Milestone 9 Q&A

My company is Nordstrom the expansion is towards Europe (focused on Italy)

In Module Nine, you will write Section I (Executive Summary) and Section VII (Questions and Answers) of your final project and submit your final external capital funding proposal. It should be a complete, polished artifact containing all of the critical elements of the final project. It should reflect the incorporation of feedback gained throughout the course.

Executive Summary: Briefly summarize the key points of your proposal, giving the loan committee the most essential information while convincing themto read further. Remember this is the first, and sometimes the only, section a selection committee will read in an initial screening.

Questions and Answers: End your proposal by constructing a persuasive, evidence-based question-and-answer section that addresses additional financial questions you think the loan committee might ask, including legal and ethical concerns and why the loan would be attractive to the bank.

NORDSTROM INC
1
Stefano Veliz
SNHU
Milestone 4-2
November 24, 2019
NORDSTROM INC
2
Introduction
The decision-making process for the external capital funding of the Nordstrom organization
involves expansion strategy to Italy. The operation base of the Nordstrom company is situated in
North America, where most retailers’ customers operate. The company provides efficient services for
fashion products to the domestic markets. The development of services and products provide a good
customer’s experience through the system of real-time location (Mohr, & Batsakis, 2018). The
company has some future plans for taking its services to the international markets system through new
sales divisions of its products. Nordstrom company is able to form some good basis of initiating
customers’ loyalty through various bases of operations. The price and market system of the product
development system involves merchandise bases for generates fashion brands with their price tags.
The company will use an effective eCommerce system to expand its sales to international market
structures, especially Italy. The target set of the company will be fulfilled according to the
development of a sales plan through logistic space that is set to initiate the reach of potential market
targets in Italy.
The company has initiated an effective assessment of the market system of Italy and has a
good review of the fluctuation of Euro. The key area of operations is supported by the market analysis
on the development of the market economy based on different conditions of expanding to a country
like Italy (Nordström, 2016). The global operations system of the Nordstrom company can challenge
the Ecommerce business operations in Italy based on the new market strategy of operations. As such,
the company aims at engaging various changes and assessment of the global economic system to
implement an expansion strategy to countries like Italy.
NORDSTROM INC
3
Description of Investment Project
The committee development for the expansion project in the Nordstrom company generates
about 10 locations in Italy. The geographical development of these locations is based on the potential
growth of customers in the prospected region (Bäversten, & Nordström, 2019). The project
development will generate some important information in the profitability, completion schedule/time
frame, and resources system. The investment plan of the company is generated through justification
procedures of current business strategies. The financial priorities of the business system generate some
important fits of funding the organization according to the microeconomic environment. The
development of the comparative advantage in the market system of Italy will be built according to the
business model of the Nordstrom company.
● Funding Plan on Investment
The initial idea of expanding to Europeans countries is riskier compared to continents like
Asia and Australia. Italy generates a small landscape of business operations according to the allocation
of various stores. The marketing department of the Nordstrom initiates some good strategies for
incorporating different cultures and the native language of Italy (Mohr, & Batsakis, 2018). The idea
of marketing products will be initiated through some interesting and attracting features like the theme
of vacations on islands to draw people. The committee has decided to start with the plan of putting up
ten stores according to the initial investment of $1.5 million. The total investment is developed
according to various activities that will take place before the initial stage of launching products. The
initial capital of starting any clothing store involves approximately $100, 000. This initial investment
involves all costs and expenses generated in the first month of doing business. These expenses are
covers insurance, paying employees, inventory, and equipment. The strategy of eMarketing system
NORDSTROM INC
4
initiates an effective system of opening some news stores, for example, for Men’s clothing only. The
new strategy of opening up some new store is based on the development of the website system where
the Nordstrom can lease land and building holding the store. This means that the budget of each store
will be ranging within $150,000 according to different locations.
● Resources
The company is able to initiate a specific resource system that covers the initial capital of
starting the project. The project leader indicates that capital allocation of $1.5 million generates some
good approval of the cultural system of Italy. The Nordstrom will have an opportunity to integrate its
products and services according to the cultural and locations of the environment of each store. The
Consumer and Competition Act generates an appropriate review of the required inventory in terms of
completeness in the business environment system (Nordström, 2016). The project development in a
new area initiates a good system of considering safety work health, employee standards, and fair work
in a new environment. The real estate acquisition program for the Nordstrom company is based on
profit generated by the organization after making a summary of total sales. The approximation of the
total sales made in the year 2017 for all clothing products was $15.1 billion. This means that the
company will enter the foreign market system through the engagement of small business units and
progressive expansion to store networks. The Nordstrom company has enough revenue to finding
expansion strategy.
The project was approved according to the allocation of resources to champion its operations
in Italy. The approval document generated that 10 locations, each with a store, were to spend $150,000
in facilitating services in the business system. The Nordstrom will initiate a new clothing design to
the prospected areas based on the development of culture. The Italian market on fashion designs is
supported by people’s preferences and cultural support systems. The Nordstrom company is planning
to introduce the American designs system in the new brand of clothes to provide the Italian market
NORDSTROM INC
5
with a new taste. The key marketing system for reaching more customers involves the online purchase
system of clothes (Nurminen, 2018). The main target company to generate online sales of clothing
products based on Italian culture is the Walmart company. The new project will incorporate Walmart
store development to reach many clients in Italy according to the people’s understanding of the
common practice. The marketing strategy and cultural development of the Walmart organization are
based on the cultural system of Italy. This means that the customer’s experience and interaction
engagement will be initiated in a short period of time despite cultural differences. The engagement of
the Nordstrom in the local markets of Italy will be supported by retailer experts in the targeted regions
of operations.
● Schedule/Time Frame
The project expansion for the Nordstrom company in the Italy local markets will be initiated
in June 2019. The project is designed to be completed before the end of the season, according to
Europeans market development. The Nordstrom company will introduce the key brand of clothing
products according to the preference and needs of potential customers. The growth of relationships
with local clients will take time to develop according to vendor interaction practices with community
members (Mohr, & Batsakis, 2018). The Seller-Buyer relationship in Italy will be initiated through
the evolution of time because they have a complex undertaking, especially when operating in a new
market system. The ultimate goal of initiating the relationship between different groups of
stakeholders is to boost the capabilities of sales in Italy. The project development will be initiated
through expansions strategy, net income, cash flows, and customer base relationship in the new area
of operation. The development of the store involves giving directions on the landmark of the
community and fixtures analysis on the permanent building (Bäversten, & Nordström, 2019). The
Nordstrom company will win the trust of local people by embracing their activities to the benefit of
NORDSTROM INC
6
the clothing business. For example, the solar energy system from the local people of Italy can be
implemented as the main source of energy to run a store.
The investment plan of the company involves some global capital funding strategy for
expanding in Europeans countries. There is an Italian company that had laid some investment in
expanding in new areas according to the geographical regions of the market system. The company
operated for four years, where it has opened more than 15 stores in the New England region
(Nurminen, 2018). The company was operating on losses for a period of six years because of the
failure to form effective market saturation. There were numerous competitors in the business
environment that hindered the expansion effort of the company. The financial statement provides that
a solid business organization will be formed in a period of five years according to the development of
the positive net income.
The TJ Maxx was able to expand in Italy with more than 30 stores; this means that Nordstrom
has the potential ability to expanding to the same geographical region with the same process.
According to the experience of previous companies, the competition was too high for TJ Maxx, but
the Nordstrom company can be able to saturate the market system of the clothing products in Italy.
The development of a new culture provides that online shopping initiates some effective environment
of marketing and advertising products (Nordström, 2016). The Nordstrom company will develop an
online customer-based system where many products will be displayed online to reach many potential
market systems. As such, the company has indicated that that beyond six years of making losses means
there is a need to close the clothing store.
Investment Justification
The capital investment procedure will be developed through a successful method of expanding
to Italy based on the success records of Nordstrom company in other areas. According to the cash
NORDSTROM INC
7
statement, the Nordstrom company will be able to pay a 3% dividend to buy new stock and paying
debts. For the last three years, the Nordstrom company will initiate some strategy through an initial
investment of $1.5 billion to penetrate the existing market of Italy according to the trending markets.
This means that the company had to initiate its own stock instead of expecting the growth of its
products (Mohr, & Batsakis, 2018). The global trade scale in the United States and Europe generate
some small penetrating fees to facilitate trade. There is some motive supporting market development
with gain market share, customer and market bases, competition, improved profits, and global scale
of the increasing arena.
The Nordstrom company has an inventory and record of equipment to be used in 10 stores that
will be put up in Italy. The engagement of diverse market systems in Italy will be regulated and
monitored by the laws and policies of the government system. The completion of the entire project
was initiated through simple regulations of law that do not compromise the market system. An
important business system generated some treatment, quarantine, permits, duty taxes, and government
regulations (Bäversten, & Nordström, 2019). The engagement of the local government was based on
the protection acts of the Nordstrom company. The classification of a good importation system is
developed according to the needs of a Nordstrom company, especially in the development of duties
and tariffs. The declaration of self-assessment initiates some diverse ways of enabling importations
through the customer base system Italy to enforce import restrictions.
Strategic Fit
● Priorities
The Nordstrom organization was developed through financial priorities to align business
activities. The development of financial priorities is based on creative designs, low costs, and creating
insignificant risks for the new brand of the product (Nurminen, 2018). The decision to expand the
NORDSTROM INC
8
business in Italy is based on the initiative of offering differentiated products and services to offer
unique experiences to customers. The idea of leveraging was the foundation for the brand design
according to the various specification of production. The drastic change in brand development can be
to be implemented in the market segment of Europe, Africa, and Asia.
Market analysis indicates that the idea of expanding to the Italy market system with an initial
operating capital of $1.5 million, which was only 0.10% of the total revenue generated in the
Nordstrom company $1.5 billion. This means that the Nordstrom company had made a smart
investment based on cash available (Nordström, 2016). As such, the Italy markets system will align
models of the brand, and a small investment of 10 stores will grow to more potential markets system.
The experience in the Nordstrom for over 100 years generates some safe financial matters for the
company. The sense of discovery for brand development creates compelling collaborations on regular
price selling on preferred brands. The strategic plan of the business operations was initiated based on
core values of solving the needs of customers.
● Microeconomic Environments
The global operation of the Nordstrom company generates some strong market operations
according to the growth of 10 stores established. The idea of expanding to a potential market system
for more than five years is enough time for Nordstrom to create a strong brand of product. The fashion
development for Nordstrom products is initiated through attractive sites that correspond with the
initial plan of full-lines stores (Mohr, & Batsakis, 2018). The TJ Maxx is starting a business system
that later expanded to most international markets like Australia, Europe, the US, and Canada. As such,
low-risk investment practices of Nordstrom ensure and effective approach to long-term operations
and forming profitable companies. The development of the international business system is based on
an economic, strategic stream for external and internal contingencies.
NORDSTROM INC
9
● Comparative Advantage
There are competence and comparative advantage for the expansion strategy of the Nordstrom
based on the primary details of customers’ experiences. The engagement of the TJ Maxx was based
on investment strategy, but the main focus of Nordstrom company is to build effective relationships
of customers’ experience and separate some pointing areas in the company that would block
employee’s engagement. There is a green gesture of nurturing customers’ relationships according to
individual needs and preferences, especially by explicitly addressing customers’ needs through
product development (Bäversten, & Nordström, 2019). The marketing strategy of the Nordstrom is
unique since the company has invested in professional trainers and hired nurturers to empower
employees. The research study indicated that many companies do not provide investment in
empowering employees and increasing customers’ relationships. As such, a Nordstrom company will
do well in international business with new strategies.
NORDSTROM INC
10
References
Bäversten, D., & Nordström, M. (2019). Key Aspects of Implementing a Corporate Sustainability
Strategy in a Decentralized Organization: A Case Study.
Mohr, A., & Batsakis, G. (2018). Firm resources, cultural distance and simultaneous international
expansion in the retail sector. International Business Review, 27(1), 113-124.
Nordström, L. (2016). A long-term perspective on private equity ownership. Ratio Working Paper,
(269).
Nurminen, S. (2018). Social Media Marketing Plan for Online Boutique Miss Chic Bohé.
EXTERNAL CAPITAL FUNDING PROPOSAL
Milestone 6-1
Stefano Veliz
SNHU
External Capital Funding Proposal
1
EXTERNAL CAPITAL FUNDING PROPOSAL
2
Abstract
This paper is designed to provide the reader with awareness into some of the issues faces
businesses. In the global market, there is stiff competition and various risk and opportunities
which requires corporations to measure their risk-reward. Several questions go unanswered if the
risks are not well regulated. These questions are such as ‘is the investment worth it?’ Will
management and stakeholders see a positive return on their investments? These questions are
supposed to be discussed by management in detail. There is a need to consider both internal and
external factors when weighing growth opportunities. Besides, it is essential to analyze the
financial impact decisions and make the necessary recommendations on how to act on those
decisions. Therefore, the risk analyst will work closely with the organization team to create
various developments which will prepare the management team of the company in its project.
These situations will involve the most likely case, best case, and worst case. As a result, by
creating a range of scenarios, it will enable Nordstrom to prepare such events for the better of its
project.
External Capital Funding Proposal
Introduction
Nordstrom is one of the competitive corporations and is involved in selling retail products in the
market. It is also involved in other small businesses, such as operating a boutique business
depending on the geographic location. The U.S. based company is growing and is expecting to
expand into the emerging market regions. However, the company has many other competitors
such as Macy’s, which has expanded its operations to Puerto Rico and Guan. Macy’s is one of
the close competitors of Nordstrom, and it has expanded its various subsidiaries to other states
such as the Bloomingdale’s stores in Dubai and Kuwait, which are under the operation of Al
EXTERNAL CAPITAL FUNDING PROPOSAL
3
Tayer Group LLC under license agreements (Lavin, 2009). Nordstrom company is currently
operating in the United States and Canada. Besides, the company is proposing expansion into
Europe, and focusing on Italy.
Our task as a corporation is to ensure that the stakeholders have a clue about the plans of the
organization, which includes the potential internal and external risks which are connected with
the expansion of the business. To understand the organizational strategy is through mitigating the
risk factors. Besides, we will be looking into various scenarios that are partitioned into three
stages, such as best, moderate, and worst, to provide our project with risk assessment.
Furthermore, we will analyze the financial sustainability of Nordstrom to be enabled to absorb
such investments (Nordstrom,1980). For the organization to measure the financial integrity, they
have to carry out a self-evaluation stress test. Since Nordstrom plans to expand its operation to
another country, various departments need to ensure the best possible direction for expansion is
followed through segment analyzation. In referring to the previous research, it was indicated that
Italy is close to an economic upturn and includes the rise of their middle class.
The rise of the middle class is an added advantage to our plan of expansion into the market.
Nordstrom is considered one of the high-end fashion retail stores in the U.S. and Canada, which
sets its focus on women and men. We aim to focus on the middle class and the upper-class
individuals through the remaining premium retailer. Our company is targeted at buying its
products from the local industry, which will keep our prices down to meet the demands of the
consumers in the area of operation. Buying from the local manufactures is our strategy which
minimizes imports hence decreasing the amount of the products, by using this strategy, our
company will gain a competitive advantage. Therefore, using the business approach, our
management team will explain the technique on the risk factors.
EXTERNAL CAPITAL FUNDING PROPOSAL
4
The direction of the organization is the primary concern and risk association with a business
setting. The project of expansion is in line with the projected risks and their impacts. It is
essential for the organization tending to expand globally to analyze its corporate structure to
ensure the planned expansion can be easily manageable. These structures are such as supply
chain, employee relations, brand integrity, and the formation of management. According to
Plowman et al (2007) the role of the leadership in a company is a very vital internal business
factor. Most companies give their formal structure comprising mission and vision statements.
These are essential in providing the project a direction to follow. Therefore, setting up a business
in another country requires a company such as Nordstrom to focus on their most essential assets
and also to ensure their mission and vision are well taken care of.
The task for the company to set up a new business in another country will be learning the unique
culture and diversity for both their customers and employees. The cultural implications which
result from leadership approaches are such as positive or negative, the effectiveness of
communication, level of family-friendliness, and the value of employees. Workers can have a
positive impact on the business when they feel to be included in the plans of the organization and
management focusing on their wellbeing. This has a significant effect on the finical performance.
Workers should be viewed as one of the essential assets in the success of the business and
investment to a firm. If the management of Nordstrom cannot include employees on their board,
it means the success of the company will be on the verge of the fall in its plan for expansion. The
achievement of the company should be based on the wellbeing of the employees in its strategy of
development. In our retail company, we are committed to sales of our merchandise and persistent
effort of the market to attract positional consumers. With motivated, talented, hardworking
employees, they produce better results as compared to unmotivated, less-talented workers. The
EXTERNAL CAPITAL FUNDING PROPOSAL
5
organizational processes and the relationship created among various departments and workers
have a substantial impact on the business and can enhance effectiveness and efficiency.
From the above, we mentioned the structure, but it is a significant internal risk, which is
overwhelming financial impacts. Therefore, Nordstrom requires to be aware of several internal
components such as product and business development, supply chain management, and
management structure, which can impact their success in the underway project. The operation of
Nordstrom is in one geographical area in the U.S., which handles all parts of Europe. Therefore,
Nordstrom requires to analyze their structure to secure the decision to either expand corporate
offices to Europe for projected expansion or consider this a concept store and later investment
into restricting their firm. Besides, it requires to continuously monitor its performance to
dedicate the direction of their geographical structure. The export taxes in Italy are competitive in
the region, but with the government, which is unstable, these items are likely to change. A team
needs to be assigned to tackle this area in ensuring the measurement of internal risk of the
Nordstrom company is subjected to is well managed.
The company is required to utilize the practices of the interdepartmental to promote every
department in communication with each other such as human resources, operations, finance,
business is supposed to be connected with the existing and future situations. With this kind of
communication, it allows Nordstrom company to alleviate the intensity of the internal risk which
the company will be exposed to. Tools for measurement such as performance indicators,
employment relations, internal surveys ensure the company is closely connected to the objectives
of the project and those of the entire company.
External
EXTERNAL CAPITAL FUNDING PROPOSAL
6
There is various internal risk associated with the company a require to be reviewed and be
monitored continuously to ensure their effect on the company business is alienated. Workers
relations is one of the internal factors, understanding the culture and the demographics of the
workers is an external factor. The primary and most significant of the Nordstrom company is the
system of education in Italy. The education system of a country can play a vital role in
incorporating a new social group into the nation. It means the board and the management of
Nordstrom Inc. need to understand the education system of the country of expansion to be able to
incorporate the social groups. Even though the regional differences and class, the institutions of
the nation were successful in the development of the nationalist feeling. This has an impact on
the success of the company. Therefore, the company needs to find the skilled labor force, which
can be productive and enhance the success of the company. Over several years, there has been a
movement by the government, which was aimed at increasing the education of middle-class
individuals, promoting urban growth, and increasing the economic growth of the middle class.
This is essential to the company in its project of expanding to Italy because there will ready and
trained labor force which will ensure quality.
It is essential for the companies to monitor both internal and external risks because they are
vulnerable to the environment, and so can affect the company, which has a plan of expansion in
Italy. To control both internal and external risks is essential to promote forecasting with
reliability, and thus, the company can get a good chance of reducing the risk. There are various
ways of measuring the risk, be it qualitative or quantitative for the better of the company. In this
case, the most significant external risks are political and economic risks. These are the risks in
which the company should focus and work in its plan of expansion in Europe. The teams of
EXTERNAL CAPITAL FUNDING PROPOSAL
7
Nordstrom are supposed to measure the amount of fluctuation and carry out the assessment as it
is occurring to find out the best solution for Nordstrom.
Microeconomic
There were several measures the Italian government took, which contributed to the sharp
contraction in consumption as there was price increment due to the restriction of the foreign
currency, while the rates of public services increased, which also led to the increase of the annual
inflation above 20%. These created a worry on retailer spending, but the government has come
up with measures to promote the growth of the economy in this sector. With the programs, they
encourage encouraging gains. The standards were essential to the Italia economy because they
created the necessary conditions which were aimed at attracting foreign investment to the
country, within the framework of higher consumer confidence and more transparent rules for
investors.
The agreement from all analysts says that Nordstrom will see improvements in their economy,
and this will increase the competition rate for both local and international markets (Simpsom,
2001). The focus of Nordstrom is targeting customers who understand the real competition in
which the company is ready for such competition to better its services. Besides, the company is
committed to keeping the same business model, with slight modifications. With our start, we will
begin with the opening of the women concept store, which is focused on the Nordstrom target
population. Secondly, the company is aimed at promoting e-commerce, which has been essential
in its gains in Italia. The report from the Euro monitor shows that penetration through the
internet in Italy is at about 85%, and the retailing through the internet is increased to about 59%.
The strategy of pricing remains the same because of the various and essential techniques used by
the company are working and other supporting subsidiaries. The same products sold at the
EXTERNAL CAPITAL FUNDING PROPOSAL
8
Nordstrom rack will be sold in the newly opened market and offer similar products to keep the
prices competitive and as a way of attracting customers. One of the Nordstrom representatives in
an interview mentioned that the company is aware most of the customers shop with them, and
therefore, they are persistent at serving their customers in many ways, which is essential to the
overall business. Due to the combination of high-end products and discounted products found at
the racks of Nordstrom and combines with e-commerce will enhance the company to gain a
competitive advantage if Italy.
Alternate Financial
The analysts of finance are paying close attention to the sending of the investment of the
company in producing the revenue. However, the company has been able to gain a return on
investment of about 10.43%. In the second quarter, the net earnings were approximately $112
million. Before interest and taxes, the profits were $218.01 million, which represented 5.8% of
the net sales as compared with the net profits, which were $ 118 million and EBIT of $
222million, which represents 6.1% of the net sales during the fiscal period of the same year. If
the net sales of the company were to increase by 20%, it means the company will see significant
market gains in the region of expansion. Therefore, Nordstrom Inc. will utilize its revenue and
pay back the loans, which was used to open the project and continue with the expansion
operations in the country. Also, the sustainability of 20% is supposed to be taken into account. If
there is a decline of 20% in the quarter of the financial year, then it means the Nordstrom Inc.
company needs to analyze the shortfall of sales happened. Frequently, times selling off various
products at a discounted price to remove unused inventory. Nordstrom, in its operation over two
years, there is no such experience of the decrease sales, which shows the company is fully
dedicated to promoting its sales.
EXTERNAL CAPITAL FUNDING PROPOSAL
9
Time values of Money
The time value of money is the available idea that the amount of money available is worth as
compared with the same amount in its future due to its potential earning capacity. The investors
of Nordstrom will have to review if their original investments are going to be worth or their
money will be used somewhere else in the company. The report shows that the business
expansion in Italy is expected to be of high returns because there is not any other competitor who
is comparable with Nordstrom in the region.
Conclusion
Nordstrom Inc. is continuously looking for innovative ways to keep its business competitive. The
project of the incorporation to expand to Europe in a creative approach, which is maintained and
aligns with the success in the U.S. and Canada. In our company, we have analyzed our risk
factors, both internal and external, and we have come up with solutions to alleviate the risk. We
have as well-reviewed the microeconomics of Italy to make sure that the company team has
made a move on various economic variables such as pricing policy and competition are accurate
and flexible in an attempt to get into the market in the region. Besides, we have looked into
multiple alternate financial scenarios. We have examined both scenarios, both the best and
worst-case, and reviewed the plan of the company to ensure the project can align with the
economic fluctuations.
EXTERNAL CAPITAL FUNDING PROPOSAL
10
References
DeFilipps, F. A., Lipper, R. O., Winters Jr, L. R., Nordstrom, L. A., & Szechy, D. J. (1980). U.S.
Patent No. 4,239,404. Washington, DC: U.S. Patent and Trademark Office.
Dickenbrok, C., & Martinez, L. F. (2018). Communicating green fashion across different
cultures and geographical regions. International Review on Public and Nonprofit Marketing,
15(2), 127-141.
EXTERNAL CAPITAL FUNDING PROPOSAL
11
A. Investopedia Corporation. (2017). A. Investopedia Corporation. Retrieved from A.
Investopedia Corporation Web site:
https://www.investopedia.com/terms/t/timevalueofmoney.asp
Lavin, M. (2009). Marshall Field’s becomes Macy’s: understanding retail brand. International
Journal of Retail & Distribution Management, 37(11), 993-1007.
Schultz, H., & Gordon, J. (2012). Onward: How Starbucks fought for its life without losing its
soul. Rodale Books.
Plowman, D. A., Solansky, S., Beck, T. E., Baker, L., Kulkarni, M., & Travis, D. V. (2007). The
role of leadership in emergent, self-organization. The leadership quarterly, 18(4), 341-356.
Simpsom, J. D. (2001). Did may company’s acquisition of associated dry goods corporations
reduce competition? An event study analysis. Review of Industrial Organization, 18(4), 351-362.
Veliz 1
Milestone 7-2
Stefano Veliz
SNHU
December 15, 2019
Veliz 2
Justification
The expansion project of the Nordstrom organization will develop through an online product
portfolio. There is a need to establish some financial summary to have an understanding of the market
growth of new products. The success will be tracked through cumulative outflows and cash benefits
through the annual increment of the product. The company’s revenue will generate some increment
and growth of the new market system. The excel spreadsheet generates some analysis for inflows and
outflows of the organization based on ten years plan. The development of these data is based on
financial principles and theories of depreciation and assumptions (Rostamkalaei, & Freel, 2016). The
demand elements in the new market system have been drafted to generate all prices for products. The
capital purchase costs are based on the assumption of demands and analysis made for cumulative cash
benefits. The initial investment of the project involves $20,000, which is annual operating cash for
the new expansion project in the form. The reduction level of the organization will happen at a
constant rate to generate some effective measures of capital purchase costs. The economic change and
fluctuation rate make the income and expenses of new products to change every year. These
assumptions are made through the understanding of the cash inflow in the company.
The free cashflows elements in the organization generate some effective assumption of
changing expenses from the first year to the tenth year. The working capital in the 10th year led to
some variation of deductions (Fisher, Kotha, & Lahiri, 2016). The increment analysis of the firm
generates some new programs to maintain the level of expansion in the industry based on funding
activities of new programs. The product development is able to increase essential elements that would
help support expansion strategies. It is critical for the firm to generate a good system of product
developing, especially in the international market system. With this analysis, it is clear that product
development in the new market system will generate some higher profits margin in terms of cash
flows for the projected ten years program.
Veliz 3
Financing Impact
Methodology and Assumptions in the Financial Analysis
The future expectations of cash development in the form are based on the exclusion of relevant
cash for various financial analysis. This means that cash inflows in the company are expected to
increase according to the initial decision of investing. The company has committed costs for all cash
and profit development in the new market system. This means the cash incremental cash flow in the
organization creates a question of primary elements to focus on the analysis. The development of the
new market system required the company to have some payable amount that would scrap the value of
initial capital. The information budget of the company generates operating 1,500 units in the analysis
of the end of year revenue (Grant, 2016). The total variance of the sold items will be supported by
rates and rent associated with a new store establishment for the Nordstrom organization. The
investment of the company for international expansion involves $20,000 working capital. The amount
is calculated as the inflow amount according to the development of variable costs for the initial
investment.
The requirement of the increment cash flow of the company generates new modifications of
rising cash in terms of assessing individual units. This means that cash on these requires will tends to
rise annually until the modification of the project is completed. The key advantage of supporting
incremental cash flow generates some questions of time in the incremental cash flows. This means
that the cash inflow of the organization in annual modification assessment will generate $ 6,000 extra
cash before the project is completed (Du, Guariglia, & Newman, 2015). The funding decision in the
Nordstrom organization is based on ten years of plan operations in the internal markets system. The
incremental cash flow generates some expected level of funding decisions in terms of operating
expenses. The incremental cash flow of the expansion project generates depreciation expenses
according to the computation criteria of the baseline amount of each year. The cost acquisition
Veliz 4
generates some good annual fixed operating amounts. The depreciation of operating expenses in the
organization involves a cash flow of $100,000 based on the assumption of cash sales (Rostamkalaei,
& Freel, 2016). This means that current liabilities and assets initiate some good measures of working
capital in terms of sales. The financial analysis makes assumptions that the estimated sales of
expansion projects will not be regular. The materialization of product development generates some
additional costs on the geographical territory of the company. The customer base system helped in
initiating the establishment of new distribution channels in the migration of new geographical areas.
Financial Projection of Revenue
The development of the financial projection of the new project of expansion is initiated
according to different primary activities like promotions, marketing, and advertisement of products.
Their working capital needs to lay some funds in expenses of adverting and promotions to ensure an
effective market system of new product development. The initial revenue of the firm provides
development of the cash flow analysis in terms of measuring revenue and expenses of the new firm.
This means that total earnings in the organization will be generated after making deductions on
expenses and pretax values to ensure effective management of cash (Fisher, Kotha, & Lahiri, 2016).
The financial projects generate historical data for similar operating in the international market system.
The prediction is based on the external factors of the market situation. The long-term projection
procedures, as outlined in the period of ten years to indicate the potential operating level of the
business. There are copious numerical data for cash flow and income statement summary.
The financial projection of the company generates profit, expenses, and revenues based on the
projection of every year. The revenue of the firm is projected on goods and services that the Nordstrom
company will provide in the international market system. The prediction criteria for revenue are
initiated through the assessment of bulk items in the market system. The future expenses on respective
years generate some essential encounters of direct sales that the company will make in the
Veliz 5
international market system. The account of expenses involves salary, employees’ wages, equipment
rentals, and materials associated with the management of the business organization (El Ghoul,
Guedhami, & Kim, 2017). There are administrative costs that are predicted according to
telecommunication, office rent, insurance, bank charges, advertising, legal, and accounting. These
expenses are initiated according to the understanding of focusing factors in the analysis of all types
of forecasting of the income statement. The total earnings in the income statement are initiated by
subtracting income taxes and expenses from the revenue of the organization. Net earnings are income
expected in the organization without income taxes.
Financing
Comparison of the Proposed Loan to Alternative Financing Methods
The development of the capital will involve global and internal financing institutions. The
company grew to the international market system will consider the development of retained earnings
in the market system and profit reserve in the company in terms of individual saving. Internal savings
of the company are expected to fund the daily operations of the business system. This means that a
business is able to expand through the capital investment plan. There some pros and cons of raising
working capital through internal financing mechanisms. The advantage of raising money using the
internal mechanism of financing involves the development of a powerful strategy that supports
business operations (Du, Guariglia, & Newman, 2015). The internal funding system provides a good
powerful funding strategy that involves assessment of debt and profit profile in the company. The
conservative option in the organization initiates an effective system of taking full control of the
business system. New partners, creditors, and lenders are able to initiate a good picture of revenue
growth in the company. This means that the revenue of the organization will tend to grow internally.
On the other hand, retained earnings of the business system generate some risks of missing
important opportunities in the international markets. The global financing strategy normally exposes
Veliz 6
the firm to the development of the large market system. Internal funding mechanisms will require
some resources to support the ongoing market system. The company needs some starving cash for a
healthy growth and expansion strategies. This means that a firm will need outside investments in terms
of controlling main market players (Rostamkalaei, & Freel, 2016). The insights and experiences of
the business system generate a higher degree of pursuing a global strategy of the financing criteria.
The weighing decision for the company to use either global or internal funding mechanisms is based
on the disposal advantages of each method. Financing principles are used to assess options according
to the quick expansion of the company for profit sustainability. There will be a steady increment of
growth with global funding criteria compared to self-financing methods.
Viability of the Business Combination
The entry of the market mechanism is assessed through direct and indirect methods of
connecting with the global market system. There some specific commodities which will be used to
assess marketing and production in terms of designing the countertrade wing. The idea process of
entering to new markets system will involve a combination of business strategies of marketing,
sourcing, investment, and control. The idea of marketing will be initiated through the implementation
of marketing efforts according to information gathered on different segments of the business system.
Market entry is developed through intermediary’s system why information is gathered through direct
means (Fisher, Kotha, & Lahiri, 2016). The sourcing system of the firm involves making a purchase
to obtain products of operations. The control and investment venture of the business organization
involve activities of enhancing acquisitions, global partner engagement, and joint venture. As such,
the decision of new market entry is based on a chain of value generated on integration and activities
of product development.
This is a reasonable option for the company because it initiates some effective approaches to
foreign market entry. The company has the advantage of exploring the development of home base
Veliz 7
development markets where there are fewer risks of investing overseas. The company is given the
opportunity to learn about the performances and operations of the overseas market system through the
idea of mortal and bricks overseas investment. The criteria for entering a foreign market system
generate some good measures of overseas operations (El Ghoul, Guedhami, & Kim, 2017). The
organization is able to generate some aggressive measures of exporting products to overseas countries
where many traders tend to get appropriate research elements in the market system. Many firms are
able to aggressively develop research elements, distributions, promotions, prices, and products. The
structural adjustment programs of the organization are based on motivational factors of foreign
exchange earning according to expansion strategies of the organization.
Track Record
Solid Financial Footing and Low Risk for Default
The financial foundation of the organization is established through reinforcement of key
building factors. The solid financial foot of the business organization generates some important
aspects of building effective financial statements. The operation of the business in the international
markets initiates series of analyzing key financial indicators and assessing future financial growth of
the business organization (El Ghoul, Guedhami, & Kim, 2017). The solid financial footing in the
income statement enables the organization to form some concrete foundations of controlling
cashflows. This means that international operations strategies require the Nordstrom organization to
take full control of the market system.
The financial performance of the Nordstrom organization generates some appropriate ratios
through low-risk premiums. Interests in the expected financial statements develop debts which are
established according to trustworthy of the company in international operations. The key factors for
assessing the credit history of the organization involve the development of pf past obligations and
interests’ payments (Rostamkalaei, & Freel, 2016). The increment debts obligations of the business
Veliz 8
system initiate more payments on interest rates, thus good credit history in the organization.
Profitability and liquidity of the company are expected to generate some effective financial positions
in terms of assessing the reliability of the business system. The cash flow statement is expected to
generate insights into business liquidity with a high default risk premium of the organization.
Evidence of Legal and Ethical Financial Behavior
The trustworthy of the firm’s operations in the new market system is assessed through the
moral responsibility of initiating operations. The risk management practices of the business provide
an important procedure for evaluating liquidity and capital based on the social purpose of expansion.
The ethical behavior of the business is supported by recent audits on results to sort the difference
between financial viability on legal and ethical standards (Fisher, Kotha, & Lahiri, 2016). This means
that a company is able to make a decision through the respect of laws to initiate a good investment
environment. The legal system provides an effective way of assessing professional ethics of law and
exploring guiding decisions in terms of professional engagement. The expected return on investment
is expected to grow with an increase in the organization’s trustworthiness.
The legal standards and ethical behavior of the organization are essential tools for assessing
trends on investment. The firm jurisdiction requires adherence to IFR and GAAP standards to create
effective global international environments of operations (Grant, 2016). The legislation provides best
practice actions for where the judgments or decisions are based on the credit history of the
organization. The financial audit ensures ethical and legal decision making in the management system
of the organization. The key legal system of trading involves taking profession actions according to
financial situations and legal principles. These practices will help the Nordstrom organization to have
a grip on the highest ethical and legal standards.
Veliz 9
Analysis of
Incrementals/
Annual
Year 1
Year 2
Year 3
Years
Year Yea Year Yea Yea
Year 5
4
6
r7
8 r 9 r 10
Cash Inflows
Increase in
operating income
Reduced salaries
Reduced defects
Reduced fringe
benefits
Total
Incrementals/
cash inflows
$40,00 $40,00 $40, $40, $40, $40, $40,
0
0
000 000 000 000 000
$90 $90
$900,0 $900,0 $900 $900 $900
$900,000 $900,000 $900,000
0,00 0,00
00
00
,000 ,000 ,000
0
0
$40,00 $40,00 $40, $40, $40, $40, $40,
$40,000 $40,000 $40,000
0
0
000 000 000 000 000
$10,00 $10,00 $10, $10, $10, $10, $10,
$10,000 $10,000 $10,000
0
0
000 000 000 000 000
$18 $18
$180,0 $180,0 $180 $180 $180
$180,000 $180,000 $180,000
0,00 0,00
00
00
,000 ,000 ,000
0
0
$40,000
$40,000
$40,000
References
Du, J., Guariglia, A., & Newman, A. (2015). Do Social Capital Building Strategies Influence the
Financing
Behavior
of
Chinese
Private
Small
and
Medium–Sized
Enterprises?. Entrepreneurship theory and practice, 39(3), 601-631.
El Ghoul, S., Guedhami, O., & Kim, Y. (2017). Country-level institutions, firm value, and the role of
corporate social responsibility initiatives. Journal of International Business Studies, 48(3),
360-385.
Fisher, G., Kotha, S., & Lahiri, A. (2016). Changing with the times: An integrated view of identity,
legitimacy, and new venture life cycles. Academy of Management Review, 41(3), 383-409.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Veliz 10
Rostamkalaei, A., & Freel, M. (2016). The cost of growth: small firms and the pricing of bank
loans. Small Business Economics, 46(2), 255-272.