Nordstrom Company faces the problem of high level of costs, competition of foreign companies, and unconsidered geographical location of some of its stalls. High Costs The high costs incurred by Nordstrom Company are caused by the high level of customer satisfaction the company provides. However, the exceptional services that Nordstrom provides come at an extra cost.
This increases product prices or has to cut short the profits that the company would have otherwise made on its returns. Competition of Foreign Companies Increase in the number of foreign companies has been a challenge too. Though these companies offer few customer services in comparison to Nordstrom, they offer cheaper commodities due to the lower cost they incur. This becomes a challenge to Nordstrom since most clients would rather opt for low cost and few services than paying for services that are not necessary. Geographical Location of Stalls Location is a key factor in planning a business.
Nordstrom has some multiple stores ocated in a given geographical area. Although this increases sales made in such areas, it is undoubted that the sales would be higher if the stalls were in different geographical areas. Problem StatementThe problem of high cost incurred by companies has been in existence since the humankind started to manufacture commodities. It is the desire of every manufacturer and businessperson to cut costs on services or products. This desire has been the cause of innovations and creativity.
Nordstrom has a culture of exceptional customer services that has been its pivotal point of reference ever since John W. Nordstrom founded it. Those were times when services were a treasure to customers. However, the changing economy has resulted into a different notion where customers would rather prefer a cheaper commodity with few services accompanied than an expensive product with exceptional services. This has led to Nordstrom currently experiencing fewer sales than initially due to the high cost of services it offers.
It is, therefore, unavoidable that Nordstrom has to cut its costs of customer services that it provides. However, the problem needs caution as any deterioration of services would erode its culture thus losing more customers than expected. Journal article: Nordstrom Buys Online Sale Site Nordstrom bought on online site, HauteLook Inc., in a move aimed at improving its strength on the online market. Due to the current advancements in technology and economy constrains, many companies opt to increase their markets to global levels without necessarily establishing branches globally.
This makes online sales the most efficient and economical sale. At a value of $270, Nordstrom’s acquisition of HauteLook Inc was a radical step that would see an increase of its sales on the global market (Dodes, 2011).The online market not only increases sales volume but also establishes permanent customer relations. Members sign in as customers thus restricting any chances of clients to buy items in a different company at any given time in the future. This article also helped in the advertisement of the online move in general.
Buying of HauteLook increased Nordstrom’s sales to 25% more than the previous year’s sales (Dodes, 2011) thus indicating substantial increase in sales. This is an indicator of a positive move in Nordstrom business.