Target Corporation

Topics: Target Corporation, Wal-Mart, Department store Pages: 16 (4839 words) Published: July 7, 2013
Target Corporation
Strategic Report

Linda Hahn Lisa Kwak John Palys April 20, 2005

Target Corporation

Table of Contents

Executive Summary .......................................................................... 2 Company History .............................................................................. 3 Financial Analysis ............................................................................. 5 Competitive Analysis: Porter’s Forces............................................... 8 Internal Rivalry........................................................................................8 Entry ........................................................................................................9 Substitutes and Complements................................................................ 10 Supplier Power ...................................................................................... 10 Buyer Power .......................................................................................... 11

Strategic Recommendation............................................................. 12 Conclusion ...................................................................................... 16 References ..................................................................................... 17

SageGroup, LLP

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Target Corporation

Executive Summary
Target Corporation has no new imminent threats on its horizon. Its greatest challenge continues to be the problem of competing with Wal-Mart. In order to reduce the threat posed to profits by internal rivalry in the discount retailing industry, Target should focus on two key issues: growth and differentiation. Target has grown consistently in the past. The obvious areas in which Target should concentrate its expansion are markets in the South and Northeast, where there are plenty of attractive locations with no Target stores. New territory also exists in the form of urban areas. Due to size constraints and higher cost of buildings and land, most urban areas have largely been untapped. Target can be the first discount retailer to enter these markets. Given the higher-income demographics and style preferences of its average customer, Target would be a better fit with urban markets than Wal-Mart. Target should be able to find neighborhoods or locations closer to city centers where higher traffic will generate sufficient revenue to justify the higher cost of land. With this strategy, Target can make significant market share gains. As Target grows in size, it will be able to enjoy further economies of scale in advertising and sourcing, making it more competitive. The power of its brand is an important asset for Target Corporation. As it pursues its strategy of differentiation, Target should be wary of damaging its reputation for low-prices. The style differentiation through exclusive design partnerships or product lines should maintain Target’s standards of good quality at reasonable prices. Aside from a differentiated shopping experience and product selection, Target can foster greater brand loyalty by creating strong bonus programs.

SageGroup, LLP

2

Target Corporation

Company History
Target Corporation’s history begins in 1902, when George Dayton opened the Goodfellow Dry Goods Store in Minneapolis. The business grew rapidly and was renamed Dayton Company. It managed to survive economic shocks such as the Great Depression and World War II. In fact, sales volume increased substantially during the war due to Dayton’s ability to keep its shelves stocked with scarce consumer goods. During these early years, Dayton Company was run as a family enterprise and the influence of its founder’s values can still be seen in the corporation’s charitable activities and community involvement. In 1946, the company began its practice of donating five percent of profits to charity. The 1950s and 60s saw Dayton Company evolve into a more aggressive and innovative...

References: Heller, Laura. “Wal-Mart remains the price leader, but competitors are closing the gap.” DSN Retailing Today 2 Aug. 2004: 8-10. Klinefelter, Jeffrey, Neely Tamminga, and Melissa Mullikin. “Target Corporation.” Piper Jaffray 22 Sep. 2004. Kozloff, Emme, Ian Gordon, and Robert Higginbotham. “A Look at the Stand-Alone Target.” Bernstein Research Call 23 Sep. 2004. Kozloff, Emme, Ian Gordon, and Robert Higginbotham. “Discount Retail.” Bernstein Research Call 16 Oct. 2004. Lightfoot, Paul. “Wal-Martification.” ALsysinc.com 1 Jun. 2003. Schlosser, Julie. “How Target Does It.” Fortune 18 Oct. 2004: 100. Stinson, Jeff. FTN Midwest Research. 29 Sep. 2004. “Target Corp. Fighting a War on Two Fronts.” CIBC World Markets Equity Research 24 Mar. 2003. “Target Corporation.” International Directory of Company Histories Vol. 61, St. James Press, 2004. Weinswig, Deborah. Target Corporation November Credit Review, Smith Barney. 27 Dec. 2004.
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