Target Strategic Outline
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 ii. Social iii. Political iv. Technological
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
c. Opportunities:
i. Changes in government regulations ii. Technological breakthroughs
iii.
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 ii. Social iii. Political iv. Technological
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
c. Opportunities:
i. Changes in government regulations ii. Technological breakthroughs
iii.
Cited: Apgar, Sally, "Dayton Hudson at Crossroads: CEO Ulrich Still Struggling to Jump-Start Mervyn 's Stores," Minneapolis Star-Tribune, July 23, 1995, p. 1A. Berner, Robert, "Dayton Hudson 's Once-Fashionable Stores Tread Water," Wall Street Journal, August 1, 1996, p. B4. Borden, Mark, "Shoppers Love Target, but Shareholders Are Seeing Red," Fortune, September 18, 2000, pp. 64, 68. Branch, Shelly, "Hot Target Got Hot," Fortune, May 24, 1999, pp. 169-70, 172, 174. Chakravarty, Subrata N., "Planning for the Upturn," Forbes, December 23, 1991, pp. 48+. Chandler, Susan, " 'Speed Is Life ' at Dayton Hudson," Business Week, March 27, 1995, pp. 84-85. "Under the Gun at Dayton Hudson," Business Week, May 20, 1996, pp. 66+. Clark, Evan, "Is Target Cooling?: Slow Growth Feared at Hot Discounter," Women 's Wear Daily, September 30, 2002, pp. 1+. Conlin, Michelle, "Mass with Class," Forbes, January 11, 1999, pp. 50-51. Dayton, George Draper, II, Our Story: With Histories of the Dayton, McDonald, and Winchell Families, Wayzata, Minn., 1987. Halverson, Richard, "Target Powers Dayton Hudson 's Growth," Discount Stores News, June 19, 1995 Datamonitor Company Profiles Saint Paul Pioneer Press (St. Paul, Minnesota) (via Knight-Ridder/Tribune Business News), June 20, 2005 pNA Target Corp