also
access a webcast of quarterly earnings
conference calls and other financial events
through our website at
investor.nordstrom.com.
(Nordstrom 10-K, 10).
The health and safety of our customers,
employees and communities is something
we take very seriously. At the onset of the
pandemic, we worked quickly to close our
stores, find new ways to support and
protect our teams and customers and keep
our employees informed throughout a
tumultuous period
(Nordstrom 10-K, 9).
To support our goals to retain and attract
talented employees, we review our benefits
and compensation approach annually.
•Be We offer a range of benefits to all
employees upon meeting eligibility
requirements, including health care,
wellness programs, financial/retirement
plans and time away. Throughout 2021, we
provided a short-term disability paid
benefit for employees with a confirmed or
presumptive COVID-19 diagnosis, high-risk
employees and employees who had first
degree exposure. We also provided paid
time off to quarantine following potential
COVID-19 exposure in the workplace, and
vaccination pay for employees to receive
both doses of the COVID-19 vaccine. In
addition, we increased our focus on wellbeing by activating a multi-year strategy to
bring our people new resources and tools to
support total well-being including mental
health support.
•C
We regularly review our pay in the
markets in which we operate to ensure we
are competitive, and update accordingly
throughout the year.
Innovation and Creativity
New innovation
Technical skills
(Nordstrom 10-K, 9).
We are continually expanding and
enhancing our Supply Chain Network
facilities and inventory management
systems to support our omni-channel
capabilities and provide greater access to
merchandise selection and faster delivery.
We select locations and customize
inventory
allocations
to
enable
merchandise to flow more efficiently and
quickly to our customers. Nordstrom online
purchases are primarily shipped to our
customers from our fulfillment centers but
may also be shipped from our Nordstrom
stores, distribution centers or omni-channel
centers. Nordstrom in-store purchases are
primarily fulfilled from that store’s
inventory, but when inventory is
unavailable at that store, it may also be
shipped to our customers from our
fulfillment centers, distribution centers, and
omni-channel centers or from other
Nordstrom stores. Nordstrom Rack online
purchases are primarily shipped to our
customers from our fulfillment centers and
distribution centers, but may also be
shipped from our Nordstrom Rack stores.
Both Nordstrom and Nordstrom Rack
selectively use vendor dropship to
supplement online offerings, which are
then shipped directly from the vendor to the
end customer.
Reputation
Brand name
Reputation with customers for highquality products.
(Nordstrom 10-K, 8).
our ability to maintain our reputation and
relationships with our customers,
employees, vendors and third-party
partners and landlords,
our ability to act responsibly and with
transparency with respect to our corporate
social responsibility practices and
initiatives, meet any communicated
targets, goals or milestones,
our ability to market our brand and
distribute our products through a variety
of third-party publisher or platform
channels, as well as access mobile
operating system and website identifiers
for personalized delivery of targeted
advertising,
(Nordstrom 10-K, 4).
Organizational Capabilities
competitiveness
We operate in a highly competitive
business environment. We regularly
compete with other international,
national, regional and local retailers,
including internet-based businesses, omnichannel department stores, specialty
stores, off-price stores and boutiques,
which may carry similar lines of
merchandise. Our specific competitors vary
from market to market. We believe the
keys to competing in our industry are what
will always matter most to our customers:
providing compelling product and
outstanding service, both digitally and in
stores, backed by people who care. This
includes serving customers on their terms
by providing a seamless digital and
physical experience, offering compelling,
curated and quality products across a
range of price points, and by strategically
partnering with relevant and limited
distribution brands, all in top markets.
(Nordstrom 10-K, 10).
Assignment F: VRIN analysis
Implication choices
include:
Competitive disadvantage
Competitive parity
CA
CP
Temporary competitive advantage
TCA
Sustainable competitive advantage
SCA
Identify only the “key” resources and organizational capabilities
RESOURCE
VALUABLE
(Y/N)
RARE
(Y/N
INIMITABLE
( Y/N)
NONSUBSTITUTABLE
(Y/N)
IMPLICATIONS FOR
COMPETITIVENESS
Tangible Resources:
Financial
Y
Y
Y
Y
Physical
Technological
Y
Y
N
N
N
Y
N
Y
Sustainable competitive
advantage
Competitive parity
Temporary competitive
advantage
Organizational
Y
Y
Y
Y
Sustainable competitive
advantage
Human
Y
N
Y
N
Innovation &
Creativity
Reputation
Y
Y
Y
Y
Y
Y
Y
Y
Organizational
Capabilities:
Y
Y
Y
Y
Temporary competitive
advantage
Sustainable competitive
advantage
Sustainable competitive
advantage
Sustainable competitive
advantage
Intangible Resources:
Explain how the company meets the four criteria for the Barriers to Iimitation:
Physical Uniqueness
The company has physical stores in addition to online stores. The company sees value in having
brick and mortar locations. Customers can easily return stuff to the physical stores instead of
waiting for the company to pick it up.
Path Dependency
The company aims to provide a seamless experience for customers across the company. The
company for a very long time has integrated its operations, merchandising and technology
across all stores and online. The company has connected its digital and physical assets to serve
the cusstomers better.
Causal Ambiguity
The company provides compelling products and outstanding service that gives it a competitive
advantage over competitors. The company also offers curated and quality products across all
price ranges and it does so by partnering with limited distribution brands and relevant brands in
the top market.
Social Complexity
The company believes that it has a social responsibility to support communities and the people
it serves. The corporate social responsibility strategy of the company has five year goals
focusing on human rights, emvironmental sustainability, and corporate philanthropy.
Assignment G: Strategic Group Map (you may use outside sources for this assignment only)
How to Create a Strategic Group Map?
•
Identify the top rivals in your industry; try to identify at least five of them. As you do
your research on them, create individual profiles for them focusing on the services they
•
•
•
•
•
offer, the impact they have on the market, who benefits from their business, and their
strategic direction.
Then identify the factors that have helped you succeed. Is it the quality of your product
or service? Is it your strong customer service or the support of your loyal customers?
Next, select the top two factors that drive success for your business. These become the
variables used for the axes of the map. There should be no correlation between these
variables. They could include the product price, geographic coverage, product-line
breadth, or quality.
Plot the firms in the industry that you have identified on the two-variable map you have
created.
Firms that are placed on the same strategy space should be allocated the same strategic
group.
Draw circles around each strategic group. The size of the circles should vary based on
the size of the group’s respective share of total industry sales.
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