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CASE DISCUSSION ANSWERS

AND
Course Code: MGT600
Course Title: Strategic Management
Section: 01

Prepared for:
Omar Faruq
Assistant Professor
Department of Business Administration

Prepared by:

Name Id
1. Md. Shariful Islam 2017-1-95-086
2. Mohammad Reaj Uddin 2017-2-91-004
3. Md. Safayet Islam Chowdhury 2017-3-95-095
4. Md. Mostafa Al Mahmud 2018-1-91-034

East West University


Date of submission: 12 April 2019.
CASE DISCUSSION ANSWERS
AMAZON.COM

1. What functional-level strategies has Amazon pursued to boost its efficiency?


Answer:
Functional level strategies can improve a company's ability to attain superior efficiency, quality,
innovation, and customer responsiveness by reducing costs and improving production by ways
such as economies of scale, learning effects, marketing strategies or efficient information
technologies.
To make its distribution centers work more efficiently, Amazon is embracing automation. In
2012 Amazon purchased Kiva, a leading manufacturer of robots that service warehouses.
Amazon used Kiva robots to automate the picking and packing processes in its distribution
centers to boost efficiency. This allowed Amazon to reduce the number of employees needed per
distribution center by 30 to 40%, and boosts productivity.

2. What functional-level strategies has Amazon pursued to boost its customer responsiveness?
Answer:
Amazon has always focused on customer responsiveness. Amazon has invested heavily in a large
network of distribution center to boost customer responsiveness. Over time, Amazon has also
become increasingly efficient and effective at managing inventory and running its growing
network of distribution centers. By opening more distribution centers and increasing the density
of its distribution network, Amazon is able to deliver products to customers more rapidly
(boosting customer satisfaction) and to do so at a lower cost. Amazon also uses a user-friendly
interface to make online shopping easier.
Taken together, these factors differentiate Amazon from its rivals in online and physical
retailing. The current strategy of automating much of the work at its distribution centers
promises to further boost employee productivity. All of this helps Amazon to achieve a low-cost
position. The company is also innovative, developing new products (the Kindle reader, digital
downloads of books) and services (Amazon Web Services) that are helping it to solidify its
customer responsiveness.
3. What does product quality mean for Amazon? What functional-level strategies has Amazon
pursued to boost its product quality?
Answer:
American Management guru Peter F. Drucker said, “Quality in a product or service is not what
the supplier puts in. It is what the customer gets out and is willing to pay for.” Quality for
Amazon would refer to the degree to which its products or services meet a customer's
expectations. Controlling the quality of products sold by third party merchants is a great
challenge of e-commerce retailers like Amazon.
Quality for amazon means improving quality as excellence: providing products by third party
merchant, that are not counterfeit, not damaged. Amazon pursued to boost its product quality by
emphasizing attributes associated with a product offering, such as ease of ordering, product
availability, and timely delivery
Amazon has implemented several strategies to increase its efficacy and customer responsiveness
to increase its overall product quality. These strategies include optimizing their picking and
packing processes by using robots to reduce the cost the customer pays. They also implemented
an easy to use user friendly interface to improve the customers’ online shopping experience .On
top of these things, Amazon offers customers just about everything they could need in one place
at low prices. These things combined with product innovation can increase Amazon’s perceived
quality to the customers.

4. How has innovation helped Amazon improve its efficiency, customer responsiveness, and
product quality?
Answer:
Innovation has allowed Amazon to offer its customers a wide array of digital media. Digital
media increases efficiency, customer responsiveness, and product quality.
Amazon offers customers a much wider selection of merchandise than they can find in a physical
store, and does so at a low price. The current innovation strategy of automating much of the
work at its distribution centers promises to further boost employee productivity. All of this helps
Amazon to achieve a low-cost position. The company is also innovative, developing new
products (the Kindle reader, digital downloads of books) and services (Amazon Web Services)
that are helping it to solidify its competitive advantage.
Innovation through expansion of its network of distribution centers, embracing automation, and
investing early in “cloud-based” infrastructure has helped Amazon improve its efficiency,
customer responsiveness, and product quality. Amazon has become the world’s largest retail,
with over 85 billion dollars in annual sales.

5. Do you think Amazon has any rare and valuable resources? In what value creation activities
are these resources located?
Answer:
Amazon’s “cloud-based” infrastructure, including server farms and Amazon Web services
(AWS), can be considered rare and valuable resources and value creation activity. Investing
early in “cloud-based” infrastructure has helped Amazon improve its efficiency, customer
responsiveness, and product quality. Amazon’s early investment in digitalization allowed them
to become leader in cloud computing industry. Amazon’ cloud-based infrastructure has created
novelty value. The server farms and AWS would both locate under the cloud-based
infrastructure. This infrastructure has allowed them to be a leader in the cloud computing
industry and has produced tremendous profits.

6. How sustainable is Amazon’s competitive position in the online retail business?


Answer:
Amazon has proved that it can use its perpetual innovation to respond to what customers want.
The company went from selling books to selling just about anything a shopper could want at low
costs through an easy to user-interface. Amazon has implemented several strategies to increase
its efficacy and customer responsiveness to increase its overall product quality. On top of these
things, Amazon offers customers just about everything they could need in one place at low
prices. These things combined with product innovation can increase Amazon’s perceived quality
to the customers. Investing early in “cloud-based” infrastructure has helped Amazon improve its
efficiency, customer responsiveness, and product quality. The company is also innovative,
developing new products (the Kindle reader, digital downloads of books) and services (Amazon
Web Services) that are helping it to solidify its competitive position in the online retail business.
CASE DISCUSSION ANSWERS
NORDSTROM

1. What is Nordstrom’s segmentation strategy? Who does it serve?


Answer:
The high-end retailer Nordstrom focuses on serving mid- to upper-income consumers who desire
fashionable high-quality merchandise. Nordstrom’s approach to business was to provide
exceptional customer service, selection, quality, and value. This approach is still the hallmark of
Nordstrom today.
Nordstrom is a niche company and focuses on a very specific group of customers. They provide
exceptional customer service, selection, quality and value to their customers. They chose to
focuses on a relatively affluent customer base that is looking for affordable luxury. Nordstrom
attempts to satisfy the desires of this customer segment not only through merchandising, but also
through excellence in customer service. Nordstrom’s philosophy is that the customer is always
right. To the extent it has been successful; Nordstrom has differentiated itself from rivals in that
segment of the retail space.

2. With regards to its core segment, what does Nordstrom offer to its customers?
Answer:
Nordstrom is a niche company and focuses on a very specific group of customers. . At its core,
Nordstrom provide its customer with exceptional customer service, selection, quality and value.
Exemplary customer service; Nordstrom’s philosophy is “the customer is always right”.
Nordstrom’s stores located upscale areas have expensive fitting and fixtures that convey an
impression of luxury and invite browsing. Thank-you cards, home deliveries, personal
appointments, and access to personal shoppers are the norm at Nordstrom. Touches such as live
music played on a grand piano help create an appealing atmosphere. The merchandise is
fashionable and of high quality, that truly differentiates Nordstrom from many of its rival, is its
legendary excellence in customer service. Finally, Management is constantly looking for ways to
improve efficiency and customer service.
3. Using the Porter model which generic business-level strategy is Nordstrom pursuing?
Answer:
Michael Porter, who was the originator of the concept of generic business-level strategies, has
argued that companies must make a clear choice between the different options outline. If they
don’t, Porter argues, they may become “stuck in the middle” and experience poor relative
performance. According to Porter, differentiation by its very nature raises costs and makes it
impossible to attain the low-cost position in an industry. By the same token, to achieve a low-
cost position, companies necessarily have to limit spending on product differentiation.
Nordstrom is pursuing a business-level strategy of focused differentiation that is built on a
distinctive competence in customer service. This is when a company targets a certain segment or
niche and customizes its offering to the need of that particular segment through the addition of
features and functions. To the extent it has been successful; Nordstrom has differentiated itself
from rivals in that segment of the retail space. In essence, Nordstrom has been so successful at
pursuing this strategy that it has been consistently profitable, measured by ROIC, while also
continuing to grow both its sales revenues and its net operating profit. In other words, through
successful execution of its chosen business-level strategy, Nordstrom has built a sustainable
competitive advantage. As previously stated Nordstrom is a niche company and provides their
customers with a luxury shopping environment with excellent customer service.

4. What actions taken at the functional level have enabled Nordstorm to successfully implement
its stategy?
Answer:
Pursuing functional-level strategies that enable the company to achieve superior quality in terms
of both reliability and excellence are important, as is an emphasis upon innovation in the product
offering, and high levels of customer responsiveness.
Nordstrom constantly emphasize the importance of customer service in order to build a
company-wide culture that internalizes this key value. Nordstrom’s successful differentiation is
due to its excellent customer service, which is an element of customer responsiveness.
Nordstrom also pays close attention to employee recruitment and training to ensure that
salespeople at Nordstrom behave in a manner that is consistent with Nordstrom’s customer
service values when interacting with customers.
Nordstrom has implemented good compensation plan for their sales person and human
resurce.Apart form compensation benefit,payment is presented for the salespepople.Nordstrom
belives that proper compensation plans for the salesperson is necessary for ensuring the complete
support from the sales person.

5. What is the source of Nordstrom’s long term, sustainable competitive advantage?what


valuable and reare resources doe Nordstrom have that its rivals find difficult to imitate?
Answer:
To ensure the competitive advantage o long-term, Nordstorm is trying to create brand loyalty
among the customer by providing superior value.The source of long term competitive advantages
is their excellent customer service.
Nordstrom is one of American’s most successful fashion retailers that provides exceptional
customer service, selection, quality, and value. Nordstrom’s legendary excellence in customer
service ensure that the customer is always satisfied with their “the customer is alwys right”
philosophy. Their commited to excellent customer service could also be considerd a valuable ad
rare resource that could be hard for rivals to imitate.
The personal touch such as luxury shopping environment, thank you cards,appointments, I and
personal shoppers greatlyenhance the customer experience at Nordstro and differentiate them
even more from their rivals. Despite its emphasis on quality and luxury, Nordstrom has not taken
its eye off operating efficiency and Management is constantly looking for ways to improve
efficiency and customer service.
6. Is Nordstrom organized for success?
Answer:
Yes, Nordstrom is organized for success. Nordstrom is a niche company and focuses on a
relatively affluent customer base that is looking for affordable luxury . Nordstrom is one of the
sucessful fashion retailers and consistently makes higher-than-average returns on invested
capital. Nordstrom consistently earns higher-than-average returns on invested capital. Its return
on invested capital (ROIC) has exceeded 30% since 2006, and was 36% in 2012, a remarkable
performance for a retailer. This can be attributed to the unique shopping experience provided by
a combination of their customer satisfaction and shopping environment.
Nordstrom’s approach to business was to provide exceptional customer service, selection,
quality, and value. This approach is still the hallmark of Nordstrom today. Nordstrom’s
philosophy is that the customer is always right. They also comitted to providing quality product
and make sure their employees are well compensated. This could lead to higer retention of
qualified and knowledgeable salespeole.
Despite its emphasis on quality and luxury, Nordstrom has not taken its eye off operating
efficiency. Finally,on top of these things, Management is constantly looking for ways to improve
efficiency and customer service that esures Nordstrom’s success.