Nordstrom, one of America's highly successful fashion retailers, was founded by Swedish immigrant John Nordstrom in 1901, starting with a single shoe store in Seattle. Right from the beginning, Nordstrom's business philosophy centered around delivering exceptional customer service, offering a diverse selection of quality products, and providing value for customers. These principles continue to define Nordstrom's identity today. In its modern form, Nordstrom has evolved into a fashion specialty chain with 240 stores across 31 states. In 2014, Nordstrom achieved nearly $12.5 billion in sales and consistently outperformed typical returns on invested capital, with a return on invested capital (ROIC) averaging in the mid-teens to low 20s. In 2014, it achieved a remarkable 16.3% ROIC, a strong performance for a retailer. Nordstrom specializes in serving a relatively affluent customer base seeking affordable luxury. Its stores, strategically located in upscale areas, boast lavish interiors that convey a sense of opulence and encourage customers to explore. Elements like live piano music contribute to an inviting atmosphere. Nordstrom's merchandise is known for its fashion-forward style and high quality. What truly sets Nordstrom apart from its competitors, however, is its renowned commitment to exceptional customer service. Nordstrom's salespeople are known for their professionalism, courtesy, and attentiveness to detail. They are carefully selected for their ability to engage with customers positively. During the hiring process, candidates are quizzed on their understanding of excellent customer service. Nordstrom goes the extra mile by offering thank-you cards, home deliveries, personal appointments, and access to personal shoppers. The company has a hassle-free returns policy, with no receipt required, firmly embracing the belief that the customer is always right. Nordstrom values its salespeople, compensating them well, providing attractive benefits, and offering commissions ranging from 6.75% to 10% based on the department. Exceptional salespeople at Nordstrom have the potential to earn over $100,000 annually, primarily through commissions. Nordstrom's customer service philosophy is deeply ingrained in the company's culture and organizational structure. The organizational chart is inverted, with salespeople at the top and the CEO at the bottom. CEO Blake Nordstrom emphasizes that his role is to ensure the success of the sales team, stating, "I work for them. My job is to make them as successful as possible." Nordstrom management frequently shares stories that underscore the paramount importance of customer service to reinforce this culture. For instance, there is a tale of a customer in Fairbanks, Alaska, who wanted to return two tires (an item Nordstrom does not sell) purchased from a previous store at the same location. A Nordstrom sales-clerk, committed to customer satisfaction, researched the tires' price and refunded the customer's money. Despite its focus on quality and luxury, Nordstrom does not neglect operational efficiency. The stores achieve impressive sales per square foot, averaging $400, even with their open-plan layouts. Inventory turnover has improved, exceeding 5 times per year, up from 3.5 times a decade ago, which is a noteworthy accomplishment for a high-end department store. Nordstrom's management consistently seeks ways to enhance both efficiency and customer service. Recently, they equipped 5,000 salespeople with mobile checkout devices, eliminating the need for customers to wait in checkout lines. Question 2: What actions taken at the functional level have enabled Nordstrom to successfully implement its strategy (2.5 Marks) Question 3: What is the source of Nordstroms long-term, sustainable competitive advantage? What valuable and rare resources does Nordstrom have that its rivals find difficult to imitate? (2.5 Marks) Question 4: Is Nordstrom organized for success? Give Reasons (2.5 Marks)