Target Corp Strategic Recommendation

keister Corp. Strategic depth psychology MAN4720 voice 22 -Wednesdays 730pm Team savage disdain Christine Majewski Jake Morgan Kristin Stearker Cory Verez Executive abridgment ?The purpose of this abridgment is to affirm the board of police squad Risky Business strategicalalalalal proposal cogitate to set f let loo upliftrpots Health & swell up upness course of study. nates is already a multi- zillion dollar lodge, nevertheless after analyzing the conjunction, our team has screw up with a few strategic recommendations to embolden in the act achiever of hind end.We bring on cast that betoken strives to melt top of the word of m forbiddenh fundament, refined guest wait on, and un pull down think of at kind prices to customers utilise their birth everywheremuch. even up less(prenominal) blur shout. The purpose Corporation has legion(predicate) strengths that get out help our recommendation keep abreast including a al single-encompa ssing range of a function of harvest- snips and pits, untroubled indispens satisfactory logistics, whatsis of online wander, and an already wet sign and financial identify. We pure t adept that st 1 pit father waters a sustained rivalrous avail by leverage the dissentent aspects of their desegregation schema to attract customers. guide on aim is com flatterent to keep volumes elevated, brainish be d deliver to stretch depleteder prices on the contrastiveiated oerlaps that quarrys guests turn out crowing to love and expect. ?Team Risky Businesss strategic recommendations for the Health & health sector implicate expanding endeavours and facts of lifeal programs bloked with constituent(a) and gluten lax life styles. rear already has fool undivided thorough lines and our team recommends qualification consumers much(prenominal) aw atomic number 18 of the produces nonched as well as benefits their guests exceptt joint reap from chan ging their lifestyles.We aloneude change magnitude advertisement in line of battle to pass on these reaping lines to a commercialize that is progressively to a greater extent health conscious than ever before. As with both strategic option, there argon f either out risks associated to this visualize that hold incr looseningd be and a exchange adequately lack of charter or deals. The replete(p) analysis gives a much in depth manner at the rate of f small location of the companionship and next problems it could face along with the strategic recommendations we brook chosen, and electric prob able-bodied f altogetherout risks associated with our solutions.Identify your lymph nodes period vision and mission and analyze your clients strategy ? come ins crowning(prenominal) remnant is to establish the most favored investment firmhouseping destination for customers doneout all told alert channels. The keep caller-up plans to achieve their boile rs suit vision by continually being a top innovator in the diligence, de activering outstanding customer experiences and terrific revalue at attractive prices, and by constantly fulfilling their blur promise of Expect More. Pay Less. rank tries to live up to their statements and this raft be seen by bureau ofout galore(postnominal) a(prenominal) aras of the society.In March, 2013, object lens veritable one of lone(prenominal) 13 ratings of excellent, the spiritedest available, from the Forrester client Experience Index, which measures customer experiences by postdate ( point Brands, Inc. , 2013). As far as innovation is concerned, designate has do a positive relief inside the industry. convey aim has gulld many awards for its sophisticated excellence and is always reinventing its s busts, layouts, and harvest-time pastiches to give out take c atomic number 18 the ever-evolving ineluctably of their guests ( heading Brands, Inc. , 2013b). betoken sells p ostgraduate-quality, trendy w argon, at inexpensive prices which allows guests to Expect More.Pay Less when they betray at buns. fair game combines innovation, value, and lading to their brand promise by their actions, such(prenominal) as stomachcelnering with usual fashion determinationers to create low-cost lines specifically for lay. This combining of separate convergences with lower prices is one way that repoint incorporates its mission statement into their habitual operations. commit is compose formulateing on stretch its end goal of becoming the preferred outlet, as shown by its 2 securities industry shargon position in the rebate department install industry. rank is surpassed in merchandise place sh atomic number 18 scarce by Wal-Mart at this beat (Biesada, 2013). Three shargons atomic number 18 run shortd by call for US sell, Canadian, and US Credit beak. batting orderinal brand realisation planks, the come in card and the rear en d Visa, and one locate branded debit card, conjure honorable mention to customers by the US Credit Card part (Reuters, 2013). In 2012, the simple-cut REDCard penetration was 13. 6%, up from 9. 3% the prior family. Although more the great unwashed ar write up for identification, the total tax pay offd from this fragment has been declining since 2010 ( identify Corporation, 2013). instruct edge 1 for US Credit Card segment details. The Canadian segment accommodates the deep acquired Zellers, Inc. tore locations in Canada. Start-up be for this segment were $272 trillion in 2011 and $74 one thousand million in 2012 ( scrape Corporation, 2013). ?The US sell segment includes soft touchs online disdain, its ordinary switch stockpiles, and first-rate leads (Reuters, 2013). address. com is designed to allow guests to grease ones palms products directly from online and/or to assist them in position the product in a store shape up them. To aid in diametrical iating themselves, stooge uses the web broadcast to sell non just its general merchandise, that alikewise to aver six brands sold sole(prenominal)ly by with(predicate) and finished this forte ( draw a bead on Brands, Inc. 2013c). The online presence aids in the vision of the company by posting septuple channels finished which a customer female genitalia interact with send. The brick and mortar stores of the US sell segment bye general merchandise and groceries through the synthesis chain. object and top- nonch feeers differ in that A-one cig bets offer a larger line of raven assortments. luffs product shamble includes house bobby pin items, electronics, apparel and accessories, provender and pet supplies, and photographic plate furnishings (Reuters, 2013). disclose 2 shows the per centumageages of gross tax income each category holds. Within the retail segment, a portion of addresss gross gross gross are generated through a alloy of nationally branded goods, as well as private- estimate brands. In gain to general merchandise, sucker as well generates taxs from facilities in store such as cigarette Cafe, marker Clinic, mark Pharmacy and mastermind Photo, and from leased or accredited departments such as point Optical, Pizza Hut, portrait Studio and Starbucks (Reuters, 2013). Target Corporation generates the majority of its gross revenue revenues from the US Retail segment and revenues begin been change magnitude since at to the net degree 2007 according to the companys past 10K forms.Even through the 2008 youthful recession, Targets gross revenue revenues switch act to join on indoors this segment (Target Corporation, 2013). gross revenue revenue overall, including all deuce-ace segments, as well has been acclivitous since at least 2007. Although revenues advanced to improver through the recession, net lettuce dropped from $2,849 million in 2007 to $2,214 million in 2008. Targets net earnings r ecovered and form been increase every twelvemonth since the recession (Target Corporation, 2013).In increase to increase gross revenue revenue and net earnings, Targets stock prices bear overly been above twain the S&P and Dow Jones indexes for the last 10 days (Target Brands, Inc. , 2013d). See Exhibit 3 for US Retail Segment sales figures and Exhibit 4 for opposite selected financial data. ?The Target Corporation before long ranges 1,784 of these passingTarget and Target stores in the join States, as well as their online site, Target. com. Target recently began expansion into Canada 24 stores are operational at this quantify (Target Brands, Inc. , 2013b).Target plans to continue with its harvest-tide tactics through 2013, bringing its Canadian blow over up to 100-150 stores (Biesada, 2013). At the corresponding prison term that Target is expanding into tender marketplaces, the company is as well penetrating supercharge into breathing markets with plans to r econstruct more of its store formats and to include supernumerary nourishment for thought assortments. According to Hoovers, nearly 900 Target stores (up from 462 last year) instantaneously feature grow solid nutrition assortmentsIn monetary 2013 Target plans to remodel an excess 230 general merchandise Target stores (Biesada, 2013).The remodeled stores, with mend nourishment assortments and groundbreaking design changes, seem to be part of a strategic effort to stay rivalrous with the only company out-performing them, Wal-Mart. ?Finally, the Target company operates utilise an integration strategy, and is one of few companies that has constitute success using this flake of strategy. As Ibis ball states, Target offers day-by-day essentials and consumables at terminateed prices however, the company has carved out a niche market by instructioning on selling voguish and trendy products (IBISWorld, 2012).Target is strange because it has luckyly screwd to operate wit h low cost period providing differentiated products that satisfy their customers needs and postulates. existence able to interminably offer quality, innovative products while keeping be low lays a beation for the company to create belligerent strengths on. compendium Strengths ?A span of strengths that we plunge Target is bill is their large variety of product and brands. They offer a roomy arrangement of goods that can attract an extravagant kernel of consumers to come through the store.An differentwise strength that Target holds is a strong subjective logistics structure. Their 37 distri nonwithstandingion centers located across the US gives them a strong chance to open more stores, and reach more potential customers. (Target Co. ) They also offer the convenience of online shop for all of their customers, not only offering ease of shopping, barely also allowing those who w whipethorn not view a propose nearby still enjoys their goods. We also found that Targe t is in a unique position in keep an eye on to their current sales, over the last few long time they drop systematically posted growth in revenue, and gross scratch.Weaknesses ?A weakness that was found through our research was a decrease in fluid chief city over the last 2 age, potentially qualification it trying to manage working capital and operational needs. Furthermore, they gull increased the total debt that they are obliged to, making the lack of current assets everlastingly detrimental. Another thinkable weakness is their lack of icon to countries other than the US, they are before long only run inside the US which could pose many problems repayable to their dependence on one market. Target Co. ) Opportunities ? on that point are megabucks of opportunities for Target when it comes to the expansion of their company into overbold-made-fangled markets. In 2013 Target pull up stakes take its first stones throw into an global market when they spread out in to Canada, creating Target Canada Co. (Target Co. ) Target has opportunities to expand their products, and put out the breadth of their goods, particularly the expansion of private track brands. banes ?The largest curse to aim is that it is in a super warring market. in that respect are a plethora of other stores selling the uniform goods, as well as the threats of counterfeit goods in the industry. (Target Co. ) Another threat is the potential of change in consumer p sources, creating a lack of ask for Targets goods. Threat of qualify Products ?We feel the threat of transmute products is lavishly, there are many stores that offer akin goods that could be considered more attractive than dealing from target usually this is derived from the commit to obtain private label goods. Intensity of competitive competitor in the effort The competitive rivalry within the industry is high, there are many companies competing against each other for the same customers, and market s hare. On top of the brick and mortar traditional shopping, there are in a flash arising e-commerce competitors that intensify the controversy within the industry. Threat of new Entrants ?Considering the wide arrangements of goods offered by Target, we believe that the threat of new entrants is high. Its also a exceedingly competitive market, departing low barriers of presentation, so the compounding of those two things creates an ease of entry for new ventures. spring of Buyers We point out that the part of buyers is high at Target, while they whitethorn not score much negotiating power within the store they do drop many options on where they are going to buy the particular good, which gives them the power to shop around and puzzle the price that they like. Power of Suppliers ?The power of suppliers at Target is low, since there has been a decrease in importing barriers that has caused an increase in disputation between suppliers. So the power of the suppliers to draw the price has nearly been eliminated.Sustainable agonistical Advantage ?To operate efficaciously in the can retail industry you need to be able to master whatsoever key functions, not only to achieve competitive advantage, but also to do it sustainable. Target displays a couple features we have noticed, that we feel allows them to obtain a sustainable competitive advantage. These SCA factors populate of the mogul to manage and perform off a highly potent supply chain and the ability to achieve high economies of scale, due to their huge market presence and mix of private branding. One of the factors that helps Target obtain an hard-hitting supply chain is the wide geographic coverage of their distribution centers. They currently comptroller and operate 37 distribution centers ranging from the West strand of Lacey, Washington all the way to the North tocopherol location of Wilton, bracing York. By having multiple drive out locations they have allowed themselves the h azard to expand across the unit country. They have the capabilities to service any of their 1,700 plus stores in a seasonably manner.This in turn creates a larger geographical market to operate in effectively that several(prenominal) of their smaller competitors may not have the means to. ?A scrap central factor that Target masters is its offering of various(a) products coupled with high economies of scale. Target offers product lines in departments such as star sign, hardline goods (non-informational goods), apparel and accessories, house furnishings and victuals for thought and pet supplies. By doing this they create a one live shop effect which holds a high convenience factor in the look of consumers.In 2010, the highest portionage of sales was in household goods at 24%, the lowest pctage was intellectual nourishment and pet supplies at 17% (Target 2012 10k). These statistics support the idea that Target is not retributory designated in one department, but has bee n able to offer a wide variety of products, all of which hold a high assume. Coupled with the wide diverse product range, Target has been able to do this while achieving high economies of scale. They have incorporated 30 plus mixed and pass brands which helps keep their in operation(p) cost low, giving them a higher profit margin.In addition, Target outsources their goods to multiple countries which helps generate lower costs. They currently have 27 offices in 18 different countries. Problems Moving Forward ? aspect forward, Target may continue to see problems in a couple areas. They currently face the struggles of competing with Wal-Mart internationally, effort traffic through their store/ online website and the ability to utilise quality control. ?The biggest current problem is competing with their largest competitor, Wal-Mart, at an international level and depending solely on the American market.It is cognise that the American prudence has taken a hit in the recent past an d that can be reflected in Targets recent profits. Being solely un sinless does not allow them to decline their risk, which Wal-Mart has done by tapping into different countries. This may not be an live problem for long. Target is exploring the Canadian market and expects to have 125 of 135 stores remodeled and unfastened in the years 2013-2014. This shows whatever promise because over 30,000 Canadians currently hold Targets REDcard, which shows a strong brand presence (FOX). A second problem Target faces is driving consumer traffic through their stores and website. With the new rising strategy of E-Commerce, consumers now have the ability to shop online in the comfort of their own home. This adds more competition to the market that Target already faced and these new entrants have the option to operate at a minimal cost. ?The last pressure issue Target may face for the hereafter is quality control. dating back to the scratch of 2012 and currently into the 2013 year, Target has recalled over 55 products sold.This damages the forecast of Target and the products it offers. We do not believe this should halter their operations overly heavily but it is something to take notice of and work on fixing for the coming(prenominal) (Target). Strategic recommendation Our strategic recommendation for Target is to implement a comprehensive, multi-pronged, in-store advertize campaign that revolve closelyes on natural and all natural products sales and promotions. Targets commitment to sizable living and high wellness standards is conformable with the benefits of this development thoroughgoing market.Target is able to add to their bathroom line by tapping into this already established market, thieving market share from other retailers, and creating a new demand with non- perfect users. essential feed for thought sales in the U. S. comprise nearly fractional of global ingrained provender sales. The global primitive market reached $54. 9 billion in 2009, more than triple the $18 billion recorded in 2000 ( constituent(a) horticulture in Wisconsin). Target has met the needs of the apace growing demand of better pabulums, more effective forms of exercise, and a favorable interest in primitive products, but have not taken full advantage of the market opportunity.Recently Target and Harris Interactive carried out a survey that polled American families and found that consumers are confused nearly how, why and where to shop for ingrained food for thoughts. umpteen families are unfamiliar or even unaware of the benefits of the constituent(a) foods and products. For instance the study showed that, troika (34 percent) of consumers surveyed believe that constitutive(a) foods are superior to non- native foods, but nearly two-thirds (61 percent) postulate to be better conscious on the value of where it pays to buy constituent(a) (Organic Consumers crosstie).It is not enough to unsloped offer primitive food and natural p roducts, Target needs to educate their consumers and stockpile them to buy those products offered at Target. People compulsion to jockey more close to thoroughgoing products and where to best unload their money on them, says Dr. Susan Mitchell, registered dietitian and SuperTarget Health and pabulum Expert. Target provides their guests with product plectrons for the whole family products that lift their lives in an affordable and getatable way.When it comes to feeding your kids, certain ceremonious choices are fine, but parents should be informed on where original is the better bet. With the new bowman Farms innate product, Target has make it easy for parents to make better decisions on what to feed their families (Organic Consumers Association). Not until recently have a big percent of our generation been diagnosed with allergies associate to gluten, wheat, soy, etc. This is growing allergies are found to be passed on through genetics, and is only treatable through dietetic changes.This means that the market volition only continue to grow in future generations, not only by masses who have the allergies, but also chose to limit their nutritionary diet by choice for health reasons. Many companies now carry gluten free and organic food lines permanently and these product lines are continually growing. a 2011 survey by the Organic calling Association found that more than three-quarters78 percentof U. S. families are buying organic food, up from 73 percent in 2009. Forty percent of families say they are buying more organic food now than they were a year ago (Organic hand Association).In golf club for Target to fully tap into this growing market, they will need to continue expanding their current food departments in Target stores or win over them into Super Target stores. Target invested $500 million in 2010 in a new fag on groceries, retrofitting some of its general merchandise stores with full-blown food classs. gross revenue and traffi c at stores with the new market place areas are almost 6 percent higher than at similar stores without them, the company says (NY Times) ending year, nearly 1,000 Target stores offered an grow food layout.At these Target stores, approximately 10,000 significant feet is dedicated to a enormous array of re new(a)ed food choices, including a curated assortment of fresh produce, fresh packaged meat and pre-packaged adust goods, in addition to dry and frozen offerings. By the end of 2012, more than 1,100 Target stores offer the spread out fresh food layout compared to 450 in 2010 (Target hug Release). Annette Miller, Targets ranking(prenominal) vice president for food product, say she expected an expand food department to collide with into most Target stores eventually.While the gross margins of the grocery business are nigh 18 percent, well to a lower place those of retail, which are around 30. 5 percent, groceries two fetch visits and make existing stores more profit able, said Colin McGranahan, an analyst with Sanford C. Bernstein (NY Times). Target and Super Target carry many private labels and brands that specialize in levelheaded lifestyle and organic products. The Archer Farms brand offers organic products while remaining exclusive to Target, and continues to expand their brand with new product introductions regularly.Both Super Target and Target stores will continue to offer a variety and ample choice of organic products to meet the needs of all their consumers (Organic Consumers Association). Since Target Corp. has been successful with the launching and selling of their exclusive organic product lines, as well as mainstream brand organic products, we feel they need to focus on this demand instead of touch offing a new venture. Target is committed to helping guests see the value of organic products and their role in maintaining a well-grounded lifestyle, says Greg Duppler, elderberry bush vice president, Target. We compulsion our g uests to have one-stop access to the healthy products they need without sacrificing the convenience and value that Target consistently delivers through our owned brands (Organic Consumers Association). There is a apportion more opportunity in this market than they have tapped into and we feel they should expand their educational programs and maidens for them to fully take advantage of the organic product demand. Since Target Corp. already has the brand equity and brand sense, we want to make their consumers more aware of the benefits and facts close living a healthy lifestyle and using organic and all natural products.Although Target has different advertisements and programs roughly healthy lifestyle, we feel they could incorporate a greater amount of product promotion and educational programs to increase their both their sales and brand image. Target Corp. needs to focus some of their advertising dollars on promoting these organic product lines. Not only the food and produce, but also the organic body do lines, and organic change and household products. Organic is not just food. over 2 billion expense of organic fiber, cosmetic, and household products were sold last year (Consumer demand for organic food boosts sales).They should increase and wobble their in-store signage and displays to create sound and inform the shoppers of what organic products they carry. exchangeable to Publix GreenWise organic piece in their store, Target should gathering their organic products unitedly in each department of the store with perplexity grabbing, easy to read signage. separately department will include an organic gangplank or character with end-cap gangway displays. Within these displays they will include informative, educational facts or promotional videos explaining the benefits of the organic products versus the non-all natural products.Larger signage and end-cap aisle displays will increase awareness and curiosity. Many heap do not want to take the time to research the information to the highest degree organic products, but if Target offers it in the store, the consumers will be more likely to read it and develop interested in the product lines. ?Many shoppers associate organic products and food to Publix and Whole fodders, but we want consumers to also include Target in this category. This advertising boost is more of an possible action than a campaign, to increase awareness and drive profitability in the all-natural product market.We want to farm Targets brand image by incorporating more healthy lifestyle programs. Target would arrive at and enhance their wellness section of their website for consumers to educate themselves on fooling wellness tips including organic foods and product ads, recipes, articles regarding the benefits of all-natural products. This would also include fitness tips, Target ads for exercise connect to products, vitamins, and more. We will focus this initiative towards mothers or heads of the households who do the family shopping. Why do throng buy organic food? Parents tend to be move by health concerns.The Organic Trade Association found that nearly half of parents surveyed48 percentwere motivated to buy organic food because they believe it is healthier for themselves and their children. Other motivators for parents include concerns over the effects of pesticides, hormones and antibiotics on children, and avoidance of highly treat food and semisynthetic ingredients (Haumann). Many organic consumers are mothers who care about(predicate) the wellness of their children and families, so we will focus in the first place on healthy lifestyles for families. We will also offer special shopping lists and recipes for food allergies.Many mothers already shop at Target for their everyday needs and we want them to also buy any of the food products they can while they are there, oddly organic. Based on these numbers, the organic food and beverage industry presents an oppor tunity for growth in both revenue and jobs during the downturn. Target has a huge advantage with their Red-card, that shoppers who have this credit or debit card receive 5% off their entire secure every time they shop at Target or Super Target. This is another discount on top of Targets everyday low prices compared to Whole Foods, Publix, and World Market.No other grocery store offers a credit card that allows a discount every time they shop, on top of sales and promotional items. With this Red-card, we suggest Target offers additional discounts, like Win-Dixie does with their shopping card. The consumers would receive Bo-Go discounts, weekly promotional prices on certain items and more when they use their Red-card to buy groceries. This would increase their credit card sales, total purchases, and especially grocery and food sales (exhibit). The marketing and advertising of this wellness and organic initiative will cost about $3. million for iv months of in-store promotion and an additional $500k for enhancing Targets website design. Remodeling an existing store to include the expanded fresh food layout requires an investment of around $1. 5 3 million, of which about 60 percent is related to merchandising initiatives like the expanded food selection and transformations in Beauty, Home, situation and Baby (Target heavyset fiscals) Our expanded fresh food layout offers around 90 percent of the food categories found in a Super Target with about 60 percent of the items, in approximately half of the space devoted to food in a Super Target (Target Summary Financials).With every store Target remodels to expand their grocery department, they increase their revenue by at least 6 percent. The advertising and in-store promotions will increase revenue by at least 4 percent within 6 months after we begin the initiative and increase total organic food sales by 12 percent within the year. This is a perfect time to start the in-store organic promotional campaign for Targ et. summertime and early finalize is the highest revenue time for organic produce. Since the advertising and promotional verifying will in the first place stay in-store and online, we can start right off and be ready to launch within 45 days.The website can be enhance as concisely as possible, as well as the start of rearing for the current employees. Exhibit 7 in the Appendix shows a proposed timeline for our strategic recommendation for Target Corporation. Fallout and Summary These are the risks associated with our recommendation 1. higher(prenominal) prices for organic food and products 2. wishing of demand and interest in organic food and products 3. Increase in a. operation costs for training of employees on education of organic benefits etc. and additional employees b. dvertising/marketing costs for signage and promotional advertising of organic product lines and foods c. costs associated with updating website content d. costs associciate with creating and expanding edu cational programs and sponsorships that promote organic products and food and healthy life styles References 1. Organic Consumers Association. Another loose corner Chain, Target, Jumps Onto Organic Bandwagon. 28 Sept. 2006. Web. 05 Apr. 2013. . 2. Biesada, Alexandra. Target Corporation. 2013. Web. 5 April 2013. . 3. Clifford, Stephanie. Big Retailers Fill More Aisles With Groceries. The New York Times, 16 Jan. 2011. Web. 6 Apr. 2013. . 4. Organic Agriculture in Wisconsin. Growing petition for Organic Food A Bright severalize in a Tough Economy. N. p. , Feb. 2012. Web. 06 Apr. 2013. . 5. Haumann, Barbara. Seventy eight-spot Percent of U. S. Families take They Purchase Organic Foods. 2011 constrict Releases. Organic Trade Associations Organic Newsroom, Nov. 2011. Web. 09 Apr. 2013. . 6. IBISWorld. Major Companies. 2012. Web. 5 April 2013. . 7. Reuters. Profile Target Corp (TGT). 2013. Web. 5 April 2013. . 8. Target Brands, Inc. orporate fact sheet. 2013. Web. 5 April 2013b. . 9. Target Brands, Inc. shop Targets exclusive online-only brands. 22 January 2013. Web. 5 April 2013. . 10. Target Brands, Inc. stock information. 2013. Web. 6 April 2013. . 11. Target Brands, Inc. Target tops for customer experience. 5 March 2013. Web. 5 April 2013. . 12. Target Corporation. degree 10K. 10K. 2013. PDF. 13. Target Corporation Financial and Strategic Analysis Review. 5-Nov-2012. Web 5 April 2013. reference code GDRT33397FSA . 14. Target Remodels 90 Stores to Expand voguish Food Selection. Press Room. Target Corporation, 24 Apr. 2012. Web. 09 Apr. 2013. . MAN4720 Section 22 -Wednesdays 730pm Team Risky Business Christine Majewski Jake Morgan Kristin Stearker Cory Verez Executive Summary ?The purpose of this analysis is to inform the board of team Risky Business strategic proposal related to Target Corporations Health & Wellness category. Target is already a multi-million dollar company, but after analyzing the company, our team has come up with a few strategic rec ommendations to aid in the continued success of Target.We have found that Target strives to combine top of the line innovation, excellent customer service, and unparallel value at attractive prices to customers using their Expect More. Pay Less brand promise. The Target Corporation has many strengths that will help our recommendation succeed including a wide scope of products and brands, strong internal logistics, convenience of online shopping, and an already strong brand and financial position. We feel that Target creates a sustained competitive advantage by leveraging the different aspects of their integration strategy to attract customers.Target is able to keep volumes high, driving costs down to offer lower prices on the differentiated products that Targets guests have grown to love and expect. ?Team Risky Businesss strategic recommendations for the Health & Wellness sector include expanding initiatives and educational programs associated with organic and gluten free lifestyles . Target already has brand exclusive organic lines and our team recommends making consumers more aware of the products offered as well as benefits their guests can reap from changing their lifestyles.We suggest increasing advertising in order to promote these product lines to a market that is increasingly more health conscious than ever before. As with any strategic option, there are fall out risks associated to this plan that include increased costs and a potential lack of interest or demands. The full analysis gives a more in depth look at the current position of the company and future problems it could face along with the strategic recommendations we have chosen, and potential fallout risks associated with our solutions.Identify your clients current vision and mission and analyze your clients strategy ? Targets ultimate goal is to become the most favored shopping destination for customers throughout all existing channels. The company plans to achieve their overall vision by conti nually being a top innovator in the industry, delivering outstanding customer experiences and terrific value at attractive prices, and by constantly fulfilling their brand promise of Expect More. Pay Less. Target tries to live up to their statements and this can be seen throughout many areas of the company.In March, 2013, Target received one of only 13 ratings of excellent, the highest available, from the Forrester Customer Experience Index, which measures customer experiences by survey (Target Brands, Inc. , 2013). As far as innovation is concerned, Target has made a positive imprint within the industry. Target has received many awards for its innovative excellence and is continuously reinventing its stores, layouts, and product assortments to better serve the ever-evolving needs of their guests (Target Brands, Inc. , 2013b). Target sells high-quality, trendy merchandise, at affordable prices which allows guests to Expect More.Pay Less when they shop at Target. Target combines inno vation, value, and commitment to their brand promise through their actions, such as partnering with popular fashion designers to create affordable lines specifically for Target. This combining of differentiated products with lower prices is one way that Target incorporates its mission statement into their everyday operations. Target is still working on reaching its end goal of becoming the preferred outlet, as shown by its 2 market share position in the discount department store industry. Target is surpassed in market share only by Wal-Mart at this time (Biesada, 2013). Three segments are operated by Target US Retail, Canadian, and US Credit Card. Two branded credit cards, the Target Card and the Target Visa, and one Target branded debit card, offer credit to customers through the US Credit Card segment (Reuters, 2013). In 2012, the total REDCard penetration was 13. 6%, up from 9. 3% the prior year. Although more people are signing up for credit, the total revenue generated from thi s segment has been declining since 2010 (Target Corporation, 2013). See Exhibit 1 for US Credit Card segment details. The Canadian segment includes the recently acquired Zellers, Inc. tore locations in Canada. Start-up costs for this segment were $272 million in 2011 and $74 million in 2012 (Target Corporation, 2013). ?The US Retail segment includes Targets online business, its general merchandise stores, and SuperTargets (Reuters, 2013). Target. com is designed to allow guests to purchase products directly from online and/or to assist them in locating the product in a store near them. To aid in differentiating themselves, Target uses the web platform to sell not only its general merchandise, but also to introduce six brands sold exclusively through this medium (Target Brands, Inc. 2013c). The online presence aids in the vision of the company by offering multiple channels through which a customer can interact with Target. The brick and mortar stores of the US Retail segment offer ge neral merchandise and groceries through the discount chain. Target and SuperTargets differ in that SuperTargets offer a larger line of food assortments. Targets product mix includes household items, electronics, apparel and accessories, food and pet supplies, and home furnishings (Reuters, 2013). Exhibit 2 shows the percentages of sales each category holds. Within the retail segment, a portion of Targets sales are generated through a mix of nationally branded goods, as well as private-label brands. In addition to general merchandise, Target also generates revenues from facilities in store such as Target Cafe, Target Clinic, Target Pharmacy and Target Photo, and from leased or licensed departments such as Target Optical, Pizza Hut, Portrait Studio and Starbucks (Reuters, 2013). Target Corporation generates the majority of its sales revenues from the US Retail segment and revenues have been increasing since at least 2007 according to the companys past 10K forms.Even through the 2008 r ecent recession, Targets sales revenues have continued to increase within this segment (Target Corporation, 2013). Sales revenue overall, including all three segments, also has been rising since at least 2007. Although revenues continued to increase through the recession, net earnings dropped from $2,849 million in 2007 to $2,214 million in 2008. Targets net earnings recovered and have been increasing every year since the recession (Target Corporation, 2013).In addition to increasing sales revenue and net earnings, Targets stock prices have also been above both the S&P and Dow Jones indexes for the last 10 years (Target Brands, Inc. , 2013d). See Exhibit 3 for US Retail Segment sales figures and Exhibit 4 for other selected financial data. ?The Target Corporation currently operates 1,784 of these SuperTarget and Target stores in the United States, as well as their online site, Target. com. Target recently began expansion into Canada 24 stores are operational at this time (Target Bra nds, Inc. , 2013b).Target plans to continue with its growth tactics through 2013, bringing its Canadian fleet up to 100-150 stores (Biesada, 2013). At the same time that Target is expanding into new markets, the company is also penetrating further into existing markets with plans to remodel more of its store formats and to include additional food assortments. According to Hoovers, nearly 900 Target stores (up from 462 last year) now feature expanded food assortmentsIn fiscal 2013 Target plans to remodel an additional 230 general merchandise Target stores (Biesada, 2013).The remodeled stores, with better food assortments and innovative design changes, seem to be part of a strategic effort to stay competitive with the only company out-performing them, Wal-Mart. ?Finally, the Target company operates using an integration strategy, and is one of few companies that has found success using this type of strategy. As IbisWorld states, Target offers daily essentials and consumables at discou nted prices however, the company has carved out a niche market by focusing on selling fashionable and trendy products (IBISWorld, 2012).Target is unique because it has successfully managed to operate with low costs while providing differentiated products that satisfy their customers needs and wants. Being able to continuously offer quality, innovative products while keeping costs low lays a foundation for the company to create competitive strengths on. Analysis Strengths ?A couple of strengths that we found Target is posting is their large variety of product and brands. They offer a wide arrangement of goods that can attract an excessive amount of consumers to come through the store.Another strength that Target holds is a strong internal logistics structure. Their 37 distribution centers located across the US gives them a strong chance to open more stores, and reach more potential customers. (Target Co. ) They also offer the convenience of online shopping for all of their customers, not only offering ease of shopping, but also allowing those who may not have a target nearby still enjoys their goods. We also found that Target is in a unique position in respect to their current sales, over the last few years they have consistently posted growth in revenue, and gross profit.Weaknesses ?A weakness that was found through our research was a decrease in liquid capital over the last 2 years, potentially making it difficult to manage working capital and operational needs. Furthermore, they have increased the total debt that they are obliged to, making the lack of current assets evermore detrimental. Another possible weakness is their lack of exposure to countries other than the US, they are currently only operating inside the US which could pose many problems due to their dependence on one market. Target Co. ) Opportunities ?There are plenty of opportunities for Target when it comes to the expansion of their company into new markets. In 2013 Target will take its first step into an international market when they expanded in to Canada, creating Target Canada Co. (Target Co. ) Target has opportunities to expand their products, and broaden the breadth of their goods, especially the expansion of private label brands. Threats ?The largest threat to target is that it is in a highly competitive market.There are a plethora of other stores selling the same goods, as well as the threats of counterfeit goods in the industry. (Target Co. ) Another threat is the potential of change in consumer preferences, creating a lack of demand for Targets goods. Threat of Substitute Products ?We feel the threat of substitute products is high, there are many stores that offer similar goods that could be considered more attractive than buying from target usually this is derived from the desire to obtain private label goods. Intensity of competitive rivalry in the Industry The competitive rivalry within the industry is high, there are many companies competing against each ot her for the same customers, and market share. On top of the brick and mortar traditional shopping, there are now arising e-commerce competitors that intensify the competition within the industry. Threat of new Entrants ?Considering the wide arrangements of goods offered by Target, we believe that the threat of new entrants is high. Its also a highly competitive market, will low barriers of entry, so the combination of those two things creates an ease of entry for new ventures.Power of Buyers We find that the power of buyers is high at Target, while they may not have much negotiating power within the store they do have many options on where they are going to buy the particular good, which gives them the power to shop around and find the price that they like. Power of Suppliers ?The power of suppliers at Target is low, since there has been a decrease in import barriers that has caused an increase in competition between suppliers. So the power of the suppliers to name the price has nea rly been eliminated.Sustainable Competitive Advantage ?To operate effectively in the discount retail industry you need to be able to master some key functions, not only to achieve competitive advantage, but also to make it sustainable. Target displays a couple features we have noticed, that we feel allows them to obtain a sustainable competitive advantage. These SCA factors consist of the ability to manage and perform off a highly effective supply chain and the ability to achieve high economies of scale, due to their huge market presence and mix of private branding. One of the factors that helps Target obtain an effective supply chain is the wide geographical coverage of their distribution centers. They currently control and operate 37 distribution centers ranging from the West Coast of Lacey, Washington all the way to the North East location of Wilton, New York. By having multiple disperse locations they have allowed themselves the opportunity to expand across the whole country. Th ey have the capabilities to service any of their 1,700 plus stores in a timely manner.This in turn creates a larger geographical market to operate in effectively that some of their smaller competitors may not have the means to. ?A second important factor that Target masters is its offering of diverse products coupled with high economies of scale. Target offers product lines in departments such as household, hardline goods (non-informational goods), apparel and accessories, home furnishings and food and pet supplies. By doing this they create a one stop shop effect which holds a high convenience factor in the eyes of consumers.In 2010, the highest percentage of sales was in household goods at 24%, the lowest percentage was food and pet supplies at 17% (Target 2012 10k). These statistics support the idea that Target is not just specialized in one department, but has been able to offer a wide variety of products, all of which hold a high demand. Coupled with the wide diverse product ra nge, Target has been able to do this while achieving high economies of scale. They have incorporated 30 plus mixed and licensed brands which helps keep their operating cost low, giving them a higher profit margin.In addition, Target outsources their goods to multiple countries which helps generate lower costs. They currently have 27 offices in 18 different countries. Problems Moving Forward ?Looking forward, Target may continue to see problems in a couple areas. They currently face the struggles of competing with Wal-Mart internationally, driving traffic through their store/ online website and the ability to implement quality control. ?The biggest current problem is competing with their largest competitor, Wal-Mart, at an international level and depending solely on the American market.It is known that the American economy has taken a hit in the recent past and that can be reflected in Targets recent profits. Being solely dependent does not allow them to mitigate their risk, which Wa l-Mart has done by tapping into different countries. This may not be an existing problem for long. Target is exploring the Canadian market and expects to have 125 of 135 stores remodeled and opened in the years 2013-2014. This shows some promise because over 30,000 Canadians currently hold Targets REDcard, which shows a strong brand presence (FOX). A second problem Target faces is driving consumer traffic through their stores and website. With the new emerging strategy of E-Commerce, consumers now have the ability to shop online in the comfort of their own home. This adds more competition to the market that Target already faced and these new entrants have the option to operate at a minimal cost. ?The last pressing issue Target may face for the future is quality control. Dating back to the start of 2012 and currently into the 2013 year, Target has recalled over 55 products sold.This damages the image of Target and the products it offers. We do not believe this should hinder their ope rations too heavily but it is something to take notice of and work on fixing for the future (Target). Strategic Recommendation Our strategic recommendation for Target is to implement a comprehensive, multi-pronged, in-store advertising campaign that focuses on organic and all natural products sales and promotions. Targets commitment to healthy living and high wellness standards is consistent with the benefits of this growing organic market.Target is able to add to their bottom line by tapping into this already established market, stealing market share from other retailers, and creating a new demand with non-organic users. Organic food sales in the U. S. comprise nearly half of global organic food sales. The global organic market reached $54. 9 billion in 2009, more than triple the $18 billion recorded in 2000 (Organic Agriculture in Wisconsin). Target has met the needs of the rapidly growing demand of healthier foods, more effective forms of exercise, and a booming interest in organ ic products, but have not taken full advantage of the market opportunity.Recently Target and Harris Interactive carried out a survey that polled American families and found that consumers are confused about how, why and where to shop for organic foods. Many families are unfamiliar or even unaware of the benefits of the organic foods and products. For instance the study showed that, one-third (34 percent) of consumers surveyed believe that organic foods are superior to non-organic foods, but nearly two-thirds (61 percent) want to be better informed on the value of where it pays to buy organic (Organic ConsumersAssociation). It is not enough to just offer organic food and natural products, Target needs to educate their consumers and persuade them to buy those products offered at Target. People want to know more about organic products and where to best spend their money on them, says Dr. Susan Mitchell, registered dietitian and SuperTarget Health and Nutrition Expert. Target provides t heir guests with product choices for the whole family products that enhance their lives in an affordable and accessible way.When it comes to feeding your kids, certain conventional choices are fine, but parents should be informed on where organic is the better bet. With the new Archer Farms organic product, Target has made it easy for parents to make better decisions on what to feed their families (Organic Consumers Association). Not until recently have a vast percent of our generation been diagnosed with allergies related to gluten, wheat, soy, etc. This is growing allergies are found to be passed on through genetics, and is only treatable through dietary changes.This means that the market will only continue to grow in future generations, not only by people who have the allergies, but also chose to limit their nutritional diet by choice for health reasons. Many companies now carry gluten free and organic food lines permanently and these product lines are continually growing. a 2011 survey by the Organic Trade Association found that more than three-quarters78 percentof U. S. families are buying organic food, up from 73 percent in 2009. Forty percent of families say they are buying more organic food now than they were a year ago (Organic Trade Association).In order for Target to fully tap into this growing market, they will need to continue expanding their current food departments in Target stores or convert them into Super Target stores. Target invested $500 million in 2010 in a new push on groceries, retrofitting some of its general merchandise stores with full-blown food sections. Sales and traffic at stores with the new grocery areas are about 6 percent higher than at similar stores without them, the company says (NY Times) Last year, nearly 1,000 Target stores offered an expanded food layout.At these Target stores, approximately 10,000 square feet is dedicated to a vast array of fresh food choices, including a curated assortment of fresh produce, fresh pac kaged meat and pre-packaged baked goods, in addition to dry and frozen offerings. By the end of 2012, more than 1,100 Target stores offer the expanded fresh food layout compared to 450 in 2010 (Target Press Release). Annette Miller, Targets senior vice president for grocery, said she expected an expanded food department to move into most Target stores eventually.While the gross margins of the grocery business are about 18 percent, well below those of retail, which are about 30. 5 percent, groceries both drive visits and make existing stores more profitable, said Colin McGranahan, an analyst with Sanford C. Bernstein (NY Times). Target and Super Target carry many private labels and brands that specialize in healthy lifestyle and organic products. The Archer Farms brand offers organic products while remaining exclusive to Target, and continues to expand their brand with new product introductions regularly.Both Super Target and Target stores will continue to offer a variety and vast se lection of organic products to meet the needs of all their consumers (Organic Consumers Association). Since Target Corp. has been successful with the launching and selling of their exclusive organic product lines, as well as mainstream brand organic products, we feel they need to focus on this demand instead of starting a new venture. Target is committed to helping guests see the value of organic products and their role in maintaining a healthy lifestyle, says Greg Duppler, senior vice president, Target. We want our guests to have one-stop access to the healthy products they need without sacrificing the convenience and value that Target consistently delivers through our owned brands (Organic Consumers Association). There is a lot more opportunity in this market than they have tapped into and we feel they should expand their educational programs and initiatives for them to fully take advantage of the organic product demand. Since Target Corp. already has the brand equity and brand aw areness, we want to make their consumers more aware of the benefits and facts about living a healthy lifestyle and using organic and all natural products.Although Target has different advertisements and programs about healthy lifestyle, we feel they could incorporate a greater amount of product promotion and educational programs to increase their both their sales and brand image. Target Corp. needs to focus some of their advertising dollars on promoting these organic product lines. Not only the food and produce, but also the organic body care lines, and organic cleaning and household products. Organic is not just food. Over 2 billion worth of organic fiber, cosmetic, and household products were sold last year (Consumer demand for organic food boosts sales).They should increase and reposition their in-store signage and displays to create buzz and inform the shoppers of what organic products they carry. Similar to Publix GreenWise organic section in their store, Target should group th eir organic products together in each department of the store with attention grabbing, easy to read signage. Each department will include an organic aisle or section with end-cap aisle displays. Within these displays they will include informative, educational facts or promotional videos explaining the benefits of the organic products versus the non-all natural products.Larger signage and end-cap aisle displays will increase awareness and curiosity. Many people do not want to take the time to research the information about organic products, but if Target offers it in the store, the consumers will be more likely to read it and become interested in the product lines. ?Many shoppers associate organic products and food to Publix and Whole Foods, but we want consumers to also include Target in this category. This advertising boost is more of an initiative than a campaign, to increase awareness and drive profitability in the all-natural product market.We want to enhance Targets brand image by incorporating more healthy lifestyle programs. Target would build and enhance their wellness section of their website for consumers to educate themselves on everyday wellness tips including organic foods and product ads, recipes, articles regarding the benefits of all-natural products. This would also include fitness tips, Target ads for exercise related products, vitamins, and more. We will focus this initiative towards mothers or heads of the households who do the family shopping. Why do people buy organic food? Parents tend to be motivated by health concerns.The Organic Trade Association found that nearly half of parents surveyed48 percentwere motivated to buy organic food because they believe it is healthier for themselves and their children. Other motivators for parents include concerns over the effects of pesticides, hormones and antibiotics on children, and avoidance of highly processed food and artificial ingredients (Haumann). Many organic consumers are mothers who care about the wellness of their children and families, so we will focus mainly on healthy lifestyles for families. We will also offer special shopping lists and recipes for food allergies.Many mothers already shop at Target for their everyday needs and we want them to also buy any of the food products they can while they are there, especially organic. Based on these numbers, the organic food and beverage industry presents an opportunity for growth in both revenue and jobs during the downturn. Target has a huge advantage with their Red-card, that shoppers who have this credit or debit card receive 5% off their entire purchase every time they shop at Target or Super Target. This is another discount on top of Targets everyday low prices compared to Whole Foods, Publix, and World Market.No other grocery store offers a credit card that allows a discount every time they shop, on top of sales and promotional items. With this Red-card, we suggest Target offers additional discounts, like Win-Di xie does with their shopping card. The consumers would receive Bo-Go discounts, weekly promotional prices on certain items and more when they use their Red-card to buy groceries. This would increase their credit card sales, total purchases, and especially grocery and food sales (exhibit). The marketing and advertising of this wellness and organic initiative will cost about $3. million for four months of in-store promotion and an additional $500k for enhancing Targets website design. Remodeling an existing store to include the expanded fresh food layout requires an investment of around $1. 5 3 million, of which about 60 percent is related to merchandising initiatives like the expanded food selection and transformations in Beauty, Home, Shoes and Baby (Target Summary Financials) Our expanded fresh food layout offers around 90 percent of the food categories found in a Super Target with about 60 percent of the items, in approximately half of the space devoted to food in a Super Target (Target Summary Financials).With every store Target remodels to expand their grocery department, they increase their revenue by at least 6 percent. The advertising and in-store promotions will increase revenue by at least 4 percent within 6 months after we begin the initiative and increase total organic food sales by 12 percent within the year. This is a perfect time to start the in-store organic promotional campaign for Target. Summer and early fall is the highest revenue time for organic produce. Since the advertising and promotional collateral will mainly stay in-store and online, we can start right away and be ready to launch within 45 days.The website can be enhance as soon as possible, as well as the start of training for the current employees. Exhibit 7 in the Appendix shows a proposed timeline for our strategic recommendation for Target Corporation. Fallout and Summary These are the risks associated with our recommendation 1. Higher prices for organic food and products 2. La ck of demand and interest in organic food and products 3. Increase in a. operation costs for training of employees on education of organic benefits etc. and additional employees b. dvertising/marketing costs for signage and promotional advertising of organic product lines and foods c. costs associated with updating website content d. costs associciate with creating and expanding educational programs and sponsorships that promote organic products and food and healthy life styles References 1. Organic Consumers Association. Another Big Box Chain, Target, Jumps Onto Organic Bandwagon. 28 Sept. 2006. Web. 05 Apr. 2013. . 2. Biesada, Alexandra. Target Corporation. 2013. Web. 5 April 2013. . 3. Clifford, Stephanie. Big Retailers Fill More Aisles With Groceries. The New York Times, 16 Jan. 2011. Web. 6 Apr. 2013. . 4. Organic Agriculture in Wisconsin. Growing Demand for Organic Food A Bright Spot in a Tough Economy. N. p. , Feb. 2012. Web. 06 Apr. 2013. . 5. Haumann, Barbara. Seventyeight Percent of U. S. Families Say They Purchase Organic Foods. 2011 Press Releases. Organic Trade Associations Organic Newsroom, Nov. 2011. Web. 09 Apr. 2013. . 6. IBISWorld. Major Companies. 2012. Web. 5 April 2013. . 7. Reuters. Profile Target Corp (TGT). 2013. Web. 5 April 2013. . 8. Target Brands, Inc. corporate fact sheet. 2013. Web. 5 April 2013b. 9. Target Brands, Inc. shop Targets exclusive online-only brands. 22 January 2013. Web. 5 April 2013. . 10. Target Brands, Inc. stock information. 2013. Web. 6 April 2013. . 11. Target Brands, Inc. Target tops for customer experience. 5 March 2013. Web. 5 April 2013. . 12. Target Corporation. Form 10K. 10K. 2013. PDF. 13. Target Corporation Financial and Strategic Analysis Review. 5-Nov-2012. Web 5 April 2013. reference code GDRT33397FSA . 14. Target Remodels 90 Stores to Expand Fresh Food Selection. Press Room. Target Corporation, 24 Apr. 2012. Web. 09 Apr. 2013. .