Target Corporation Taylor Kreis Ashley Hallmon Mallory Dillon Justin Meade Dr. Robbins Business Policy March 13, 2008

Executive Summary Products Markets Size Dominant Firms Keys to success

Mission / Vision Statement Unavailable

Discount Retailing External Environment Five factors: Economic, Social, Political, Technological, and Ecological

Level of disposable income Economic Level of disposable income Credit Propensity of people to spend Inflation rates Prime interest rates

Social ONE STOP SHOP

Political sales tax pollution policies

Technological Types of changes that could be made: new products improvements to existing products manufacturing/marketing techniques

Ecological recycling and reuse programs energy-efficient stores and facilities food donations

Present and Future Influence of Five Forces - Rankings Rivalry Suppliers Buyers Threat of Entry Substitutes Future Buyers Rivalry Suppliers Barriers to Entry Substitutes

Porter’s Five Forces Model Rivalry K-Mart Wal-Mart Target Barriers to Entry High economies of scale Huge capital requirements Government regulation Power of Suppliers Many standard products among all retailers Unique brands for each retailer Power of Buyers Want quality Drawn to low prices Substitutes Specialized shops

Competitor Profiles Target Wal-Mart K-Mart # of Stores 1,502 1,075 1,400 Store Locations Suburban areas Small towns Smaller, lower class towns National/Global? 47 U.S. states Worldwide 49 states + Puerto Rico, Guam, Virgin Islands Customers Majority Caucasian, middle-class Typically lower to middle-class, all ages & races Low to middle-class minority families

Value Chain Analysis Marketing and Sales Service Inbound Logistics Markets through Bulls-eye Logo and Slogan Service Customer service matters Inbound Logistics Distribution Centers to get merchandise to Target Stores Outbound Logistics Output of merchandise Consumers

Tangible Assets Basis of Operation Distribution Centers Suppliers Headquarters and Regional Offices Distribution Centers 26 total in 2007 Most recent in California and Illinois in 2006 Suppliers Private labels Partnerships

Intangible Assets Brand Recognition Company Reputation Recognized through Logo Company Reputation Associated with high quality and trendy merchandise Accumulated Experience Continuous growth through sales

Organizational Capabilities Affordable Prices Able to offer best prices for merchandise Pleasant Shopping Experience -Through signage and displays

Strengths High quality and trendy range of merchandise at an affordable price Private labels Attractive shopping environment

Weaknesses Target is nationwide, not global Does not offer a range of services as does their primary competitor Wal-mart As a result, less revenue

Competitive Advantage They have a competitive advantage over Wal-mart and Kmart because they sell quality, stylish and trendy merchandise. They are considered an upscale discount chain.

Financial Analysis 2004-2007 Balance Sheet Income Statement Key Financial Ratios

Balance Sheet Assets: Experienced slow continued growth Target has grown 41.9% in terms of Property, Plant, and Equipment Have not paid a dividend last four years Liabilities and Equity: Long term debt has risen almost $5,000 Reinvested more then $3,772 back into the company

Income Statement Net sales risen more then 30%

Financial Ratios Target Wal-Mart Costco Industry Symbol tgt wmt cos Liquidity ratios Current 1.6 0.8 1.1 1 Quick 0.2 0.5 0.4 Activity Ratios Inventory Turnover 6.6 8.3 10.4 9.7 Total Asset Turnover 1.5 2.4 3.4 Debt Ratios Debt 1.12 0.69 0.25 Profitability Ratios Gross Profit Margin 32.6 23.5 12.4 24 Operating Profit Margin 7.3 5.3 2.6 Net Profit 4.5 3.5 1.7 Earnings Per Share ROE 18.4 20.4 12.5 19.1 ROA 7 8.4 5.6 7.9 PE 15.8 15.6 25.3 16.8

Firm’s Position / Core Issue Differentiate Innovative products Pleasant shopping experience Quality customer service Clean, organized stores

Long Term Objectives Differentiate itself from the competition Focus on upscale products and customer satisfaction Market share growth 40% Wal-Mart 45% K-mart 15% Focus on Long term industry growth Growth of stores and distribution centers Supply chain management improvement

Strategic Scenarios Best Case: Most Likely: Target reach and exceed 40% market share target Surpass Wal-Mart as the discount retail giant Increased consumer spending Worst Case: Economic downturn forces Target to exit the industry Fail to meet market share goal and lose current share Huge loss of profit Most Likely: Target continues steady growth Ease into more untapped markets Continue being a differentiated leader in the market

Corporate Level Strategic Alternatives Open a new high volume low cost outlet store Appeal to new market Offer higher volume of targets current products Much like Sam’s club or Costco Could tarnish Target’s upscale name Partner with an upscale national grocery store Help target compete with Super Wal-Mart’s grocery sales Better supply chain management and coordination with a grocery store Allow for complete upscale grocery store inside Target.

Business Level Strategic Alternatives Generic Strategies: Differentiation Focus Grand Strategies: Market Development Innovation Concentric diversification Divesture

Strategic Choice Differentiate… Innovative, trendy products Grand Strategies Market Development Advertise/Promote current products Innovation New, unique products/styles Product Development Add new products to already existing products Differentiate… Innovative, trendy products Quality over quantity Do not focus on lowest prices

Questions?