Analysis of Target Corporation - Coursework Example

Running Head: Target Corporation: Case Study Target Corporation: Case Study Table of Contents Executive Summary 3 Introduction 3 SWOT Analysis 5 Strengths  5 Weaknesses 6 Opportunities 6 Threats  7 Macro Environment Analysis 8 Economy  8 Culture  8 Politics  8 Technology  9 Conclusion 9 References 10 Executive Summary The following report is about analysis of Target Corporation. It starts with the introduction of company providing factors such as history, size, growth and revenue in detail. Introduction also includes Competition analysis of company, its success factors, Mission statement of the company and market analysis. Then the SWOT analysis of Target Corporation providing description of strength, weakness, opportunity and threat of the company has been discussed. After SWOT analysis the report contains analysis of macro environment of the company which includes details about its economy, culture, politics and technology. The overall report is followed by a conclusion stating what has been mentioned and discussed in the report. Introduction Target Corporation, an American retailing company with its headquarters in Minneapolis, Minnesota is among the second largest discount providing retailer after Wal-Mart in United States. It was founded in the year 1902 and characterized as the Dayton Dry Goods Company and also one of the first Target stores which have been opened near Roseville, Minnesota in 1962. It operates 1556 stores in 47 states. Target stores, Mervyn’s and Marshall Field’s were the three main retail divisions of Target which was formerly known as Dayton Hudson Corporation. It offered fashion conscious upscale products at affordable price thus distinguishing itself from competitors. Hudson’s and Marshall’s were department stores offering sophisticated costly products to the mooned customers while Target and Mervyn’s offering apparel and recreational items to the budget conscious customers. Target received America’s Corporate Conscience Award in 1989 and contributed over $2 million to the communities where the stores were located (ABOUT, 2012). Target continued to be the biggest money maker of Dayton Hudson’s Corporation in 21st century with a successful business mix of trendy merchandise and easy to navigate quality stores. Fifty expanded Target Great land stores were open in 1990 which was combined by general merchandise mix with grocery store. The Target Guest Card which is the first store credit card was introduced in 1995 which attracted around nine million accounts by 1998. With the growth of Target and being the largest division of Dayton Hudson Corporation the company was then renamed in August 2000 as Target Corporation. In 2002 Target generated 84 percent of fiscal revenue from 1225 stores located in 47 states. In 2010 it was ranked at number 33 in Fortune 500 companies. It is also a component of Standard & Poor’s 500 index. Target Corporation expanded business in Canada in January 2011. By 2013 it plans to operate 100 to 150 stores in Canada (ABOUT, 2012). The mission of Target Corporation is to provide outstanding value, exceptional guest experience through continuous innovation while fulfilling Except More, Pay Less promise and become the preferred shopping destination for guests. Positioning of Target Corporation was based on quality, style, trend and not just pricing. Today Target operates more than 1600 outlets in 47 States which includes grocery shopping, photo processing centers, pharmacies, food avenues, in-store bakery, deli, and meat and production section. Target Corporation used attractive promotional strategies for advertisement and became the second largest discount retailer in United States by 2002. Main competitors of Target were Wal-Mart and K-Mart. When K-Mart declared bankruptcy the only competitor for Target remains Wal-Mart is one of the retailers which leads the market and industry in terms of sales and size. Target Corporation’s key element of success was its ability of communicating effectively the unique position of company through attractive marketing promotions. Apart from this elements of success were updated retailing technology, creative advertisement and customer centric philosophy etc (ABOUT, 2012). SWOT Analysis Strengths  Strong Presence in Market: Target Corporation has been able to achieve economies of scale because of its company’s size. This helped the company to offer goods to the consumers at low prices. By diversifying its operations the company was able to decrease its volatility in revenue. Brand Mix: The Company maintains strong brand image because of which it can charge higher prices for its in-house brands. The mix of private and other licensed brands provides consumer with multiple options for selection and increased margins for the company. Some private brands of the company includes Choxie, Embark, Circo, Archer Farms, Kool Toyz, Merona, Room Essentials, Target Limited Edition, Trutech, Market Pantry, Gilligan & O’Malley, ProSpirit, Xhilaration and other prominent brands. While to name a few licensed brands are Cherokee, Fieldcrest, C9, ChefMate, Isaac Mizrahi, Liz Lange, Kitchen Essentials, Mossimo, Genuine Kids, Nick and Nora, Simply Shabby Chic, Sean Conway, Thomas O’Brian, Sonia Kashuk etc (Innovative ProjectGuide, 2012). Increase in Operating Cash Flow: With strong positing on cash flow Target corporation was in a state to invest, provide return to investors and improve its balance sheet. The company with its increasing cash flow invested in expansion of old stores and opening of new ones. Varied Product Range: Stores of Target Corporation includes great variety from clothing, beauty products, healthcare products, electronics, jewelry, CDs, DVDs, sporting goods, hardware, bedding, kitchen supplies, pet supplies, automotive supplies and toys etc (Target Corporation: Company Analysis and Evaluation SWOT Analysis, 2012). Weaknesses  Perceptions of Customers: Huge marketing done by Target Corporation did not always produce desired results. The image created by marketing promotions was not always same as the actual product. At times the customers even felt disconnect between their expectations and perceived quality of products. Demographic Focus: The focus of Target Corporation in terms of expansion was only limited up to America thus ignoring the need to diversify business internationally. Unlike its competitor Wal-mart which has presence in various countries around the world, Target was active only in market of United States. Target because of its limited geographical concentration is more vulnerable to market changes. And the problem further gets complicated with threat of recession (Target Corporation: Company Analysis and Evaluation SWOT Analysis, 2012). Poor Quality Control: The large array of products available in store was difficult to be managed on shelves. Due to this company has to recall several products which led to choking hazards and other dangers in children’s toys. This may fail the company’s ability to attract new customers (Innovative ProjectGuide, 2012). Litigations: Target Corporation as an employer has been accused by Equal Employment Opportunity Commission in 2006 of racially biased hiring. It gave bad publicity to the company and also reduced its credibility as an employer. Opportunities Expansion in Canada: Target Corporation’s decision to expand its stores in Canada by acquiring the Canadian chain Zeller’s has been one of the great growth opportunities for the company. The estimation of opening around 100 to 150 stores there would facilitate the customers out there while increasing profitability for the company. Generic Drugs: Target Corporation has been an established name in Pharmacy market. Pharmacy market provides an excellent opportunity to the company to capitalize on high profit margins on generic drugs (Target Corporation: Company Analysis and Evaluation SWOT Analysis, 2012). Growth of private label products: Sales growth in private labels has increased over recent years. Profit margin is much higher for these products than branded ones. Private brands of Target Corporation include Choxie, Embark, Circo, Archer Farms, Kool Toyz, Merona, Room Essentials, Target Limited Edition, Trutech, Market Pantry, Gilligan & O’Malley, ProSpirit, Xhilaration etc. Photofinishing Market: With digitalization of photography gaining ever increasing popularity, many people in United States still depend on retailers providing finishing for prints. Target Corporation’s partnership with yahoo in 2005 has provided its customers with the opportunity to share, store, print photos and also creating customizing gifts (Innovative ProjectGuide, 2012). Threats  Increased Competition of product range: Target Corporation faces tough competition from supermarkets, national and local department stores, specialty stores, discount stores, drug stores, online business and independent retailers in terms of wide range of products which it offers. Price Competition: Retail industry faced a period of consolidation with price competition. The flourishing market has attracted many foreign companies to invest in this sector thus creating tougher price competition. Target Corporation faced threat from Wal-Mart and K-Mart as both of them were offering almost same range of product and services (Target Corporation: Company Analysis and Evaluation SWOT Analysis, 2012). Slowdown of American Market: Slowdown or recession in American Market created threat for Target Corporation as it operates only on domestic level within United States thus creating difficulties for the company. Target because of its limited geographical concentration was more vulnerable to market changes thus worsening the crisis (Innovative ProjectGuide, 2012). Macro Environment Analysis Economy  United States is the main base of revenue for global general merchandise store sector. It experienced sales growth with increased revenue due to low trade barriers thus getting low cost goods from Asia. The company was very successful until the downturn of economy during recession which seriously declined sales. This also created problem of unemployment in the country. The continuous rise in prices of crude oil even worsens the economy. It increases company’s cost of raw material, energy, transportation etc. eventually affecting consumers (Strydom, 2005). Culture  Target Corporation has always been a trend setter in its business line. In order to differentiate itself from its competitors Target focused on customers’ needs. They emphasized on providing low cost designer clothes and products along with better shopping experience to their customers. As a part of fulfilling their corporate social responsibility they do not sell tobacco, fire arms and toy guns. Target sponsors educational programs; provide help to people and families in crisis. It also funds celebrating Earth Day and emphasizing recycling programs. Target promotes conservation of water, waste reduction, saving electricity, reduction of greenhouse emission and efficient transportation through its operations (Hill & Jones, 2009). Politics  Both domestic and international firms get affected with changing political situations. The market in which firm operates gets affected by political movements, global events and international trade policies. Liberalization of international trade has greatly benefited the retail industry. The market gets benefit from the ending of Europe’s Multi Fiber Agreement. It facilitated availability of low cost labor thus providing companies the opportunity to manufacture products at low prices while maintaining high profit margin (Strydom, 2005). Technology  Retail industry is majorly driven by technology. Consumers in developed countries prefer for easy and relaxed shopping experience. With the advancement of internet access consumers can now purchase product sitting at home or from any part of the world. With e-marketing strategy of Target Corporation the company is able to promote itself worldwide as more and more people are accessing internet. Target.direct, the company’s team who owns and manages the e-commerce initiatives takes care of online marketing. This gives the company more sales and brand recognition (Hill & Jones, 2009). Conclusion It can be concluded from the above description that Target Corporation has played an important role in creation of discounting upscale stores. In recent years it showed steady growth while surpassing its main competitor Wal-Mart. It has achieved strong brand identity for goods at reasonable prices. Target Corporation while providing stylish products and pleasant shopping experience to its customers has carved a niche for itself. Through innovative and creative marketing initiatives Target Corporation has been able to create strong brand equity for its products thus becoming the second largest discount retailer in United States. References ABOUT. (2012). Retrieved on November 1, 2012, from http://www.targetcorporation.com/about_military_pcba Hill, C. & Jones, G. (2009). Strategic Management Theory: An Integrated Approach. Cengage Learning. Innovative ProjectGuide. (2012). Retrieved on November 1, 2012, from http://www.innovativeprojectguide.com/project-risk-management/9-project-risk-management/49-how-swot-analysis-for-target-corporation-may-be-applied-to-other-business.html Strydom, J. (2005). Introduction to Marketing. Juta and Company Ltd. Target Corporation: Company Analysis and Evaluation SWOT Analysis. (2012). Retrieved on November 1, 2012, from http://www.scribd.com/doc/10631745/Taret-Corporation-AnalysisSWOT Read More