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Target Corporation AnalysisWriting Mentor Meeting Held 2/12/15Ryan ReviaTable of ContentsBalanced ScorecardPage 1Market Commonality vs. Resource SimilarityPage 4SWOT AnalysisPage 7Uniqueness DriversPage10Conclusion Page12 ReferencesPage13Balanced Scorecard ApproachTarget’s Vision: "Our mission is to make Target the preferred shopping destination for our guests by delivering outstanding value, continuous innovation, and an exceptional guest experience by consistently fulfilling our Expect More. Pay Less. Brand promise."“Our mission is to make Target the preferred shopping destination for our guests by delivering outstanding value, continuous innovation, and an exceptional guest experience by consistently fulfilling our Expect More. Pay Less. Brand promise.”The four perspectives of the balanced scorecard show Target’s variety of strategic initiatives and the actions taken to achieve them. Maintaining a large market share in the retail industry for a number of years, Target looks to drive financial performance by reaching $100 billion in sales and $8 per share profit by 2017. Financial statements show that Target’s revenue has decreased 1% over the last year, while gaining 2.3% over the last five years. In addition, earnings before interest and taxes (EBIT) have decreased 21.3% in the last year and 0.8% over the last five. Similarly, net earnings and diluted earnings per share (diluted EPS) have decreased by 34.3% and 32.1% over the last year, and losing 2.3% and 1.4% over the last five, respectively. While the financial indicators are significantly low, Target looks to rebound with improved performance in Canada and through investment in their current product lines and Omni-channel presence.From the customer perspective, Target looks to increase market share through development in current product lines. One of the 2015 initiatives is to increase their sustainable seafood selection to 100%, of which 45% of the current inventory has fulfilled. In 2016, Target looks to improve its owned-brand packaging. Of the 50 brands, 32 have undergone changes to reflect improvements in weight, such as the Archer Farms nuts and trail mixes, and environmental impact. Target also looks to increase its organic offering 25% by 2017 (currently up 13%). Target plans to make additional improvements in the learning and growth perspective over the next year. Target will reinforce their mantra of “A legacy of giving and service” through a number of team and company goals. For example, Target planned to reach 700,000 employee volunteer hours by 2015. Target employees actually reached more than a million hours over the last year, a statistic they now look to maintain. In addition, Target plans to increase employee use of financial tools, like their 401K, by 30% in 2015. Currently, only 18% of employees are enrolled. Target also looks to increase health assessments of those offered in their plan to 80%, an increase from 45% today. Biometric screening of employees on the company-sponsored health plan also looks to rise, at 60% of the desired 80% in 2015. Other employee healthcare initiatives include screenings for breast cancer, colon cancer, cervical cancer, diabetes (HbA1C), and educational support or giving.Efficiency is also a focus for improvement in the next year, with transportation costs and environmental impact leading the way. In 2015 Target looks to improve inbound transportation by 15% Cartons/Mile (C/M) and outbound transportation by 20% C/M. Inbound transportation has improved by 16% C/M and outbound transportation has improved by 22% C/M. Target also plans to achieve ENERGY STAR certifications for 75% of it’s U.S. buildings, of which 45% currently have. Target will also continue their reduction of greenhouse gas emissions in two measures: per square foot and per million dollars. Currently, emissions have been reduced by 7.1% per square foot of the desired 10% and 7.4% per million dollars of the 20% desired, respectively. Water use will also be monitored, now with a 4.8% per square foot decrease of the desired 10%. Market Commonality vs. Resource Similarity for Target Corporation1143002049780Market Commonality00Market Commonality2743200131445Resource Similarity0Resource SimilarityThe previous chart compares several firms in the discount retail industry and the extent to which those firms share market commonality and resource similarity with Target Corporation. Market commonality indicates a similar customer base between two companies, while resource similarity indicates that the products, or range of products, offered by two firms are alike. Seven other major discount retailers were used as a basis for analysis of the Target Corporation’s external environment. As Wal-Mart is Target’s largest retail competitor, it was a natural fit for the market commonality and resource similarity analysis. Wal-Mart has the most commonality with Target in terms of both resource and market similarity, thus it is the most direct competitor of Target. In other words, the actions of Wal-Mart have the most impact on Target’s customer base and ability to generate sufficient revenue. While they are the most similar, Wal-Mart actually offers a larger range of products, has a greater geographic dispersion, and does so through a broad low-cost strategy. Because of this, Target has to avoid losing customers on the basis of price by continued differentiation of products and services that generate value greater than the cost savings associated with switching. Both Sears Holding Corporation and Costco Wholesale Corporation have high resource similarity to Target, however, Costco has less market commonality because it is a wholesale distributor, whereas Sears and Target are not. Furthermore, Target shares high market commonality with because of their immense popularity and customer base. has a lower resource similarity to Target because of the immense range of products of they offer, far exceeding that of Target. Kohl’s Corporation is moderately similar in terms of market commonality; however, it lacks the product range and overall scope needed to indicate resource similarity. Big Lots had the lowest levels of market commonality and resource similarity for a number of reasons. While both Target and Big Lots are discount retailers, Big Lots is generally perceived as a low-cost provider. In other words, while Target’s customers may not mind paying a premium for better service and cleaner stores, many customers of Big Lots shop on the basis of price alone. In addition to the low market commonality, Target carries a broader range of products and services like pharmacies, grocery sections, and electronics. By understanding the market commonality and resource similarity between firms of the same industry, one can indicate where true rivalry exists and thus, where external risk is coming from. SWOT Analysis of TargetStrengths-Quality of service and customer’s in-store experience-Cleanliness of the stores-Loyalty programs like Cartwheel-Target credit card, Target Visa credit card, and Target REDcard-Strong owned-brand presence -Price match policy-Product rangeWeaknesses-Less locations than Wal-Mart, their closest competitor-Exists solely in the U.S. -Higher perception of pricing than other discount retailers-Reliance on the value of differentiating guest experience-Expansion into CanadaOpportunities-Continued enhancement of its grocery department, especially in organic foods and sustainable seafood-Further development of online retail capabilities -Increased push of owned-brand products-Lead the industry in conducting environmentally friendly business practicesThreats-Increasingly competitive retail segment-Reliance on a recovering U.S. economy-Increased development of multichannel retailing by competitors -Loss of consumer confidence in online retail activities following the 2013 data breachThe SWOT analysis is used to evaluate a company’s resources, capabilities, and competitiveness by separating the internal and external factors by whether or not they could help or hurt the firm. The four distinct categories that result are the internal strengths and weaknesses, and the external opportunities and threats. Internally, Target Corporation maintains a very strong brand that has resulted in the strengthening of other owned-brands and a loyal customer base. In addition, the overall guest experience, cleanliness of the store, loyalty programs, and internal financing options (like the Target credit card) are critical strengths that have helped differentiate Target as a company. On the contrary, some of the weaknesses that will need to be monitored include the lower geographic dispersion of stores as compared to Wal-Mart (their closest competitor) and the lack of Target’s international presence. When Target announced in January that it would be closing Canadian operations, it ended its journey into international expansion. Some other relevant weaknesses were the perception of Target as a more expensive store and their reliance on guest experience to be valuable enough to offset the higher cost. Target has a number of opportunities to grow the firm, as the development of the grocery section mirrors a public shift toward healthier, and oftentimes organic, food choices. By having the correct products in place to satisfy the changing market conditions, Target can benefit from the larger profit margin of owned-brand products, in addition to third-party suppliers. As the retail industry continues to move towards multichannel and online dispersion, Target will have to continue to update its capabilities beyond the current applications and loyalty programs so that they can merely maintain market share and not be squeezed out by an internet giant like . Finally, Target has the opportunity to lead the retail industry in a movement towards responsible, eco-friendly business practices across all segments of the business. From an external perspective, Target will be threatened by the increasingly competitive discount retail industry, much of which is now moving towards multichannel distribution because of the flexibility and lower costs associated with online customers. Because of Target’s reported data breach in 2013, Target will have to work towards repairing consumer confidence in Target’s online presence and assurance that they will be able to protect customer’s financial information safe. The final external threat was Target’s heavy reliance on a soft and unstable U.S. economy, which if consumer preference changes, would remove Target’s customer base. Analysis of Uniqueness Drivers for Target CorporationSince Target follows a differentiation strategy, an analysis of the uniqueness drivers was completed to show the actions that differentiate Target from that of the competition. For example, by using quality control processes to ensure less waste and minimum ecological impact during manufacturing, Target can set the example for the discount retail industry and other firms as a whole. Minimizing waste will also result in the cost savings generated from using the least amount of inputs, while maximizing the quality of those inputs to ensure that the extra cost of Target’s products are accurately adjusted for the additional perceived quality. Target also benefits heavily from their unique brand image. While the bull’s-eye is a very noticeable symbol in the United States, the perception that it and its products are of a greater level of quality is much more valuable. Target’s most important uniqueness driver is their customer service and overall guest experience. By creating a clean, enjoyable, and personalized experience for each shopper, Target creates more value to the customer than the money that might be saved at another retailer. In order to sustain this advantage, Target will have to continue to invest in their employees and employee development programs. ConclusionAfter analyzing Target Corporation through the balanced scorecard, market commonality and resource similarity comparison, SWOT, and a review of the company’s uniqueness drivers, it is apparent that the differentiation strategy employed by Target has contributed heavily to the company’s placement as one of the discount retail market leaders. Target has effectively differentiated itself through investment in guest experience and service, meaning customers value their time in Target more than any other discount retailer. Because of that, people are willing to, all other things being equal; pay more for an item because of the subsequent Target experience than they would for the same item at a different store. By continuing to develop multichannel distribution techniques and Target’s online presence, the company can continue to grow its revenue base through browser or application based sales. In addition, the move towards online sales can potentially help Target attain some of the market share that online marketplaces like currently control.This will become increasingly important as Target looks to recover from their failed expansion into Canada, leaving a loss of about $5.4 billion after closing each of the 124 stores opened just two years ago. With consumer trends long indicating movement towards Internet and application-based shopping, Target will either move with the trend and reap the benefits of online shopping, or they will suffer in a digital age where some people now solely shop online. ReferencesLeinbach-Reyhle, Nicole. (2014, August 8). How Target stands out among its discountstore competitors. Forbes Magazine. Retrieved from Wahba, Phil. (2015, January 15). Why Target failed in Canada. Fortune Magazine.Retrieved from Corporation. (2014, June). Target 2013 Corporate Responsibility Report.Retrieved from Target Corporation. (2014, March 14). Target 2013 Annual Report. Retrieved from Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland III, A.J. (2014). Craftingand Executing Strategy: The Quest for Competitive Advantage (19th ed.).McGraw Hill Education. ................
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