Identification of Problems and Justification for Target Corporation - Case Study Example

Identification of Problems and Justification Introduction Target Corporation had been a success in the US. However, the Target Company failed to realize success in Canada. It is estimated that the company made losses close to $994 million yet it had anticipated to realize revenue of one billion dollar the year it was launched in Canada. This was a shock to many with the management inclusive. There are a number of factors that contributed to the downfall and woeful performance of the organization. The launching of the project and the time period for its commencement was hurriedly done. Experts viewed that the company’s predicaments were as a result of poor management. The management system was not in touch with the realities of the Canadian consumers needs. The analogous approach by the management without incorporating the difference in dynamics in culture, demographic and perception of Canadians in comparison to the US consumers by the management played a key role. However, current the leadership of the company has exchanged hands from Tony Fisher to Mark Schindele. This clearly demonstrates that indeed failure of success of the company emanated from the management execution (which might have been poor). Mark Schindele has the mandate and the responsibility to ensure that Target Canada is revived (Pirouz and Hong Para 1). Sourcing merchandise was a critical problem at the company. The storing inventory and distribution of products to the stores doubled the problem. Moreover, Target Canada relied on retailers to distribute its merchandise hence stocking became a real problem. Keeping shelves stocked with minimum stock proved challenging for the company. Majority of the stores were empty. It is completely impossible to sell products that are not available. In less than a year Target opened more than a hundred store with few national distribution centers that were to services these stores. It was impossible to distribute the right product to different stores in a manner that would commensurate with the products that the respective stores actually needed. For instant, in Windsor store, the products offered did not match the taste and preference of the locals. Customers would walk into the stores and would hardly find the desired products. The management was unconscious of the customers’ need analysis at its various stores. Many shelves were empty because the stores had too many that they did not need and had little that they needed. It is difficult, in fact next to impossible to change customers shopping habits with empty shelves. Impulse buying may be limited in such scenarios. Basic commodities such as food and other consumables (which are known to run repeat business) were most cases unavailable. In addition, replenishing the products at the stores was poor due to the poor execution of the distribution strategies. The most affected products were the perishable products. Food and grocery being sourced by a potential competitor called Sobey. Perhaps Sobey stalled in its partnership with Target Company in order to have a competitive age. Another instant was the poor choice of in-store coffee shop. Target Canada was widely and wildly anticipated to prefer Tim Holtorns Company to Starbucks as an in-store coffee shop. Experts view that had the company partnered with Tim Holtorns then it would have been an ideally strategy to enter into the Canadian market using Tim Holtorns (Pirouz and Hong Para 4). Social media was abuzz with complains that at the stores there were slow checkout processes and length of checkout lines. This was attributed to training deficiency of staff members. Most leadership positions were held by the US officials. International Assignees (IAs) was their common reference names. The international assignees were not accountable as they were in the US and they suppressed ideas that were put across by the Canadian employees. The international assignees openly and blatantly blamed the host workers that they were lazy. They swam with the perception of their mother country’s way of retailing thus neglecting the tastes and attitude of the Canadians. This created animosity and ill feeling between the Canadian workers and the US workers of Target Canada in Canada. At the onset after the company bought majority of its stores from Zeller Inc the former employees to that company were not guaranteed of jobs at Target Company. They would have been ideal in helping this company to acclimatize in a new marketing environment being it was the first time the company was expanding beyond the US borders (Pirouz and Hong Para 4) The other problems besides the above illuminated were high pricing of products compare to rivals. The pricing of food products were higher by 8.6 percent compared to Wal-Mart. Wal-Mart is the second largest retailer in Canada. Most firms price their products in two ways. By skimming and factoring in the competitive price in relation to prices offered by rival companies. Pricing by skimming is normally higher as it psychologically manipulates customers’ thoughts that expensive products are of high quality. However, Target products were expensive and Canadians who shopped in US Target stores claimed that their prices were highly inflated. It was therefore unable to compete with it main rivals-Wal-Mart and Canadian Tire (Pirouz and Hong Para 1). Alternative Solution to the problems and recommendation The management crisis can be solved by changing leadership at every structure from the top echelon of the management to the bottom leadership structure of the company. Management entails doing things right while leadership involves doing the right things (Plunket 4). In reference to Target Canada management leadership, it is crystal clear that decisions made on execution of programs that run the company are not well weighed or filtered in the screen of reality. It is imperative to know that leadership influences decision making in all aspects of life. Either the survey conducted in the Canadian market was not accurate or the management leadership ignored the red lights on the business arena in this country. It leaves more questions than answers why the management applied an analogous strategy to that of the Target Corporation without synchronizing the dynamics and differences between the US market and that of Canada. Canada is a large country with huge population. In addition, there are so many regional differences that provide dynamism in the business ecological niche. The management can be rectified by incorporating the locals into positions of leadership. When the locals are involved, then the animosity (as demonstrated with one of the employees through a dispatch) will be minimized (Nolan Para 2). The other alternative solution to the illuminated problems is by resetting the supply chain. The previous distribution network had failed completely. The distribution of merchandise to the Targets numerous stores have been poor. The supply to the stores should be by increasing the number of national distribution centers. Three national distribution centers supplying more than one hundred stores is tantamount to disastrous dissemination of products. In addition, these distribution centers should be goods specific. They should be supplied with the correct goods that are geared towards meeting the customers’ needs at various stores to avoid situations where goods that are not needed in a particular store are there while those needed are not available. Earlier on the team leaders at various stores were unable to know prior the items that would be distributed to their stores. This can be improved by the management coming up with the system where the team leaders do stock taking. The team leaders at the various stores in turn feed the information to the management at the national distribution level on what to supply to these stores (Shaw Para 2). The various stores should be stocked with goods. The image and perception of Target Canada in Canada was not achieved. When the news of Target Company extending its sphere of influence was let out of the bag, the Canadians who had shopped products of Target Corporation in the US had huge expectations. The idea of Target shops not getting well stocked left many questions than answers (Nolan Para 2) It is also prudent that the company verifies its pricing techniques. The pricing should be competitive to other companies offering similar products. In cases where pricing is slightly elevated, the product related to the value embedded to it should coincide. Wal-mart and other companies have applied the system and that proves that it can be a sustainable system despite cost incurred such as distribution costs, transportation costs, taxes and wages. In addition, the companies should invest on innovative ideas irrespective of where these ideas emanate from. Local employees complained that their ideas were suppressed by the international assignees from the US who held various positions of leadership (Nolan Para 2) According to Ivey publication, shopping habits on Canadians indicate that they spend more on wines and spirits compared to food and beverage. They are more loyal customer to Target Canada than those in US. The company should therefore use these leverages and ensure that provision of wine goes abuzz. They can opt for wines and spirits to be one of the brands marketing avenues to penetrate the market. In addition, customers loyalty to the firm should not be taken for granted. When customers are loyal to products or services, for the long term goals it creates a nourished atmosphere to predict future trends hence the need to readjust to lure more customers (Pirouz and Hong Para 1). The branding of Target Canada should be different from those of the US branches. The system of aping the US has out rightly failed as demonstrated by the losses witness in the first year of venture into the foreign market. Finally, the employees of the stores should be trained on customer handling techniques. This will aim at minimizing not only the length of checkout lines but also help in providing an image that will impact positively to the consumers of products at various stores (Shaw Para 2). Short term implementation plans The company needs an implementation plans to revive the company from its ailing status by providing the correct antibiotics to the diagnosed problems. However, to implement these plans, huge capital injection should be made available for proper and appropriate budgeting. It is for this reason that the immediate implementation of these plans should be geared towards obtaining adequate funding. The funding may be solicited from investors hoping to venture into Target Company as well as though loans (Shaw Para 2) After the funds are availed and budgeted for, the immediate short term plan is to change the leadership in the required departments of the company. These will entail readjusting these leadership positions according to contributions of the individual in the previous performance. Besides, it will be based on experiences with the locals being given priorities with the presumption that they understand the terrain of the business arena of the country. In addition, to the leadership changes, remunerations of every employee would be reexamined so that wages commensurate with both the work involved and the wage structure of the country. The implications of the implementation will be to influence change in the management leadership. These will energies the employees’ performance as the current management has been viewed to have been changed (Nolan Para 2). Among the influences that will be expected from the new leadership will be to review the pricing of marketing products. They will be reviewed with the aim of adjusting to competitively resonate with the consumers as well as not to give leverage to its competitors as earlier witnessed. The implications of these are that the loyalty of the established customers will be further enhanced besides the aim of luring other customers (Nolan Para 2). Another short term goal will be to add additional national distribution centers to the already existing ones. The chain of supply of products to the various stores has been stalled since the numbers of the stores are numerous while the main distribution channels are few. The effect of this plan is that replenishing of finished products to stores will be faster. Besides, it is anticipated that it will eliminate scenarios where shelves of Target stores are empty. When shelves are full customers tend to purchase items as there is confidence in obtaining the requisite requirements (Shaw Para 2). In addition to the above two programs, the partnership in distribution of products with other companies will be reevaluated. For instant, partnership with competing rival companies such as Sobey in delivering merchandise will be revoked. These competing companies have the potential of interfering with the operations of the company with the sole aim of having a competitive age (Shaw Para 2). Midterm plans After the short term plans of reviving the company, the preceding midterm strategies should be in marketing Target Company as a brand. This will aim at creating awareness to the Canadian public. In addition, at this stage the company is anticipated to have stabilized. This stage will be critical into setting precedents for the revenues anticipated to be generated by the firm (Shaw Para 2) Long term plan Since the infrastructure had already been laid out, in the next two years the company should generate $ 2 billion dollar revenue thus sky rocket the value of the shareholders to the stratosphere. The debt accrued to the revival of this firm will also be settled in this stage (Shaw Para 2). Very long term plans The success of the company will prompt the need to expand to company’s width to other foreign economies as well as growth by acquisition of other established companies (Shaw Para 2). Conclusion All is not lost for the company. It has come to the realization and acknowledgement that the executions programs had discrepancies and flaws. With the new leadership through Schindele and the infrastructure that have been laid down, the revival of the company is eminent. The highlighted problems need to be addressed using high definition quality magnified glasses for the company to realize any significant success. In addition, planning on the execution of the recommended recommendation is of vital importance. One of the encouraging elements is that the Canadian public still has expectations that need to be satisfied. Most of its customers are still loyal to its products despite the company downhill performance. Work Cited: Dante, Pirouz and Hong, Steven. Ivey school of Business Foundation. Ivey Publishing.2015. 1-5. Print. Shaw, Hollie. Financial Post. Target Corp CEO says every Canadian store ‘has to improve’ as bare shelves continue to plague retailer. 2014. Web 19th Feb 2015. < http://business.financialpost.com/2014/10/08/target-corp-ceo-says-every-canadian-store-has-to-improve-as-bare-shelves-continue-to-plague-retailer/> Plunkett, W R. Management: Meeting and Exceeding Customer Expectations. Mason, OH, 2013. Print. Nolan, Hamilton. Why Was Target Canada Such a Disaster?2014. Web 19th Feb 2015< http://gawker.com/why-was-target-canada-such-a-disaster-1579554288> Read More