Target Corporation

By: Leigh Blackmon, Justin Napier, Sara Ratliff, and Brian

Roundtree

Executive Summary

The FirmUpscale discount chain that offers trendy

merchandise at affordable prices

The IndustryDominant Firms – Wal-Mart, Costco, K-MartKeys to Success- Marketing, Promotion, Brand

Loyalty, Differentiation

Mission Statement

At Target, our mission is to create a loyal customer base by selling a trendy, yet affordable range of merchandise. We are also interested in being socially responsible and do not define the success of our company simply by the bottom line. We are committed to the social, economic, and environmental welfare of all communities. Finally, it is our mission to encompass quality, style, and trend into all aspects of our corporation to ensure customer satisfaction.

External Environment

EconomicCustomer’s amount of disposable incomeCustomer’s propensity to spend

SocialAge of customersBeliefs of customers

TechnologicalTechnological forecastingGiving customers the ability to shop from the comfort of

their own home

Ranking of Porter’s Five Forces

Present- 1) Substitutes

2) Rivalry

3) Powerful Buyers

4) Powerful Suppliers

5) Threat of Entry

1= Most Important, 5= Least Important

Suppliers

No similar companiesEx. 1-Including

purchase volumeEx. 2-Including

differentiation of inputs

Wal-Mart, K-Mart, and Costco

Need more product differentiation

Increase buyer volume

Establish brand identity

Providing quality and performance in each store

Buyers

Threat of Entry

Difficult to establish large companiesHard to imitate brand identityLarge capital requirements

Substitutes

None- Due to quality and fashion

Results in customer loyalty

Results in brand identity

Wal-MartK-MartCostcoDifferentiation is key

factor= FashionPush Target’s brand

identity

Rivalry

Company Profile

Primary ActivitiesCustomer ServiceMarketing and Sales

Advertising, promotions, market research, planning

OperationsProduction and Quality Assurance

Company Profile

Secondary ActivitiesHuman Resources

Recruitment, hiring, training, and development

TechnologyConduct researchNew trends and interests

Company Profile

StrengthsLoyal customer baseReadily available productsConstantly produces new ideas and exclusive

products

Company Profile

WeaknessesHigher prices than Wal-Mart

Population response to the economy

Not a global retailerOther companies, such as Wal-Mart, are gaining a

competitive advantage

Not all stores are SuperTargetsCustomers want a one-stop store

Financial Analysis - Revenue

Target2001: $32.5 billion 2005: $51.2 billion

Costco2001: $34.1 billion 2005: $51.8 billion

Wal-Mart2001: $180.7 billion 2005: $285.2 billion

Revenue

Revenue

$0 $50 $100 $150 $200 $250 $300

2001

2002

2003

2004

2005

Yea

r

Amount (in billions)

Wal-mart

Costco

Target

Financial Analysis – Net Income

Target2001: $1.1 billion 2005: $2.4 billion

Costco2001: $0.6 billion 2005: $1.06 billion

Wal-Mart2001: $6.2 billion 2005: $10.2 billion

Net Income

Net Income

$0 $2 $4 $6 $8 $10 $12

2001

2002

2003

2004

2005

Yea

r

Amount (in billions)

Wal-mart

Costco

Target

Profitability

0%

1%

1%

2%

2%

3%

3%

4%

4%

5%

5%

2001 2002 2003 2004 2005

Year

Pro

fit

Mar

gin

Target

Costco

Wal-mart

Asset Turnover

0

1

2

3

4

5

6

7

8

9

2001 2002 2003 2004 2005

Year

Tu

rno

ver Target

Costco

Wal-Mart

Firm’s Position / Core Issue

Core IssueCompetition with Wal-Mart

Target has one-fifth the sales of Wal-Mart

Firm’s PositionBased on more than just pricingStrive to encompass style, quality, and trend

Long Term Objectives

Increasing Market ShareAchievable and Measurable

ScenariosBest Case: Wal-Mart going out of business and

Target having a significant share of marketWorst Case: Target going out of business Most Likely: Wal-Mart maintains market share

and Target’s profit margin, sales, and net income will continually increase

Corporate Level Strategy

GrowthInternational Expansion

Create more competitive advantageIncrease market share

Business Level Strategy

Strategic Business UnitTarget Food Centers, Target Pharmacy, Target

Retail MerchandiseGeneric Strategies

DifferentiationFocus

Grand StrategiesInnovationProduct Development

Strategic Choice

DifferentiationHigher quality, more trendy clothing, better styleDrive-through PharmaciesExpansion into SuperTargets

Any Questions?