Milestone One: Investment Project & Justification
Natalia Cardona
Southern New Hampshire University
02/12/2017
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INTRODUCTION
The investment plan is based on a retail company that deals with the personalization on how various varieties of footwear can be freshly made, prepared and created at home and e workplaces. It is committed to achieving high levels of supplies through water conservation methods in supplying high-quality products for our esteemed customers. Nordstrom estimated revenue per year is $1.2 billion.
The first set of its products includes apparel and footwear specialty which comprises fitting selections across generations and ages while taking care of choice, quality, and match. Another set is home furnishings and design products. Through e-commerce as well, Nordstrom Rack trades its products through the use of technologies ranging from mobile commerce and internet marketing and at the same time making use of its website to ease and improve transactions.
The company had shown great projections in terms of market strategy and sales in different locations, making its expansion more viable and achievable over there. This followed a recent decline in the sales of stocks over the recent years. The market structure in terms of sales of its products has also registered a downfall due to bad receptions of the products.
The company diversifies its products through a partnership with other companies and stakeholders in an effort to expand to other regions. The different choices of customer satisfaction are being considered through the development of footwear specialty. The company has also resorted to the application of innovational skills and exploitation of technology while in the purge of expansion (Waller, 2011).
EXECUTIVE SUMMARY
Nordstrom is a retail company. The customers are catered by being provided with products that suit them even to the smallest details. It operates in hypermarkets, departmental stores, retail outlets, supermarkets as well as online shops. The company was founded in 1973 with its headquarters in Seattle, Washington in the United States. It operates locally at the present but due to its size and expanding industry, there is a need to explore international markets.
There are constraints that are associated with external borrowing as opposed to internal financing mechanisms, at times it becomes a suitable option. The retail industry is one of the best performings worldwide and the company enjoys a fair share in the United States. Being one of the leading figures in clothing and like apparels, it has managed to maintain encouraging performance numbers while improving methods on its products promotion and management, selling strategies as well as establishing effective bonds with its American units (Walter, 2015). However, the market will need a different approach due to unavoidable changes in mixes and consumer preferences and seeking additional markets is an effective way to ensure that customers are won, satisfied with the products and eventually maintained for continued success.
Approximately $0.1 billion will be needed for the plans and total costs of the products. The detailed plans for the expansion are included in the text with their cost projections assuming a number of factors are withheld. It reaches a crucial time during a company’s operations that it seeks to deviate from the norm. A notable and a worthy approach which has been a normal practice are to explore international markets when situations allow. However, there are numerous challenges that come along with such adventures and one of them is financial constraints. It may be possible at times to raise enough funds to cover its expansion, but depending on the area of expansion that a company is seeking, external aid becomes paramount. The situation is the same with Nordstrom Rack. The company is at a critical stage of growth where expanding is a primary need. However, there is a need to borrow to ensure all operational ends are met without delay or other hiccups.
INVESTMENT PROJECT
An initial loan of $ 0.1billion will be enough for the company. It is expected that this projection will be paid in about 6 years. Some of the tasks that the money will be used for include:
- Purchasing of products and machinery that will be of use in the manufacturing process of most of the beverages.
- Investing in the technological advancements and invention of more technical breweries that will ensure large production of products in a more effective and efficient manner.
- The hiring of a group of highly qualified staff and personnel that will assist in the production process of footwear. It is expected that the costs will also cover research studies on products that the customers buy in large quantity.
- Purchase of office equipment and supplies such as more computers, printers, and the internet set up etc.
The management will be in charge of handling transactions in various departments. These departments may involve procurement, accounts. Sales and supplies. It is expected that the treasurer together with the financial manager will have to execute and determine costs trajectories (Conference Board, Inc., 2012)
The success of the company will be determined using financial metrics. It can be deduced from the range between the profits to be realized on the long run after the debt repayment. This includes the receptions of the products in the area of expansion.
RESOURCES
The project will require various resources that will be of great use in the production process. These include various footwear products and their hand-crafted items. These products are obtained from raw materials producers.
Human resources should be considered also especially during the expansion process. Besides the team that had earlier existed in the company, it was advisable to explore and hire out the assistance of the following personnel to help in the promotion of the expansion process;
The Chief Marketing Officer
Job description:
Amenable and accountable in ensuring the business sustains itself annually while controlling assets and liabilities in company production line. The officer will be in charge of the overall control and monitor of the company’s activities including the assessment of various products that need to be imported from various regions of their productions.
Survey all aspects of purchasing and marketing footwear products in the establish links and relationships with various partners and other multinational corporations to achieve the international and global platform. The officer should have; 5 years of experience in a marketing department in footwear manufacturing company, Bachelor degree and will be compensation $50000 annually.
Advisors
Assists in making decisions on how to allocate funds in the company
Designer:
The deals in the branding and fashioning the various wrappers and crafted baskets will improve the modern fashion shapes.
Part-Time General assistants
General assistants are frequently large in numbers and perform tasks in duties; their responsibilities include duties such as bookkeeping and arranging records on purchases up to date. The compensation will be $10000 annually.
Time Frame
The project is purported to begin in six months’ time after a careful review and assessment by the various committee members on the eligibility of the project. It has to be approved by a number of authorities including governmental personnel dealing with the issues of trade, foreign ministry among other concerned members of the government. The review of the expansion project must be passed after the various shareholders of the company agree and project the objectives that are a prerequisite in the organizational expansion (Sage Publications. & Sage Reference (Online service), 2014).
The proposed expansion is set to maintain a long lifespan due to a number of strategies which have been formulated to maintain the expectancy of the company. Besides the projections of the marketing strategy which definitely shall attract most customers to ensure the continuity of the company, various researches will be conducted depending on the fluctuations of the customer tastes and preferences. These will enable the prosperity of the company. Diversification of most of the products that will be produced during expansion can create the perseverance of the company during a number of states as the competition facing from its counterparts. It is bound to clauses that stipulate its dissolution and the circumstances under which it occurs.
JUSTIFICATION
A slight change in the normal approach and converging efforts to product positioning and expansion is a technique hoped to influence purchase decisions for Nordstrom Rack in great details considering that its competitors have not ventured into the market through the marketing technique. Although most of the strategies used are centered on driving sales and sustaining customer loyalty, reserving interest on effective product positioning is quite beneficial and more advantageous with the expectation that product delivery will be improved by increased ease of access and recognition. However, the most important element is to have sources of funding that can help in the expansion process.
Considering the current favorable trade regulations experience across the Border States, an immediate execution of the investment plan will be a good projection in the global context. The tariffs and the trending nature of the foreign policy ultimately pave a direct path to begin the plan.
It is imperative to note that there are several assumptions made when projecting the financial statements. Firstly, it has been assumed that the proportionate increase in both revenue and expenses in 2013-2014 and 2014-2015 periods applies to what will happen in the succeeding years (an increase of 0.053% and 0.09% respectively). Therefore, a proportionate increase across years applies evenly irrespective of the situations that affect business success in the countries of operation. Another assumption is that there will be no risks such as overhead costs, emergencies or unplanned losses that will have a significant impact on costs during the stated period. This is a very hypothetical situation but using the figures in the two successive periods can be essential to give a rough estimate of what can happen if the same conditions remain unchanged.
The investment proposal has presented a number of impacts both directly and indirectly to the company. Most of the investments being made are dependent on a number of factors which are considered within the timeframe of the company. Due to different vagaries, an individual in a company may be forced to expand the business or definitely invest in the stocks of the company through various ways. The following are factors which make it suitable and highly possible for an immediate investment plan within the company;
- Stiff Competition: The Company faces a stiff competition in footwear industry both in the local market and at various places. Most of the footwear is bound to be fragmentary competed from the stores and many other retail shops both large and small including those that are sold at various hotels restaurants and clubs. Thus, investment in the expansion of the company should be deemed to happen now due to the rising nature of competition and existence of small openings in the entire market structure. The rebranding of the products and footwear can also lead to a change in the way competition rate is experienced. Most of the products will be preferred by the customers when a lot of innovation, rebranding, improved quality and quantity, promotions through advertisement and price changes (Kelman, & Friedland, 2015).
- The increase of the market population: Usually, with an increased population, high demand of products is known to be experienced. This is because the number of consumers in the market will tend to rise up leading to a sudden increase in the level of goods being needed in the market. The number of individuals that are directly using the products has registered an increment making it viable to speed and increase the supply of various types of products into the market. This, however, can only be achieved when channels dealing in the production of footwear are expanded and more investments are made based on the number of the products that need to be liberated and supplied in the entire market. Due to this factor, it is, therefore, highly required for the investment plan to be executed with an immediate effect to cater for the increasing population.
- Speeding technological waves: Due to the unprecedented increase in the technological advances, most of the companies try in order to cope and adapt to the changing technological waves. It is the responsibility of the management to adopt new technology especially during the designing of footwear products. There are new technological advances and machinery that makes the production work easy and fast. More footwear products will be produced when the machines are used. The company takes its time to assess the best areas to capitalize on and the best technological approaches to use in investing its worthy resources. Similarly, it will have an ample time in checking on what might be dangerous in sole entry resulting into careful assessment hence reduced risks.
- The sudden attempt to invest now in the company considering the global context can be as a result of the increasing nature of collision of cultural practices and beliefs. Most consumers of the products have diversities in the way they prefer a number of products. Some have other diversions in the degree of their consumption trying to shy away from a number of products. It is due to this factor that a majority of the companies including the Nordstrom to devise methods that will create a diversity in the types of goods and products to be produced depending on the consumer’s needs and preferences (Tiffin, 2015).
STRATEGIC FIT
The investment plan is strategically aligned with the organizational priorities and the financial expectations. In the company, a number of strategies have been implemented over the year to help in the achievement of their goals and meeting their priorities. These include;
- A priority to issue out the hot beverages to a number of households. In this strategy, the company has always devised a mechanism on how to effectively reach out the larger percentage of households with a variety of brand selection. This was to enable them to be distinguished and different from the other local bandits and retail shops that also provided the same commodity in the similar form.
- The launch of new modern technologies and innovative strategies. Due to the increasing nature of the change of technology and technological advancements, it needed to develop such methods that will impede on the production process more effectively and efficiently. This call for the need to diversify and adopt those technological advancements that will be rendered innovative enough thus speeding the production process.
- The company had also prioritized on the beginning of international expansion considering the global context and the need to widen the market gap of the products from the company. This is the main agenda for the investment program and it aligns with the organizational strategy that was formulated in order for the market expansion.
The financial projections of the company show that it has more assets than the liabilities in the current state hence a limited company and it cannot suffer from bad debts from the financial institutions. The loaning institution, therefore, needs to provide the company with the amount requested for expansion bearing in mind that the company is a multinational company whose profit margin is above the grid and potentiality of its future success is highly guaranteed (Hagstrom, 2014).
References
Waller, W. S. J. (2011). Investment proposal. Berkeley: University of California.
Marina, S. (2015). Nordstrom delays openings of low-cost Rack stores in Canada. The Global and Mail.
Sage Publications. & Sage eReference (Online service). (2014). Sage sourcebook of modern
biomedical devices: Business environments in a global market. Thousand Oaks, Calif: Sage Publications.
Kelman, S. G., & Friedland, S. (2015). Investment strategies. Toronto: Penguin Books.
Hagstrom, R. G. (2014). The Warren Buffett way: Investment strategies of the world’s greatest
investor.
Siegel, J. J. (2008). Stocks for the long run: The definitive guide to financial market returns and
long-term investment strategies. New York: McGraw-Hill.
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