Value proposition, CVP analysis, fixed costs, and opportunity costs Nordstrom, Inc. (http:/ /www.nordstrom.com) and Saks Fifth Avenue (http:/ /www.saksfifthavenue.com) are upscale retailers. Using the following sources, answer the questions below.
• Each company’s history reported on its web page (from “About Us” at the company’s home page, link to the company’s history).
• Statements of each company’s vision or mission.
• “Nordstrom Accelerates Plans to Straighten Out Business,” Wall Street Journal (October 19, 2001).
• “Nordstrom Regains Its Luster,” Wall Street Journal (August 19, 2004).
• “Struggling Saks Tries Alterations in Management,” Wall Street Journal (January 10, 2006). Required
(a) What is each company’s value proposition as defined in Chapter 2 of this textbook?
(b) What measures did Nordstrom take to reduce costs? How might these reductions affect Nordstrom’s ability to fulfill its value proposition?
(c) What fixed costs did Nordstrom incur in hopes of long-term benefits? Have these benefits been realized?
(d) How did Nordstrom’s efforts affect the cost–volume–profit elements of sales prices, variable costs, fixed costs, and volume of sales?
(e) How did each company attempt to expand its customer base and how successful were the efforts? Were any opportunity costs associated with Nordstrom’s “Reinvent Yourself” campaign or Saks Fifth Avenue’s “Wild about Cashmere” campaign?