External Capital Funding Proposal|Business Finance – Economics
Introduction
Nordstrom Company is a universally recognized fashion company which deals in the online sale of shoes, apparels, and cosmetics for adults, and children. The firm has been operational in the United States for many years, and this has made it able to create a brand which has helped them to remain productive in the global market. In this case, with the increasing laxity in the local market, the firm aims to increase its reach by expanding its business into Canada. The feasibility study carried out affirms that the anticipated expansion will positively impact the overall productivity of Nordstrom Inc. There are various ways through which firms can establish themselves in the global market some of which include joint ventures, franchising, purchasing of other companies, and turnkey projects. For the case of Nordstrom firm, the institution aims to enter the Canadian market through licensing. By doing so, the business faces minimal objections to its location in the new target location. Hence, this proposal aims to evaluate all parameters which justify the expansion of the activities of Nordstrom in Canada. Additionally, the proposals assess the financial status of the firm, and states how much it needs to complete the expansion into Canada.
Description of The Investment Project
A for-profit firm is established with the primary aim of accruing profits, and increasing its productivity scope, and the case is not different in Nordstrom Inc. The investment project, in this case, involves the firm expanding its business in Canada thus increasing its overall market share. Luo notes that the move to expand any business territory will not only boost its level of revenue but will also go ahead to increase the reputation of the brand created by the firm (Luo, and Tung, 2013). In this case, the project will involve the establishment of the businesses of Nordstrom Inc in the various cities located in the country. The location of the branches will be done strategically bearing in mind the geographically populated regions which have a high number of persons with a high purchasing power. For the entire project to be successful, then the management has to come up with the criteria of employing people who reside in Canada as it will help in nurturing a good social relationship with the natives of the country. Another element which the expansion will concentrate on is the aspect of advertising which has to be done exhaustively. Proper publicity will ensure that the inhabitants of Canada are correctly notified of the new business venture, and how it will work to improve their standard of living. Therefore, the project not only satisfies the intentions of the establishment but work to check on the welfare of the customer, and the society in general.
From the previous assessment of the Canadian market, it is evident there are few brands which have firmly established themselves in the region. Johanson notes that the managers of a given institution have the mandate of discovering the faults, or the needs of the client base, and thus improvise mechanisms which adequately address the tastes, and preferences of the clients thus satisfying their utility levels (Johanson & Vahlne, 2003). In this case, the firm has recognized the deficiency in the high-quality fashion items ranging from shoes to cosmetics in the market, and thus the expansion will undoubtedly generate positive returns in both the short, and the long run. Therefore, the financing of all these elements will be beneficial in ensuring the whole project is successful. The estimated budget for the entire expansion process is estimated at approximately $930.53 million. The total budget covers the advertisement costs, the erection of the branches, and the payment of the employed individuals in the first quarter of the fiscal year.
Resources for The Project Investment
The success of any planned project depends on the amount, and the availability of the funds to carry out the process successfully. Antonelli asserts that the administration of any business has the mandate of ensuring that all the resources which are essential in initiating the process are all available (Antonelli, Crespi & Scellato, 2015). The author adds by pointing out with the availability of all the resources helps to reduce the setbacks which may jeopardize the progress of the anticipated move. For the proposed investment by Nordstrom corporation to push through then there must be adequate funds which can guarantee the firm to carry out all the activities which ensure positive returns to the business. Over the years, the industry has performed competitively, and has been able to accrue annual revenue of close to $3.79 billion. Thus, to facilitate the expansion, the firm has to cut part of the income, specifically on the profits, and include it in the proposed expansion project. In this case, a more considerable portion of the funding will be dependent on the internal revenue generated from the institution, and this will be close to 53% of the total revenue required to facilitate the expansion. The other part of the resources will depend on foreign loans from the World Bank. The terms of the loan should be lenient to ensure it does not cripple the objectivity of the firm, and also provides the company with adequate time generate income soon after the establishment of the expansion in Canada. To get the funds from the lender, the firm has to represent a comprehensive business plan on how the company aims to regain the money spent in the process. In this case, another essential resource is the presence of a task force which is well aware of the prevailing market conditions, and sound advice of the mechanisms which can be put in place to ensure the proposed project is not faced with severe setbacks. Therefore, the presence of these vital resources will help to increase the chances of success for the planned expansion into Canada.
Investment Model Time-Frame
Setting projects’ resources is essential but putting in the time limit for the completion of the pan is significant. Kamiagari notes that the time-frame selected should be realistic, and also viable enough to ensure that the project is fully operational (Kimiagari, Gabrielsson, & Montreuil, 2015). In this case, Nordstrom Inc. has a module time frame of one year where they can establish the project, open the branches, monitor the staff members, and also keep track of the progress of the firm. The investment timeframe of one fiscal year is sufficient to correctly establish the businesses of the company in Canada, and market it thus reaching a diverse client base. The first activity to undertake is to seek permits from the government, and set in place all the required paperwork. The next step will involve the selection of the most promising cities in the country where the branches can be established. The establishment focuses on targeting areas where the demand for the goods can be higher. In this case, places like Toronto, and Vancouver are the most viable spots where the establishment of the branches can be useful. The step should be done exhaustively to avoid establishing the business in an unproductive zone. The procedure can take up to four months which will mainly involve visiting the different towns in the country, and carrying out a statistical assessment of the region. Therefore, it is evident that the set timeframe acts as a guiding element which controls the operations of the project. The final item to undertake is severe marketing, and in this case, the marketing period will cover the entire fiscal period. Carrying out advertisements will aid in enticing the clients to make use of the products being sold by Nordstrom Inc. Therefore, placing a proper schedule for carrying out the activities in the project is essential to the overall success of the process.
Justification of Why Now
The primary focus of any business is to capture a client base that can guarantee them a constant profitability level. Bravo notes that successful companies usually can discover a deficiency in the global market, and thus improvise mechanisms which adequately address the issue (Bravo, Criscuolo, and Menon, 2016). In this case, Nordstrom Inc. has decided to expand its business to Canada, and this has been facilitated by various factors. The primary factor promoting the expansion is the availability of ready market which has a high purchasing power for the goods sold by the facility. A critical assessment of the area showcases that the country is made up of other firms which have not adequately sold their brand to the customers in the region. For instance, the only business which sells such designs is the Saks Corporation, and in this example, they have not gone global, and thus establishing the firm in the country will face very minimal competition. Therefore, the minimum competition in the region will help the company to control the market situation.
The potential for growth is observed as one of the reasons which make companies expand their territories in the global scene. The potential for growth also means that the firm will be in a position to accumulate massive profits. Yoder notes that the management of any company tends to increase its reach so that they can produce more, and impact the lives of many other individuals (Yoder, Visich, and Rustambekov, 2016). In this case, Nordstrom Corporation has been linked with an overall increase in the revenue, and this is a positive sign on the operations of the company. Hence, to channel this revenue to more useful means then its expansion into Canada will be the most vital step to undertake. Investing the profits will act as a long-term investment which the firm can enjoy in the perceived future.
Nordstrom vision, and mission statements all tend to focus on the aspect of the firm becoming the top corporation which provides the latest fashion to individuals across the globe. Quatraro in his book on the drivers of entrepreneurship notes that the decisions, and the steps undertaken by any given firm should always be in line with the mission, and the vision of the company (Quatraro, & Vivarelli, 2014). The case of Nordstrom Inc is not different because the institution aims to cease the opportunity which will steer them in the goal towards the realization of their mission. Therefore, by undertaking the objective, the firm is in an excellent position to achieve the set objectives. Thus, this is the reason why it is the most viable time to undertake the initiative.
A critical assessment of the economic orientation, it is evident that the Canadian economy is progressive, and thus the value of the Canadian dollar holds almost the same strength as the United States dollar. Antonelli advises of the importance of investing in a competitive economy because it brings value to the type of goods or services being sold (Antonelli, Crespi, & Scellato, 2015). A growing economy provides a proper investment ground, and a closer look at the Canadian economic orientation it is true that expanding into this region will be very beneficial to the activities of the company.
Justification of The Strategic Fit
The strategy set in place with by the business serves as a cornerstone selling point for the firm. In this case, the approach should be unique, progressive, and one which cannot be imitated by the other players in the global arena. Luo affirms that the undertaken strategy should fit the requirements of the worldwide market so that the set productivity level can be maintained (Luo, and Tung, 2013). Nordstrom Inc growth strategy evolves on the aspect of satisfying the needs, and the wants of the customers, and the staff. By doing so, the firm has been able to create a cordial relationship between the two groups, and this can be observed as the source of the growth in the facility. In this perspective, the strategic fit of the institution can facilitate the swift adjustment of the company in the economy of Canada. The company can be in a position to woo the citizens of Canada to make use of the products, and thus this will result in productivity.
Justification of The Comparative Advantage
Nordstrom Inc. has been well-known fashion store which sells the latest shoes, and cosmetics, and thus this is their primary area of specialization. The company can be observed to have a comparative advantage since the firm deals with the well-known designers in the global market. As a result, the firm is perceived as the most trusted fashion wear retailer, and thus its establishment in Canada will not be faced by stiff competition. Additionally, the staff members can socialize with customers. By engaging in this, the company will be in a position to surpass all the rest of the players in the Canadian market.
Conclusion
Conclusively, it is evident that there are many aspects a firm has to consider before establishing itself in the global market. For the case of Nordstrom Inc., the business has assessed all the available channels that can adequately ensure that the company remains productive in the Canadian market. Additionally, proper funding of the project will facilitate the smooth flow of operations, and thus guarantee its completion within the specified time frame. Furthermore, if the required funds are provided in time, the firm will go ahead, and capture the client base before other players in the field discover the existence of the productive Canadian base.
References
Antonelli, C., Crespi, F., & Scellato, G. (2015). Productivity growth persistence: firm strategies, size, and system properties. Small Business Economics, 45(1), 129-147.
Bravo-Biosca, A., Criscuolo, C., & Menon, C. (2016). What drives the dynamics of business growth? Economic Policy, 31(88), 703-742.
Johanson, J., & Vahlne, J. E. (2003). Business relationship learning, and commitment in the internationalization process. Journal of international entrepreneurship, 1(1), 83-101.
Kimiagari, S., Gabrielsson, P., Gabrielsson, M., & Montreuil, B. (2015). 5. Market strategy of international new ventures originating from a small, and open economy. Handbook of Research on International Entrepreneurship Strategy: Improving SME Performance Globally, 85.
Luo, Y., & Tung, R. L. (2013). International expansion of emerging market enterprises: A
Springboard perspective. Journal of international business studies, 38(4), 481-498.
Quatraro, F., & Vivarelli, M. (2014). Drivers of entrepreneurship, and post-entry performance of newborn firms in developing countries. The World Bank Research Observer, 30(2), 277-305.
Yoder, S., Visich, J. K., & Rustambekov, E. (2016). Lessons learned from international expansion failures, and successes. Business Horizons, 59(2), 233-243.
201801070206133_2_short_paper__executive_memo.docx
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Running Head: NORDSTROM EXPANSION MEMO
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Running Head: NORDSTROM EXPANSION MEMO
Nordstrom Expansion Memo
Southern New Hampshire University
December 7, 2017
To: Government Federal Bank
From: Strategic Planning Manager
Date: 7th December 2017
Re: Nordstrom Expansion Memo
An overview of the expansion opportunity
Nordstrom Company has expansion opportunities for its business and stores. The expansion of the business in another country will increase the company’s market niche and enable it to create and establish their brand name which is very important for a business.
Key information sources listed for the final project
The information for the project will be obtained from the company’s website through the face book page of the company, its twitter, @Nordstrom and additional information will be obtained through an interview with the sales and marketing executive person of the company. The information will help in finding and collecting data for the final project (Willing, 2015).
The country in which the expansion will take place
Nordstrom will expand its business in Canada and plans to expand its branches to the country. It has allocated a certain number of funds to facilitate the expansion process in the country. The reasons for expanding into Canada include; favorable government policies in the country, the company will gain competitive advantage in the country due to its brand name, the company has favorable factors such as availability of ready market, favorable environmental and political factors in the country. The business environment for Canada is much favorable and there are available resources that will enable sustainability of the organization in the country (Ellegård, 2013)
Why the project and company make sense for the chosen company
Nordstrom organization is selected as it has the capacity to expand its business in Canada and has equipped itself with the funds for expansion of the project and this will make it easier for the company to carry out its expansion project. The organization has an established brand that will make it easier to attract the customer in the organization (Luo, 2013).
References
Ellegård, A., Arvidson, A., Nordström, M., Kalumiana, O. S., & Mwanza, C. (2013). Rural
people pay for solar: experiences from the Zambia PV-ESCO project. Renewable energy, 29(8), 1251-1263.
Willing, E. M., Rawat, V., Mandáková, T., Maumus, F., James, G. V., Nordström, K. J. &
Zytnicki, M. (2015). Genome expansion of Arabis alpina linked with retrotransposition and reduced symmetric DNA methylation. Nature Plants, 1, 14023.
Luo, Y., & Tung, R. L. (2013). International expansion of emerging market enterprises: A
springboard perspective. Journal of international business studies, 38(4), 481-498.
20180107020349mba_640_milestone_two_guidelines_and_rubric.pdf
MBA 640 Final Project Milestone Two Guidelines and Rubric
Overview: The final project for this course is the creation of an external capital funding proposal. Most businesses face a landscape of uncertainty and a never-ending stream of risks and opportunities. Managers must continually project the likely financial impact of decisions, make recommendations, act on those decisions, determine how to pay for them, and evaluate the costs and effectiveness of what has been done. Many decisions are short-term, routine, and operational. Others are longer-term investment decisions that require substantial new resources, such as developing new services, expanding into new geographic markets, or undertaking business combinations or spin-offs. Each requires managers to forecast, plan, and make decisions based on a thorough understanding of both internal and external factors that can affect a company’s financial success. For the summative assessment in this course, you will bring your finance and economics knowledge to bear by preparing an external capital funding proposal for a major international investment at a publicly traded corporation. In order to secure the support of potential financial backers, your proposal will need to lay out what the proposed investment opportunity is, how it fits within the company’s broader mission and goals, its financial impact, and the amount being requested and why (including alternative funding mechanisms considered). In addition, it will also need to include information on the organization’s context, risk factors, and microeconomic assumptions that could affect the success of the investment. Prompt: Submit a paper that addresses critical element IV, Risks, of the final project. Discuss any risks that might affect the success of the project and how you have planned for those contingencies. Note: The risks (and opportunities) you identify should demonstrate your understanding of the company you selected, the industry, the investment project you are proposing, and your project’s country and timing. Your estimates of financial impacts will be only preliminary; you will most likely revise them in your final submission at the end of Module Nine. Specifically, the following critical elements must be addressed: Section IV Risks:
1. Internal. What are the company’s most significant internal risks and opportunities related to the project? How might they affect your financial estimates and how will you address them? Support your response with specific examples.
2. External. How will you address significant qualitative risks outside the company that might affect project success? Give specific examples. For example, how might culture or politics in the target country affect the proposed investment’s financial success? Natural disasters? How have you planned for these risks?
3. Microeconomic. Assess the microeconomic factors that might affect decisions about the proposed investment. Support your response with specific examples. For example, how competitive is the market you will be entering? How elastic is the price for your product or service?
4. Alternate financial scenarios. Use this section to discuss the sensitivity of your financial projections to different scenarios. Be sure to address:
a. How would your projected financial performance change if sales fall 20% short of or are 20% higher than your base assumption? What does your analysis of these two scenarios imply for the proposed investment? Justify your response.
b. What do the net present value, internal rate of return, and payback values from your base scenario and the sales variation scenarios above imply for the proposed investment? Be sure to explain how the time value of money affects your calculations and analysis.
Rubric Guidelines for Submission: Your risk assessment paper should be approximately 8-10 pages in length (excluding any tables, other exhibits, and list of references as necessary). It should be double-spaced with 12-point Times New Roman font and one-inch margins, and should use APA format for references and citations.
Critical Elements Proficient (100%) Needs Improvement (75%) Not Evident (0%) Value
Risks: Internal Projects how company’s most significant internal risks and opportunities might affect financial estimates and how they will be addressed, supported by specific examples
Projects how company’s most significant internal risks and opportunities might affect financial estimates and how they will be addressed, supported by specific examples, but response contains inaccuracies, omits key details, or links between projections and planning are tenuous
Does not project how company’s most significant internal risks and opportunities might affect financial estimates and how they will be addressed
18
Risks: External Evaluates how significant external, non-financial risks that might affect project success will be addressed, giving specific examples
Evaluates how significant external, non-financial risks that might affect project success will be addressed, giving specific examples, but response contains inaccuracies, omits key details, or examples are not relevant
Does not evaluate how significant external, non-financial risks that might affect project success will be addressed
18
Risks: Microeconomic
Assesses the microeconomic factors that might affect decisions about the proposed investment, supported by specific examples
Assesses the microeconomic factors that might affect decisions about the proposed investment, supported by specific examples, but response contains inaccuracies, omits key details, or examples are not relevant
Does not assess the microeconomic factors that might affect decisions about the proposed investment
18
Risks: Alternate Financial: Sales
Fall
Projects how financial performance would change if sales fall 20% short of or are 20% higher than base assumption, including what analysis of two scenarios implies for the proposed investment, justifying response
Projects how financial performance would change if sales fall 20% short of or are 20% higher than base assumption, including what analysis implies for the proposed investment, but response contains inaccuracies, omits key details, or is poorly justified
Does not project how financial performance would change if sales fall 20% short of or are 20% higher than base assumption
18
Risks: Alternate Financial: Time Value of Money
Assesses what net present value, internal rate of return, and payback values from base and sales variation scenarios imply for the proposed investment, including how time value of money affects calculations and analysis
Assesses what net present value, internal rate of return, and payback values from base and sales variation scenarios imply for the proposed investment, including how time value of money affects calculations and analysis, but response contains inaccuracies or omits key details
Does not assess what net present value, internal rate of return, and payback values from base and sales variation scenarios imply for the proposed investment
18
Articulation of Response
Submission has no major errors related to citations, grammar, spelling, syntax, or organization
Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas
Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas
10
Total 100%
