Case Study: Nordstrom Takes Retail Relief for Test Data Management
Nordstrom-Strategic Management
-
Upload
marianapardalmonteiro -
Category
Business
-
view
9.328 -
download
0
description
Transcript of Nordstrom-Strategic Management
Dissension in the Ranks?
Mariana P.Monteiro | Joana R.Santos | João Ildefonso
Company’s Background
1901- Founded by John W.Nordstrom
Family Business Shoes
1989- Nation’s leading speciality retailer Apparel Shoes Acessories
59 Department Stores, 6 states
20 years of uninterrupted earnings growth;
Highest profit margins in the Industry;
National Retail Merchants Association Gold Medal
2
Background
Comission system
CompetitiveAdvantage
Comp. pratices
Pros & Cons
Legal Implications
Competitive Advantage
Nordstrom Management philosophy: “Offer the customer the best in service, selection, quality and value”
Source of Competitive Advantage:
Superior Customer Service
Decentralized system
Product availabilityNordstrom ImageCustomer loyalty Lofty sales
Sales clerks: “Heroics”; “Nordies”
Extraordinary services Higher salaries Promotion possibilities
3
Background
Comission system
CompetitiveAdvantage
Comp. pratices
Pros & Cons
Legal Implications
Competitive Advantage- Nordstrom vs. Competitors
4
Nordstrom Inc. Stock price ( 1988-2000) vs. Macy’s Inc. Stock price ( 1992-1999)
Norstrom Inc.1990 stock price $5,2175
Norstrom Inc.1992 stock price $10,375Macy’s Inc.1992 stock price $6,6875
Source: http://www.google.com/finance
Norstrom Inc.1990 stock price $10,438
Background
Comission system
CompetitiveAdvantage
Comp. pratices
Pros & Cons
Legal Implications
Competitive Advantage-Current situation
Source: http://retailsails.com/monthly-sales-summary
Nordstrom’s annual sales
Macy’s annual sales
Background
Comission system
CompetitiveAdvantage
Comp. pratices
Pros & Cons
Legal Implications
Management Strategy - Commission System
High-service strategy Incentive compensation system (SPH)
SPH Target = (SALES – MERCHANDISE RETURNED)
Nº HOURS WORKED
Actual SPH >Target SPH 6,75% to 10% commision on net sales Failure to meet target SPH Base hourly wage ($9)
More and better working hours
Less working hours Termination
Incentive to work off the clock rather than report all hours
6
Background
Comission system
CompetitiveAdvantage
Comp. pratices
Pros & Cons
Legal Implications
Example : A sales clerk who works 50 hours/week; weekly sales of $8000
a)If hours reported= 40, SPH= $200 Weekly earnings= $540
b) If hours reported= 50, SPH= $160 Weekly earnings= $587,25
Lower SPH reduces clerk’s ranking among peers
Fewer scheduled hoursWorse shifts
Management Strategy - Commission System
7
Different payments for low performers vs. highBackground
Comission system
CompetitiveAdvantage
Comp. pratices
Pros & Cons
Legal Implications
Management Strategy – Complementary practices
8
Motivational Methods
Sales contests
Group recognition (praise letters read aloud)
Honor: “Customer service All-Stars”(Discounts + efforts documented)
Employees’ ability to track their performances
Background
Comission system
CompetitiveAdvantage
Comp. pratices
Pros & Cons
Legal Implications
9
Sales Force Management - Pros & Cons
Background
Comission system
CompetitiveAdvantage
Comp. pratices
Pros & Cons
Legal Implications
Sales Force Management - Pros & Cons
10
Pros
Freedom to make decisions ( decision-making responsibility)
Objectiveness of the sales clerks’ contributionfor the company
“Customer service All-stars”
Opportunities for rapid advancement
Background
Comission system
CompetitiveAdvantage
Comp. pratices
Pros & Cons
Legal Implications
11
Cons
Preverse incentive
Disloyal competition“sharking”
Contraditory pressure
“Selling/Non-selling” work time Extra selling hours affect SPH negatively
Equal emphasis to service, profitability and mini-managerial autonomy
“Sharking”: stealing credit for sales made by other staff
Working off the clock. Violating state and federal fair labor standard laws.
Sales Force Management - Pros & Cons
Background
Comission system
CompetitiveAdvantage
Comp. pratices
Pros & Cons
Legal Implications
Legal implications and new system procedures
Nordstrom policies and compensation systems became target of:
› Employee complaints› Union allegations› Law suits› Regulatory orders
Strong presence of the Union in Washington
UFCW Local 1001
New procedures
›Back-pay fund › New company pay policies› Sign-out sheets
12
Background
Comission system
CompetitiveAdvantage
Comp. pratices
Pros & Cons
Legal Implications
Dissension in the Ranks?
Mariana P.Monteiro | Joana R.Santos | João Ildefonso
THANK YOU!