Nordstrom and Capital Budgeting Paper

Nordstrom is a company situated in Seattle in the US. The company initially started as a retail business, which dealt with retailing shoes .by 1946, the company was among the top in shoe selling in the US, and the company is driven by the motive of becoming the leading in the digital world as the best fashion retailer.

It aims at relation g with clients via what it sees as the trio of strategic pillars that include product provision, better delivery, and dealing with the company strengths via the branding of Nordstrom. That company offers diversified products of high quality, private, and name. They deal with cosmetics, shoes, and accessories.

Nordstrom aims at delivering the best services to the clients, and the need to expand their business to be in line with the demand and the client’s need is what poses risks to the company. Via capital budgeting, the company is likely to face several threats, both internal and external, which may endanger the company’s existence.

Capital budgeting is used about the whole process in which it involves decision making in investments at decision-making long-term decisions. For income production and purchase of an organisation’s assets, it uses the capital budget in those activities. There is another relevant term that is frequently used in budgeting and is the operating cost.

Operating cost refers to a combination of various costs and expenses like the expected cost for the future, and the predicted income for 12 months (Damodaran,2008). The essentiality of the operational budget is that it is used in daily operations and meets the daily organizations expenses like the wages, bills, and rents of the floor space.

The reason why the operating budget is usually estimated is that the budget is compiled long before the accounting process. Capital budgeting is one of the challenges that need to be analysed by the Nordstrom company to remain competitive on the market

Reference

Damodaran, A. (2008). Strategic Risk Taking: A Framework for Risk Management. Upper Saddle River, NJ: Pearson Prentice Hall.

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