Target Corporation-The Canadian Decision Case Solution
Target Corporation was started in 1902 with the name of Dayton Dry Goods Company. The company started a value chain to link the fashion world with discount stores. This business aims to provide a quality shopping experience by producing family welcoming shopping spaces and easy shop displays. The company offers everyday essentials and fashionable products at discount prices. There is huge competition in the industry with retailers, stores, and superstores. The website of target.com was designed by 75 designers with innovative techniques. E-commerce is increasing in the United States, it allows users to use the web and mobile for shopping. The CEO of Target Corporation was facing the situation to make a few important decisions related to its operations and strategies. Dayton has a total of 133 stores but the company is facing issues in its operational chain, the sales are decreasing, and competition in the industry is increasing. The company faced a loss of $1.36 billion. The company had to decide if it’s favorable to stay in Canada or exit the Canadian market and leave the expansion plans. Along with that company is suffering in the United States and investors are not ready to wait for long. There is a severe need to change the strategies to maintain a competitive edge in the industry(Ivey Business School Foundation, 2017).
The major issues, in this case, are low sales, inefficient operations, and competition. The sales of Target Corporation are decreasing in Canada. Due to the challenges faced by the company in the case need a proper solution. Now CEO has to decide if the company needs to continue in Canada or leave the Canadian market.
After Walmart, Target Canada has been considered as the second largest retail store in the United States of America. The key objective of the company’s management is to expand the company into a broader market. The company has to make a key decision about expanding into or quitting from Canadian, thereby deploying the company’s revenues, resources, and expertise. The company is aimed at increasing its customer base in the Canadian market to make its current situation better, apart from maintaining the customer base in the United States market. The key strategic goal is to devise out a proper plan to recover from the challenges in the Canadian market and the future goals are comprised upon expanding the company’s operations into other market segments including Asian or North American markets. But the crucial factors are to get customer satisfaction and huge profitability in the Canadian market segment(Brian Cornell, 2014).
There was a huge competition in the industry, the major sales portion was decreasing in the Canadian market due to competition. Walmart launched its first store in 1994 and it worked as a game-changer for the corporation. Because it changed the consumer expectations and their purchasing behaviors. The growth of the US retail market shows that amazon was the highest growing firm. Whereas Walmart and home depot were also performing well in the market(Christine White). The revenue data shows that Walmart Canada was generating the highest revenues i.e. 23.4 billion. Refer appendix 1
Target provides a better experience as compared to its big competitor Walmart, customers get fun while shopping in the target. That is why the target has a large as well as loyal customer base. The brands of the target are reputable because of customers. Another strength of the target corporation is that possesses a competitive and expert marketing team or professionals especially in a segment of the retail market that is highly profitable. The target can build a shopping experience that is enjoyable for customers. So the brand is most appealing to the target market especially the younger population.
The biggest weakness of target is that they are not able to change its business model to adapt to the changing market conditions, as target planned to opena much small number of stores in 2015 as compared to Walmart. The goal of the target was 8 stores on the other hand goal of Walmart was about 270-300 stores. Another noticeable weakness of target was that its portfolio is less diversified as compared to the other retail giant. So there is a high risk for the company in economic downside.The financial performance of the target is also disturbed such as the decrease in revenue and the faces of losses.
As the target corporation is also targeting customers online strongly.As the case with the promotion of Lilly Pulitzer became popular in the same way they can attract a large number population or customers by becoming a go-to site for fashion customers. There is large % of the population belongs to the middle class, and the targets of Walmart are not middle-class people, so there is an opportunity for the target to get most of the market share by serving fully to the middle class.
There is a threat for target from the American economy because the average income of American households in a decrease that ultimately decrease the purchasing power of customers means customer purchases will decrease that will decrease the sales of the target in the US market. As Amazon is the biggest and strong competitor of the target on e-commerce, so the target has a threat from amazon to snatch online shoppers.
US Market Analysis (Porter’s Analysis)
Bargaining power of buyers:
The bargaining power of buyers is high in US retail market. There are so many competitors in this market even the market is more attractive to national as well as international investors to enter the market. There is also a low cost of switching for customers that increases the bargaining power of buyers.
Bargaining power of suppliers:
The bargaining power of suppliers in the US retail market is low because the buyers have power as the amount of their purchase is very are so manufacturers and dealers are largely dependent on large retail giants.
The threat of new entrance:
The threat of new entrants is high in US retail market because, there are no barriers to entry, such as no high legal requirements, no need for any tough skills to start a business, and new entrants can start with small scale businesses and can grow to large one such as target………………
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