Nordstrom Case Study

Nordstrom Case Study

1. What is the cause of the problems described in the case? How serious are the problems?

1.1 Cause of problems:

* Internal

1.1.1 Operation Level: a. Principal agent problems: Conflicts between Shareholder

(long-term objective) & manager(short-term objective); Conflicts between manager(profits) and sales people(promotion). b. The decentralization system of operations:There is a lack of control for the top management over the implementation of sales force management systems. Therefore, although some managers can obey the company regulation and management system very well, which can be shown by some satisfied employees’ feedbacks, there are also some managers did not enforce the the management system as what they should do, which can be shown by some employees’ dissatisfied comments and suits.

1.1.2 Policy/Culture:The employees are mostly new graduates, and they prefer to be promoted. / Nordstrom encourage a highly competitive company environment.

* External

-High competition from new entrance in the retail industry

-The nature of the retail industry: retail industry requires close interaction with customers. And sales people normally need to satisfy customer demands. Therefore, retail industry is very hard to standardize. For example: there are a lot of/various customer need coming up at any time. And the time needed to solve the same problem for a customer also varies a lot, which depends on salespeople and certain situations. Some people can make high sales in shorter time (high SPH) just because they are in the good time or they have easy customers. But others can not. This could be a reason why employees have negative feelings about their job. The uncertainty of sales may also lead the company let some low-efficient employees work off the clock to gain more customers. If Nordstrom pay for every minute those employees do for gaining customers, companies probably need to spend undeserved money for what the salespeople logically should do. And this could be a reason why some stores did not pay for the non-selling time, which can be seen as a penalty for those employees.

1.2 How serious?