Learning Team Peer Evaluation

Week Three Individual Assignment

External and Internal Analysis

Gomerex Linayao

University of Phoenix

WH12MBA01

STR/581

Claude Tolande

October 12, 2013

To create an effective strategic plan, a company should do a complete external and internal analysis; this is essential to the success of a business (Nickels & McHuge, 2013). An external analysis will assess how factors outside of the control of a company can affect the business. For instance, how do factors within the remote environment affect business? Companies can build their strategies verse external factors by knowing the internal. Some external factors may be a threat, others may be an opportunity, however if a company know their internal factors will enough they can build strategies against the external factors. The following will evaluate Nordstrom’s internal and external factors, including a complete analysis of the competition and organizational structure. Two environments will be assessed; the general environment and competitive. The general environment involves an assesment of economic, social, politcal, technological, and ecological factors affect Nordstroms business (Nickels & McHuge, 2013). The competitive environment will assess what competitors are a threat to Nordstroms. Are there substitute products? Porters five-forces will be used to assess the competitive enviroment. Key success factors will be an indication of effecacy.

External Environment Analysis

When conducting an external environmental anlysis, there are three factors managers must be aware of in the remote environment; industry, operating, and remote factors (Nickels & McHuge, 2013). Opportuities and threats are external factors that can affect a company’s bottom line postively or negatively, respectively. By knowing opportunities, management can potentially realize more profits. Threats should aslo be known, because these can result in the exact opposite; less profits or even worse, threaten a company’s future.

In assessing social, political, economic, and technological factors some are positive factors midde- upper class shoppers see Nordstroms as providing higher value in services and return policy (Nordstroms Inc., 2014). Provides opportunity for women; you’ll find the majority of their sales force to be women. The economony is improving and people are shoppiing providing Nordstroms the opportunity to expand its customer base. Another opportunity to expand customer base is that there are many more dual income families; men and women can be targeted alike. An overall higher standing of living generates more customers. The most important of external factors is Nordstroms new adavanced means of the checkout; it’s new point of sale service (MACNN Staff, 2011). Now, a customer can be checked out anywhere in the store Some negative factors include lack of targeting to minority groups. Some of these minority groups are growing. The dual income family could also be a negative factor as their might be less time to shop. Society is becoming more casual dress accepted; therfore the high end threads ae less in demand. May experience high invetory cost as customer tastes and styles/trends change rapidly.

Internal Analysis

An internal anaysis looks deeply into those things a company can control or build a strategy to mitigate. The best way to conduct an internal analysis is to conduct a SWOT analysis. The following is Nordstom’s SWOT:

Strengths:

· Brand is recognized as

· Strong public image- excellent customers support

· Loyal Customers

· Distribution channels

· 3 year double digit growth (The opinion leaders, 2013)

· Merchandise value and return policy

· Point of Sale technology’

· Nordstrom Credit – offers a rewards system

Weaknesses

· Lawsuits of discrimination (AP: Times Staff, 1992)

· No internal presence

· Family owns majority- could bring in family issues (Staff at Encyclopedia of Business, 2001)

· Huge inventory

· Price points

Opportunities

· Web- target untapped markets

· Go green- all major companies are making some effort to do so

· Lay-away- used to offer; could bring it back in certain regions (Funk, 1989)

· Increase adverstising

Threats

· Bloomingdales

· Lord & Taylor

· Neiman Marcus

· Saks Fifth Avenue

Competitive Assessment

To assess Nordstrom’s competitive possition and possibilities we must have tool to assess the status. Using Porters five forces that drive industry competition, industry competitiors and rivalries can be determined. The five forces are threat of new entrants, supplier power, threat of substitutes, buyer power, and competitive rivalry (Nickels & McHuge, 2013). . Although Nordstrom’s has a lot competition in women’s clothing we’ll assess these five factors to establish how Nordstrom’s has kep its success.

One advatange Nordstrom has is economies of scale. For new competitors to enter the market, it would be very expensive to carry even a quarter of the womes merchandise that Nordstrom’s provide. Unless, the competitor had major financial backing could it build up the economies of scles, even that is a risk because of brand recognition. Another advantage towards a new entrant is product differentation. While the new competitor may carry some of the same merchandise, Nordstroms’ product differentiator is its service. It took Nordstrom’s many years to build its reputation for service, therefore a new entrant would have to invest double the effort.

A threat of substitue is hard to determine for Nordstroms’. There are many places a customer could purchase apparel, shoes and accessories. However, lets remember that what is bought at Nordstrom’s is not only the product. Customers are also buying into the experience. They want to be treated special and are willing to invest a little more for this esperience.

Competitive rivalry is a risk for Nordstrom’s, especially in a down economony. Nordstrom’s strives to keep a upper middle class customers so lowering prices is a big risk, as this might offend some of it’s customer base. Nordstrom’s depends on its anniversary sale to offer a discount to its customers. This is a risky strategy as this of course occurs only once a year while competitors offer many sales throughout the year.

Success factors is hiring good peopl and keeping them employed (Nordstroms Inc., 2014). the flexibility to allow supervisors to create nordstroms style of custoemer support. Factors that go into the cutlture that builds this is through employees. Employees work at nordstoms because there is opportnity for growth, freedom- sales force feels their runnig their own businesses the customer feel served, the feeling that you are part of something big and meaningful and finally feeling valued. Builds its coporate structure; the inverted pyramid approach.

Corporate Structure and Performance

Nordstrom’s corporate structure is an inverted pyramid where customers are at the top, followed by employees, supervisors, middle managers, vice presidents, and finally CEO (Staff at Encyclopedia of Business, 2001). Nordstroms has impemented a division strategy was very profitable. Instead of keeping the company as a strcitly familty operated business, they branched the company out into many stores that are ran by general managers; general managers run the many stores instead of reporting in to the family. Store managers, in turn, are the critical decision makes for their respective stores. A strategy that has indirectly lead them to their current status of year after year double digit growth. (The opinion leaders, 2013). Multiple opportunities have presented themselves as a result of corporate’s strategy to focus on being a leader in superier customer experience and its expectation to be customers number one choice in retail. The opportunities that Nordstroms now needs to focus on are targeting different cultures, using technology to reach groups that may not have before. This in turn will allow the expansion of merchandise offered and a growth of online sales (The opinion leaders, 2013). Overall this stratefy is in lign with its’ corporate culture to focus its on providing outstanding service every day, one customer at a time (Staff at Encyclopedia of Business, 2001).

Conclusion

To remain in existence and then competitive, a company must have a focused strategy. That strategy must be reinforced from the top down, meaning eveyone in the company must practice. However, if the strategy is not focused or well defined, bad practices could be implemented then reinforced. Therefore to asses the strategy, it is best practice to evaluate the company’s mission or goal, and then develop a strategy that enforces the vision or meets the goal. The next five weeks will research how effective Nordstroms is as meeting is strategical plan.

AP: Times Staff. (1992, April 15). Second Suit Filed against Nordstrom. Retrieved July 13, 2013, from The Seattle Times: http://community.seattletimes.nwsource.com/archive/?date=19920415&slug=1486493

Funk, M. (1989, July 16). Nordstrom Cuts Layaway Service. Retrieved July 13, 2013, from Deseret News: http://www.deseretnews.com/article/55733/NORDSTROM-CUTS-LAYAWAY-SERVICE-AS-OTHER-UTAH-STORES-HOLD-FIRM.html?pg=all

MACNN Staff. (2011, May 12). Nordstrom testing iPOD Touch-based mobile POS systems. Retrieved July 13, 2013, from MACNN: http://www.macnn.com/articles/11/05/12/follows.gap.old.navy.others.in.testing/

McClave, J. T. (2013). Statistics for Business and Economics. Boston: Prentice Hall.

Nordstroms Inc. (2014, July). Company History. Retrieved July 5, 2013, from Nordstrom.com: http://shop.nordstrom.com/c/company-history

Staff at Encyclopedia of Business. (2001, July). Blake W. Nordstrom. Retrieved July 13, 2013, from Reference for Business: http://www.referenceforbusiness.com/biography/M-R/Nordstrom-Blake-W-1961.html

The opinion leaders. (2013, Feb 21). Nordstrom Management Discusses Q4 2012. Retrieved July 13, 2013, from Seeking Alpha: http://seekingalpha.com/article/1213731-nordstrom-management-discusses-q4-2012-results-earnings-call-transcript