In the 14th of November, 2006, five executive officers of Target Corporation were meeting for the Capital Expenditure Committee (CEC) to discuss five projects that represents about $200 million in requested capital. Reaching the end of the fiscal year 2006, there was a need to determine which of the five projects the CEC should decide on to help Target keeping on its current strong performance that result The History of Target Corporation
The first Target store was opened in 1962 in Roseville, Minnesota. By 2005, Target became a major retailor in the U.S. with $52.6 billion in revenues from 1397 stores in 47 states. Target strategy is to consider the shopping experience as a whole, in contrast to its largest competitor, Wal-Mart, which focuses in low prices. Target refers to its customers as guests and work hard to support the slogan “Expect More, Pay Less”. The corporation had been highly successful in promoting its brand awareness through its advertising campaigns. This consistent advertising results in that Target’s logo is ranked among the most recognizable logos in the Unites States. The Approval Process of the CEC
The CEC meetings last for several hours where each project receives a considerable attention by the committee members. The process is rigorous because the CEC believes that capital expenditures have large impact on the short and long-term profitability of Target. There are several factors that the committee considers to, be able to, decide whether to accept or reject a project. The main factor is to meet the corporate goal of opening 100 stores a year while maintaining its current image. While the financial factors include the following:
Consider the total investment size.
Measure the impact on sales of other nearby Target Stores. •
Keep the project’s approval within the capital budget of the year. Population growth and wealthy communities are demographic factors that affect the CEC’s decision on the chosen projects. When deciding...
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