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

2. Executive Summary
Products
Markets
Size
Dominant Firms
Keys to success

3. Mission / Vision Statement
Unavailable

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

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

6. Social
ONE
STOP
SHOP

7. Political
sales tax
pollution policies

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

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

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

11. 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

12. 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

13. 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

14. 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

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

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

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

18. 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

19. 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.

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

21. 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

22. Income Statement
Net sales risen more then 30%

23. 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

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

25. 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

26. 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

27. 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.

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

29. 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

30. Questions?