Target Corporation is an international company designed to create an exceptional experience for its guests. The company ensures that every shopping experience by its customers who are referred to as quests is the best. Target has small format stores of the right size for the urban dwellers in addition to its iPhone app that allows the customer to shop on the go. The two platforms ensure that the customer shopping experience is unique to each individual and memorable. The company has capitalized on its design capabilities in order to satisfy the needs of the guest simplify their life and make them feel great. Target is dedicated to avail good designs that are accessible and affordable to its customers. The company is also known for its commitment to support the surrounding communities where it gives 5% of its profits in addition to volunteering its time and talent. The company also partners with other organizations in order to empower the community and to develop the team members. The company is aspiring to be the place where the customers and team members can find more than what they are looking for (Target, 2017). According to Target (2018), the company has 1839 stores and 39 distribution centers in the U.S. It also has 350,000 team members in the international market and global locations in India. The company’s market has a median age f 40 years where 43% have children at home with 57% of the customers having completed college. The median household income for the guests is $64k.
SWOT Analysis
Target has a strong brand that is widely publicized and perceived. The brand name, images, and the bull’s eye are widely known and recognized by customers. The company has successfully built a strong reputation for quality products at affordable prices. The company's one-stop shopping experience appeals to the needs of the customers who are certain that their different needs will be met in one location. The company prides itself of establishing strong relationships with its suppliers and vendors, therefore, managing to take advantage of strategic relationships and economies of scale (Hunger & Wheelen, 2014). Similarly, the company has a strong presence in the U.S and international market. It has managed to differentiate its merchandise which is stylish yet affordable. The pricing is also adjusted according to the market needs and different loyalty programs are used to attract and retain customers
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The online platform is however underutilized since the awareness levels are still low. Similarly, the company does not offer all its products through the online platform. Despite offering quality products that are appealing to different market segments, the company has to overc.ome negative publicity due to its unfavorable apparel items. Similarly, it is challenging to cope with the ever-changing fashion trends as well as to appeal to the target market using such items. The company relies on a supplier from other countries which can affect its operations if there are economic or political issues in the country of origin (Hunger & Wheelen, 2014). Data breaches are also an issue that affects the confidence of the customers.
Target has an opportunity to expand its operations to other markets in the U.S and outside the country. Similarly, it has a strong online presence which has contributed to increased sales in the domestic and international market. The private labels offered by Target have enhanced its ability to meet increased demand for such products (Target, 2017).
There are however overlaps of the products offered by the company and its strong competitors like Walmart and Costco leading to price competition and reduced margins. E-commerce and online shopping has changed the landscape of retail stores and contributes to significant disruptions. Labor cost in North America has continued to rise affecting the profitability of the company (Hunger & Wheelen, 2014). The competitors have also merged with other companies increasing their sizes and customers. Economic conditions have also affected the buyer power leading to reduce profit margins.
PESTEL Analysis
The company has established strong cooperation with China where it obtains its supplies. A conflict between the U.S. and China like the one facing the country now can adversely affect its performance (Hunger & Wheelen, 2014). The company is also affected by tariffs, taxation, costs, and trade restriction in its effort to expand to the international market.
Economic factors that are likely to affect the company include consumer buying power. Similarly, international markets are less competitive for example the company had to close 133 stores in Canada in 2015 two years after they were opened leading to $5.4 billion loss and lost jobs for over 17,000 employees (Target, 2017). Consumer behavior, interest rates, inflation, employment factors, and general economic conditions affect the operations of the company.
The company has successfully established a positive corporate culture in addition to supporting the surrounding community by donating 5% of its profits in addition to joining hands with like-minded companies. The company also offers online services as well as financial services (Target, 2017). The company also values diversity and offers different products that meet the needs of different ethnic groups.
The company is striving to be technology and social media driven where it engages its customers using different platforms like Facebook, Instagram, Twitter, Linkedin, and Tumblr. The company uses the internet to connect to its customers. Legally, the company has experienced safety concern issues and food and drug contamination. Similarly, the company must adhere to environmental, labor, employment and privacy and security laws (Hussey, 2012). The company offers fresh and organic products for its health-conscious consumers and as such, the consumers must adhere to strict standards in order to prevent any form of contamination.
Diversification and Strategies
Target uses different strategies in order to diversify its operations from its competitors. The company employs related corporate diversification approaches where 70% of the total revenue is obtained from several lines of business. The company, therefore, engages in multiple lines of business in order to generate more revenues (Target, 2017). The company sells fashionable upscale goods and does not directly compete with its biggest rival Walmart or Kmart. The company owns associated merchandise corp. which is its biggest supplier and therefore can easily change its products to appeal to its customers.
From the Porters five forces model, Target has the low bargaining power of suppliers, a moderate buyer power and threats of new entrants. Similarly, the company has a moderate threat from substitute products and services. Rivalry among existing stores, however, is high. The company deploys resources in its market and is determined to develop its Omni-channel capacity. Similarly, the company is capitalizing on effective pricing and inventory management in addition to product diversification
The company can, therefore, use its strengths to overcome the identified weaknesses in order to take advantage of the emerging opportunities and to address some of its limitations. The SWOT analysis will enable the company to deals with external factors that affect its operations. The PESTEL identified some of the issues that can enhance or negatively affect the operations of the company in the international market. A clear understanding of the internal and external environment is critical for its long-run success.
References
Hussey, D. (2012). Strategic Management . Hoboken: Taylor & Francis.
Target. (2017). Form 10-K: 10-K Report: Target 2017 Annual Report | Target Corporate. Retrieved from https://corporate.target.com/annual-reports/2017/10-K/10-k-cover
Target. (2018). Corporate fact sheet. Retrieved from https://corporate.target.com/press/corporate
Hunger, J., & Wheelen, T. (2014). Essentials of strategic management . Essex: Pearson.
