Strategy Management of Wal-Mart and Nordstrom

Outline

Table of content

Mission statement

Wal-Mart: “Saving people money so they can live better.”

Nordstrom: “to provide outstanding services every day, one customer at a time”

Price Points & Positioning

Wal-Mart

• food retailers
• Low price point
• Selection/variety
• Poorer consumers shop regularly
• Local competitors and international competitors
• High volume
• Customer satisfaction

 

Nordstrom

• Fashion merchandise
• Quality services and higher price point
• Multi-channel
• Inventory management system-customer experience, digital capabilities
• Attracts wealthy customers whose average income is more than $100,000

 

Generic competitive strategy

Wal-Mart

• Cost leadership
• Selling point: low prices
• Low operating costs
• Efficiency operations
• High sales volume

Nordstrom

• Differentiation strategy-services, selection and quality, shoes accessories
• Latest fashions and great quality
• Multichannel
• Technological innovations
• Switching costs-online shipping, online inventory, price matching
• Information system
• E-commerce channel

 

Long-term Strategies for Growth and Sustainability

Wal-Mart

• IT investment
• Low prices and high convenience
• Technological improvement
• International expansion

 

Nordstrom

• Multichannel presence
• Online presence
• Superior customer services

 

Reference:

 

 

Mission statement

            Wal-Mart states that “saving people money so they can live better” (Whitaker, 2010).  The company ensures that customers save money and makes a difference in their life by accessing quality products at low prices. The board, management and employees are highly committed to ensure quality products at reasonable prices. In addition, the company helps the community live a better life through protecting the environment and following the environmental ethics. The company also values the health and safety of associates and communities; it ensures safety laws, policies and ethics in conducting operations. In order to achieve the mission, the company works for maximum efficiency through building a strong cooperation with manufacturers. Through cooperation, it improves efficiency in logistics and through the application of merchandise mix; the company is able to offer customers low prices (Whitaker, 2010).

 The mission statement of the Nordstrom Corporation is “to provide outstanding services every day, one customer at a time” (Spector & McCarthy, 2012). The founder of the company, John Nordstrom states that customers should be valued and offered the best services. The company puts much focus on product differentiation to achieve its mission of offering customer quality services and products, selection and fair prices. To achieve the mission, managers play an important role in motivating and empowering employees to show trustee, integrity, honest, and kind (Spector & McCarthy, 2012).

 

Price Points & Positioning

   It concentrates on providing high value products and services at low prices.  In addition, the company focus on key brands and cost control and this strategy creates customer impression and maintains the competitive edge in the market. Wal-Mart uses the strategy of cost leadership and this increases competitive advantages by ensuring that services and products are offered at the lowest prices. In the competitive market, Wal-Mart is the leading company in offering low prices.  It has main goals of proving its customers with quality products at low prices and achieving high profitability and return in investment (Clifton, Simmons & Ahmad, 2003). To achieve this, the company has effective operational management such as opening new stores in new regions and establishing new distribution. In Wal-Mart, customers are satisfied with the structure of the stores since there are clean, brands are relevant and it is easy to navigate. In addition, customers have a great experience by providing them with faster checkouts and services. Customers are provided with a great experience as they can now access online grocery where they can purchases variety of products (Clifton, Simmons & Ahmad, 2003). According to Pew survey in 2005, workers who earn less than $20,000 shop regularly than workers who earn $50,000. The company has a unique culture which values employees and focus on raising wages and training.  There is a strong relationship with employees and the company creates a culture where employees are motivated and allows them to develop a sense of belonging. For example, employees are known as ‘associates’ and the associates are connected with customers. The culture forms a family-orientated business and a customer-centric team (Clifton, Simmons & Ahmad, 2003).  Associates are highly engaged and this increases customer satisfaction by ensuring that customer get prices at a lower cost.

A big difference is seen when it comes to price and values since Nordstrom Company focus on offering quality product and services at higher prices. Nordstrom does not deal with competitors by offering low prices but it concentrates on customer services. It uses the omnichannel which ensures that customer in different locations can access all products they need (Spector & McCarthy, 2012).The company mainly focuses on premium prices and quality services.  For example, while customers are shopping in retail stores, employees offer services such as warming up cars. There is a strong relationship with employees. The latter are allowed making personal decision when it comes on customer interactions. The company has a unique culture where employees are provided with flexibility and other necessary resources needed in achieving the mission (Spector & McCarthy, 2012). Employees receive payment with respect to sales commission. However, they get commission compensation and share revenue. In addition, there is a strong relationship with customers where they are offered with quality services which meet satisfaction.

 

Generic competitive strategy

Wal-Mart uses the cost leadership as the generic strategy and this strategy is important as it helps the company offer goods and services at low prices (Hill & Jones, 2009). Price reductions are the main price point and technologies such IT promotes the cost reduction by ensuring efficient operations. Wal-Mart is able to deal with completive threats through offering low prices, low cost of distribution and efficient networks. In addition, the company has the ability to offer services like online purchases and store pick-up on sales channel. Having established international presence, it is expanding the scales which will lead to high sales volume and high revenue. People have different choice and some may opt to buy from bricks and mortals while others on online stores (Hill & Jones, 2009). Therefore, Wal-Mart and Nordstorm have different strategies to ensure that customers are satisfied on both retail stores and online stores. For example, Wal-Mart offers cheap prices to attract retail store customers and loyalty programs to attract online consumers (Hill & Jones, 2009).

 Nordstrom Company uses the differentiation strategy where it provides high end products and quality services. The company offers great customer services while competing with larger corporations in the world. It has the capability of reaching worldwide customers and ensures that all customers access quality products and services and that their expectations are met (Hill, Schilling & Jones, 2016). It believes that success is achieved through offering quality services, variety of selection, higher performance and fair price. These are achieved through hard work than other competitive companies. The company also believes that their goals are not to attain profits but to help other people achieve their goals. It has a strong culture where customers are valued and develops a sense of belonging the company has many customers with different preferences. To offer high-touch experience, technology is applied to ensure that customers access quality products at a fast and convenient way (Hill, Schilling & Jones, 2016. The company noticed that there is an evolving customer demands and to satisfy the demand, it ensures flexibility, productivity and IT. Nordstrom offers excellent services to satisfy the need for customer who purchase retail stores and alternative strategies to meet the needs of online consumers. In online stores, the company has mobile apps with visual search where customers can scan images and view the products. In bricks- and mortals, Nordstrom offers great services and develops outlet business which allows the company to reach millennial customers (Hill, Schilling & Jones, 2016).

 

Long-term Strategies for Growth and Sustainability

            To achieve growth and sustainability, Wal-Mart concentrates on meeting the demand of the evolving customer base through price and experience- where new ways to make customer delight are needed. In other words, it focuses on redefining ways in which customers will access products such as improving locations. In addition, the company focuses on managing capital, improving the performance through combining price, stock and merchants’ skills, increasing investment and maintaining the low prices in locations worldwide (HUSAIN, 2014). The cost leadership strategies enhance growth and sustainability in that it becomes highly competitive in market, thus establishing markets where it offers variety of product to different customers. The company has a growth opportunity due to its cost advantage and supply chain management. These will assist the business in expanding in geographic areas where it will offer services and increase revenue. However, political factor may affect growth and sustainability due to political instability and rules and regulation (HUSAIN, 2014).  In addition, economic factors such as high inflation will affect the due to high prices of products and services.

In future, Nordstrom will generate sustainable growth accompanied by high sales volume and market share, high workforce and high revenue. This is because; it is focusing on store expansion to compete with the evolving industries.  By 2020, the company wants to achieve $20 billion growth, and this will be achieved through advancing technology, improving supply chain, implementing cost saving initiatives and digital network (Spector & McCarthy, 2012). With these technologies, the growth will be sustainable.  The company does not concentrate on financial markets, real estate markets or high profit but its main concern is on customer service. All the same, profit is important but customer service is the first priority. Nordstrom has implemented new technology on brick-and-mortar and new functionality in marketplace. Customer is given great experiences where they can now access point-of-sale devices and full-line stores (Spector & McCarthy, 2012). In addition, customers have great online experience through the use of fit ratings, free shipping and mobile application. However, growth and sustainability in Nordstrom will be affected by government factors such as political instability, labor law and trade restrictions.

 

 

Reference

 

Hill, C. W. L., & Jones, G. R. (2009). Essentials of strategic management. Mason, OH: South-

Western/Cengage Learning.

 

Hill W.L. Charles., Schilling A. Mellisa & Jones R. Gareth. (2016). Strategic Management: Theory: An

Integrated Approach. Cengage Learning

 

Spector, R., & McCarthy, P. D. (2012). The Nordstrom way to customer service excellence: The handbook

for becoming the"Nordstrom" of your industry. Hoboken, N.J: Wiley.

 

Whitaker, K. (2010). Principles of software development leadership: Applying project management

principles to Agile software development. Boston, MA: Course Technology.

 

Clifton, R., Simmons, J., & Ahmad, S. (2003). Brands and branding. London: Profile Books.

 

HUSAIN, S. E. H. B. A. (2014). EMOTIONAL INTELLIGENCE FOR EMERGING LEADERS AND

ENTREPRENEURS - ILLUSTRATING THE FORTUNE GIANTS. S.l.: PARTRIDGE PUBLISHING.