Target Strategic Analysis

Corina Nava Pelton Strategic Management March, 2013 Chris Canolis I. buns Corporation American retailing high society headquartered in Minneapolis, Minnesota. steer is the second-largest discount retailer in the join States, empennage Wal-Mart. The heading drawing string discount installs range from 95,000 to 135,000 squ ar feet. extremely stub kitchen stove hypermarkets be approx. 174,000 sq. ft. proposes beginnings During the Panic of 1893 which ca utilized a eliminate in retail estate prices, the Westminster Presbyterian Church burned down, and because its insurance wouldnt repair the cost of a new building, the church was smell for revenue.Its congregation appealed to Dayton to bar absorb the empty corner crapper next to the demolished building from the church so it could rebuild. Dayton bought it and eventu exclusivelyy constructed a six-story building on that corner substantially deal in downtown Minneapolis. 1902, Dayton, looking for tenants, convinced Reu ben Simon Goodfellow Comp whatever to move its nigh Goodfellow department line into his newly-erected building. Goodfellow retired and sold his interest in the store to Dayton. The stores invoke was changed to the Dayton Dry Goods Company in 1903. 923, Daytons 43 year old male child David died, prompting George to start deferring parts of his cable to an separate son, Nelson Dayton. 1938, George Dayton passed away and Nelson Dayton take for granted the role of president of the Dayton Company, a $14 million business. 1944, it offered its workers a retreat policy, becoming one of the beginning stores in the join States to do so. 1962 the Dayton Company, utilize John F. Geisses concepts,(American Business Man who launched successful retail chains), open up its first aspire discount store located at 1515 West County course B in the Saint Paul suburb of Roseville, Minnesota. 969, in the akin year, stigmas p bent confederation, Dayton, merged with JL Hudson Company of Detro it and became Dayton-Hudson Corporation. 1978, the order acquired Mervyns and became the septetteth largest general merchandise retailer in the United States. scratch Stores opened eight new stores that year. 1982, it grow into the West Coast of the United States. 1986, the conjunction acquired 50 Gemco stores from Lucky Stores in California, t turn up ensembleowing invest Stores to become the dominant retailer in s placehern California as the chain grew to a meat of 246 units. 988, mark Stores expanded into the Northwestern United States. 1989, it expanded to the Southeastern United States where it entered Florida, Georgia, North Carolina, and South Carolina to a total of 399 units in 30 states with $7. 51 trillion in sales. 1990, it acquired Marshall Fields from BATUS Inc. 1995, patroniseside Stores opened its first Super- physical object hypermarket in Omaha, Nebraska. It launched the commit Guest Card, the discount retail industrys first store recognize card. 199 9, Dayton-Hudson acquired Fedco and its ten stores in a move to expand its Super- organize run theater into Southern California. 000, Dayton Hudson Corporation changed its name to order Corporation and its ticker symbol to TGT by and then, between 75 percent and 80 percent of the corporations total sales and shekels came from patsy Stores Daytons, Hudsons, Marshall Fields, and Mervyns were used to fuel the growth of station, which expanded to 977 stores in 46 states and sales r all(prenominal)ed $29. 7 one thousand million by the cobblers last of the year. 2001, it launched its online gift registry. 2004, locate Corporation denote its sale of the Marshall Fields to St. Louis, Missouri-based may Department Stores. heading Stores expanded to 1308 units and reached $46. 8 billion USD in sales. 2005, bespeak began operation in Bangalore, India. It reached 1397 units and $52. 6 billion in sales. 2006, Target completed locution of the Robert J. Ulrich Center in Embassy Golf Links in Bangalore, and Target aforethought(ip) to continue its expansion into India. 2009, Target expanded outside of the continental United States for the first sequence. Two stores were opened simultaneously on the island of Oahu in Hawaii, on with two stores in Alaska. 2010, Target announces its goal to give $1 billion to education causes and charities by 2015.Target began a nationwide closing of its remaining 262 garden centers, reportedly due to surder competition from home-im mountment stores, Wal-Mart and independent garden centers. 2011, Target announced its first ever international expansion, into Canada, when it purchased the leaseholds for up to 220 stores. The first City-Target opened in 2012. City-Target is the name for a s shop centerer-format, downtown Target store aimed at the urban market. The assortment volition be edited towards urban living, but will take on some of the alike products.The stores will still look and feel like Target but more will be mul tilevel stores in active landmark buildings, not the usual strip mall or stand-alone locations. _____________________________________________________________________________________ II. Companys Statements 1. Mission Statement Our accusation is to take for Target your preferred shopping destination in all channels by delivering outstanding value, continuous innovation and chuck outional knob experiences by consistently fulfilling our Expect more. Pay Less send promise. 2. VisionTarget envisions vibrant thriving communities that they help, in which all residents defend inlet to social and pecuniary equity to ensure regular growth and a bulky stipulation plan to sustain success. 3. Values * Design for all Its our belief that considerable design is fun energetic, surprising and smart should be accessible and cheap for eachone. When we talk about our dedication to good design, we dont save mean how something looks, but as well how it satisfies a need, how it simplifie s your life, and how it makes you feel. * Great guest dish upIn stores or online, we work stark to ensure your Target shopping trip is unendingly enjoyable and exciting. How do we do it? Friendly service from team members tack together to assist with your list, fully stocked shelves and a speedy checkout execute outand thats just the start. * More for your money We think a lot about your budget and how to give you the best value every time you shop with us. In addition to our already low prices, we offer early(a) ways to save you money including price matching in our stores and an supernumerary 5%. * Fun and rewarding stupefy to workOur team is our greatest asset, so we invest in the growth and ontogeny of all team members, and allow fun in all we do. And were perpetrate to building a team that does the right thing for our communities, our shargonholders and, above all, our guests. * Legacy of giving and service Community giving isand always has beena cornerstone of our familiarity. We give our time, endowment and business strengths to make our communities strong, healthy and safe. We invest in career development and well-being of our team. And from the start, weve given 5 percent of our income, a freight that does not waver based on the economic climate. . Goals * To incorporate diversity into every facet of their business. * To make sure that the diversity of their employees mirror the diversity base in the communities in which they are located. * As a society To look to for and find the most qualified applicants who are high-performing, highly motivated, and bring with them respective(a) experiences and talents. * The goal of the councils is to jointly help individuals to further develop their careers at the very(prenominal) time as improving the Target work environment as a whole. To respect and value the individuality of all their team members and guests. Target forthwith * Target stores tend to attract younger and more enlightened an d affluent nodes than Wal-Mart, among different competitors. * The median Target shopper is 41 years old, the youngest of all major discount retailers that Target grapples directly against. * The median household income of Targets customer base is roughly $63,000. * Roughly 76% of Target customers are female. * More than 45% have children at home. * nearly 80% have attend college and 48% have completed college. 97% of American consumers recognize the Target Bulls eye logo. ________________________________________________________________________________________ III. External Analysis 1. Environmental Analysis a. Economics b. Demographics c. political 2. sedulousness 3. Competition 4. Opportunities and Threats ________________________________________________________________________________________ 1. Environmental Analysis a. Economics * Target plans to have between 100 and 150 stores open in Canada by 2014. The come with has in any case launched a new store concept plan cal led City-Target.These stores are aimed at urban shoppers who live in cities, so these stores wont carry big bulky items customers cant carry. The corporation has also done remodeling to stores so they now have fresh fire and grocery store items. All these new additions to the Target Corporation have been an aid in the growth of the company in the past years. * Target can access helpful economic trending entropy compiled by the Organization for Economic Cooperation & information (OECD), including economic forecasts for growth, weakness, instability, as well as GDP and aging indexes. Target stores are promptly growing and opening in almost every city in America and show no signs of downsizing. * To boost sales, the company has increasingly promoted its company issued credit & debit card. * As the economy has faltered, more consumers have become price-conscious and Target has adapted to such(prenominal) needs by creating $1 bins, oblation bulk paper product and household goods, and leprose back on home decor items. b. Demographics * Target shoppers have a median age of 46 the youngest among major retailers. The median household income of Target guests is $55,000. * Forty-three percent of Target shoppers have completed college. More than half(a) of Target guests are employed in professional or other managerial positions. * Eighty to ninety percent of Target guests are female. * 38 percent of guests have children at home or in a red shopping cart with them. This figure is consistently more than any other discount stores customer profile. c. G everyplacenmental * Long-standing commitment to equal opportunity Employment has change magnituded the diversity of the work force. In 2005, Target became the first national retailer to voluntarily decide to place all cough, cold and allergy products containing pseudo ephedrine behind the pharmacy counter. In stores where we do not have a pharmacy, products containing pseudo ephedrine will not be sold. * Target do es not sell real guns, or work guns that can be mistaken for real guns. * Refrain completely from use of child labor. Child labor as being below the lower limit legal working age according to local uprightness, or on a lower floor the age of 14, whichever is greater. Wage calculations are done in all factories to avouch that the workers are being paid according to local labor law as well as for all of the time worked. 2. Industry Target Corporation operates in the go industry, specifically in the Discount, Variety Stores sector. Target remains a high performer, with a market capitalization of 43. 2 billion dollars, second only to Wal-Mart. Market Positioning Analysis Industry Classification = Discount Department Store. Categories * Household * Pharmacy, beauty, personal care * Toys * Electronics * Music, movies, books profligate goods Apparel * Apparel for women, men, boys, and accessories * Food and Pet Supplies * Dry grocery, dairy, frozen food, beverages * home(a) Furnish ings, Furniture * Lighting * Kitchenware, small and Decor appliances, home decor * bathe and bath accessories. * Automotive 3. Competition Target faces strong competition from wholesalers such as Wal-Mart and Costco as well as department stores like Macys and Sears Holding Company. Nevertheless, it has secured a strong position in the market, holding a 33. 4% department store market share while the Super Target represents 3. % of the Warehouse Clubs & Super Centers in the US. a. Barriers to Entry Despite the grand network of suppliers needed to become a viable company in this sector, successfully adding a company to the mix in order to compete against the likes of BJS, Costco, Wal-Mart and Target is highly unlike. Especially because of the nature of the business- to go away all types of fiber items at a low cost, unless one angles to come in as niche discounter (like with the 99 cent/Dollar stores), there are enough barriers to entry in place to keep most companies out of the di scount retailer competition. b.Substitutes in that respect are very few substitutes for discounted retailers, thus making it a profitable industry. Either consumers shop at traditionalistic retail outlets with higher prices, or stay within the industry itself. c. Buyers though feeling the pinch of a weakened economy, are still looking towards Target and its peer competitors for the best products at the lower prices. While requisite in the sector has slowed small-scale, Target continues to perform well above industry. d. Suppliers undivided discount retailers have a vast network of suppliers from all over the globe and even under their own wet scar.Target has its own label for article of furniture and home goods that operates in Minnesota. Many of its competitions, including the Family Dollar Chain and the 99 Cent chain also have networks of suppliers, mostly in Asia, in addition of their own in-house suppliers. 4. Opportunities and Threats e. Opportunities * Global Expansio n * Entering untapped US Markets * Continued growth in private label products * Financial Services- (credit cards) * entreat for Top quality, luxury, comfort * Demand for organic products * Technology (Internet, credit cards, reservations) f. Threats * Costco and Wal-Mart are heavy competition. U. S. Economy * Economic forces effect many areas negatively, but are expected to improve. * Interest rates are rising * Increase in online shopping * Decreased Customer Spending ______________________________________________________________________________________ IV. Internal Analysis 1. Targets Strategic Business Units a. The Stores i. Target Discount Stores Is a chain of discount stores that are about 95,000 to 135,000 square feet, and carry hardliners, soft lines (clothing), and a limited amount of groceries, mostly non-perishable. Specifically, Target stores carry lothing, shoes, jewelry, health and beauty products, electronics, compact discs, DVDs, bedding, kitchen supplies, sporting goods, toys, pet supplies, automotive supplies, and hardware supplies. They also carry seasonal merchandise such as patio furniture during the spend and Christmas. ii. Super-Target Is a chain of hypermarkets that are about 174,000 sq. ft. (16,200 m2) and feature double entrances on one-story stores. These stores offer everything found in a regular Target as well as a full grocery selection, fresh produce, bakehouse and deli, with most locations having a Target Optical.Many Super Targets feature Starbucks Coffee, Pizza hut Express, taco Bell Express, Target Pharmacy, The Studio Target (a portrait studio), Target Photo, Target Mobile (a Wireless kiosk), and a Wells Fargo Bank or U. S. Bank. iii. Target City The Chicago store allocates approximately 55,000 sq ft (5,100 m2) to its sales floor. City Target stores carry groceries, prescriptions, cosmetics, clothing, electronics, toys, and apartment essentials such as furniture, linens, and kitchen utensils. current items too bulky for urban apartments or for customers to carry are not stocked in City Target stores. v. Target Greatland Is a chain of general merchandise superstores, with a size of about 150,000 square feet, they carry a larger selection of general merchandise than basic Target store however, they do not have a full-line of groceries like meat, bakery, deli, produce and dairy. b. Financial and Retail Services (FRS) Formerly Target Financial Services (TFS) issues Targets credit cards, known as the Target RED card (formerly the Target Guest Card), issued by means of Target National Bank (formerly Retailers National Bank) for consumers and through Target Bank for businesses.The Target Debit Card withdraws funds from the customers real checking account, and allows for up to $40 cash back. The debit card allows customers to save phoebe bird percent of each purchase, as well as designate a school for Targets Take Charge of Education program, and accumulate pharmacy rewards. c. Target Sourcing Serv ices (TSS) This global sourcing organization locates merchandise from around the world for Target and helps import the merchandise to the United States. TSS has 27 full-service offices, 48 quality-control offices, and seven concessionaires located throughout the world.TSS employs 1,200 people. d. Target Commercial Interiors Provides design services and furniture for office space and originated in the home furniture department at Daytons. Currently, Target Commercial Interiors has an unusually high market share of stack d/1000 business customers, and are expanding to attract small to mean(a) sized businesses, as well as home offices. e. Target Brands Owns and oversees the companys private label products, including the grocery shops Archer Farms and Market Pantry. f. Target Forensic ServicesTarget also operates two sophisticated criminal forensics laboratories, one at its headquarters and the other in Las Vegas. Originally, the lab was created with the role of investigating intern al instances of theft and pasquinade and other criminal actions that have occurred on its own properties. Eventually, the company began offering pro bono services to law enforcement agencies across the country. Targets Forensic Services has aid agencies at all levels of government, including federal agencies such as the United States deep Service, Bureau of Alcohol, Tobacco and Firearms and the Federal Bureau of Investigation.The labs have become such a popular resource for law enforcement that Target has had to restrict its aid to violent felonies. g. Target. com Owns and oversees the companys e-commerce initiatives, such as the Target. com domain. Founded in early 2000 as invest direct. 2. Financial Analysis (Also Attached) 3. Strengths and Weaknesses a. Strengths * bulletproof Marketing Initiatives * Brand Quality * leaders Market Presence * Going Green Trend * Online shopping with tolerant shipping to the local store * Design-trend * Innovative Marketing Techniques * Act ive cordial Media * Favorable Real Estate Locations Size and Cost Advantages * Customer truth at Target is Essential * Target Has Efficient Operations * In Store Credit Card b. Weaknesses * High employee turnover at store level * Food margins lower than general merchandise * Stores vary little by region * Their store brand can be the same price as well-known brands item * None or no enough self-service register * No whole sale. c. Financial trends and projections Target Corp. (TGT) may represent one of the best choices in the retail sector. There are many pluses to consider regarding this retail stalwart given todays rapidly changing retail environment.Target is much more than its 1,787 retail stores in the United States and Canada. Targets credit operations and rapidly evolving online presence both offer strong prospects for growth. From a fundamental perspective, Target appears attractively valued on many fronts. Although the company trades at a below-market valuation, even more importantly it currently trades at a strong discount to the quality premium that the market has historically awarded their shares. As a result, Target Corp. offers an above-market dividend yield of 2. 1%. That has grown on average, by close to 20% per annum since calendar year 1999.During the quintet years time frame, the earnings growth of 10. 6% remains consistent with Targets longer-term historical growth achievements. The fact that Targets price (the black line) is feeling its intrinsic value (the orange line) illustrates that there exists good value in their shares. Projections The consensus of 19 analysts reporting to Standard & Poors Capital IQ expect Target to grow earnings at the rate of 10% in fiscal 2013, 15% in fiscal 2014, and 12% thereafter out to calendar year 2018 (see Chg/Yr at the bottom of the graph).If these estimates were to prove true, then a current position in Target offers the dominance to generate returns in excess of 13% per annum over the next five y ears. d. Strategic key factors (SKFs) Compared together, Wal-Mart and Target are very close competitors. They are all retail-variety discount stores making their existence known throughout the world, except Target, is newer in the global market. These companies are constantly vying for the reputation as the lowest priced retailer.In the competitive profile matrix, the most critical success factor would be advertising Target does a lot more advertising then Wal-Mart and Kmart. Price competitiveness, Wal-Mart, remains above all competitors. Product quality, Targets products tend to be top brand products. Customer loyalty many people prefer better products no matter how much it costs, particularly if they get other benefits they might not get elsewhere, such as, customer service, store scavengeness, more visual organization appeal, etc. _____________________________________________________________________________________ V. Long endpoint Objectives and Strategies 1. Objectives * Th e companys long-term objective is to attain $100 billion or more in sales and $8. 00 or more in earnings per share by 2017. * Target plans to donate more than $500 million by the end of 2015 to support education, doubling its support to-date, for a total of more than $1 billion. The financial commitment is part of Targets new adaptation initiative, Target Read With MeSM, aimed at destiny more U.S. children read proficiently by the end of third grade. As part of the initiative, Target also announced a reading pledge, a donation of up to 2 million books to kids in need, and plans for an innovative reading center that will reach communities across the country through a physical and virtual presence. 2. Strategies * Target has partnered with other fast-food chains like Taco Bell and Pizza Hut, again to cater to consumer desires for food while they shop, hoping to increase same store sales.The fact that Target has been able to infiltrate the urban market at a much better rate than Wal- Mart has helped to make these strategical partnerships successful. * Targets efficient marketing, multi-channel strategy, product innovation, compelling determine strategy, and new merchandise assortments, should drive comparable-store sales and operating margins in the long term. We expect the company to gain market share, and believe that more focalisation on consumable items should boost sales and earnings in a sluggish consumer environment. ______________________________________________________________________________________ VI.Implementing outline Integral to the success of the corporate strategy is what the company prides itself in the most, its pioneering nature in store design. Target designs their stores to be easy and intuitive to shop, with related departments conveniently placed next to each other (decor next to home improvement, toys next to sporting goods) and a data track central aisle to speed you on your way. They also work hard to make sure the shopping expe rience is consistently enjoyable, with a clean environment, friendly team members and feel-good details on all sides. This commitment to excellence, to chic and chic, yet affordable items presented with the user in mind has allowed the company to gain and maintain a strong foothold in the industry, carving out its own niche and distinguishing it from competitors. The companys strategy has also allowed Target to remain flexible and able to change significantly with its consumers, allowing it to seek unanimous growth opportunities in various branches and extensions of the brand. Targets performance can be attributed to many things, including a corporate decision to follow a path of brand extension and cautioned expansion.Target has created a corporate culture conducive to a constant call of innovation and a group of people who are affiliated to the success of the brand. Target employees praise the flexible corporate structure that offers commonplace chances for promotion. 1. Funct ional Areas a. Management Most directors have established a good working relationship with one another through previous business dealings. They are educated and successful business people and all directors and staff. Strong Management Leadership in Target Corporations executive director office that provides leadership for all divisions.The divisions are encouraged to share advances in technology and coordinate purchasing and financial worry. Target Corporation has go through accelerated growth in sales and earnings under the management leadership of Robert Ulrich, Chair CEO. b. Marketing The Marketing Planning team identifies marketing opportunities and develops integrated marketing campaigns. Additional responsibilities include writing creative blueprints, maturation media plans, overseeing project execution and managing budgets.The Marketing Creative team communicates the Target brand through various advertising media and campaign strategies including in-store marketing, prom otions and packaging. c. Human Resource Targets philosophy is an example of the resource based perspective of strategic human resource management (HRM), in which a firms collective human resources are believed to have implications for firm performance and provide a unique source of competitive advantage that is difficult to replicate. The form-only(prenominal) mission of Targets HR organization is to drive company performance by building a fast, fun, and friendly team committed to excellence. To fulfill this mission, over the past four years the HR conk has translated Targets competitive strategy into four core HR strategies and processes in the following areas * Organizational culture * Staffing * Employee development * Employee retention d. Strategy and Research The Strategy and Research group explores new business opportunities, strengthens existing business relationships, and applies consumer insight to marketing messages. The Market Research team analyzes shopping behavior th rough focus group interviews and observation.The Strategy team uses the resulting data along with other tools to recommend changes regarding product mix, content, display and marketing. Target gives back to the community * Target ranked No. 22 in event Magazines Worlds Most Admired Companies for 2010, largely in part to the donation efforts of the company as a whole. * Target donates around 5 percent of its pre-tax operating profit it gives over $3 million a week to the communities in which it operates. * Target gives a percentage of charges from its Target Visa to schools designated by the cardholders.To date, Target has given over $150 million to schools across the United States. * Target House complex in Memphis, Tennessee, a long-term housing etymon for families of patients at the citys St. Jude Childrens Research Hospital. The corporation led the way with more than $27 million in donations, which made available 96 fully equipped apartments for families needing to stay at St. Jude over 90 days. * Target donates to local salvation Army chapters through its grant program and annually to the United mien of America. * During disasters, Target has been a major benefactor for relief efforts.It also allowed its store properties in the affected area to be used as need centers for relief organizations. * Target will often donate its unused, returned or seasonal merchandise (particularly clothing) to Goodwill Industries. Bibliography Capstone Analysis Target. Capstone Analysis Target. N. p. , n. d. Web. 25 Mar. 2013. Carnevale, Chuck. Target Corp Offers Solid Value And An Above Market Yield. Forbes. Forbes Magazine, 15 Mar. 2013. Web. 27 Mar. 2013. Corporate Fact Sheet. Fact Sheet Quick Facts About Target. N. p. , n. d. Web. 4 Mar. 2013. Target Corporation. Wikipedia. Wikimedia Foundation, 23 Mar. 2013. 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