Company Analysis Essay on Nordstrom

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Carnegie Mellon University
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Nordstrom is a luxury retail store headquartered in the United States. Nordstrom began in 1901 as a shoe store in Seattle and has grown to 347 locations in the United States and Canada. We believe fashion is a business of optimism, and in that spirit we continue to grow and evolve. Of the 347 locations 123 are full-line shops, 215 are Nordstrom Rack, seven Trunk Club locations, two Jeffrey boutiques, and two clearance locations. Nordstrom Rack is more of a discounted version of the original Nordstrom and Trunk Club is a personal stylist branch. John Nordstrom partnered with shoemaker Carl Wallin to offer great service and a quality product to consumers.

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Within four years the company made $80,000, which is roughly the equivalent of more than $2,000,000 in todays market. 18 years later the two decided to open a second store since business was steadily growing; even through the Great Depression the shoe stores were thriving. Once Nordstrom and Wallin retired, they sold their shares to the sons of Nordstrom who then built the company into the largest independently owned shoe store in America. It wasnt until the 1960s that the Nordstrom brothers expanded the business into the beginnings of what we now know as Nordstrom. In todays world, consumers are very specific with what they want from a company, product, and service. While consumers dont expect companies to be perfect on product and service at the same time for continued business, Nordstrom identifies good products and service is their main goal. It is also something that all employees of the company strive towards. We want to bring Nordstrom to an untapped market like Dubai for continued growth.

The United Arab Emirates (UAE) economy is second only to Saudi Arabia in the Arab world worth an estimated $570 billion as of 2014. Dubai is the highest populated area of the UAE. Bringing Nordstrom to Dubai would continue to bring the hottest and latest fashions to other parts of the world. Dubai is known for its wealth and its taste in fine things, Nordstrom can bring that to almost all of the residents and not just the creme de la creme. There are several designer stores that would compete with Nordstrom, but those are mainly frequented by the richest of the rich. Nordstrom would provide luxury items at a lower cost to those who cannot afford or do not want to pay Prada, Burberry, or other top designer prices.

With a current population of around 2.7 million, and the high number of tourists found in Dubai, our customer base would not be limited to locals. Dubais strategic geographical location makes it the ideal getaway between the East and the West opening the door to target more than 10 million visitors yearly. Tourism numbers are up from 14.2 million in 2015 to 14.9 million visitors in 2016.Even though Nordstrom serves 96 countries with online shopping; this would be the first brick and mortar store outside North America. This would be a huge advantage to tourists who have purchased online and even bigger advantage to those who have not. This could see a huge increase in sales revenue for Nordstrom. As a team, we believe bringing Nordstrom to Dubai would help the brand that Nordstrom has created. This is an opportunity for domestic and worldwide growth. A full service Nordstrom department store in Dubai will also expand shopping to all members of the area plus the millions of tourists who like shopping while on vacation, but also dont want to break the bank by shopping at high-end retailers. Numbers have shown that Dubai is a country that is steadily increasing in popularity not only as a tourist destination, but also as a place for special events. Dubai is becoming a conference hub, hosting conferences on topics like forensic science and quinoa. This is in addition to the numerous sporting events being hosted there, the main one being the FIFA World Cup to be held in 2022. This falls under the tourism category, but it brings tourists who wouldnt normally go to Dubai for any other reason. With such a broad variety of consumers heading to Dubai, the horizons of potentially future Nordstrom locations abroad will broaden.

Nordstroms Strategic Management Analysis

The four major elements of international management are planning, organizing, leading, and controlling. Planning is the thought process of what a firm will do in order to gain market share. Arranging the firms assets to best fit planning objectives is organizing. The coordination and directing of firm activities and human resources is defined as leading. Finally, controlling is when plans are checked to ensure accuracy and completion. Of course there are many ways each of the elements is executed and there is no correct way for all of them. Some companies can choose best structures or culturally determined approaches when planning the firms objectives. As for leading, companies can go one of two routes, the democratic route or the autocratic route.

SWOT Analysis Why Other Retailers want to be Nordstrom

Along with the internal environment, analysis of the external environment is equally important. It describes the opportunities that the company has and what the barriers and threats for the company are. The external factors influence a firm's decision for direction, action, and the strategies it implies for the achievement of its objectives. A list of areas in which the firm can seek advantages is made, and threats that might affect the operations of the firm made clear. The firm then formulates countermeasures to avoid the incidence of risk. An organization's external opportunities refer to how an organization can improve its performance in the external environment and at the same time are competitive in the market. If utilized properly, opportunities offer a firm growth potential. In addition, uncovering threats or influential factors that have negative consequences on a firm is equally important through the proactive development of countermeasures to ensure minimize negative impacts on the firm. External threats have an adverse effect on an organizations goals to achieve higher performance and growth. They are a barrier to the path of development and seeking out opportunities. An organization must foresee these threats and formulate strategies to counter them. The International Management external environment of a firm consists of the home country, the host country, any 3rd country, and global venues. Since Nordstrom is planning to expand its operations to the Middle East Market in Dubai, the company must follow UAEs laws and regulations for the business there. The relationship between the host country (UAE) and home country (US) must be taken into account. Fortunately for Nordstrom, the countries share a good bond with each other. UAEs policies allow easy business setup in Dubai. Many companies have their businesses running over there. There would be a number of third countries involved in this expansion as businesses from those countries have also established themselves in Dubai. The political environment in Dubai is quite stable and business friendly. Since several similar businesses are already established in Dubai, Nordstrom is likely to face tough competition from them. The market of Dubai is highly stable and saturated; this will act as a boon and as a threat too. Nordstrom would have to market products, which are highly competitive, of high quality, and fulfills the need of the people buying there. Dubai is a hot destination for tourists around the world, so Nordstrom must consider global tastes and preferences in products. Opportunities in the international market occur when firms discover new markets and profitable ventures that can be made outside the home country. Other opportunities that can encourage firms to seek new markets are globalization of financial markets and incentives given by host countries to foreign investors. Some countries can offer companies incentives like certain tax breaks. International markets such as Dubai, represent huge opportunities for growth.

These foreign markets provide companies with an opportunity to sell their products at higher prices, which gives the companies larger profit margins than in the home country. These markets attract buyers from all around the world and offer a posh class of buyers to the companies. Certain markets provider cheaper raw materials and labor and the businesses can take advantage of this to increase their profits. With international trade, the businesses also have the option of selecting the best markets for sales and best markets for manufacturing or development of their products.

Globalization has paved the way for these international business operations, which has opened a great opportunity for businesses to grow and develop. A global economy is emerging owing to companies and countries expanding their operations through advancement in technology. People are also travelling to foreign countries more and cultures are being exchanged to form a shared global identity. This has created more opportunities in the foreign markets than in the domestic markets. International trade has significantly improved the world economy and provided an opportunity for the businesses to seek ideal markets for their operations.

If established and marketed properly, the company can realize greater profits in Dubai than in the domestic markets selling to people from all over the world that comprise the Dubai market. Also, Nordstrom can shift its manufacturing to China or India, which are not very far from Dubai, which will enable it to reduce production costs and improve the supply chain and inventory. China and India has one of the lowest labor rates in the world and fairly cheap raw materials and other supplies which will further reduce costs for Nordstrom.

Improving the technologies for the distribution channel will also help to manage their inventory better. Moreover, opening a store in Dubai will give Nordstrom an opportunity to gain higher economies of scale by distributing their products to China and India. With numerous companies and malls in Dubai offering easy shipping facility to and from China and India, these markets will be open to the store to operate in, extending the potential market reach it could earn. With no laws on company ownership, Dubai is highly attractive and friendly to foreign companies seeking to set up operations there. Their corporate tax rates and legal costs are also low, providing more opportunities for further reduction in costs. There is huge potential for faster growth from higher disposable income of locals, which also provides an opportunity for Nordstrom to market products at higher rates. If incorporated in a UAE free zone, Nordstrom will be capable of owning 100% of the company as an international investor. Free zones give business owners and investors access to ready-made-office, factories and warehouses with simple start-up and licensing procedures.

It is recommended to procure the services of a reputable consultancy for the incorporation of Dubais company, to ensure 100% ownership under Dubais complex company low. Nordstrom can also look for acquisitions of smaller companies in those markets wi...

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