Target Financial Analysis - Example

Target Financial Analysis Introduction Business isan important activity by which people can fulfill the needs of people as well as improve their financial welfare. The business industry is complex, having different forms of businesses, products and services targeted at fulfilling the needs of particular people. At the same time, the business environment is very competitive, with different businesses and entrepreneurs dealing in similar products, the success of which depends on individual skills and knowledge of market needs and effective service delivery. Many businesses operate globally, providing goods and services that appeal to people in those particular regions. This paper examines a business enterprise that has been successfully run in the United States and Canada, managing to beat the extreme competition its industry to emerge as a leading giant in general merchandise and food industry. Target Corporation Company Background Target Corporation is a business that was registered In the United States in 1902 at a place called Minnesota, to provide retail and general merchandise to people. The company was registered to give its customers, who are referred to as guests their daily essentials and as well as fashionable merchandise at extremely favorable discounted prices. The company has so far achieved great success in its field, managing to establish several branches in the United States and Canada, with prospects of expanding to explore other unexploited markets that exist in different countries. The company’s is attributed to its strong and stable supply chain as well as a reliable technological infrastructure. In addition, the company has dedicated itself to having an innovation that is specially ingrained in its organizational culture. Target has managed to grow and establish two renowned segments, one in Canada and the other in the United States, both of these retail outlets are designed to enable their clients to make purchases of their preferred merchandise in both online and offline stores at their convenience. Company Competitors The retail industry in the world has significantly grown and expanded in the recent past, in this understanding, many people and business organisations have emerged to exploit the opportunities present in this fast growing industry. Target Corporation has endured stiff competition from various retailers and general merchandise stores that have been established in the United States and Canada (Tomberlin 2012). Advancement in technology has seen the company face stiff competition from various internet retailers that have been established. Wholesale clubs have also emerged to become strong rivals to Target Corporations, at the same time, apparent retailers, supermarkets and drug stores have also emerged to force the company into extreme competition in the sale of general merchandise. However, the company’s ability to create an effective value proposition has been the driving force behind its success, giving it its competitive position in the industry (Hill 2009). Unique risk factors that the company faces Despite its growth and success, target Corporation faces various types of risk factors, its close attention to them has helped it achieve success in most of its stores in the United States and Canada as well as in other countries that it operates. In any business, the success of set strategies depends on its creative execution and attention to detail so that any issues arising can be sought out. Differentiation of target experience Target Corporation has various risk factors that have stood in its growth path, while careful attention to the set strategies has been instrumental in its growth, greater involvement and analysis of its particular business environment is needed. During the company’s 2013 fiscal year, it opened 124 outlets in Canada, this was the company’s first major store expansion happening outside the U.S, however, this expansion has not performed to its expectation because of various factors. This has been a risk factor, because there is extremely high competition in this industry in all the countries that the company has invested. For this reason, an effective differentiation of the Canadian market is an important strategy that can ensure the company achieved its expectations. The company needs to establish and execute reliable marketing programs aimed at creating awareness for their retail outlets. At the same time, the success of these Canadian outlets lie in the company’s ability to make proper inventory management systems, this will enable it manage its inventory for convenience of its guests in Canada as well as in its outlets. Proper inventory management will avoid challenges in over-stocking and under-stocking, as well as dynamic macroeconomic factors in the Canadian market. Differentiating of the market is also important for a company to effectively understand how to determine strategies needed for market entry and penetration in various countries and regions that it is joining. It is important for its marketing executives to understand that different places and people have varied purchasing behavior that need to be given due attention. Effective management of technological infrastructure The dynamic technological industry presents another important risk factor in Target Corporation’s business environment. The business environment is one of the most dynamic environment; this is because, consumers’ needs are unlimited, secondly, people’s tastes and preferences keep changing from one generation to another. The ability of any business enterprise to remain relevant and effective in the competitive business environment depend on its ability to comprehend the prevailing needs of consumers (Bilgin 2004), and adopting cost-effective measures to address those needs with excellent outcomes. Target Corporation depends on its computer systems in order to control its inventory and other issues relating to the needs of its guests in its outlets in the United States and other countries. This technology has also been helpful in general management, communication as well as facilitation of other issues critical to its existence. One of the major risks associated with the company’s technology is the fact that it is prone to depreciation and becoming obsolete. The systems are bound to suffer from problems of power outages, the computers are prone to viruses and other malicious attacks; these problems present the company with huge challenges that affect the company’s efficiency and effective achievement of its set goals and objectives. To avoid situations of data breaches; the company has invested in persistent reinforcement and improvement of its technological infrastructure. This is aimed at enabling the company update its computer systems’ ability to process customer transactions and increased their confidence in the company’s ability to address their needs (Guard 2010). Additionally, other risk factors associated with the company’s technological infrastructure, include disruptions in company activities whenever there is an unexpected breakdown. Attention to these risk factors is essential in ensuring that the company is responsive enough to its operational efficiency, as well as attempts to enhance its guests experiences and confidence in their retail outlets worldwide. Stock Exchange Trading Target Corporation is listed on the Stock Exchange market in the United States, where it uses the symbol of “TGT.” On this platform, the company boasts of its capacity to offer a total of six million shares with a par value of $0.0833, at the same time, it has also been allowed to offer five million shares relating to its preferred stock at a par value of $0.01. Following this development, 2014 has been a great year in its stock trading, it has managed to have 15, 875 shareholders. In 2012, the company’s board of directors managed to authorize a program to repurchase its common stock that had been valued at $5 billion, this move had no expiration date slated for the repurchase of the shares. This program has proved a very important step; this is because, the company has so far repurchased common stock shares valued at $49.1 million as shown. Adapted from: Target Corporation (2014) In the table above, the shares that were reacquired soon after clearing forward contracts that had been paid for in advance are included. The data above is comprised of all common stock shares that were got from its team members. It is important to note that in the company’s 2014 financial year 168, 253 shares were received using a weighted average that was calculated at a $61.91 per share in pursuit of the company’s future incentive plan. Financial Trends Comparison of cumulative Five-Year Total Return Adapted from: Target Corporation (2014) The following graph presents a comparison of the company’s overall shareholder return that has been cumulated from its consecutive five financial years. Both peer groups used in this cumulation have been weighted using on market capitalisation that is characteristic of each company components. The company has posted positive trends in its growth patterns, something that has been appreciated by its shareholders. However, the company needs to create different strategies in order to secure their market prices in the phase of changing competitor strategies and other factors in the business’ external environment. The company’s market prices have suffered from various factors, first there have been incidences of data breach, in this case, the company is said to have lost a good number of payment cards as well as important information that related to its guests. The company was forced to spent much money in safeguarding its information systems while assuring their guests of the security of their payments systems. This is something that has made the company invest heavily in reliable computer systems and other infrastructure to restore its public image and general customer confidence. The company believes that by securing its systems effectively; it will be better-placed to make saving from costs that would have been incurred in mending the damages suffered. This way, it will be positioning itself to take on its rivals and increase its returns by increasing its general market share in the industry. At the same time, it will meet its expansion goals and reach many places and regions to offer goods and services to its clients. References Bilgin, F. (2004). Drivers of global business success: Lessons from emerging markets. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan. Guard, M. (2010). Business innovation and regulatory enforcement case studies of the big box retail industry and enforcement of RCRA. Atlanta, Ga.: Georgia Institute of Technology. Hill, C. (2009). International business: Competing in the global marketplace. Boston: McGraw-Hill/Irwin. Target Corporation. (2014). Targets’ 2013 Annual Reports. Retrieved from, Tomberlin, M. (2012). 2 – Story Target to open in Homewood in March 2013. Retrieved from. Read More