Strategic Audit: Target Corporation

Executive Summary 

History of Target Corporation gives an overview of the Target Corporation since it was founded in 1902 by George Dayton. The company has since then grown to be one of the largest retailing companies with different units of operation including supermarkets, department stores, and hypermarkets. The mission and vision statement analysis shows that the company has poorly structured statements that can be improved by modification. However, it shows that company's goal of ensuring that the end user is satisfied with the products and services produced by the company. The corporate governance section gives a list of board of directors and members of the different committees. The members of BOD were elected in 2017 while Dmitri L. Stockton, their chair was elected in 2018. Additionally, there is a list of senior managers who are responsible for providing strategic direction to the company. The external environment analysis gives a list of opportunities and threats and an EFAS matrix detail rating of the external factors affecting the corporation. The internal environment analysis lists the strengths and weakness of the corporation and provides an IFAS matrix showing the score for the factors affecting the company. The Strategic Factor Analysis Summary indicates a value that is slightly higher than an average firm's value. Importantly, the SFAS helped in developing a strategic plan that will ensure the company grown better. From the different available options, expansion through brand imaging is the best strategic plan that will ensure the growth of the company. Finally, the paper discusses the implementation of the strategic plan identified. 

History of Target Corporation 

Target Corporation was founded in 1902 by George Dayton as Dayton Dry Goods Company (Wilson, 2017). Due to the rapid growth experienced, the company was changed to a department store in 1911 to reflect the wide assorted goods it offered. The first store was created as a subsidiary of Dayton Dry Goods Company which offered discount retailer in Roseville, Minnesota in 1962. The company continued to expand so that by 1970, it had 24 stores that operated across the United States making more than $200 million sales. From 1970, the company continued to expand by acquiring Arian department store chain and Ayr-Way discount chain. By 1981, Target corporations operated all the acquired firms under its brand. 

The company focused on a nationwide expansion between 1980 and 2000. In this case, the company fueled the expansion using acquisition where it successfully acquired Rivertown Trading Company, Gemco, FedMart, Fedco and associated corporations (Wilson, 2017). As a result, it managed to have 912 units by 1999. These units included superstores, hypermarkets, departments stores from which they made up to $26 billion sales. 

By 2000, the company had 1700 stores, and it operated in all states in the United States except Vermont (Absalom et al., 2016). At this time, the company offered a vast range of products which included private label products, groceries, clothing, and household essentials. Additionally, the company offered debit card and credit card services. However, the company faced a hitch in 2008 due to the financial crisis that forced it to shut down some of its stores. 

In 2010, Target Company started focusing on international expansion when it got an opportunity to expand to Canada. The company targeted between 100 and 150 stores in Canada and by 2013 it had 133 stores. Unfortunately, all the Canadian stores were closed in 2015 through liquidation. Since 2016, the company has focused on delivery of quality services and products that meets the customers' needs. Today, the company is the second largest retailing company after Wal-Mart Stores. The company was ranked 36th on the Fortune 500 in 2013 (Wilson, 2017). 

Mission and Vision Statement Analyses 

The company's mission is as follows; 

"We fulfill the needs and the fuel the potential of our guests. That means making Target your preferred shopping destination in all channels by delivering outstanding value, continuous innovation and exceptional experiences consistently fulfilling our Expect More. Pay less. Brand Promise" (Target (2016). 

The company's vision is as follows: 

"Guided commitments to great value, the community, diversity and the environment" (Target, 2017). 

Usually, a mission statement should be as succinct as possible, unique, realistic, current, and that member of the organization should identify with it. Usually, mission statements are focused on what the company does; it is concise and specific so that customers understand how services are provided and how they gain value from them. 

Target mission statement includes technology, philosophy, and self-concept. However, it does not include customers, products and services, markets, concern or survival, employees, concern for public image, teamwork, and integrity among other critical factors. 

Evidently, the company's mission statement is customer oriented and thus enables the company to focus on the needs of the customers as opposed to products operated in the market. However, the company's mission statement is structured poorly. The company's mission statement only focuses only on customers as the main stakeholders. However, it is critical for the company to include other stakeholders like suppliers, shareholders, communities, partners, and employees who also contribute to the success of the organization. 

Target Vision statement also lacks clarity, legality, and formality. There is, therefore, a need to modify both the vision and mission statement to provide for the missing clarifications. 

Mission Statement 

"To make Target Corporation a shopping destination most preferred retail for our customers through provision of exceptional customer experience, up to date and continuous innovation, outstanding value with fast checkout processes, keeping in stock items for the guests, making all shopping trips enjoyable and exciting, and creating stores to be easy and intuitive to shop." 

Vision statement 

To fulfill the Expect more, pay less, brand promise where customers expect more for everything. More designer created items, more choices, more great unique designs. Importantly, customers will pay less for everything. 

With the modification of the mission statement, Target will reach its ultimate goals as it will be able to respond to the customers' needs and wants. Additionally, the company will be able to enhance convince and value. The modified vision statement will ensure that the company provides goods and services with unique styles, exceptional design, thoughtful innovations, great brands, and outstanding value to its customers. The stakeholders should also expect that the company will continue to provide more of consistent, strategic, and smart financial discipline that will sustain the company's leadership in the industry. Both the vision and mission statement provide unwavering focus on all its stakeholders. 

Corporate Governance 

Board of Directors 

Target has the following 12 members of the board of directors. The directors were elected in June 2017 at the annual shareholders meeting. The members elected ratified the appointment of the Target's independent registered public accounting firm, approved the "say on Pay" management proposals, approved "1 year" as the recommendation for the frequency of Say on Pay votes and approved the Target Corporation Executive Officer Cash Incentive Plan (Target, 2017). The board of directors meets at least once annually, and if the chair is not available, the meeting is usually directed by the chair of the nominating and governance committee 

Roxanne S. Austine, 54, is the president, Austine Investment Advisors and Independent Director at Target Corporation. 

Donald R. Knauss, 65, Former Executive Chairman, The Clorox Company. 

Douglas M. Baker, Jr., 59, is the chairman and chief executive officer, Ecolab Inc. 

Brian C. Cornell, 57, is Chairman of the Board and Chief Executive Officer, Target Corporation 

Calvin Darden, 66, is Chairman, Darden Putnam Energy & Logistics, LLC 

Henrique De Castro, 51, is Former Chief Operating Officer, Yahoo! Inc. 

Robert L. Edwards, 60, is Former President and Chief Executive Officer, AB Acquisition LLC (Albertsons/Safeway) 

Melanie L. Healey, 55, is Former Group President, North America, The Procter & Gamble Company 

Monica C. Lozano, 59, is the Former Chairman and CEO, US Hispanic Media, Inc. and Chairman, Aspen Institute Latinos and Society Program 

Mary E. Minnick, 56, is Partner, Lion Capital LLP 

Kenneth L. Salazar, 61, is the Partner, WilmerHale 

Dmitri L. Stockton, 54, is Former Special Advisor to the Chairman & Senior Vice President of General Electric Company. In 2018, Dmitri was elected as the director by other board members. 

The committee structure (Target, 2018). 

The audit and finance committee has the following members: Robert L. Edwards (Chair), Henrique De Castro, Monica C. Lozano, and Mary E. Minnick. The committees review financial risk exposure of the company and help the BOD to look into the integrity of financial statement, financial reporting, performance and compliance with regulatory requirement. The human resource and compensation committee is composed of Roxanne S. Austin (Chair), Calvin Darden, Melanie L. Healey, and Donald R. Knauss. Gives oversight about compensation, evaluates the performance of CEO, discharge board responsibility, and oversees equity compensation among others.The infrastructure and investment committee has Mary E. Minnick (Chair), Henrique De Castro, Donald R. Knauss, and Kenneth L. Salazar. Douglas M. Baker, Jr. (Chair), Calvin Darden, Melanie L. Healey, and Monica C. Lozano work in the nominating and governance committee. Kenneth L. Salazar (Chair), Roxanne S. Austin, Douglas M. Baker, Jr., and Robert L. Edwards work in the risk and compliance committee. 

Senior Management 

The senior management is made of the following executive officers. The top management is responsible for providing strategic direction and financial reporting of all worldwide operations in the company. 

Brian Cornell: is the Board chairman and CEO and responsible for Target's global business including the over 1800 US stores and digital properties and a team of 323,000 members. 

John J. Mulligan : he is the Executive Vice President and Chief Operating officer and some of his responsibilities like merchandising and managing stores and supply chain. 

Don H. Liu : he is the Executive Vice President and Chief legal risk officer and thus oversees legal risk and compliance, corporate governance and government affairs. 

Rick Gomez : Executive Vice President and Chief Marketing Officer: He is the executive vice president and chief marketing officer and oversees marketing and media strategy. 

Michael E. McNamara : executive vice president and chief information and digital officer and oversees the company's technology and long-term information strategies. 

Stephanie Lundquist : executive vice president and chief human resources officer. 

Minsok Pak : executive vice president and chief strategy and innovation officer and oversees the companies enterprise strategy and innovation efforts. 

Janna Potts : Executive vice president and chief stores officer and she is responsible for leading a team of 300,000 members in more than 1800 stores. 

Cathy R. Smith: Executive vice president and chief financial officer and manages financial operations like treasury, tax, and reports. 

Mark Tritton: executive vice president and chief merchandising officer and oversee the buying, sourcing, product design, and merchandising. 

Laysha Ward: Executive Vice president and chief external engagement officer whose role is to facilitate the company's engagement with external stakeholders and drive positive business community impact. 

External Environment: Opportunities and Threats 

Opportunities 

Expansion in the US: Target closed 133 Canadian Stores to allow it to focus on expansion in the US (Absalom et al., 2016). The company has an opportunity and resources to expand in the densely populated cities by increasing the location of stores 

Strong online market presence: Target has managed to keep up with the consumer behavior by providing services online. The company has an opportunity to grow further due to the increase in E-Commerce sales both in the US and in the United States (Absalom et al., 2016). 

Growth in Private label acceptance: presently, the demand for private label is increasing both in Europe and the US. The company provides a wide variety of private labels and thus will continue to benefit from it. 

Threats 

Overlap of offerings: Target has much giant competition like Wal-Mart and Amazon who offer similar products; as such pricing pressures affect its profitability. 

Brick and mortar outlets: the brick and mortar outlets are at constant risk because of a decrease in some customers as most are proffering E-commerce. 

Rise in labor cost: the constant rise in wages and salaries in the US increases the overall costs and thus affects the company's profitability. 

External Factor Analysis Summary (EFAS Matrix)
External Factors	Weight	Rating	Weighted Score	Comments
Opportunities
Expansion in the US	0.20	4.00	0.80	Expansion is in progress
Strong online market presence	0.15	3.75	0.56	Online market is well established and continues to grow
Growth in Private label acceptance	0.10	0.25	0.25	Provision of private label is increasing
Threats
Overlap of offerings	0.25	3.25	0.81	Increasing at a rapid rate
Brick and mortar	0.10	2.75	0.28	Questionable
Rise in labor cost	0.20	3.00	0.60	The prices keep changint
Total	1.00		3.30

Table 1 : EFAS Matrix 

Internal Environment: Strengths and Weaknesses 

Strenghths 

Strong presence in the US: Target largely operates in the US and is one of the largest retailers in the country. The huge economies of scale allow for a higher buying power. 

Merchandise differentiation: unlike its competitors like Wal-Mart, the company employees some designers who help in ensuring differentiated merchandise. Thus, customers get stylish and affordable products. 

Pricing strategy: the company adjusts its prices to meet the trends in the market. The scheme has made it possible for the company to meet its "Low price promise" and "expect more. Pay less." 

Loyalty program: the company's RED card Reward that was introduced in 2011 enables loyal customers to receive discounts whenever they make purchases. The program helps in attracting business security and customer loyalty. 

Weaknesses 

Data Breach: there are instances where the company experience leak of customer's confidential information. For instance, in 2013, there was a leakage of credit and debit card details about customers. Such instances erode confidence from customers. 

High dependence of foreign suppliers: most of the companies merchandise is sourced outside the United States. As a result, the company faces huger business risk as any political and economic condition change will affect the supplies and revenues consequently. 

Internal Factor Analysis Summary (IFAS Matrix)
Internal Factors	Weight	Rating	Weighted Score	Comments
Strengths
Strong presence in the US	0.20	4.0	0.80	The company needs to maintain the strong presence in the US
Merchandise differentiation	0.10	2.50	0.25	Good customer service
Pricing strategy	0.15	3.0	0.45	It enhances ability to obtain a larger market share
Loyalty program	0.15	3.75	0.56	This is a kind of good sign of customer care as customer gain rewards
Weaknesses
Data Breach	0.15	1.5	0.23	The situation is being managed
High dependence of foreign suppliers	0.25	2.5	0.63	There is a need to put measure to manage the situation.
Total	1.00		2.92

Table 2 : IFAS Matrix 

Analysis of Strategic Factors SWOT analysis 

Strategic Factor Analysis Summary (SFAS matrix)
Strength	Weight	Rating	Weight Score	Short	Intermediate	Long	Comments
Strong Market Presence	0.20	4.25	0.85		x	x	Efforts are being made to increase customer reach
Pricing strategy	0.15	3.00	0.45		x	x	Cutting edge
weakness
Weak communication system	0.10	2.00	0.20		x	x	Recovering
Dependence of foreign supplies	0.10	2.20	0.22	x	x		The company needs to rectify the problem
opportunities
More market opportunities	0.10	2.10	0.21			x	Target will experience an increase in sales
E-commerce	0.20	3.5	0.7		x	x	Increase in use of technology meets the consumer behavior
weaknesses
Offerings overlap	0.10	3.4	0.34		x	x	The company need to take up measure to maintain its market share
Volatile labor costs	0.05	2.9	0.15	x	x		Challenging to keep up with the changes in labor market prices
Total	1.00		3.12

Table 3 : SFAS Matrix 

From the analysis in table 3, Target corporation SFAS analysis is 3.12 which is slightly above the average firm industry. Usually, the average firm has 3.0 (Wheelen & Hunger, 2011). Importantly, the factors identified in the situation analysis are critical to preparing a strategic plan. The greatest risk factors for the company are the high dependence on foreign supplies and overlapping offerings from competing firms. Usually, economy and political stability are not guaranteed. Thus supplies may be affected. Even though rivalry among other competing firms is intense, all of the affected firms face the same economic situations, and thus, a forced balanced is created by each of them to ensure profits. The economic situations make them all the companies vulnerable to losses. 

The use of forecasting will help Target company to conserve resources and manage the economic fluctuations cases. However, the company needs to take more measures to ensure that its offerings are unique and differentiated services and products from competing firms. From the SFAS matrix, it is clear that e-commerce will continue to affect the company's profitability in the future. Online marketing works par the demands of the current markets, and it will ensure the company expands more is it has opportunities for expansion. The pricing strategy and differentiated products also ensure that the company meets the needs of the customers as promised in the mission and vision. 

Strategic Alternatives and Recommended Strategy TOWS Matrix 

Based on SFAS matrix analysis, it is possible to easily identify the different strategic options that can be employed by Target Corporation. First, the company needs to maintain the current strategies; however, they need to take up measures that will give best results from the measures. The company's plan is to meet the ultimate needs of the clients while giving back to the community. Failure to take up innovative measures will mean the company may not be able to grow and thus give the opportunity to prosper while it stagnates. 

Therefore, strategies like a strategy that utilizes a strong brand image and works to expand to larger scales of operation. By targeting more countries, even the developing countries will ensure that the company increases its global market share (Rothaermel, 2015). Additionally, the company can benefit with partnership creation and do more acquisition especially of smaller firms in the United States. In this case, innovative measures will be required to ensure the success of the strategies. Unfortunately, the strategy will require huge amounts of funds. Also, partnership reduces the competitive advantage as opposed to acquisition. 

The fluctuations in the prices in the labor market can be tackled by employing a restructured and centralized operation that reduces redundancies across all operations. This way, the company will be able to save on costs by reducing expenses and employment functions. 

Other alternative measures are business leadership strategy and business differentiation strategy. The business leadership strategy will not require additional input; however, it does not reduce the operation cost either (Rothaermel, 2015). Product differentiation will require the company to use more finances and invest in the research and development that will help in identifying unique innovations that is different from other companies. The innovative measure including improving online shopping and ensure that customers get exactly what they want timely. Additionally, the company could invest in green movements that will earn the company a competitive advantage. 

	Strengths	Weaknesses
opportunities	Targeting other countries  Innovative measures in ecommerce	Centralized operations  Restructure some poor performing divisions
threat	Brand image  Partnership and acquisitions	Green measures  Increase differentiated supplies

Table 4 : TOWS Matrix 

Implementation of the Recommended Strategy 

The best strategy for the company is for the company to focus on its current strategy which involves further improving the brand image and taking innovative e-commerce measures. At the same time, the company will need to work to ensure its strategy. The first step is to develop defines objectives that will lead to the realization of the larger goal. The goals will be an advertisement campaign that will ensure an increase in brand image awareness and encourage customers to use online services from all over the world. Some measure necessary for the success of the strategic plan is creating a budget for it, allocating incentives to employees, and ensuring that all stakeholders understand the plan well (Rosenbaum-Elliott, Percy, & Pervan, 2015). The budget will ensure all steps are funded well and that financial constraints will not prevent successful implementation. Involving all stakeholders will ensure support for the goals and facilitate its realization. Finally, allocating incentives will encourage employees to commit to the strategy. 

A brand equity model will help in ensuring the company has a successful advertisement campaign. The mode Customer-Based and thus make it easier for Target Corporation to meet or surpass customer expectation regarding goods and services. The model offers a four-step model: brand identity where the company identifies how they are perceived, brand meaning where imagery and performance are used to give customers a good experience, brand response where positive customer response is achieved, and brand resonance where customer involvement is created (Keller, 2001). 

References 

Absalom, A. R., Glen, J. I. B., Zwart, G. J., Schnider, T. W., & Struys, M. M. (2016). Target-controlled infusion: a mature technology.  Anesthesia & Analgesia ,  122 (1), 70-78. 

Target (2016). Mission & values. Available at: https://corporate.target.com/about/mission-values 

Target, (2017). Target Announces Voting Results from 2017 Annual Meeting of Shareholders. Target. Web. https://corporate.target.com/press/releases/2017/06/target-announces-voting-results-from-2017-annual-m 

Target (2018). Board Committees. Target. Web. 

Keller, K. L. (2001). Building customer-based brand equity: A blueprint for creating strong brands. 

Rosenbaum-Elliott, R., Percy, L., & Pervan, S. (2015).  Strategic brand management . Oxford University Press, USA. 

Rothaermel, F. T. (2015).  Strategic management . McGraw-Hill Education. 

Wheelen, T. L., & Hunger, J. D. (2011).  Concepts in strategic management and business policy . Pearson Education India. 

Wilson, R. E. (2017). Target Corporation: Maintaining Relevance in the 21st Century Gaming Market.  Kellogg School of Management Cases , 1-25.