Target Strategic Outline

Topics: Wal-Mart, Retailing, Department store Pages: 22 (7389 words) Published: June 25, 2005
I.Mission Statement:
II.External Environmental Analysis
a.Remote environment – these are the factors, which affect all businesses, and frequently, neither the business nor the industry has any control over them – examples: i.Entry barriers
v.Ecological factors
vi.Economic factors:
The economy has a major influence over the retail industry. Target's market has a very broad scope. When the economy affects the purchasing ability of its customer base, customers turn to less expensive commodities offered by discount retailers. b.Industry environment:

i.Entry barriers
A.Economies of scale: Target can compete well against county general stores, surplus and salvage stores, Army and Navy goods stores, warehouse club stores, and catalog showroom stores because they have a significant cost advantage over any new rival. B.Product Differentiation: Target creates high entry barriers through their high levels of advertising and promotion (Essentials of Strategic Management) ii.Supplier power

iii.Buyer power
iv.Competitive rivalry: The increased productivity gap between Wal-Mart and Target is affecting both companies in terms of competitive stances. Wal-Mart will attempt to exploit the existing gap by lowering prices further and creating an even stronger advantage. This is highlighted through the disparity in sales per square foot; 1999 was the narrowest, with Wal-Mart selling $441 and Target selling $260; by 2002 Wal-Mart had increased this to $498 and Target to only $271 per square foot. Similarly, the operating productivity of Wal-Mart, far outstripped Target. Target must therefore address this competitive issue. Investors continue to choose K-Mart and Wal-Mart first Investors in retail are less prepared to acquire Target stock than the two other main competitors in the sector v.Substitute availability

i.Changes in government regulations
ii.Technological breakthroughs
iii.Credit Cards: The introduction of the store credit card is an attempt to gain two advantages: one is to increase the frequency of visits; the other is to gain fees for the card. It has already been shown that Target credit card holders visit the store more frequently than non-holders do. iv.alternative product streams: The company plans to add more emphasis on the good value on offer in the stores in future marketing initiatives. It has announced a plan to expand the assortment of food items (including more private-label) in new and remodeled stores, while downsizing men's apparel, home improvement, automotive, and sporting goods. v.Specific demands by a narrow group of customers

i.Geographic interventions
ii.Unexpected competition: The largest threat to Target is product and company competition. The Target division competes with many discount, off-price, and drug chains, moderate department stores, and specialty retailers. The biggest of these is US giant Wal-mart, which dominates many consumer goods sectors in the US, focusing on low prices and good value. SuperTarget's rivals include grocery stores, SuperCenters, and warehouse clubs. Target must compete with Wal-Mart in product ranges as well as through actual store numbers. iii.New substitute products

III.Operational Environment – these are factors in the immediate environment in which the business operates – examples: a.Competition: The company has been slow to move into the higher-end consumer electronics market, whereas Wal-Mart has adopted an aggressive strategy and incorporated products such as Sony flat screens or Panasonic LCDs. Furthermore, the company is adopting a new strategic direction, by lowering prices on consumables in order to drive more traffic, though this appears to have been unsuccessful to date. b.Creditors/Suppliers

c.Customer profiles
d.Labor: The retail industry was a significant source of employment in the United States, accounting for roughly 18 percent of the...

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Target Corp
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