1. Due November 17, 2015
MGMT-4500-004: Business Policy and Strategic Management
Professor Jeffrey Nystrom
Presented By:
C.J. Dugar| Camron Eidsness |Dane Grashuis | Artem Kukushkin
Denicia Luna |Sondra Morris | Sydney Sullivan |Monica Yuan

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Table of Contents
Section 1: The Case Study.............................................................................................................. 4
1.1 Current and Historical Background....................................................................................... 4
1.2 Organization Mission............................................................................................................ 4
1.3 External Environment ........................................................................................................... 5
1.3.2 External Environment: Industry Environment................................................................ 6
1.3.3 External Environment: Operating Environment............................................................. 7
1.4 Internal Environment............................................................................................................. 7
1.4.1 Internal Environment: Current Strengths....................................................................... 7
1.4.2 Internal Environment: Key Weaknesses.......................................................................... 8
1.4.3 Internal Environment: Financial Situation..................................................................... 9
1.5 Generic Strategy.................................................................................................................... 9
1.6 Long-term Objectives.......................................................................................................... 10
1.7 Grand Strategies .................................................................................................................. 11
1.8 Short-Term Objectives and Action Plans............................................................................ 11
1.9 Functional Tactics ............................................................................................................... 12
1.10 Strategy Execution Policies............................................................................................... 14
1.11 Executive Bonus Compensation Plans.............................................................................. 14
1.12 Organizational Structure, Culture, and Leadership ........................................................... 15
1.12.1 Organizational Structure, Culture, and Leadership: Organizational Structure.......... 15
1.12.2 Organizational Structure, Culture, and Leadership: Culture and Leadership ............ 15
1.13 Strategic Control ............................................................................................................... 19
1.14 Entrepreneurship and Innovation ...................................................................................... 19
Section 2: Identification of Key Strategic Issues and Problems ................................................... 22
Section 3: Analysis and Evaluation .............................................................................................. 23
3.1 External Environment Analysis .......................................................................................... 23
3.1.1 External Environment Analysis: Remote Environment................................................ 23
3.1.2 External Environment Analysis: Industry Environment............................................... 24
3.1.3 External Environment Analysis: Operating Environment............................................ 26
3.2 Internal Environment Analysis............................................................................................ 30
3.2.1 Internal Environment Analysis: Resource-Based View................................................ 30

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3.2.2 Internal Environment Analysis: Value Chain Analysis ................................................ 31
3.2.3 Internal Environment Analysis: Current vs. Past Performance................................... 32
3.2.4 Internal Environment Analysis: Nordstrom’s Resource Competencies vs. Competitors
............................................................................................................................................... 33
3.2.5 Internal Environment Analysis: Analysis of Industry Success Determinants............... 34
3.2.6 Internal Environment Analysis: Financial Health Analysis......................................... 35
3.3 SWOT Analysis................................................................................................................... 36
3.4 Mission Statement Analysis................................................................................................ 37
3.5 Generic Strategy Analysis................................................................................................... 37
3.6 Long-term Objectives Analysis........................................................................................... 39
3.7 Grand Strategy Analysis...................................................................................................... 40
3.8 Short-Term Objectives Analysis ......................................................................................... 42
3.9 Functional Tactics Analysis ................................................................................................ 43
3.10 Analysis of Policies Aiding Strategy Execution ............................................................... 43
3.11 Structure, Cultural, and Leadership Analysis.................................................................... 46
3.11.1 Structure, Cultural, and Leadership Analysis: Structure, Culture, and the
Environment........................................................................................................................... 47
3.11.2 Structure, Cultural, and Leadership Analysis: Strategic Leadership ......................... 48
3.12 Strategic Controls Analysis............................................................................................... 48
3.13 Executive Compensation Analysis.................................................................................... 50
3.14 Innovation and Entrepreneurial Analysis .......................................................................... 51
Section 4: Consulting Report with Recommendations ................................................................. 53
4.1 Summary of the External and Internal Environment’s Analysis......................................... 53
4.1.2 Summary of the External and Internal Environment’s Analysis: Internal Analysis
Summary................................................................................................................................ 54
4.2 Mission Statement Recommendations ................................................................................ 54
4.3 Generic Strategy.................................................................................................................. 54
4.4 Long-term Objectives, Grand Strategies, Short-Term Objectives, and Action Plans......... 57
4.5 Policies Aiding Strategy Execution Recommendations...................................................... 62
4.6 Executive Compensation Practice Recommendations ........................................................ 63
4.7 Strategy Implementation: Structure, Culture, and Leadership Recommendations............. 65
4.8 Strategic Control Recommendations................................................................................... 67

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4.8.1 Strategic Control Recommendations: Premise Control Assumptions.......................... 67
4.8.2 Strategic Control Recommendations: Implementation Control................................... 68
4.8.3 Strategic Control Recommendations: Strategic Surveillance and Special Alert Control
Considerations....................................................................................................................... 69
4.9 Innovation and Entrepreneurship Recommendations ......................................................... 69
Bibliography ................................................................................................................................ 71

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Section 1: The Case Study
1.1 Current and Historical Background
In 1901 John W. Nordstrom partnered with Carl Wallin to open a shoe store, founding
what would later be known as the leading customer service fashion retailer, Nordstrom Inc. The
duo opened a few “Nordstrom and Wallin” shoe stores, before selling their shares of the
company to John Nordstrom’s three sons in 1928. Nordstrom started out with slow but constant
growth, which eventually led to its success in becoming a wildly successful west coast shoe
store. They ran eight shoe stores in Washington and Oregon by 1960 (Nordstrom, Inc., 2015). In
1963, the company entered its second phase when the brothers purchased a women's apparel
store called, “Best Apparel” (Nordstrom, Inc., 2015). This expansion broadened the company
market with sales of women’s clothing, but more growth was soon to follow. Three years later, a
fashion retail location in Portland was added to the list of purchases. The company then merged
their shoe business and apparel store. To ensure they were a one-stop apparel store, the sibling
owners also added men's and kid's clothing, and renamed the store “Nordstrom Best” (Lyman,
2014). The three sons then retired in 1968, leaving the company to the heirs’ next generation.
This generation of Nordstrom’s leaders made the company public in 1971, renaming the
company officially, Nordstrom, Inc. (Nordstrom, Inc., 2015).
1.2 Organization Mission
In the words of John W. Nordstrom, the company's overall mission is, “to provide
outstanding service every day, one customer at a time” (Rosecrans, 2014). This initial
organization mission statement has led Nordstrom to become “one of the nation's leading fashion
retailers, offering a wide variety of fine quality apparel, shoes and accessories for men, women

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and children at stores across the country (Reference For Business, n.d.). Operating 115 full-line
Nordstrom retail stores and 167 Nordstrom Rack retail stores in the United States, Nordstrom
Inc. has just recently expanded to operate two full-line retail stores in Canada. The company has
adapted to rising technological demands with online channels such as: Nordstrom.com,
Nordstromrack.com, HauteLook, and TrunkClub.com. Other channels the company operates
include the five Trunk Club showrooms, two Jeffrey boutiques, and one Last Chance clearance
store. In addition to the retail segment, Nordstrom now has a credit segment, which includes its
own federal savings bank through which the company provides its own private label credit card,
Nordstrom Visa. Accordingly, “the Company operated 290 United States stores located in 38
states, as well as an e-commerce business through Nordstrom.com, Nordstromrack.com and
HauteLook and TrunkClub.com, as of March 16, 2015. It also operates two Nordstrom full-line
stores in Canada” (The New York Times, 2015).
1.3 External Environment
Services provided
Brick and mortar and Online retail of men’s clothing (15% Net Sales), women’s clothing
(34% Net Sales), children’s clothing (3% Net Sales), shoes (22% Net Sales), beauty products
(11% Net Sales), accessories, home décor, bedding and home accessories (3% Net Sales).
Scope
Currently, there are 118 full line stores located in the US and Canada, 178 Nordstrom
Rack stores, 2 Jeffery boutiques, and one clearance store. They operate online as
Nordstrom.com, Nordstromrack.com, and privately as Hautelook.com.
Competitors

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Nordstrom falls under a mid-range affordable luxury department store category. This
particular industry category includes direct competitors such as: Macy’s, Dillard’s, and Neiman
Marcus.
Customer Demographics
Traditionally, Nordstrom attracts customers between the ages of 25 – 54 with an average
household income of >$100,000. Nordstrom has recognized that targeting millennials’ will
definitely increase revenues for the long-term. Due to this they are now starting to target
customers between the ages of 16 – 30. Department stores typically are more attractive to
women but have a fine line of menswear.
1.3.2 External Environment: Industry Environment
Entry Barriers
Nordstrom is a large and a well-established organization, and in two countries it operates
in, the firm does not have any entry barriers. That said, the industry itself does have significant
entry barriers due to economies of scale that stores like Nordstrom, Macy’s, Neiman Marcus can
offer.
Supplier Power
Certain suppliers are powerful in the clothing industry, and may be able to dictate prices
with smaller stores. Brands like Michael Kors, or Coach, are desirable to many women, thus it
becomes a necessity for stores large and small to carry certain brands.
Buyer power
Although consumers of the retail industry typically do not buy in bulk, they do possess
buyer power due to availability of the same product elsewhere. For example, Nordstrom is

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typically located in the malls, like Cherry Creek mall. If a customer is shopping for Hugo Boss
shoes, he can buy that brand at Nordstrom, Neiman Marcus, or the Hugo Boss store, all located
within the mall.
1.3.3 External Environment: Operating Environment
Substitute availability
This industry has plenty of substitute products. In most cases, a shopper is paying for the
brand.
Competitive rivalry
Because price wise, Nordstrom is somewhat geared toward middle class, it competes with
luxury retailers, such as Lord & Taylor, Neiman Marcus, Saks Fifth Avenue, and
Bloomingdale’s, as well as middle class retailers like Macy’s.
1.4 Internal Environment
1.4.1 Internal Environment: Current Strengths
Nordstrom’s current state of affairs appears to be mostly on the right track with only
some challenges in sight. Concerning industry, it appears there could be some trending toward
the need for department store luxury retail diminishing. Internally, Nordstrom is addressing this
concern with off-price retailing and increasing their Nordstrom Rack presence by both physical
locations as well as the launch of nordstromrack.com. Even with this concern on the horizon
Nordstrom’s continues to do well on paper. Their end of quarter two in 2015 suggests positive
reporting. Sales increased by 9% and net income climbed 15%. Related to their efforts of their

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off-priced brand they see business increasing by 16%. Now that Nordstrom has been successful
in their luxury brand and now leveraging that skill in their branch off into their bargain line it
appears that they will continue to have success in the future (Caplinger, 2015).
Figure 1.4.1: Strengths
 Brand equity
 Typical customer base is moderately affluent
 Good penetration in the market through multiple online entities
 Product portfolio
 Outstanding customer service
 Current has over 300 stores (including Nordstrom Rack and full-line stores)
o Nordstrom.com, Nordstromrack.com, HauteLook, Jeffrey Boutiques
and Trunk Club (Weishaar, 2015)
 Strong Management
 Digitally savvy
o Providing customers with a strong mobile platform to shop and buy
and continuance of providing customers with new features faster
1.4.2 Internal Environment: Key Weaknesses
Figure 1.4.2: Weaknesses
 Perceived as outdated
 Perceived to be for more affluent target markets
 Nordstrom Rack, a lower cost alternative, could compromise
Nordstrom's brand equity

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1.4.3 Internal Environment: Financial Situation
Currently Nordstrom’s financial condition continues to maintain a steady pace in the
positive direction. At the end of their second quarter, August 1, 2015, they achieved 9.2% sales
growth, which makes this the fourth consecutive quarter they maintained high single-digit
increases. Key successful contributors to their most recent successful quarter are:
 The Anniversary Sale – as their largest event of the year
 Growth investments such as entry into Canada, the acquisition of Truck Club, and the
Nordstromrack.com launch, which drove over one-third of their net sales growth
 Nordstrom Rack generated a net sales increase of 13% - this being their 26th consecutive
quarter of double-digit growth
 Full-line and Nordstrom.com business delivered 4.8% comparable sales increase
(Nordstrom Inc., 2015)
1.5 Generic Strategy
Nordstrom’s generic, or competitive strategy, is to be the best in customer service when it
comes to fashion retailers in the market. This is to be accomplished by providing the best
selection, quality, value and service (Nordstrom, Inc., 2015).
To accomplish this they have provided their customers with a wide variety of clothing,
shoes, and accessories for women, men and children. They strive to not only be on the cutting
edge of fashion but want their customers to possess style (Nordstrom, 2015). One key element to
this is providing great quality along with their variety so their customers can rely their brand.
Nordstrom also always provides free shipping and returns to meet their customer’s requests and
needs when other competitors do not consistently have the same offerings, which helps with
making them competitive in the market.

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Nordstrom, Inc. continues to strive to be competitive in the market by attempting to
emerge into other markets like smaller boutiques and attracting the clientele of those type of
establishments. Nordstrom is currently trying a new strategy with their Director of Creative
Projects, Olivia Kim. On August 20, 2015 Nordstrom unveiled their latest project with Space, a
boutique style standout in select Nordstrom stores; Seattle, Chicago, and San Francisco
currently). Space is decorated with eye-catching colors; “The effect of stumbling into one of the
Space camps should be similar to going from black-and-white Kansas to Technicolor Oz.” This
project also opens up doors to create new relationships with smaller labels so they can operate
like their boutique counterparts. The Space project will continue to grow into stores in
Vancouver, British Columbia and Nordstrom’s first New York store in 2018 (Schnier, 2015).
This falls within their generic strategy because by evaluating the market and recognizing what is
currently up and coming Nordstrom can provide a fresh outlook to their brand. This provides
their current, lost, and new customers with what is currently trendy and they can match their
current customer service strategy with new, appealing projects.
1.6 Long-term Objectives
Nordstrom has many long-term objectives, or improvements the company is seeking to
achieve within a multi-year period of 5-10 years. While specific, these long-term objectives are
still flexible given the multi-year period and other execution specifics. Thus, we summarize the
company’s current long-term objectives into three categories: technological improvement,
national expansion, and international expansion (Zacks Equity Research, 2013).

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1.7 Grand Strategies
Nordstrom's Grand strategies, or the firms central ideas on how to achieve its long-term
objectives, consist of a series of web developments and improvements, acquiring a series of
online businesses, and new store openings across the nation, and (for the first time) new
Nordstrom and Nordstrom Rack store openings in Canada. Specifically, to achieve technological
advancement Nordstrom plans to improve upon current Nordstrom online shopping platforms on
nordstrom.com, nordstromrack.com, and Hautlook.com. “Striding ahead with its store expansion
strategy," to achieve national expansion, Nordstrom plans to open many more stores across the
U.S. within the next five years (Zacks Equity Research, 2013). Among these will be the grand
opening of the company’s highly anticipated, Manhattan location, along with locations in Austin,
TX; Los Angeles, CA; Norwalk, CT; and San Diego, CA. Finally, to achieve international
expansion, Nordstrom plans to open the following stores in Canada: Canadian flagship store in
Vancouver 2015; Toronto, ON, Canada (Toronto Eaton Centre, Yorkdale Centre) 2016; Toronto,
ON, Canada (Sherway Gardens) 2017.
1.8 Short-Term Objectives and Action Plans
Short-term objectives are the current activities an entity implements in order to achieve
their long-term objectives. Short-term objectives generally represents an activity or project that
can be completed within a year or less. Objectives must be measurable and have a time frame to
be completed.
Nordstrom plans on expanding and maintaining customers by meeting their needs with
excellent customer service. As Blake Nordstrom stated in an earnings call in 2015, “Our
customer strategy is guided by customer expectations around speed, convenience, and
personalization” (Seeking Alpha, 2015). In light of this initiative, Nordstrom Racks are offering

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47 out of the 50 brands offered in full line stores including store exclusive brands. Nordstrom has
also acquired HauteLook.com in order to expand in ecommerce, creating more ways for
customers to shop in store and online.
Specific, measurable objective plans are the company’s plans to expand through the
openings of its most iconic, Nordstrom retail stores. Nordstrom plans on opening 19 full-line
stores within 2016. The locations of these new full-line stores will include: Arizona, Colorado,
Florida, Hawaii, Louisiana, Minnesota, New Mexico, New York, Texas, Utah, Virginia, as well
as three store openings in the state of California. The final two openings will cross-borders, with
grand openings in Canada.
1.9 Functional Tactics
Functional tactics are used to achieve short-term objectives. These tactics give Nordstrom
a unique advantage over their competitors in areas such as financial needs, operational
improvements, research and development, marketing, and human resources.
Figure 1.9 : Functional Tactics
Financial
 Nordstrom will spend a 15% of its capital expenditure on expanding in ecommerce and
technology, about $375 million (Brohan, 2011).
 Expansion on Nordstrom Racks have proved to be more profitable per square foot than
full line stores. These store generate $553 in revenue compared to $372 per square foot
in full line stores. Plan to have 230 Nordstrom Racks by 2016 (Bailey, 2015).
 Nordstrom have their own credit union for store credit cards. This creates a more
personalized relationship for customer financing.
Operations and Sustainability
 Stores have cut down on energy use by using LED lights with HVAC systems that
remotely control when lighting is needed.
 Decreasing water usage include a normal toilet flow and waterless urinals.
 Truck drivers use compressed natural gas when they can and are given rewards for
improving mileage.

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 Teamed up with Forterra to offset 50% of their carbon emissions by planting and
maintaining tree restoration sites in Tacoma, Seattle, and Everett. (Sustainable Apparel
Coalition, 2015)
 All bags and boxes can be recycled.
 Shopping bags are made of 25% of recycled material
 30% of catalogs are made up of post-consumer waste content.
 Receipts are also made from recycled material, however, the percentage of this varies
on how much recycled resources are available (Nordstrom, 2015).
 Participate in organic recycling programs. Technology such as computers and printers
are also involved in a recycling program.
Marketing
 Nordstrom communicates their products and services through subscribed emails, flyers,
and radio advertisements.
 To have a competitive advantage, free shipping and free returns are offered for
customers.
 Outside of apparel, stores offer spa services and restaurants. This creates a more
relaxing environment for customers to take a shopping break.
Human Resources
 Nordstrom offers internships in retail management, merchandising and planning,
fashion, technology, and general headquarters internship
 The company offers an MBA internship as well
 900 interns are in the retail management internship alone
 ”Open Door Policy” allows employees to express their concerns with management.
The company highly values honesty.
Research and Development
 Nordstrom is looking into more ways to be sustainable.
 In 2014 the U.S. Environmental Protection Agency awarded Nordstrom with a
SmartWay Excellence award for their innovative ways of cutting down cost on
mileage.
 One-third of new customers come from online, which is why the company emphasizes
on expanding in technology and ecommerce.

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1.10 Strategy Execution Policies
The most noteworthy policy for strategy execution is product exposure and customer
service. At each boardroom meeting every strategy challenge and opportunity is discussed and
thus improved or replaced, this has allowed Nordstrom to have an adaptable and highly effective
management tool for environmental changes. The newest strategy execution regards their
omnichannel strategy, which allows online orders and alterations to be delivered from the store
to the consumer’s doorstep known as ‘curbside pickup’ it is being implemented in its 20 flagship
stores. What separates Nordstrom from competitions regarding omnipresent channels is its
inventory visibility where customers can view the entire inventory online, where's it's located in
the store and its availability (Popovec, 2014).
1.11 Executive Bonus Compensation Plans
Key executive compensation is distributed to Michael Koppel, the Vice President and
CFO, Erik Nordstrom the Executive Vice President and president of the online retail website,
Peter Nordstrom the executive Vice President and president of merchandising, Blake Nordstrom
the president, and ken Worzel the executive Vice President of strategy and development. Total
compensation in 2014 was $20,194,158. 17% of compensation was through salary, 23% through
restricted stock awards, 18% through security options, 22% through non-equity compensation
(rewards through inventive plans), and an additional 10% in other compensations (Morningstar,
2015).

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1.12 Organizational Structure, Culture, and Leadership
1.12.1 Organizational Structure, Culture, and Leadership: Organizational Structure
Overview:
“Use good judgment in all situations”
 Inverted organizational pyramid – Customers on top and executive team on bottom.
 Employee Characteristics –Entrepreneurial spirit,persistence,passionforbusinessandfashion,
create and maintainstrongrelationships.
 Company Values
 Ethics, Social Responsibility, Community giving, environment and human rights
(The CareerBliss Team, 2012).
1.12.2 Organizational Structure, Culture, and Leadership: Culture and Leadership
Thanks to the family’s leadership and people-first mentality, the company has maintained
a “very family feeling” culture. Eighty-four percent say there is a team or family feeling
throughout the organization (Nordstrom Cares, 2013). Nordstrom encourages people to be
themselves and are empathetic towards customers’ needs and requests. By putting the customer
first, they have changed the way retailers do business.
Nordstrom is a company that is built on the idea of providing the best customer service
possible while also providing an upscale environment to purchase high quality upscale products.
With specific focus on creating and managing organizational cultures, Nordstrom has become
very effective in creating a successful company that has developed powerful cultural norms from
both its terminal and instrumental values which support its mission, “one goal: make the
customer feel good” (Nordstrom, 2015). Nordstrom describes that they strive to work hard every

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day in order to make the customer feel good about the shopping experience. They have also been
very successful in implementing this value with their employees and creating the norm of
providing friendly, caring, high-quality customer service. There have been many examples to
prove their success in how their values have influenced the behavior of their employees to rise
above and beyond what it means to provide great customer service. New.edu and educational
website that outlines corporate management examples for learning purposes provides great
examples of times Nordstrom has truly lived up to making the customer feel good. One example
is from 1975 when the company had bought out an old tire shop to develop a new Nordstrom
store. One day an elderly couple had come into the Nordstrom not realizing that the tire store was
no longer there to return a set of tires they had purchased when the location was still a tire shop.
Without hesitation the store accepted the tires and refunded the elderly couple.
Values and norms of culture are a learned concept, Nordstrom works very hard to create an
environment where its employees represent the overall values of the organization.
They start this in their socialization process of employees and have been very successful
in the programs and systems set up to have great employees. Form the very start, Nordstrom only
hires people that they believe to possess the qualities and characteristics they are looking for.
With a high standard for who they hire they focus on hiring the best people they can by requiring
previous customer service and retail experience. They do this by training management in
behavioral interviewing techniques, this creates interviews that give them an understanding of a
person’s character and demeanor. Nordstrom as a whole also places high value on its employees
and wants to build strong lasting relationships with the people they hire. They do this by
promoting from within, and offering rewards for outstanding work. This creates an environment

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of people that want and care to be there and participate in the organization because Nordstrom
makes its employees feel welcome and desired.
Nordstrom has been effective in promoting its values of high quality customer service
and taking care if its employees by being well known for its continuous mentoring programs.
Management mentors.com describes Nordstrom’s two most well know programs, Nordstrom’s
future leaders and the new manager development program, as superior and excellent for
employees because of their preference for examples and lessons over formal training. Nordstrom
has also been able to reiterate to its employees its value on customer service and its openness for
communication between employees and management with its programs that send senior level
management around the country to speak with and inspire its employees. These seminars
provide open communication for employees to voice their concerns as well as to continue to
establish the culture and values of the organization in order to reinforce Nordstrom’s
organizational norms. Nordstrom has also been successful in its efforts towards its corporate
social responsibility with its stance describes on their webpage Nordstrom-cares.com as “leave it
better than we found it.” On their website is also provides links to news articles that highlight
their actions, for example, by participating in the EPA’s SmartWay smart transport partnership.
With this they have been able to identify and lessen their environmental impacts when moving
and shipping.
As a result of the empowering culture that Nordstrom has created, they have also created
an environment that would seem to attract and encourage entrepreneurs. Nordstrom offers good
wages to their employees with incentives that increase compensation. Nordstrom also encourages
internal career growth by offering extensive training and support to their staff. They adopt an
“each one teach one” philosophy where everyone is responsible for training and supporting each

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other as much as the company is. Nordstrom supports professional development with programs
like Nordstrom Future Leaders and the New Manager Development Program, both of which rest
on the shoulders of everyone to be mentors and to help with coaching (Lyman, 2009).
Employees are also encouraged to have an entrepreneurial spirit to help customers and to
maintain a customer focused strategy. Employees are expected to try new sales techniques and
new approaches to help customers. This comes from the only rule that Nordstrom has which is to
“use good judgment in all situations”, which is written in their famous employee handbook that
really is just a card that has 75 words on it (Stansberry, 2011).
Nordstrom has not changed its key values or culture for much of their existence; they
believe in customer first and employee empowerment. As stated, Nordstrom has been around for
quite some time, over a hundred years in fact, yet little has changed in the way they have chosen
to do business. For most of the company’s existence, Nordstrom has stayed within the control of
the Nordstrom family who established the culture of the company. However, in the 90’s
Nordstrom began to decline in sales. In response to the declining sales, they had to change their
business from a formal apparel location to something more fashion conscious in order to become
more affordable for their target market. They switched their focus to following fashion trends
and embraced web-based retail as well.
The control of Nordstrom has only recently left the hands of the family but their
influence and values are still prevailing. Nordstrom focuses on the customer's’ experience from
start to finish and are aware that this is one of their strengths. However this requires a total
employee and management buy-in for it to succeed. Nordstrom does this by empowering their
employees so that they can provide the best possible customer service that they can. They have

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focused on this for so long and that it is so ingrained into their culture. This creates loyal
customers and ensures that they remain a major name in the retail industry.
Beginning in the 60’s, when the company made the decision to expand their product
offerings, innovation has always been one of the company’s prevalent traits. Key innovation for
Nordstrom can be seen in the company's focus on the customer’s experience and the
empowerment of their employees. It can be concluded then, that innovation has helped the
company to expand and grow over the years, making it a trustworthy company that understands
both their employees and customers.
1.13 Strategic Control
Nordstrom uses many different types of strategic and operational control systems.
Strategic control systems that the firm uses include: employee surveys and systems that deliver
industry analysis (premise control), loss prevention cameras as well as systems that monitor
customer spending/credit card fraud (strategic surveillance), and employee and customer surveys
to assess the effectiveness of the company’s overall strategic control systems. There are no
known special alert control systems that Nordstrom uses at this time. Operational control systems
include: the POS systems used within all full line and rack stores, as well as micro strategy
reports generated on each quarter’s sales by store and by department (Timberlake, 2011).
1.14 Entrepreneurship and Innovation
Individuals should have clear understanding of the difference between invention and
innovation.

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Invention – With the combination of existing and new knowledge new products and processes
are created.
Innovation – taking ideas and commercializing into a profitable source; after production
product, services or processes are sold.
Incremental innovation – “fine tuning” existing products, services or processes. Change and
making adjustments. Less risky in comparison to breakthrough innovation.
Breakthrough innovation – enforces drastic change on product, services or process.
Dramatically increasing efficiency/ performance associated and greatly impacts costs associated
with it.
Entrepreneurship – “process of bringing together creative and innovative ideas and actions
with the management and organizational skills necessary to mobilize the appropriate people,
money and operating resources to meet an identifiable need and create wealth in the process”
(Pearce & Robinson, 2015).
Nordstrom’s primary focus is its customers; “understanding their needs, interests, and
expectations. Strives to meet customer expectations and demands through all internal process
and individuals involved in meeting customer needs; from the people at the front check out to the
people behind the scenes designing, creating and implementing customer experiences.
Late 1990s began focusing on technology that would further empower employees and increase
accessibility and consistency of services and products offered to customers. By 2002 innovations
included up and running website, Nordstrom.com and a perpetual inventory system. From 2004
to 2014 Nordstrom made various breakthrough innovations. Various investments were made, all
focused around the customer experience. New POS system, personal book software, enabling
salespeople to track individual needs and requests online.

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Quickly after new POS system, Nordstrom innovation lab was established. Technology
lab is comprised of various types of individuals; techies, designers, entrepreneurs, statisticians,
researchers, and artists all collaborating to find and implement innovations in all aspects of
Nordstrom; from operations, business model, products, technology and management. Created
many new channels that are tightly integrated. Nordstrom apps, merging accessibility with other
apps (primarily social apps), mobile check out enabling salespeople to text and cloud based
clothing services. Successful opt-in only application, customers can enter their preferences in app
and when they enter a store these preferences, as well as online purchase histories, are pushed to
salespeople, expediting their shopping experience. All innovations are connected enabling the
sales people to monitor individual customers from beginning to end, ensuring they have the best
experience and exact demands are met (van Rijmenam, 2015)
In comparison to other retailers, Nordstrom is very good at identifying and taking digital
technologies that will best serve their purpose while also maintaining easy accessibility and
simplicity for the customer. Recently reported to be downsizing innovative lab and really
encouraging all employees to share innovative idea (Duryee, 2015). I believe this could be
because the success they have experienced with the lab in recent years, not as many people are
still required in the process, enabling employees to branch out to other tasks.

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Section 2: Identification of Key Strategic Issues and Problems
Key Strategic Issues and Problems Identified
1. Ecommerce is becoming a high demand, Nordstrom is meeting those demands; but is it in
the company's best interest to continue expanding and doubling their chain of stores when
culturally it is becoming more common and preferable to do shopping online.
2. Considering the millennial generation, how can Nordstrom’s position themselves more
prominently to be desirable to the evolution of tastes and preferences of individuals in this
demographic.
3. While retail companies usually face the challenge of a relatively high employee turn-around, steps to
improve the internal retention rate should be taken to ensure the optimal customer service Nordstrom
is known for.

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Section 3: Analysis and Evaluation
3.1 External Environment Analysis
The external environment consists of factors beyond the control of the firm. Nordstrom
needs to be aware and understand these factors in extensive detail in order to make smart
business decisions to continue to increase profitability. The external environment factors include
the remote environment, industry environment, and operating environment.
3.1.1 External Environment Analysis: Remote Environment
For our external environment analysis we will first analyze the remote environment and
how it relevantly relates to Nordstrom. The remote environment is the “economic, social,
political, technological and ecological factors that originate beyond, and usually irrespective of,
any single firm’s operation situation” (Pearce & Robinson, 2015).
Figure 3.1.1: Remote Environment
Economic Social Political Technological Ecological
 Since 2010 the
unemployment
rate in the US
has been on a
steady decline
and has
reached as low
as 5.5% in
recent months.
 Since 2009 the
unemployment
rate in Canada
has been on a
steady decline
and now
plateauing at
6.8%.
 As
unemployment
continues to
decrease
disposable
 Changes in
fashion
preference
(attitude &
opinions)
 Divorce rate
 People are
choosing to
not have
children or to
wait longer to
have children
 Mot getting
married (shifts
in lifestyle)
 Baby boomers
 Use of social
media

 Tax
 War
 Pollution
 Government
injection
 Changes in
minimum wage
requirement
 Staggering
increase use
of smart
phones/mobile
devises
 Advancements
in Customer
Relationship
Management
through
systems
1. Less stock-out
 Innovation of
renewable/alte
rnative energy
 Global
warming
 Resource
allocation
 Increased
expectation to
be sustainable
(green)
 Urbanization

25. 24 | P a g e
income
becomes more
prevalent
 Availability of
credit
3.1.2 External Environment Analysis: Industry Environment
Next we will analyze the industry environment and how it pertains to the department
store industry. The industry environment is “the general conditions for competition that influence
all businesses that provide similar products and services” (Pearce & Robinson, 2015).
We will be using Michael Porter’s Five Forces model for this analysis and determine the strength
of each force as it pertains to industry rivals, new entrants, substitutes, buyers and suppliers.
One thing to keep in mind as we analyze the department store industry environment is
how the market continues to expand outside of department stores and into the online retailer
market. With that said, figure 3.1.2A illustrates that the threat of new entrants is a strong force.
This may not have been the case in the last 5 years but with the increased opportunity of entrance
into the market through the internet this force has gained strength over the years and will
continue to do so.

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Figure 3.1.2A: Porter’s Five Forces Model
Industry Rival |
Strong Force
New Entrants |
Strong Force
Substitutes |
Strong Force
Buyer Power |
Strong Force
Supplier Power |
Weak Force
 Dillard’s
 Macy’s
 Nieman
Marcus
 Barneys
Warehouse
 Kohl’s
 Mr.Porter.com
 H&M
 Hudson’s Bay
(Canada)
o Saks Fifth
Avenue
 Popularity of
online
retailers
 Ease of
access for
online
retailers
 Millennial’s
interest
 Local
business
 Economies
of scale
 Discount
department
stores
 Drug stores
 Shoe stores
 Jewelry stores
 Make up/beauty
supply stores
 Clothing and
accessory
boutiques
 Online stores –
i.e. etsy.com,
zappos.com
 Accessory/hand
bag/hat stores
 Children’s
clothing
retailers``
 Company
competition –
price
comparisons
 Customer
service
 Promotional
efforts
 Product –
quality,
variety
 Merchandise
o Clothing
o Shoes
o Makeup
o Accessories
o Furniture
o Kitchen
appliances/
necessities
o Kids and baby
clothes/necessi
ties
o Shoes
o Beauty –
women/men
 Utilities
o Water
o Gas
o Electric
o Trash/
recycling
 Legal services
 Maintenance
 Building/land
 Shipping trucks
 Employees
New
Entrants
Buyers
Substitutes
SuppliersIndustry
Rivals

27. 26 | P a g e
 Equipment
o Racks
o Hangers
o Shipping
packaging
o POS work
stations
o Office supplies
 Technology
o Computers
o Internet
o Software
Figure 3.1.2B: Department Store Industry
Boundaries of the industry
 Technology continues to shape the industry at a rapid
pace
 Perceptions of the consumer
 Competitive environment
Structure of the industry
 Traditional department stores (locally owned)
 National chain department stores (Nordstrom)
 Full-line discount department stores (Walmart)
(Cronin & Kelley, 2014)
Competitors
Direct
 Hudson’s Bay/Saks
Fifth Avenue (Canada)
 Macy’s
 Dillard’s
 Neiman Marcus
 Upscale online retailers
Indirect
 Kohl’s
 Target
 Walmart
 Marshals
 Ross
 Online retailers
(amazon.com, etsy.com)
Major Determinates of
Competition
 Quality
 Price
 Variety
 Customer service
 Location
 Online capacity/capability
3.1.3 External Environment Analysis: Operating Environment
Lastly, we will analyze the operating environment of Nordstrom. There are five factors to
consider when addressing the operating environment; 1. Competitive position, 2. Customer
profiles, 3. Suppliers, 4. Creditors, and 5. Human resources. These factors are more controllable
in nature compared to the remote environment. This is a benefit for Nordstrom, or any firms
conducting this analysis, because this enables Nordstrom to be more proactive rather than

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reactive when it comes to address factors that can improve market share and increase
profitability (Pearce & Robinson, 2015).
Competitive Position
Competitive position is fairly strong for Nordstrom, shown by the increase in revenue of
7.8% from 2013 to 2014 (Nordstrom, Inc., 2014). They continue to steadily increase their
revenue over time which continues to keep them competitive in their market.
Location and age of facility
Nordstrom has a total of 323 stores throughout the US and recently expanded internationally by
opening stores in Canada. Considering the breadth of their locations they are able to reach a
large share of the market. They plan to continuously expand. In 2014 alone they opened 27
Nordstrom Rack stores and plan to open a total of 300 Nordstrom Rack stores by 2020.
Figure 3.1.3A: Competitive Position – Locations
 121 full-line stores | US and Canada
 194 Nordstrom Rack locations | Off-price fashion store
 Trunk Club Clubhouses | Men’s fashion retailer
 2 Jeffery Boutiques
 1 Clearance store
 Capability to serve customers in 96 counties through Nordstrom.com
Advertising and promotion effectiveness
Nordstrom does not have a prominent advertising and promotional strategy as far as
traditional promotion channels (i.e. TV and radio). Much of their advertising is accomplished
through “internet, magazines, store events and other media” (Nordstrom, Inc., 2014).
They do, however, create and are known for their outstanding customer service and customer
oriented approach when it comes to making their customers happy and increasing the amount of
return customers by doing so. They focus on customer service as their number one priority but

29. 28 | P a g e
they could benefit from extending their promotional activities to reach different market
segments, such as millennials.
Caliber of personnel
Nordstrom strives to hire the best, qualified employees. Nordstrom’s employees are
ultimately the ones who carry out and create the best customer service experience for their
customers but they have to be willing and know how to do that. According to Frobes.com writer
Micah Solomon (2014) they do that in two ways; 1. Empowering their employees and 2.
Providing their employees with high standards to follow to create the optimum customer
experience.
Nordstrom expects their employees to use their best judgement in situations with customers and
to do that Nordstrom knows they must empower their employees to make those decisions. This
creates trust and respect between the employee and the company and enhances the opportunity
for the employee to do their job the best they can.
Employees cannot be expected to do everything right, according to Nordstrom’s standards,
which is why employees are given a set of guidelines and standards that are clear and precise on
how a Nordstrom customer should be treated. These two initiative together, empowerment and
standards, are the recipe for success in Nordstrom customer service success.
Customer profiles
Nordstrom is typically thought of as an upscale, pricey department store. They continue
to modify this perception and do so by their Nordstrom Rack stores (off-price/discount) and the
launch of Nordstromrack.com and additional acquisitions such as HauteLook.com (men, woman
and kids apparel) and Trunk Club (men’s apparel).

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Suppliers
Nordstrom has strong relationships with their suppliers through clear communication and
well we-define supplier guidelines, policies and expectations through their Supplier Compliance
document. Nordstrom prides themselves on these good relationships and must keep them
positive in order to maintain exceptional product at a reasonable price.
A way Nordstrom creates differentiation in regards to their suppliers is through a Supplier
Diversity program. This program was launched in 1989 and is Nordstrom’s way of establishing
progressive relationships with diverse-owned businesses. Through this program Nordstrom
enlists vendors to provide merchandise, supplies and services through all parts of the
company. This program was created to provide opportunity to these diverse-owned businesses
while encouraging economic growth of the communities they serve (Nordstrom Inc., 2015).
Creditors
Nordstrom’s relationship with their creditors is positive since their net sales continue to
increase year over year with a 7.8% increase since 2013. However, they did have a slight
decrease in the earnings before interest and income taxes (EBIT) by 2% since 2013. Before
2014 Nordstrom’s EBIT had continued to increase slightly since 2010 (Nordstrom, Inc., 2014).
The decrease in 2014 should not be something to be overly concerned about but should be
followed to make sure trends do not start falling in a negative direction.
Human Resources
According to the Nordstrom 2014 Annual Report, they had approximately 67,000 full-
time and part-time employees. This number fluctuates between 68,000 – 73,500 depending on
seasonality in the months of July and December, respectively (Nordstrom, Inc., 2014). These

31. 30 | P a g e
numbers are considerably higher than 2013 whereas they has 62,500 full-time and part-time
employees and ranged from 64,500 – 66,000 in their busier months (Nordstrom, Inc., 2013).
It would suggest that the increase in employment rate correlates with the number of stores
Nordstrom opened in 2013 – 2014. It also suggests that there is a positive correlation between
the increase in the number of employees and the reputation of the company. Nordstrom is a
well-known brand and because of that is able to leverage their brand equity while searching for
favorably qualified employees for the company.
Nordstrom’s employees are all non-union and they believe their relationship with their
employees are good (Nordstrom, Inc., 2014).
3.2 Internal Environment Analysis
3.2.1 Internal Environment Analysis: Resource-Based View
The resource-based view is “a method of analyzing and identifying a firm’s strategic
advantages based on examining its distinct combination of assets, skills, capabilities and
intangibles as an organization” (Pearce & Robinson, 2015) In Figure 3.2.1 we will examine the
tangible and intangible assets and determine how Nordstrom has turned those into organizational
capabilities.
Figure 3.2.1: Resource-Based View
Tangible Assets
 Real estate
o Property plant/equipment
o Brick and mortar retail locations
 Equipment
 Inventory
 Employees
 Online presence with a variety of acquired online
retailers
 Cash and cash equivalents equal $827 million in 2014
(Nordstrom, Inc., 2014)

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Intangible Assets
 Outstanding customer service
 Culture
 Positive brand equity
 Organizational morale
 Business methodologies
 100% non-union employees
 Positive relationships with suppliers
Organizational Capabilities
 Nordstrom is continuing to leverage their online market
with Nordstromrack.com, Trunk Club and HauteLook.
These channels continue to reach a younger
demographic compared to their full-line stores. This is
the market in which Nordstrom should be
concentrating on to maintain positive growth rates in
market share and increases in net sales.
 Through their rewards program they offer store credit
cards. The Nordstrom private label card can be used
at any Nordstrom location or online entity, such as
Nordstromrack.com. They also offer two Nordstrom
Visa® credit cards and debit card which can be used
for Nordstrom purchases. Attached to these credit
cards is a loyalty program in which their customer
accrue points based on the amount they spend.
(Nordstrom, Inc., 2014)
 Nordstrom also has a unique relationship and recruits
suppliers through their Supplier Diversity Program.
This provides Nordstrom with a competitive advantage
in the market to have unique inventory/merchandise
and to ensure they are providing additional opportunity
to diverse-owned business.
3.2.2 Internal Environment Analysis: Value Chain Analysis
Figure 3.2.1: Value Chain Analysis
Inputs Conversion
 Raw Materials (clothing, Shoes, Accessories
and other inventory)
 Human Resources (sales staff, managers,
online sales staff, shipping and receiving
personal)
 Money and Capital (Shareholder
investments)
 Customers
 Processes (customers service and sales)
 Systems (cash registers, online ordering
systems, and inventory management
systems)
 Human Skills and Abilities (sales staff and
customer service)

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Environment Outputs
 Satisfied Customers
 Potential Customers
 Suppliers of Apparel
 Greater Population pool to choose from for
employees
 Competitors (Macy’s, JCPenney, TJ Maxx,
Marshall's, Dillards)
 Quality Apparel
 Great Reputation
 Satisfied Customers
 Satisfied Employees
 Satisfied Shareholders
3.2.3 Internal Environment Analysis: Current vs. Past Performance
The company has shown signs of decline. In the early 1990’s Nordstrom struggled to
appeal to a wide range of consumers and in an effort to change their brand and include a younger
crowd they were unsuccessful. They ended up just alienating the older generations which had
been a loyal customer base for many years. To fix this management abandoned the new
‘redefine yourself” campaign that was aimed to include 20 something year olds to shop at a store
that was viewed as too formal and too expensive.
Nordstrom had also seen a decline during this time period because of their lack to adjust
to new and useful technology. They had always been behind when it came to internet literacy
and sales but they also used an archaic POS system, they were unable to inspire quick change
among all branches because of the co presidency that was established in the early 1990’s. This
Co-presidency made it nearly impossible for effective and efficient communication to be spread
as a result it took Nordstrom entirely too long to update the POS system to something that was
beneficial to the company. To combat these inefficiencies management split up the co-
presidency and re networked and upgraded technology company wide.
Nordstrom has been fairly consistent, unlike many others in the same market, with their
overall strategy over time. Nordstrom seems to take the approach that if it is working, and
working well, why change things. This is evident in that their overall philosophy on which the

34. 33 | P a g e
entire organization is built upon is provide excellent customer service. It is really as simple as
that, and it works for them. The decision-making model that best characterizes the way
Nordstrom makes decisions is defined by the “Rational Model,”
Figure 3.2.3.
Being one of the most simple of the models it makes sense
that this is the model most utilized by Nordstrom. It goes along
with their general philosophy of picking a general core
competency, excellent customer service, and do it really well. It’s
really the reason people like to shop at Nordstrom - the excellent
shopping experience.
3.2.4 Internal Environment Analysis: Nordstrom’s Resource Competencies vs. Competitors
Similar to Nordstrom competitors and quite frankly any entity that wants to compete,
Nordstrom has adapted and utilized available technologies in day to day business operations.
Technological resources that once gave competitive advantage to the organizations with the
latest and greatest no longer have the same impact. In previous years, specifically from the 1990s
to 2014 Nordstrom has been an industry leader due to innovative breakthroughs combined with a
series of investments. Many of Nordstrom’s competitors have trailed behind mimicking their
actions. Most recent years unveiled Nordstrom’s key resource competencies enabling the
organization to prevail over its competitors. In its continuous process of establishing new
channels the organization has maintained complete integration through all channels. Regardless
of changes required for ongoing success; Nordstrom continuously ensures employees are further
empowered. Easy and immediate accessibility to resources has allowed employees to better serve
Figure 3.2.3: Rational Model

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customers. Nordstrom has integrated all scopes of operations so well it is difficult to copy, thus
creating an intangible asset. Ultimately establishing a resource competency competitors are
unable to compete with.
3.2.5 Internal Environment Analysis: Analysis of Industry Success Determinants
Figure 3.2.5: Industry Success Determinants
Threats of new entrants
 Threat is low in terms of brick and mortar.
 Nordstrom has exclusive products, it would be very difficult
for new entrants to establish exclusive licensing power.
 Retailers have already established long term relations with
suppliers.
Threats of substitute
products
 Retailers that offer products at cheaper prices or “knock off
brands”
 Increase preference in online shopping
 Consumer chooses to buy from designer store rather than
Nordstrom.
Bargaining power of
consumers and
suppliers
 Consumer power is moderate, because Nordstrom is known
for providing great customer service consumers are willing to
pay more for desired product(s).
 Ongoing shit into e commerce will continue creating more
consumer power.
 Nordstrom also matches price with competitors.
 Supplier power is moderate, because of the limited specialty
retailers in the market.
 It is necessary to have certain products in stores which allows
suppliers to have some negotiating power.
Company long term
objectives
 Providing superior customer service, going above and
beyond what competitors do.
 Selling designer clothing at fair and reasonable prices.
 Continues to remain the focus point regardless of internal and
external factors.
Technological
advantage
 All new processes add to the value chain, focused around the
employees satisfying customer needs and customers easily
accessing inventory whenever needed.
 Free shipping and returns
 Mobile shopping apps, providing real time inventory
information.

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 24/7 access to Nordstrom.com
Customer Loyalty
 Has established an image over the years.
-Customers know the quality of products, the service provided
and the ease in the overall shopping environment.
3.2.6 Internal Environment Analysis: Financial Health Analysis
Figure 3.2.6: Financial Health Analysis
Ratios and
Working
Capital
2010 2011 2012 2013 2014 Interpretation
Liquidity:
Current
2.57 2.16 2.82 1.01 1.87 The company has become less
operationally liquid and more
leveraged in operations.
Quick 2.05 1.71 1.67 1.45 1.25 From the data we see the company
has become less liquid over time
minus inventory.
Leverage:
Debt-
assets
.37 .43 .39 .36 .34 Reveals the ratio of total debt to
total assets, another liquidity ratio.
Assets are 66% greater than
assets.
Debt-equity 1.38 1.86 1.64 1.5 1.28 Debt is the predominant source of
financing for the company.
Activity:
Asset
turnover
1.41 1.38 1.36 1.47 1.51 The company turns over assets 1
½ times last year. Relatively more
efficiently last year.
Fixed asset
ratio:
Inventory
turnover
4.67 5.07 5.37 5.56 5.56 The company turned over total
inventory 5.56 times last year.
Becoming more efficient over the
years.
Accounts
receivable
turnover
4.34 4.78 5.36 5.84 5.82 The company turned over AR 5.82
times last year. There is a trend
increasing the ability for the
company to fulfill AR.
Average
collection
period
84.13 76.41 68.10 62.53 62.67 Average collection tool 62.67 days
last year, overall decreasing from
past four years. It has been greatly
reduced within four years.
Profitability:
ROI
13.48 15.46 14.65 15.67 16.28 Last year investment returned
16.28%

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ROE 31.70 34.12 34.35 37.99 36.76 Last equity financing returned
36.76%. A trend in the increase of
return is noted.
3.3 SWOT Analysis
Figure 3.3: SWOT Analysis
Strengths Weaknesses
 Brand equity
 Typical customer base is moderately
affluent
 Good penetration in the market
through multiple online channels
 Product portfolio
 Outstanding customer service
 Current has over 300 stores
(including Nordstrom Rack and full-
line stores)
o Nordstrom.com,
Nordstromrack.com,
HauteLook, Jeffrey Boutiques
and Trunk Club (Weishaar)
 Strong management
 Digitally savvy
o Providing customers with a
strong mobile platform to
shop and buy and
continuance of providing
customers with new features
faster
 Ability to expand internationally into
Canada
 Perceived to be for more affluent
target markets
 Nordstrom Rack, a lower cost
alternative, could compromise
Nordstrom’s bran equity
 Perceived as outdated
 Does not appeal to the millennial
generation
 High turnover for their frontline
employees
Opportunities Threats
 Increases in minimum wage
requirements
 Financial leverage
 New products
 International emerging markets
 Increased marketing efforts
 Consumer are more willing to spend
with the increase of disposable
income
 Social media usage and interaction
 Smartphone/Mobile development
 New entrants
 Decreased need for brick and
mortar locations
 Security threats on firm’s systems
and customer information
 Existing competitors
 Shifting customer preferences
 Social media interaction of
customers

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3.4 Mission Statement Analysis
Given our internal and external analysis, we believe Nordstrom’s mission is appropriate.
Their mission is “to provide outstanding service, one customer at a time.”
Internal
Nordstrom’s customer service is perfectly aligned with their mission. They have a
reputation for their amazing customer service. They offer free shipping, free returns, in store
amenities, one-to-one service and are accessible no matter where their customers are with their
up-to-date apps and online presence. They recruit heavily through innovative means such as
social media and are focused on keeping with trends and hiring tech first people.
External
Nordstrom’s focus on customer service allows them to have customer intimacy; to be
close enough to their customers to understand how to meet their needs as trends change. They
are able to stay up to date with social, political, and technological trends and in doing so give
better customer service.
3.5 Generic Strategy Analysis
Nordstrom uses their goal to be the best at customer service in the fashion retailer’s
market as their generic strategy. They focus on customer satisfaction. This strategy allows them
to differentiate themselves, use cost leadership and rapid response to grow profits.

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Differentiation
Nordstrom differentiates itself by offering superior customer satisfaction. In order to offer
a high level of service to their customers, Nordstrom has taken an initiative to create a company
culture that is employee driven. This focus on the front lines allows them to offer superior
services. This year Nordstrom was listed in Forbes Top One Hundred places to
work. Companies that landed on Forbes’ list of top one hundred places to work saw profits
increase on average of 22.2% (Bio, 2014). Through the empowerment of their employees to
create their own clientele and rewarding them for it, Nordstrom has created an entrepreneurial
culture and has seen profits rise because of it (Son, 2015). This profitable retail environment that
Nordstrom has created comes from their unique recruitment strategy. Outstanding service comes
from company culture and outstanding employees. Nordstrom uses social media techniques to
market to potential employees keeping corporate brand identity top of mind and due to their
understanding that e-commerce is important; they started marketing directly to tech talent
(Bevegni, 2015). This helped lead to Internet sales at Nordstrom.com accruing one third of their
net sales growth.
In addition to offering their customers excellent customer service through free shipping
free returns, and unlimited return policy Nordstrom has in store amenities and offers one to one
service.
Cost Leadership
Nordstrom‘s size allows them to have competitive prices. They order larger quantities of
product, which allows them to pay lesser amounts than smaller companies. This economy of

40. 39 | P a g e
scale allows Nordstrom to be competitive through their cost leadership and makes it harder for
potential competitors to enter the market. In addition to lower cost due to their margins they also
offer price matching to the consumer. The introduction of Nordstrom Rack has allowed them to
offer lower prices on select items and target different and younger demographics.
Rapid Response
As stated previous, Nordstrom markets directly to tech focused potential employees in
order stay competitive through technology. The emphasis that Nordstrom puts on being at the
forefront of online sales and their customer service allow them to have high rapid response rates.
Their technological presence allows them to receive and ship customers’ orders efficiently. Their
customer service allows them to be very responsive to their customer’s needs and trends.
Market Focus
Nordstrom focuses on their target demographics but not on a particular niche. Their size
allows them the luxury of having a larger market to sell to.
3.6 Long-term Objectives Analysis
Long-Term Objectives
Now we will review Nordstrom’s long-term objectives and summarize each in figure 3.6:
1. Technological
2. Profitability
3. National Expansion
4. International Expansion

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Figure 3.6: Long-term Objectives
Technological Leadership
Nordstrom looks to improve their customer experience through the use of new
technology. Currently, Nordstrom uses their online store, mobile app, and location based
technological features in order to drive sales (Tierney, 2015). This objective possesses many
qualities to be successful. It is flexible given the new and different technologies they have
introduced. Improvements in technology can be small or large and this scale allows them to be
either and still be positive. It is measurable. By looking at the sales numbers and how they
correlate directly to sales from the website, app or any other new technology, it is easy to
measure the effectiveness of the new technology. E-commerce accounts for 19% of
Nordstrom’s total sales (Brohan, E-commerce for Nordstrom accounts for 19% of total sales:
Internet Retailer, 2015). Since the driver behind this objective is to enhance the customer
experience, it suits the company’s mission. It is easy to understand and easy to motivate
employees to reach this objective, especially, because Nordstrom employs tech specific people.
Profitability
Nordstrom has a goal of $20 billion by 2020 (Tierney, 2015). This objective is measurable and
generally has some flexibility. Although Nordstrom has increased profits every year ($9.7 billion
and in 2011 and $13.51 billion in 2015) is expanding nationally and internationally, this objective
is still high. It is easy to understand this objective and it suits the company’s mission. Given
how employee driven Nordstrom is, their creative incentive programs should still motivate their
employees to reach this objective.
National expansion
Nordstrom plans on opening twenty-four stores by 2018. This objective is understandable,
suitable and carries the characteristic to motivate in regards to new employees. One example of
a store opening in the US shows Nordstrom’s objective to social responsibility. Before it opens
its doors, the store will host a gala to benefit Ronald McDonald House Charities and the United
Way (Gores, 2015).
International Expansion
Nordstrom plans to open six new stores and introduce Nordstrom Rack in Canada by
2017. This objective gives measurable numbers, is easy to understand and suits the
company’s mission. It also allows the company to follow their objective of employee
development. Although these stores are in a new country it is still key to follow the company’s
standard of excellent employee engagement.
3.7 Grand Strategy Analysis
Nordstrom’s main grand strategies include Market Development, Concentric
diversification, Product development, and Strategic Alliances.

42. 41 | P a g e
Figure 3.7: Grand Strategy
Market Development
Nordstrom has expanded internationally into Canada, planning to have 6 locations by Spring
of 2017. Each location will be opened roughly six months apart from each other. This is done
intentionally so that the company can learn about the Canadian market and fine-tune their
approach. Nordstrom has also acquired multiple online retailers in order to expand their
market share on different channels. Nordstrom Rack locations are expanding in the United
States in order to attract millennials.
Concentric Diversification
Nordstrom has invested heavily in e-commerce by acquiring online retailers. Bonobos,
Shoefitr, Trunk Club, and HauteLook have been purchased by Nordstrom so that the
company can have more channels for customers to shop.
Product Development
Nordstrom has new styles and products seasonally. Offering customers new clothes as soon
as new styles are developed. The new styles are high quality, making it difficult for substitutes
to compete.
Innovation
Nordstrom is coming up coming up with new ways for customers to shop online, in-store, or a
combination of the two. This includes new user-friendly ways to shop online as well as ways
to shop in-store more efficiently. Nordstrom is trying smart fitting rooms, which is a digital way
to shop in the dressing room. Designers are constantly coming up with new products and
styles for customers of Nordstrom (Wahba, 2015).
Vertical Integration
Nordstrom is opening up its third distribution center in Pennsylvania. The goal is to make
online order deliveries faster. Instead of relying on typical mail carriers such as FedEx or
UPS, Nordstrom has decided to take the delivery process into their own hands. (Wahba,
2014)
Horizontal Integration
Recycling programs and energy saving programs are expanding regionally in order to meet
the company's sustainability goals, as well as saving costs productively. (Corporate Social
Responsibility Report, 2014)
Strategic Alliances
Certain brands are only offered at Nordstrom. This gives the company a competitive
advantage over other department stores. A few in-house brands include Caslon, Nordstrom
Collection, and Classiques. Nordstrom also teams up with other companies to help offset
emissions and promote recycled material in clothing lines.
Based off the grand strategy selection matrix, Nordstrom is utilizing quadrant III and IV
since the company is maximizing their strengths internally and externally. With Nordstrom’s
mergers with HauteLook, Trunk Club, and Shoefitr, they have created concentric diversification.

43. 42 | P a g e
Market Development is being internally created by expansion of off-price locations, international
expansion, and e-commerce expansion.
3.8 Short-Term Objectives Analysis
Short-term objectives assist the company’s long-term objectives. Short-term objectives
are the current activities implemented to achieve future goals. Long term objectives include
productivity, profitability, competitive position, employee development, employee relations,
technology leadership, and social responsibility.
Figure 3.8: Short Term Objective Analysis
Short-Term Activities Long-Term Objectives
Within the next year Nordstrom plans on opening 19
stores in the United States and Canada.
 Competitive Position
 Profitability
Store openings in Canada have been separated roughly by 6
months. By taking time to open each location the company
can better understand their new market and train new
employees. (Levine-Weinberg, 2014)
 Employee Development
 Employee Relations
Recycled material is used in catalogs, shopping bags and
receipts. Cut down on energy, gas, and water use - offset
carbon emissions by 50%. (Corporate Social Responsibility
Report, 2014)
 Productivity
 Profitability
 Social Responsibility
Acquire multiple online retailers in order to increase
shopping channels and market share. (Beath, Ross,
Sebastian, 2015)
 Competitive Position
 Technology Leadership
Opening more Nordstrom Rack’s to appeal to
millennials. Off-price stores are more appealing to
younger consumers but eventually the company
expects millennials to shop in full line stores as they
age. Off-price stores have the opportunity to sell older
inventory and are more profitable per square foot.
 Competitive Position
 Profitability
 Productivity
Employee retention is being worked on, hope to lower
the employee turnover rate.
 Productivity
 Employee Relations

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3.9 Functional Tactics Analysis
Figure 3.9: Functional Tactics
Short-Term Activities Functional Tactics
Within the next year Nordstrom plans on
opening 19 stores in the United States and
Canada.
 Operational/Sustainability
 Marketing
 Financials
Store openings in Canada have been separated
roughly by 6 months. By taking time to open each
location the company can better understand their
new market and train new employees. (Levine-
Weinberg, 2014)
 Human Resource Management
 Research and Development
Recycled material is used in catalogs, shopping
bags and receipts. Cut down on energy, gas, and
water usage. Offset carbon emissions by 50%.
(Corporate Social Responsibility Report, 2014)
 Operational/Sustainability
Acquire multiple online retailers in order to
increase shopping channels and market
share. (Beath, Ross, Sebastian, 2015)
 Marketing
 Financials
Opening more Nordstrom Rack’s to appeal to
millennials. Off-price stores are more
appealing to younger consumers but
eventually the company expects millennials to
shop in full line stores as they age. Off-price
stores have the opportunity to sell older
inventory and are more profitable per square
foot.
 Marketing
 Financials
 Research and Development
Employee retention is being worked on, hope
to lower the employee turnover rate.
 Human Resources Management
3.10 Analysis of Policies Aiding Strategy Execution
Figure 3.10: Policy Analysis
Strategy Policy Execution

45. 44 | P a g e
Great customer service
(Differentiation)
 100% return policy
 Returns acceptable to any store
 Employees will provide Excessive
product knowledge and
recommendations
 Free minor alterations
 Friendly and customer oriented sales
staff
Outlet Store Positioning
(Cost leadership)
 Nordstrom Rack will provide options for
discount buyers
 Value exposure to bring in value
customers and introduce them to high-
end stores
Millennial Market Share Growth
(Focus)
 Omnichannel presence
 Breadth of brand exposure
 “Space” concept, in-store shops
featuring young rotating young fresh
designers
Omnichannel Presence
(Differentiation)
 Curbside pickup provides a new
convenience to shoppers (Anderson,
2015)
 “text-to-shop”, mobile shopping service
helps shoppers navigate store inventor
 In-store inventory assessable online
provides shoppers with a better
understanding of store inventory (Lutz,
2014)
Variable Strategy Adaptation
(Differentiation, Focus)
 Management will address old strategies
and create new ones on a regular basis,
avoiding fixed strategies (Farvaro, 2013)
 Conduct market intelligence analysis of
key industry trends (consumers,
competitors, technology) that inform key
decisions and long-term strategy
 Develop compelling materials that
effectively communicate
insights/strategies and influence
decision-making within Nordstrom
 Provide analytical and execution support
to key marketing initiatives including
financial model development,
communication of strategic relevance
and execution required for potential

46. 45 | P a g e
strategic opportunities (Velvet Jobs,
2015)
Policies regarding “great customer service” are appropriate, they have thus excited these
policies so well that Nordstrom’s reputation is based on these principal strategies. They are great
for image and customer retention.
Additionally, Nordstrom rack has successfully introduced value-oriented customers to its
brand as well as young customers. Policies regarding millennial customers such as the
introduction of its Omnichannel presence as well as discount outlets like Nordstrom Rack have
proven to provide a more interactive and convenient method for millennials to familiarize
themselves with the Nordstrom brand and reputation as well as obtain significant revenues from
this demographic. Furthermore, omnichannel policies have proven successful to all
demographics, as Nordstrom has proven to be a market leader and trendsetter by allowing all in-
store inventory to be accessible online, with industry competitors replicating the same policies.
Variable strategy policies have allowed for the creation of Nordstrom’s Omnichannel
presence, innovation in the entire industry as well as the ability to be flexible with changes in the
industry and overall environment.

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3.11 Structure, Cultural, and Leadership Analysis
Figure 3.11: Structure, Cultural, and Leadership Analysis
Bonus Type Actual Bonus Description Rational Shortcomings
Restricted
stock awards
$4,644,656.34 Shares given to
executives who
are prohibited
from selling them
for a specific time
period. May
include
performance
restrictions.
Promotes longer
executive tenure
than other forms
of compensation.
Biggest
shortcomings
regard the fact
that third and
fourth
generation
founding family
members make
up a
substantial
amount of the
executive
body.
Security
Options
$3,634,948.44 Right to purchase
stock in the future
at a price set
now.
Compensation is
determined by
“spread” between
option price and
exercise price
A lucrative bonus
which ties
employee’s
immediate
performance to
pay.
Shortcomings
include
employee’s
disregard for
long-term
outcomes and
lack of
incentive to
stay with the
firm.
Non-equity
compensation
$4,442,714.76 Cash/monetary
compensation
including
retirement and
other insurance
benefits.
Liquid
compensation
which
encourages
quick results tied
to short-term
performance.
Employees
may be
encouraged to
act irrationally
to business
ethics and
company
standards in
order to
achieve short-
term goals.
(Morningstar, 2015)
At Nordstrom, executive bonus compensation may become a hot subject of lower level
employee and investor scrutiny. This is due to a substantial number of founding family members
compromising the executive body (Loeb, 2015). The current structure is highly susceptible to

48. 47 | P a g e
nepotism which would not only cause unrest with investors but in addition may disrupt internal
operations and employee morale. Fortunately Nordstrom has positioned its executive bonus
compensation plan to primarily tie long-term performance to compensation. The majority of its
compensation plan is made up of restricted stock awards. With this plan executives are
encouraged to stay longer in the company and long-term performance is the primary determinant
of pay. What should be noted here is that non-equity compensation is the second largest segment
of executive bonuses, just barely falling short of the restricted stock awards segment. This form
of compensation, being highly liquid in nature, does not sit well with investors due to
employee’s immediate behavior in achieving these awards, which generally consists of irrational
behavior with disregard to long-term performance and client/employee retention.
3.11.1 Structure, Cultural, and Leadership Analysis: Structure, Culture, and the Environment
Nordstrom’s environment, strategy, culture and structure are completely based on the
customer experience. Their strategy is to offer exceptional customer service. This idea is echoed
through all facets of the company. The business structure that Nordstrom uses is an inverted
pyramid. The customers and front-line employed on the top and the CEO on the bottom. John W.
Nordstrom stated that when starting Nordstrom he wanted “to provide exceptional service,
selection, quality and value” (Nordstrom, 2015).
This idea is used by the current CEO, Blake Nordstrom to the front line employees and
has been the focal point of the culture at Nordstrom. This culture has led to the company
empowering their employees with a sense of entrepreneurship. As stated in section 3.5, these
employees are highly recruited for all company positions in order to find those that are the right
fit and will promote the company’s strategy of customer service and their number one rule to use

49. 48 | P a g e
good judgment. Ultimately, Nordstrom’s environment, strategy, culture, and structure all
revolve around one main focus; to give excellent customer service. This, when added to the
strategic leadership practices that are based on this goal gives them their competitive advantage.
Their ability to have all personnel focused on customer service from the top down, gives them
the advantage of understanding their customers’ needs and knowing how to best fill them.
3.11.2 Structure, Cultural, and Leadership Analysis: Strategic Leadership
Nordstrom has lead the retail industry through various different strategies recently;
however, its key strategy has obviously been differentiation. Eric, Peter, and Blake Nordstrom
have recently changed the vision of buy addressing new aspects of its strategic intent (Loeb,
2015). Historically Nordstrom has differentiated itself with outstanding customer service but
with the Nordstrom family taking control of key executive positions within the last ten years we
have seen Nordstrom redefine its differentiation strategy by being the first in its industry to
create an Omnichannel presence to aid its differentiation strategy. By doing so it has become a
market mover in its strategy with its competition recreating the same policies and strategies.
3.12 Strategic Controls Analysis
Now we will evaluate the strategic controls of Nordstrom. “Strategic control is
concerned with tracking a strategy as it is being implemented, detecting problems or changes in
its underlying premises, and making necessary adjustments” (Pearce & Robinson, 2015).
Surveys, as a strategic control, has positively measured Nordstrom’s customer service and the
level of customer satisfaction their customers are receiving (Timberlake, 2011).

50. 49 | P a g e
During a time in 1995 the company was handled off to John Whitacre, who was the first
person that was nonfamily to run the business. During that time he completely changed the
image of Nordstrom with various marketing campaigns that were not in line with Nordstrom’s
original mission. In 2000 two of the Nordstrom brothers were given the company and were able
to again focus their attention on the customer and not gimmicky marketing campaigns. They
improved outdated inventory management systems and started engaging each other to create new
a fresh ideas that would ultimately lead to Nordstrom’s success today (Timberlake, 2011). By
addressing the tainted image of Nordstrom at one time the new leaders had to employ strategic
controls in order to get Nordstrom back on its feet.
As each company should intelligently enforce strategic surveillance other company’s
wanted in on the successes of Nordstrom and how they connected with their customer. They
would personally surveillance Nordstrom to see what they were doing for their customers that
made it a unique experience. It all boiled down to customer service (Timberlake, 2011).
Nordstrom clearly implements strategic surveillance and this is apparent by them expanding into
the markets of ecommerce and analyzing trends to see how they can continue to grow their
existing and new channels, their omnichannel. They will have to continue to do this as to stay a
leading competitor in their upscale fashion industry.

51. 50 | P a g e
3.13 Executive Compensation Analysis
Figure 3.13: Executive Compensation
Bonus Type Actual Bonus Description Rational Shortcomings
Restricted
stock awards
$4,644,656.34 Shares given to
executives who
are prohibited
from selling them
for a specific time
period. May
include
performance
restrictions.
Promotes longer
executive tenure
than other forms
of compensation.
Biggest
shortcomings
regard the fact
that third and
fourth
generation
founding family
members make
up a
substantial
amount of the
executive
body.
Security
Options
$3,634,948.44 Right to purchase
stock in the future
at a price set
now.
Compensation is
determined by
“spread” between
option price and
exercise price
A lucrative bonus
which ties
employee’s
immediate
performance to
pay.
Shortcomings
include
employee’s
disregard for
long-term
outcomes and
lack of
incentive to
stay with the
firm.
Non-equity
compensation
$4,442,714.76 Cash/monetary
compensation
including
retirement and
other insurance
benefits.
Liquid
compensation
which
encourages
quick results tied
to short-term
performance.
Employees
may be
encouraged to
act irrationally
to business
ethics and
company
standards in
order to
achieve short-
term goals.
At Nordstrom, executive bonus compensation may become a hot subject of lower level
employee and investor scrutiny. This is due to a substantial number of founding family members
compromising the executive body (Loeb, 2015). The current structure is highly susceptible to

52. 51 | P a g e
nepotism which would not only cause unrest with investors but in addition may disrupt internal
operations and employee morale. Fortunately Nordstrom has positioned its executive bonus
compensation plan to primarily tie long-term performance to compensation. The majority of its
compensation plan is made up of restricted stock awards. With this plan executives are
encouraged to stay longer in the company and long-term performance is the primary determinant
of pay. What should be noted here is that non-equity compensation is the second largest segment
of executive bonuses, just barely falling short of the restricted stock awards segment. This form
of compensation, being highly liquid in nature, does not sit well with investors due to
employee’s immediate behavior in achieving these awards, which generally consists of irrational
behavior with disregard to long-term performance and client/employee retention.
3.14 Innovation and Entrepreneurial Analysis
Curbside Pickup
Curbside pickup is seen as an add-on to the company’s ever-expanding omnichannel
presence in high-end retail. This extension allows for customers to purchase their products either
through mobile or internet medians and pick up the products outside the store at the customer’s
convenience. This approach is seen as expanding on Nordstrom’s amazing customer service
reputation which has distinguished the company from the rest of the competition through the
years.
Text-to-Shop
Text-to-shop, a mobile service which allows customers to locate and purchase store
inventory through the customer’s mobile device is attempting to address several different short
and long-term goals of Nordstrom’s including increasing its younger demographic base due to
millennials reliance on mobile devices, further developing its omnichannel presence through

53. 52 | P a g e
merging in-store and online retail processes, and expanding on customer convenience and
service.
Sale of Credit Department
The sale of the credit department has not only allowed for Nordstrom’s credit base to be
managed by a third-party but also allows for the expansion into Canada to be partnered by an
American-Canadian bank which specializes in both territories. This has also freed up enough
cash for investor compensation through dividend growth and earnings-per-share (EPS). Because
of the freed up capital, Nordstrom can continue to innovate as well as continue its product
acquisition route.
“Space” Concept
The “Space” concept basically creates a store within a store experience by creating small
units within the store space featuring rotating collections of various young and fresh designers.
This new feature is meant to attract the millennial segment by maintaining a young and relevant
appeal, thus connecting to the younger demographic and increasing millennial market share
exposure.

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Section 4: Consulting Report with Recommendations
4.1 Summary of the External and Internal Environment’s Analysis
Figure 4.1.1: External Environment Major Insights
Key Opportunities Key Threats
Remote Environment
 Unemployment rate decreasing since
2010 (U.S.)
 Unemployment rate decreasing since
2009 (Canada)
 Availability of credit
Industry Environment
 Global warming
 Urbanization
 Increased expectation to be sustainable
Social
 Baby boomers
 Advantages of many social media users
 Not getting married
Political
 Pollution
 War
 Changes in minimum wages
Technological
 Alternative energy/Innovative renewable
 Advantages of increased use of
smartphones/mobile devices
Economic/Social/Technological
 Declined use of brick and mortar locations
 New competitors
 Security threats from hackers
Conclusion
Nordstrom’s external environment has many key opportunities for the firm to use its advantages
to grow. Advancements in the internet and technology are changing the way customers shop,
such as smartphones and tablets. Customers don’t need a laptop that requires a Wi-Fi to shop
online. They can shop online from wherever they are from their mobile devices. Nordstrom’s key
threats are the expectations of everything becoming sustainable and always the risk of losing
customers information.
Further information can be found in the following Figure: Section 3.1

55. 54 | P a g e
4.1.2 Summary of the External and Internal Environment’s Analysis: Internal Analysis Summary
Figure 4.1.2: Internal Environment Major Insights
Key Strengths Key Weaknesses
 Outstanding Customer Service
 Strong Brand Equity
 Over 300 Stores in the Nation
 Strong Management
 Good Penetration in the Market
 Product Portfolio
 The potential of Nordstrom Rack could
compromise Nordstrom’s brand equity
 Not attractive to the millennial generation
 Lack of international market share
Conclusions
Nordstrom’s internal environment, it displays main strengths as well as weaknesses. Above
mentioned strengths and weaknesses are affecting Nordstrom’s long-term objectives. The key
strengths Nordstrom is known for is the great customer service they provide. Other strengths
including: hundreds of stores in the U.S. and strong management in the company. The key
weaknesses Nordstrom has is the lack of attracting the millennial generation, the potential of
Nordstrom Rack could compromise Nordstrom’s brand equity and the lack of expansion in the
international market share.
4.2 Mission Statement Recommendations
As their mission, Nordstrom strives to deliver best customer service possible (Nordstrom Inc.
10K, 2014). Although, there is not an exact wording on Nordstrom’s mission statement, it falls
within constraints of Joh W. Nordstrom’s founding philosophy, to “offer the customer the best
possible service, selection, quality and value” (Nordstrom, 2015) Nordstrom’s mission served the
company well for many decades, partially due to it being broad while still identifying the scope –
exceptional customer service. For that reason, it is not suggested to make any changes to
company’s mission, but to identify its location and its wording more clearly.
4.3 Generic Strategy
Nordstrom is beating every other retail stores, the company shares gained 110% in 5
years. The Nordstrom is in a great position and have a bright future as well. Nordstrom’s
successes are due to key points:

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1. Great Customer Service: Throughout their history, Nordstrom provided some of the
best customer services in the industry.
2. The Outlet Business: Nordstrom Rack gave the company exposure to a completely
different customer who is all about value.
3. Emphasizing Omnichannel: Nordstrom made it possible to buy clothes through
Instagram.
4. Reaching Young Customers: Nordstrom Rack opened the door for younger customers
to step in the Nordstrom high quality products for affordable prices.
However, one of the strengths that could be improved is the reaching the younger
customers. Nordstrom is known for its expensive, great quality products. Nordstrom is trying to
reach the younger customers through their Nordstrom Rack, the outlet version of the Nordstrom.
Nordstrom Rack do offer great quality products for discounted prices, however the products are
from last year, where the fashion is out of style. Younger customers want what is trending at the
moment, not what was hot a year ago. Nordstrom acquired Trunk Club, an online store, you sign
up and take style survey to find out what clothes are the best for the customer. Then the stylist
will handpick the products that the customer chose in the survey and the customer can review the
products before it shipped. Once the customer gets the products, he has 10 days to try it on and
keep what he liked and return what he didn’t. The customer only pays for the clothes he keeps
and the shipping is free on both ways. Acquiring Trunk Club does help Nordstrom with
connecting the male customers, however there are few issues that Trunk Club doesn’t solve.
1. Trunk Club is not sold at the Nordstrom store. People like to try on clothes before they
buy it and to see how it looks on them. Every brand’s sizing isn’t always the same and
Trunk Club sells about 100 different brands.

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2. Trunk Club only reaches men within the targeted demographic.
What Nordstrom needs is to horizontal acquisition on a company that does decent quality
products but also for an affordable prices for both male and female. The store has to also
represent Nordstrom, so it can’t be just a very cheap price and poor quality products. The
store/line should use:
 Differentiation: because the products are designed to appeal younger (new) customers
with special sensitivity for a particular product (trending) attribute. The Nordstrom will
attempt to build customer loyalty and which will translates into a firm’s ability to shift
younger customers to eventually convert into the premium price products.
 Speed-Based Strategies: Nordstrom has to understand the target market (younger
customers) and make the trending products fast so it doesn’t become fast version of
Nordstrom Rack but still late. The products has to be available to when the demand is
high and accelerating new-products improvement and development, quick at adjusting
any production processes and needs make decision quicker.
The store like Express would be a nice fit. Express isn’t cheap but they do offer many discounts
and the products usually goes on sale fast and most importantly, they follow what style is
trending at the moment. Once, Nordstrom acquires the affordable store for the younger
customers, Nordstrom needs the advertise that. When it comes to Positioning in marketing,
Nordstrom is the expensive retail where the younger customer don’t even think about it.
Acquiring stores such as Express would also mean getting their customers as well. The brand
should be located at the Nordstrom so the younger customers will also convert into the higher
quality products eventually.
Citation

58. 57 | P a g e
Nordstrom's Simple Strategy For Beating Everyone Else In Retail. (2014, October 8). Retrieved
November 15, 2015,
Gallagher, B. (2014, February 3). The 10 Lamest Department Stores in America - 8. Nordstrom Rack.
Retrieved November 15, 2015,
Abrams, R. (2014, July 30). Nordstrom Buying a Website for Men’s Wear. Retrieved November 9, 2015,
4.4 Long-term Objectives, Grand Strategies, Short-Term Objectives, and Action Plans
Figure 4.4A: Formulation Plan
Long-Term
Objectives
Grand
Strategies
Short-Term
Objectives
Functional
Tactics
Time
Frame
Who’s in
Charge
Profitability:
Revenue goal
of $20 billion
by 2020. This
will be
achievedby
technological
improvement,
and expansion
both
domestically
and
internationally
(Tierney,
2015)
Market
Development
Opening19
storesinthe
UnitedStates
and 2 in
Canada.
Fine-tuning
market
approach in
Canada by
openingstores
roughly6
monthsapart.
(Levine-
Weinberg,
2014)
Target the best
store locations
for best
shopping
traffic.
Strategized
buyingout
failingSears’s
locationsin
Canada. Secur
edreal estate
inmallsthat
generate 50%
more salesper
square foot
than inthe U.S.
September
2015 – June
2017
Eric Nordstrom
KennethJ.
Worzel,
Executive Vice
Presidentof
Strategyand
Development
Market
Directorof
Canada
locations
Productivity:
Expandingto
300
Nordstrom
Rack locations
inthe United
Statesby
2020;
appealingto
younger
Market
Development
with
Competitive
Position
Reach 230 Rack
locationsby
2016.
Expand
NordstromRack
online
inventory
choices,off-
price inventory
ishard to
predictwith
Researchand
developmore
efficientways
to offeroff-
price inventory
online faster.
August
2015 -
November
2016
OliviaKim,
Directorof
Creative
Projects
GeeryS.K.
Thomas,
Presidentof
Nordstrom
Rack

59. 58 | P a g e
millennialsand
increasing
inventory
turnover
trends.
(Wahba,2015)
Competitive
Position:
Expansionine-
commerce
offersmultiple
channelsto
shop,by 2020
the company
will invest$4.3
billionine-
commerce.
(Wahba,2015)
Purchase of
delivery
facilitieswill
speedup
online orders.
Concentric
Diversification
with Vertical
Integration
Online
shoppingwill
have 2-day
deliveries
(Wahba,2015)
Use social
mediatolink
the online and
offline shopping
worlds(Loeb,
2014)
Openupa new
distribution
centerin
Pennsylvaniato
cut down
deliverytime
Popularitems
on Pinterest
will be
displayedand
featuredin
stores.
October
2015 –
February
2017
Michael Sato,
Executive Vice
Presidentof
SupplyChain
Brian Saltzman,
Executive Vice
Presidentof
User
Experience and
Optimization
Employee
Development:
Expansionin
the US,
Canada,and
PuertoRico
will require
outstanding
trainingand
hiringof new
personnel.
Concentrated
Growth
Hire 1,000
employeesin
Canada
Buildmore
personalized
relationships
withcustomers
and employees
(Clay,2012)
Recruitand
hire the
employeesthat
are most
passionate
aboutfashion
Train
employeesto
use mobile
devicesto
checkout
customers
anywhere on
the floor,
quicklycheck
inventory,and
notifyclients
aboutnew
products.
September
2015 –
December
2016
Christine
Deputy,Vice
Presidentof
Human
Resources
Human
Resource
managersin
Canada and
PuertoRico