Target Corporation Strategy - Essay Example

Target Corporation Introduction Target Corporation is the US-based company, operating in large-format general merchandise and food retail sector. The company operates under three major brands: Target, City Target and Super-Target through two business segments: Canada and the US (MarketLine Advantage, 2014). This paper aims to provide a more detailed analysis of Target Corporation and evaluation of the company’s business performance. 1. The impact of the Target’s mission, vision, and primary stakeholders on its overall success The mission of the company is “to make Target your preferred shopping destination in all channels by delivering outstanding value, continuous innovation and exceptional guest experiences by consistently fulfilling our Expect More. Pay Less.® brand promise” (Target Mission and Values, 2015). This mission statement determines the course taken by a company and navigates it during strategic decision-making process. The vision of the company was initially created by its founder, Doug Dayton, who has decided “to combine the best of the fashion world with the best of the discount world. A quality store with quality merchandise at discount prices, and a discount supermarket ... 75 departments in all.” The shopping experience would be fun, delightful and welcoming to the entire family, and stores would include wide aisles, easy-to-shop displays, fast checkout and, "loads of well-lighted parking.” (Target Corporation, n.d.). This vision has determined the goal of how the company should look like and how it will differentiate itself from major competitors. Unique vision of the founder, creativity and innovation enabled Target Corporation to gain competitive advantage and sustain it in today’s highly competitive market. Besides the vision and mission statements, the primary stakeholders also have impact on the company’s overall success. Primary stakeholders of the Target Corporation can be differentiated into several categories, including the following: customers/guests, team members/employees, policy influencers, communities, and investors (Target Corporation, n.d.). Engaging and listening to the ideas, perspectives and concerns of its stakeholders is recognized to be vital element to the success of the business (Target Corporation, n.d.). 2. The five (5) forces of competition Target operates in the retail sector, which includes supermarkets, hypermarkets, and specialist retailers. In order to analyse the competition and rivalry in this sector, it is possible to apply Porter’s five forces model. Buyer’s power - Moderate The buyer’s of Targets’ goods and products are end-consumers. It means that buyer’s power is weakened as loss of several customers will not have strong impact on the company’s profitability. However, buyers also have collective power, and therefore, wider consumers’ interests cannot be ignored. Convenience, price and product range are the major aspects that affect buyer’s choice (MarketLine Advantage, 2014). Supplier Power – Moderate Suppliers in the retail industry vary from farmers, manufacturers to distributors. Large retailers are more likely to establish and maintain business relationships with many different suppliers. Thus, retailers are less dependent on the suppliers and they can mitigate the risks of possible delivery disruptions and unreasonable price changes. The retailers offering own-brand products also reduce the power of suppliers (MarketLine Advantage, 2014). New Entrants – Moderate The players in the industry vary widely by size and scope of retail business. Such large-scale established retailer as Target enjoys a significant advantage due to achieved economies of scales, ability to employ aggressive pricing strategies, and ability to perform strong branding. However, there is still a threat of entry of potential competitors, as the costs for entry and exit are relatively low (MarketLine Advantage, 2014). Threat of substitutes – Weak Target operates in the retail industry, and offers a broad variety of goods to its visitors. While consumers may switch to visiting alternative stores one by one, it is more convenient to visit a one-stop-shop where they can buy everything they need in one place (MarketLine Advantage, 2014). Rivalry – strong There is a high level of competition and rivalry in the industry. Switching costs for consumers are negligible and threaten retailer’s business. The business models of major retailers are quite similar to each other, contributing thus to fierce rivalry in the industry (MarketLine Advantage, 2014). 3. SWOT analysis Below are summarised the key strengths, weaknesses, opportunities, and threats of the Target Corporation. Strengths Well established presence in the US market; Diversified product line assortment; Adjustment of pricing strategy to consumer behaviour; Multi-channel retailing in the US market Weaknesses Data breach instances No click-and-collect limits retail convergence (MarketLine Advantage, 2015). Despite the significant investment into opening of new stores and developing of online platform, the company has failed to ensure sufficient convergence between the store-based and online retail (Euromonitor, 2013) Opportunities Expansion of presence in both existing and new markets Potential of e-commerce and innovations in m-commerce (MarketLine Advantage, 2015). The company could test online groceries in major cities, following an example of AmazonFresh (Euromonitor, 2013) Threats Increase of labor wages and healthcare cost might negatively impact the company’s bottom line; Stiffening competition in e-retail Overdependence on the US retail market makes Target vulnerable to increased competition and economic uncertainty in the US (Euromonitor, 2013) 4. A strategy proposed for Target Corporation Based on the SWOT analysis, it is possible to outline a strategy for Target Corporation to capitalise on its strengths and opportunities, and minimize its weaknesses and threats. The company has a strong presence in USA and should expand its business beyond the North America. By expanding its international business the company will be able to overcome the threats associated with the overdependence on the US retail market and thus, to diversify its business risks. Also, the company needs to address the existing weaknesses and to address the problem of limited convergence between the store-based and online retail channels. Furthermore, the company needs to focus on the opportunities offered by e-commerce and m-commerce and create new products/services. 5. The various levels and types of strategies the firm may use to maximize its competitiveness and profitability In order to maximize its competitiveness and profitability Target Corporation needs to focus on both domestic and international markets. Domestic strategy Consumer tend to select retailers on several major factors, such as convenience and prices. However, increasing number of consumers nowadays are also concerned about how fast and where the company can deliver the goods. Therefore, it is crucial to focus on improvement of online retailing strategy, whereas customers are capable to gain excellent shopping experience online. There could be introduced various online shopping apps encouraging customers to visit the corporate website and enabling the company to increase customer loyalty online (Euromonitor 2013). International strategy Target is already a successful and well-established brand in the USA. Its originality and wide product range allow Target to propose a smaller store concept for international markets with a focus made on several key categories such as homewares and apparel (Euromonitor 2013). Moreover, Target could introduce international shipping in order to increase customer’s interests before opening physical stores in foreign countries. Latin America and Asia Pacific are recognized to be the most attractive and promising markets for Target Corporation due to the growth of the middle class in these regions and increased demand for more sophisticated retail experience (Euromonitor 2013). 6. A communications plan the company could use to make the recommended strategies known to all stakeholders. In order to inform all stakeholders about the company’s strategies there can be used several major communication channels. First of all, the company should use media in order to inform the general public about its plans and opening of new stores. Also, it is important to communicate with the corporate shareholders and potential investors. For communicating with this group of stakeholders Target may use its internal resources, such as its corporate website, annual report and news portal. Also, it is important to launch effective PR campaigns that will allow the company to build up necessary image and brand perception. References: Euromonitor International (2013), Retailing: Target Corporation. [online]. Retrieved 13 June 2015, from www.warc.com MarketLine Advantage, (2014), Company Profile: Target Corporation. [online]. Retrieved 13 June 2015, from www.marketline.com MarketLine Advantage, (2014), MarketLine Industry Profile: Food Retail in the United States. [online]. Retrieved 13 June 2015, from www.marketline.com Target Corporate, (2015). A vision on Target: remembering Doug Dayton. Retrieved 13 June 2015, from https://corporate.target.com/article/2013/07/a-vision-on-target-remembering-doug-dayton Target Corporate, (2015). Retrieved 13 June 2015, from https://corporate.target.com/corporate-responsibility/stakeholder-engagement/stakeholder-engagement Target Mission and Values (2015), Target Mission, Values & Stories Behind Them [online]. Retrieved 13 June 2015, from https://corporate.target.com/about/mission-values Read More