Company- Target 1.Introduction/Executive Summary. Brief introduction of the company and product(s) One

Company- Target
1.Introduction/Executive Summary.
Brief introduction of the company and product(s)
One or two key strategic issues confronting the firm
The objective of your project and importance of the issue
2. External Environment and Industry Analysis.
General environmental components that impact the industry and the firm: economic, political, cultural, technological, or legal forces, including global/international economy.
Industry analyses: competitive structure, current and future competitors, customer needs and key stakeholders.
Key analytical tools you can choose from 1) Porter’s Five Forces Model; 2) Stakeholder Analysis; 3) SWOT Analysis (primarily the OT portion); 4) Strategic Group Mapping; 5) Industry Key Success Factors
https://expandedramblings.com/index.php/target-statistics/
3. Analysis of Internal Condition.
Internal firm resources and capability in competing with other companies.
Analytical tools include: 1) Value Chain Analysis; 2) Resource and Core Competency Evaluation; 3) SWOT Analysis (primarily the SW portion)
4.Strategy Development.
Based on the results of the analyses, key strategic recommendations should then be made.
Discussion on strategy development includes firm’s competitive strategy, business diversification strategy, and global competitive strategy.
5.Strategic Implementation and Control Systems.
Develop a strategic action plan for successful implementation of the recommended strategy, which addresses, resource and capability development, organizational structure, corporate culture, incentive system, human resources strategy, strategic leadership, corporate entrepreneurship.
6.Conclusions.
End the study with key points in your study emphasizing why the result of your research is useful. You can add recommendations for future action/direction for the company
External Environment and Industry Analysis
Analysis of External Environment
Some economic and environmental forces that are currently impacting both Target and the supermarket industry have a lot to do with the Covid-19 pandemic. First, in the last year and a half all stores have seen fewer in person shoppers due to concerns about health and the spread of Covid-19. There has also been an overall downturn in spending due to the economic implications of Covid-19. Many businesses had to shut down, causing high unemployment and a negative impact on the economy. With more people unemployed, facing high medical bills or challenges with their health, there has been a downturn in spending. This has impacted Target because they are a huge retailer of not only groceries but of electronics, clothing, household goods, cosmetics, and a lot of other things. With people spending less money, Target is selling less products and thus seeing less revenue.
Covid-19 also brought on a need for a new way to shop and use technology, not only when it comes to groceries, but other consumer goods as well. Covid-19 has brought along the concept of ordering ahead and curbside pick-up. Target not only needed to develop a process to allow customers to be able to do this, which is mostly done through their website or app, but they now also must need to hire people to be online shoppers and deliver these products to the customers’ cars. This has been seen industry wide in both grocery shopping and other retail stores. Target has been one of the most effective and efficient adopters of this trend.
A legal issue that is now coming forward due to Covid-19 is now the status of employees based on vaccinations. The US government has mandated that by January 1st, all companies with over 100 employees must have a fully vaccinated work force or get tested weekly. If employees do not comply, they must be terminated as an employee. Target has over 350,000 employees which creates a potential for a large problem for Target. Target must either find a way to incentives their unvaccinated employees to vaccinated or try to fill the spots of the unvaccinated employees. There is already a labor shortage so Target could run into some large issues trying to get these spots filled and keep their stores fully staffed and running smoothly.
Another issue Covid has caused for the industry and Target is some backups in the supply chain process. A lot of retailers and businesses are having trouble getting their hands on products due to the labor shortage and supply chain issues. Target is known for being well run and having everything the customer wants. If they cannot keep their shelves stocked with highly desired items, especially with Christmas coming up, they could run into some real problems and start to lose the favor and loyalty of their customers.
Analysis of Competitors
While Target is one of the most popular retailers in the US with more than 1897 stores and over $90 billion in revenue each year, they still have some very serious competition. The two main competitors Target needs to worry about are Walmart and Amazon. Both are unique in their own ways but offer similar products to Target.
First, starting with Walmart. Walmart is also a superstore chain that is known for its extremely low prices. Walmart is a fierce competitor to Target with over 4,743 stores in the US. Walmart has been known to offer impossibly low prices to consumers, but with this comes the consumer image of Walmart being ‘cheap’. While Walmart has more stores, most consumers when given the option prefer shopping at Target due to the quite different shopping experience and products offered. Like I mentioned, Walmart products are viewed as cheap and not as nice but with a lot of variety, while Targets are viewed as higher end and associated with better brands. Target is also seeing competition with Walmart through their development of an online store front, mobile app and curbside pickup. One way Target has been trying to combat the competition from Walmart is by offering a price match to products from Walmart, though Walmart offers the same. The benefit of this price match at Target is that you get the nicer Target shopping experience at the prices of Walmart.
The other major competitor of Target is Amazon. Amazon is an online retailer as well that truly offers anything someone could want. Target has a small advantage over Amazon by offering in person stores for people who need things right away. Amazon is trying combat this by offering two-day shipping on almost everything, and even same day shipping on some items. At the same time, they cannot provide the in-store shopping experience Target offers. By shopping online consumers miss out on actually getting to see the product in person, feeling it, trying it on, talking to an employee to help find things and just the enjoyment of walking around and browsing things. Having physical locations also makes returns and exchanges easier for Target customers since they can go in and get it right away rather than taking a trip to the post office and having to wait for the new one to arrive. Amazon does appeal more to the people who do not want to leave their houses and are even trying to compete with the Target for the other group by opening a few in person stores. Amazon also has the advantage of offering a lot more products than Target does. While Amazon is a huge retailer and still growing, I do not think Target needs to be extremely concerned yet. They have the advantage of in person stores and I do not think the need for that will disappear anytime soon. People like having the ability to go in and get something right away, try on things, touch things, browse and talk to customer service people.
Key Stakeholders
Targets business impacts a lot of distinct groups of people. First, it obviously impacts the customers and communities where their stores are located. Target acts as a grocery store and retailer in many different communities which gives access to various products for the people in those areas. Target also donates heavily to a variety of different nonprofit organizations. Without their good business, these organizations would be without generous support and funding. These organizations provide abundant support in their communities and provide resources to many individuals. Without these organizations and Target’s support, these communities could be underserved and have negative impacts on those individuals and communities.
Target also, like previously mentioned, employs over 350,000 individuals. If Target had to close a sizable portion of their stores or shut down completely that would result in a large number of unemployed individuals. These individuals would no longer be able to support themselves or their families. This means that this would impact not only the employees, but also their families. Also, if 350,000 people were to lose their jobs, that would have a heavy impact on the economy. That is 350,000 less people spending money and keeping money flowing throughout the economy.
Target also has a substantial impact on the economy, its competitors, and its consumers. Target helps create competition in the market like mentioned above. If Target went out of business, that would leave only two companies remaining to fill this specific need of the consumers. Less competition means companies are not as pressured to offer high quality products or lower prices. They can demand more from their consumers because consumers do not have many other options to go to if they do not like what they are doing.
Target also has a great impact on the companies of the products that they stock and sell. Many businesses sell a lot or all of their product through Target. Target is some companies only distributor. If something were to happen to Target, these brands would need to find an alternative mode to the market which can be very difficult. Getting shelf space is a difficult task and Target going out of business or doing poorly could result in the same for other companies that rely on them to sell their products.
Finally, stakeholders also include people who hold stock in Target and work in the corporate division of Target. Target’s business practices and success impact these individuals greatly.
Analysis of Internal Condition
To improve the understanding of a firm’s current capacity, internal analysis is very important. To obtain a competitive advantage over their customers, Target Corporation should consider developing its value chain management strategies. Within a corporation, the most vital thing is to ensure they offer maximum value to the customers in order to sustain high levels of satisfaction.
Value Chain Analysis
The value chain is a chain of activities for transforming inputs into outputs that customers value. Value chain management concentrates on all the activities carried out within a firm at all categories. The primary activities of Target Corporation include research and development, inbound logistics, outbound logistics, marketing and sales, and customer service. The support activities include the firm’s infrastructure, information systems, human resource management, technology development, materials management, and procurement.
SWOT Analysis
A SWOT analysis gives managers the information to choose the strategies and business model to attain a sustained competitive advantage. Focusing on just the strengths and weaknesses for the internal analysis. Strengths include assets that boost profitability and weaknesses are liabilities that depress profitability. Looking at Target Corporation we are only going to concentrate on the strengths and weaknesses but will touch on opportunities and threats. One of the biggest strengths is the wide range of products Target provides for its customers. Target is a one stop shop and has many product lines available such as grocery, electronics, toys, décor, apparel, health, beauty, and much more. Another strength is their customer base, target has provided their customers with great experiences which makes the customers brand loyal to them. A strength is their store design, Target customers often like to browse around the store and see what is new which then makes them purchase more items. Another major strength is the corporate partnerships that Target has. When you walk into a Target you know you are going to see a Starbucks within the store. Target also has a partnership with CVS Pharmacy. CVS Pharmacy operates all of Target’s pharmacies. These partnerships benefit all three of these companies and provide an increased bottom line. Another big strength of Target is its online services. The technological advances in Target have really taken off, especially since the COVID 19 pandemic. They offer curb side pickup as well as delivery which makes it so simple for their customers.
After looking at all the strengths, Target has weaknesses within their corporation and brand as well. Target’s greatest weakness is that they are more expensive than other brands. Target charges more for groceries than their competitors. Target has also been known for data breaches which is also a weakness within the corporation. Target had to pay $18.5 million in settlement claims from a massive data breach in 2013. This impacted their reputation, therefore, makes it a weakness. Another weakness is that Target surprisingly does have to compete with smaller retail stores. The term “shop small” has been growing within the past few years and people are starting to purchase more and more to support local small businesses.
Target is not at its peak, so we are going to look at opportunities for them. One big opportunity is their customer loyalty program. They have things such as Target Circle, Target RedCard, and weekly ads, adding more will only further its customers’ brand loyalty. If customers can save more money at Target, they will gladly shop there more often. Another opportunity is expanding their private label brands. Target can offer more collections and further their products being offered to create an even greater interest to their in-house brands.
Some threats that Target encounters is the market competition that it faces with big brands such as Amazon, Costco, Walmart, and Sam’s Club. All these brands are trying to be the best, so for Target to keep doing well, they need to keep up with new trends and evolve to reach new customers. Another threat that Target must deal with is their online presence. Companies like Amazon don’t have any storefronts, so they are strictly online. Especially with the COVID pandemic, online sales were booming because people didn’t want to leave their houses. The final threat is the low barrier to entering the market. Target faces new companies forming and taking a big part of the market. Although it will take a large amount of money to do this, it is still a threat because of the low barrier.
Strategy Development
Strategic Recommendations
Taking into account the analysis of Target’s competitors and external/internal environment, we would make the following strategic recommendations for Target’s future managerial decisions: 1) continue to expand on existing physical storefront infrastructure support with new store openings and remodels; 2) expand and improve upon the growing online storefront; and 3) scale capabilities and reduce existing issues within its supply chain operation.
As discussed above, one of Target’s sources of competitive advantage over online competitors such as Amazon is its nationwide presence in the form of its physical storefront locations. Existing storefronts have the advantage of being built in areas that allow for a high traffic of customers; these existing locations have been the subject of remodels designed to consolidate floor space and allow for a more curated selection of retail items that makes the experience convenient for Target’s customers. Target should continue with the existing model of remodeling existing stores to optimize their customer’s retail experience. Remodels should also take into consideration the increase in online retail usage and the Drive Up and Order Pickup services in order to be fully capable of offering both the instore retail and online ordering experiences. New store openings should also be considered in addition to remodeling existing storefronts. Target has already introduced the idea of “small-format” stores in the same vein as Amazon’s small physical storefront locations – these offer a more limited selection of relevant good in denser urban areas where the larger retail stores are not feasible. Target has also discussed introducing a mix of the standard and small-format stores to suburban areas and college campuses.
Due to the COVID-19 pandemic, online sales for all retailers that have an online presence saw an increase from 2020 into 2021, with Target seeing an 80% increase in 2020 on top of a 500% increase in 2020 specifically in the use of the company’s Drive Up. Orders are not delivered to the customer’s address when compared to other online retailers; instead, customer orders are processed using Target’s online platform and fulfilled by physical storefronts through curbside pickup. In addition to the Drive Up system, Target offers same-day shipping on specific grocery items through Shipt, an online platform. Even with restrictions on travel and businesses easing as the pandemic goes on, customers have continued to utilize online retail services and Target should continue to expand and improve upon the existing system. Expansion could include offering a wider selection of items through both the Drive Up and Shipt platforms. Improving on the existing platforms can include optimizing both the customer-facing parts of the website to make for a more convenient online shopping experience, finding ways to keep costs low for customers that utilize the online services often, as well as utilizing the building of new locations and remodels of existing locations to allow for easier pickup or more capacity for items held for online orders.
Finally, Target should be looking to scale capabilities and eliminate existing issues within the supply chain. The COVID-19 pandemic saw the closure of port cities and the halting of international trade across multiple countries’ borders as measures against the virus. This unexpected slowdown of the supply chain caused shortages of goods and Target was no exception. While the pandemic did cause an influx of online sales that continued into this year, issues with the supply chain required a ramp-up of the modernizing of Target’s supply chain that had already begun before the pandemic. The ship-from-store fulfilment model had already seen limited use through Shipt prior to 2020, and the timetable for full implementation was pushed forward in an effort to meet growing demand and traffic at existing physical storefronts. Efforts have been made to reduce the shipping issues that plagued 2020 by moving goods received in congested port cities at night, cushioning the blow from shortages. Going forward, Target should remain wary of future lockdowns that could create further shipping slowdown. Investing more into owning more of the supply chain in order to remain independent from other entities should be the number one goal with the end of the pandemic being nowhere in sight; owning companies like Shipt proved invaluable as lockdowns kept customers in their homes and away from physical stores, and future investments could be in things like shipping and manufacturing companies located here in the US. This would avoid dependence on foreign companies that are subject to different lockdown rules and regulations on international shipping.
Competitive Strategy
Competitive strategy is defined as a company’s long-term plan of action intended to lead to greater competitive advantage over competitors. Competitive strategy is developed from evaluating the company’s strengths and weaknesses compared to its competitors. As discussed above, Target’s main competitors are Amazon in the area of online retail and Walmart in the area of physical retail storefronts. Compared to Amazon, Target’s strengths come from its physical locations combined with its existing online platform and brand offerings. Compared to Amazon’s brand-name furniture, appliances, and clothing, Target is able to offer higher quality retail items for slightly higher prices. Customers who prefer the higher quality and don’t mind the lower selection of Drive Up and same-day shipping offerings would be the current target of this model; this can be expanded upon by finding a way to offer a wider variety of goods through these systems to compete with Amazon. Walmart, as discussed above, is able to offer very cheap prices on retail items compared to Target at the expense of quality and brand selection. Target can build on the advantage it already has by increasing product variety over those already offered by both stores.
Business Diversification Strategy
Business diversification strategy is defined as a company’s plan to achieve growth through the acquisition and development of new products and businesses. Target’s current business diversification strategy has been to break into e-commerce prior to the pandemic, which was enhanced and expanded upon in 2020 in order to continue offering retail products to customers through the lockdown in the US. In addition, Target plans on opening small-format stores in denser urban and suburban areas like college campuses or larger cities in order to reach new markets in these locations. While this plan was set back slightly during the pandemic, Target’s successes throughout 2020 and 2021 in sales allowed this plan to move forward, with a set goal to open 30 to 40 new small-format stores each year going forward.
Global Competitive Strategy
Global competitive strategy is defined as a company’s strategic plan in the context of an increasingly globalized economy. From Target’s perspective, this could refer to the markets chosen by the company across the world to source materials, goods, manufacturing, and labor. Target does not itself have what could be defined as an international presence; by comparison its competitor Walmart has over 5,000 international retail store locations across the globe. Target itself made a bid to expand store openings into Canadian cities in 2011 as part of its burgeoning international growth strategy, but ultimately pulled out of this plan by 2015 and closed these stores due to increasing supply chain costs that made it uncompetitive with Walmart and localized retailers. While Target has no strategy in place as of now to break into the global market with retail stores, renewed plans under our recommendations to gain control over key parts of the supply chain could lower the costs associated with getting the products to new locations both in Canada and internationally and could lead to competitive physical storefronts that operate similarly to locations in the US.