Running head: COMAPARE AND CONTRAST OF WALMART AND NORDSTROM 1

Compare and contrast the strategic management of Walmart and Nordstrom

COMAPARE AND CONTRAST OF WALMART AND NORDSTROM 2

Introduction

Walmart is the worlds largest retailer that specializes in being low-cost provider

and operate over 4150 retail facilities globally. Similarly, Nordstrom is a leading fashion

specialty retailer that offer high brand clothing, shoes and accessories for men, women and

children. It committed to provide customer with best possible service and improve it every day.

Comparison of mission statement

The mission statement is the essential tools that explain the purpose of existence in order

to give the company its own identity (Tankovi, 2013). Mission also explain about the business

culture the company will have. For example, the company wants to give message that it is safe

or environmentally friendly where its worker gets motivated, supervisors creates innovation,

provide superior product. Then its mission statement looks like: Using the highest industry

standards for safety, our motivated and innovative work force will mine (Roach, 2009).

Therefore, mission statement is not made by one person, instead it is derived through team

process that include executives, top-level management of the organization, employees and if

required a third-party consultant. It acts as communication tools to conveys an organizations

policies, procedures, plans and strategies, thereby guiding the behaviors and decisions of

management and subordinates (Rajasekar, 2013).

The mission statements of Wal-Mart and Nordstrom:

Walmarts mission statement: Saving people money so they can live better.

This mission statement conveys messages that Walmart follows cost leadership strategy.

The company providing quality product at low prices that the people can buy more product what

they need at one place, and live higher standard of living through saving money.
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Nordstroms mission statement: To provide outstanding service every day, one customer at a

time.

It focuses on differentiation strategy. They assume customer have best possible service,

selection, quality and valuable product and pay reason amount for the product. To do this, the

company has trained employee in practical ways to execute this mission. They are encouraging

to trust one anothers integrity and use own good judgement on the job. The managers are

encouraged to empower and support their subordinates.

According to Azizi & Makizadeh (2014), the criteria for evaluation of mission statement for

Walmart and Nordstrom are as follows:

Information In Wal-Mart's Vision In Nordstrom's Vision

Focus on Customer Yes Yes

Product/Service Yes Yes

Market Yes Yes

Technology Yes No

Focus on survival No Yes

Philosophy Yes Yes

Self-concept Yes Yes

Concern for public image No No

Concern for employees No Yes

Total 6/9 7/9

Explanation of these information is given below

Focus on Customer:
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Walmarts and Nordstroms mission statement gives importance to customer welfare. Walmart

offers product at lower price for similar product to save customer money. Likewise, Nordstrom

provide quality product that make customer feel their own family product.

Product and services:

The company had contract with good manufacturing company that provide quality product.

The employees in Walmart store always welcome customer and provide the detailed about the

product the customer want if it is necessary. For examples, men, women or children clothing.

On the other hand, the Nordstrom provide what type of fashion is available in market and what

cloth suit them. Its staff always welcome to serve help if their customer need help.

Market:

Walmart current focus to brick and mortar strategy customer to gain its competitive advantages.

They also implement online business but they didnt give it more importance because they lack

technical skills to compete with Amazon.com. However, the company is planning to do

aggressive online business in future. Whereas, Nordstrom also applied same strategy as

Walmart. It gives more importance on brick and mortar and less in click and mortar strategy.

Technology:

Nordstrom doesnot gives more importance to technology. Walmart has implemented supply

chain management systems to ensure to proper flow of inventory in its warehouse from

suppliers. It has implemented global satellite software that send automatically information about

stock that finished from stock once customer purchase. Thus, Suppliers fulfill empty stock. It

has reduced operating cost of inventory system that Walmart have (Basker, 2007).

Focus on survival:
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From the mission statement, we predict that Walmart strategy is low cost providers. From it we

assume that a company achieves profit in short run and fail to sustain in the long run. Whereas,

Nordstrom concern on differentiation strategy to provide excellence customer services to

customer. The rivalry has difficult to copy Nordstrom strategy and provides sustainable

competitive advantages though it doesnot have profit in short run.

Philosophies:

Both companies have illustrated its philosophies in its mission statement. Walmart provide low

cost provider. Whereas, Nordstrom gives value to provide excellent customer services.

Self-concept:

Walmart illustrate self-concept through low cost provider strategy. They perceive they can

attract customer through charging low prices as compare to rivalry industries. This strategy has

made Walmart to become number one store all over the world. On the other hand, Nordstroms

illustrate that they have loyal customer through providing excellence customer services.

Concern for public image:

Both company fails to represent that they are socially responsible company through

mission statement. The company should not importance to environment where they do business.

They have only focus to two pillar of sustainability: economic and society. Both company didnt

explain what they are doing to protect environment.

Concern for employees:

Walmart did not include any benefit about employees. However, Nordstrom illustrate

about importance of employees. They are giving training to believe among each-other and

provide good quality of customer services with whom the employees dealing. The manager is

encouraging to support and empower employees (What is Nordstrom's mission statement).

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Expectation of customer experience:

The customer is fully satisfied while shopping to Walmart retails store. The customer

getting all variety of items in one place. The customer who visit retails store by their own

personal vehicles are getting free parking spaces as much as they shop in the retail store.

On the other hand, Nordstrom illustrate they provide better excellence service to

customer in the mission statement. From this statement, we can predict customer are better treat

in Nordstrom as compare to Walmart.

Price points and positioning

Walmart:

Walmart works on theme: everyday low prices. It sending the messages that they are

providing their product at low prices to all customer who visit Walmart stores. So, they assume

they can attract customer from this strategy and doesnot need any promotions activities such as

advertisement (Only Walmart: 2016 Annual Report, 2016). Walmart deal contract with best

manufacturing that provide good quality of product at low prices at large bulk and maintain

operating cost of the organization and gains reasonable revenue from daily operations. Such

successful management makes Walmart to become biggest retailer globally.

Some researcher believed that technology and large scale buying behavior of Walmarts

is the core competitive advantages over its rivals. Walmart had implemented bar code reader

that operate through retail link software. It traces the product transaction; it means the decrease

of inventory stock and send to supplier to fulfill empty stock. It had reduced half of labor costs

and lower its operating costs than other retailers. This cost advantages had helped Walmart to

expand than its competitors. The prices range different of Walmart from its competitors start

from 8 to 27 percent discount (Baskar, 2007). However, after the end of recession, the Walmart
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losing its market share, the competitors such as Kroger Co., Costco Wholesale Crop gaining its

market share. Increase in dollar stores and other discounters, Walmart facing ever more

competition on prices to retain market in US market. The Walmart have given pressure to

supplier to cut prices and stick its goal Everyday low prices (Ziobro & NG, 2015).

Concern to Walmarts employee, low prices strategy doesnot benefit them. To compete

with low cost strategy, Walmart pay low wages that its employee can buy product in Walmart.

The high earning people can only buy necessary good at Walmart. The employee earn wages

from Walmart cant fulfill family needs such as healthcare, housing, and transportation costs

(Bernstein & Bivens, 2006). The fulltime employee of Walmart makes around $10.11 which

72% less than Costco pay i.e. $17 an hour (Cascio, 2006) that is not sufficient for earning living.

Nordstrom:

Nordstrom focus on differentiation strategy in order to charge premium value. The

company has provided excellence customer service that people dont believe. Nordstrom

salesclerk even replace worn shoes your wear which bought from Nordstrom. The Nordstrom

department store chain thrives on stories about its service heroics, such as employee dropping off

orders at customers homes or warming up cars while customers spend a little more time

shopping (Kotler & Armstrong).

Like Nordstrom, competitors such as Macys, Dillards, Neiman Marcus and Saks special

in high-end fashion retailer. As we know Nordstrom is well recognized by many customers for

excellence customer service. So, many competitors also follow Nordstrom by consistently

accepting service as a growth strategy (Investopedia, 2015). As compare to competitors,

Nordstrom has better inventory management that include inventory turnover ratio of 5.35. Its

competitors such as Neiman Marcus, Macys, Dillards and Kohls who provide luxury
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department store facilities has inventory turnover of 3.06, 3.08, 3.20 and 3.17 respectively

(Balley, 2015).

Nordstroms well respected its employees. It empowers employee to take their own

decision to deal with customer. Employees are free to treat customer the way they like to be

treat. The entire organizational culture of the Nordstrom is properly designed to provide

flexibility needed for employees to achieve organization mission statement. Employees are paid

according sales commission based. It means employees are paid through their ability in jobs.

Nordstrom also provide commission based compensation plan by providing a retirement. It is

based on profit share revenue to motivate and encourage employees to work better in the

organizations (Spector & McCarthy).

Customers are fully satisfied with company services. Nordstrom only target high class

people. They get good respect from employees, helps if need, replacement facilities. The

customer satisfaction is aligning with companys mission statement so, Nordstrom gaining

revenue less in short run but market data shows that Nordstrom will number one luxury fashion

retailer in the future if they fulfill excellence customer too in future (Spector & McCarthy).

Generic competitive strategies

From mission statement, we can easily predict that Walmart focus on low cost provider strategy

and Nordstrom focuses on differentiation strategy. The generic strategies in retail and online are

as follows: -

Retail Stores:

Walmart start as a small discount retailer in Rogers, Ark, USA, now opened thousands of

stores in the United States and expanded internationally. There are around 11500 retail units

under 63 banners in 28 countries (Our Story: Where in the world is Walmart). These all store
COMAPARE AND CONTRAST OF WALMART AND NORDSTROM 9

follow low cost provider. Walmart working hard in cutting prices for suppliers to benefits

customer by providing low price product (Ferguson, 2016).

Nordstrom pursue differentiation strategy by offering designer clothes, high priced and

personalized services to attract and hold customer (Gerorge & Jones, 2002). Nordstrom

empowering and giving responsibility to provide a fabulous customer experience to customer to

come in contact with Nordstrom (Ross, Beath, & Sebastian, 2015).

Online Stores

Walmart loss around $20 billion in market cap per day because of its business strategy to

invest more into its e-commerce operations. Walmart has been struggling for selling product on

online which market consume by Amazon.com. Walmart has been implementing loyalty

program for people who shop online (Mohammed, 2015).

Nordstrom following same strategy differentiation strategy like it did in retail store. The

company usually focus young working people who have less interested to visit store. The

company provide online stylist that serve service just like it done in stores (Loeb, 2014).

Bricks and Mortar Vs. Online stores

Both Walmart and Nordstrom use different strategy between retail store and online stores

because people have more options to choose product and shift on online purchase. They can

evaluate product prices online within few minute on online purchase. However, People have less

time to visit different retail store to evaluate prices but they can power not visit if they found that

their purchase product has less quality of product and expensive than other competitors. In both

retail store, for example, Walmart has applied discount (cheap prices) in retail store and add one

facilities (loyalty program) in online store to compete with Amazon.com. Likewise, Nordstrom

gives excellence services in retail stores but applied alternatives strategy in online stores due to
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overcome certain barrier that makes difficult to communicate just like in face-to-face

communication.
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