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Target                           Chihiro Yamaguchi
                                      Kai-Jen Shih (David)
                 Group 4                   Diana Colgrove
                                                  Yuxiao Li
                                              Linyu Chang




/Users/dianacolgrove/Desktop/50.png
Agenda

Internal Analysis
 History and Performance
 Culture/Ethics Analysis
Industry Analysis
SWOT/Trend Analysis
Recommendations
Question…

Who shops at Target?

Why do you shop at Target?


    Low-price,                       Comfortable,
   high-quality,   One-stop shop,    fun, and safe
   well-designed   large selection     shopping
   merchandise                       environment
Capstone Analysis: Target
History &
Performance
History

  1902                     2000
Dayton Dry                Target
  Goods                 Corporation




              1962                      2011
              Target                    Target
             Discount                 Canada &
               store                  City Target
Current Status


2nd Largest Discount Department Store

1,763 Stores

3 Branches

Expanded Offerings: PFresh, Target Clinic
How Does Target Define Performance?




                  Brand       Community
Market Player
                Recognition     Giving


          Service        Financial
        Performance    Performance
Financial Performance

                       Total Revenue (Millions)
70000
60000
50000
40000
30000                                                       Total Revenue
20000
10000
    0
        2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Financial Performance

                         Yearly Total Net Income
3500

3000

2500

2000

1500                                                       Total Net Income

1000

500

   0
       2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Product Categories

    Household           • Pharmacy, beauty, personal care


                        • Toys, electronics, music, movies, books, sporting
     Hardlines            goods

   Apparel and          • Apparel for women, men, boys, girls
   Accessories

Food and Pet Supplies   • Dry grocery, dairy, frozen food, beverages


Home Furnishings        • Furniture, lighting, kitchenware, small
   and Décor              appliances, home decor, bed and bath
Service Category: REDcard

 Financial service: Debit/Credit card
 Target REDcard
    Offers great discount
    Free shipping
    Donation to education
    Extra savings on prescriptions
    No annual fee
Competitive Space
                           Apparel
                        Ross, Kohl’s,  T
                                J
                        MAXX, Marshall’s,
                              Costco


                                                   Toys
     Pharmacy
                                                ToysRus, Disney
   CVS, Costco, Rite
  Aid, Walgreens, Cli
                         Target              Store, Amazon, EBay
                                                   , Learning
    nic Pharmacies                             Express , U.S. Toy
                                              Co., Inc., Barnes &
                                                   Noble Inc.

                            Grocery
                        Costco, Ralphs, Al
                        bertsons, Food 4
                        Less, Vons, Stater
                               Bros
Culture/Ethics
   Analysis
Employee Interview
Mission



Mission Statement:
“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.”

Major Commitment:
                                                   Continuously
                       Meet the                     cater to the
                     guests’ needs                     guest
                                                    experience
Values
Core Values:

   Diversity    Teamwork   Community   Innovation    Service

                                  these values are ingrained in the culture


               Integrity = most important moral value


  Within the company, culture is transferred to all:
        Vendors, Part Times, Seasonals, Etc.

                                    Fifty”
                    “Fast, Fun, and Friendly”
Organizational Structure

Distribution Center:                              General
                                                  Manager

                                   Senior Group             Senior Group
   • One GM per building              Leader                   Leader
   • SGL:
                                     Group            Group           Group
     Performance, Strategic          Leader           Leader          Leader
     Planning
   • GL: 2-12+ Team                      Team
                                        Member
                                                         Team
                                                        Member
                                                                            Team
                                                                           Member
     Members, Monitor
     Performance and                     Team            Team               Team
                                        Member          Member             Member
     Development
   • Team Members                                                           Team
                                                                           Member
                                                  ERA 1
Structure transfers to all areas
Organizational Culture
Process-Oriented
    Concern with getting things done with integrity
Employee-Oriented
    Deeply concerned with the wellbeing of employees
Professional
    Embrace diversity in the hiring process
Open System
    Welcoming to new employees, orientation persistence
Loose/Tight Control
    Improvisation welcomed, yet training programs enforced
Pragmatic Orientation
    Driven by the market, desire to meet guests’ needs
Fulfilling Target’s Values

Customer Satisfaction
Action Plans: Message + Training
Orientation Overviews
Modeled Top-Down
Working on a Team
No Guesswork Involved
Guest Service Departments
Diversity

To promote diversity:
  • Embrace team member differences
       Individual and Community
  • Foster a feedback culture
       Weekly meetings
       Upward Communication
  • Diversity Events
       Ex: Chinese New Year at Downtown Riverside

         Second Nature, Inclusive
Artifacts


• Symbols
• Language
    Customers = Guests
    Employees = Team Members
• Heros
• Rituals
Ethical Climate

Ethical Criteria: Benevolence

 • Team Interest

 • Social Responsibility
Wellbeing Pillars




 Individual      Community      Social        Financial


   Safety        Outreach    Celebrations       Tuition
Healthy Living    Service    Recognition    Reimbursement
  Exercise                     Events         Financial
                                              Planning
Sustainability/Social Responsibility

• Volunteer Events



• Community Giving/Support
    Commitment to Education
    5% of Income Given Back
• “Here For Good”
Here For Good

    • Sustainable Living
       • Energy Smart
    • Smart Development
       • Green roofs, Urban Stores
    • Sustainable Products
       • Traceable seafood, Packaging
    • Efficient Operations
       • LED lights, motion centers
Partnerships

      Partnership

     Local
     Authorities
Going Green


Recycle
Save Energy
Reduce Waste
Reduce Water Usage
Transportation Efficiencies
ENERGY STAR Certifications
Reduce Greenhouse Gas Emissions
Trends to Watch



  Social Consciousness
       Longer Life Span
  Green Practices


Target is on track to staying ahead of these trends with their
commitment to individual and environmental sustainability
Industry
Analysis
Market Positioning Analysis




Industry Classification = Discount Department Store
Market Share

    Discount Department Store
        Market Share, 2010
 Dollar
General                          2010             Sales (in billions)
  3%          Others
                                 Walmart          258
Kmart          14%
  3%                             Target           67
     Costco            Walmart
                                 Costco           60
      12%               54%
                                 Kmart            16
          Target
           14%                   Dollar General   13

                                 Others           66
Prospector, Analyzer, or Defender?

Target = Analyzer
  Stable, routine, and efficient in its product
  market domains
  Closely watches competitors and rapidly
  adopts promising new ideas
BCG Matrix

Discount Department Store Industry

 Slow growth
 industry
 Relatively high
 market share
 High sales
BCG Matrix

                     Toys
• Toy industry is
  expected to
  shrink
• Target is among
  the top 3 toy
  retailers
• Target is in a
  leading position
  in this segment
BCG Matrix

                     Apparel
For 2009-2014, the
estimated growth rate is 2%
Target’s sales in 2009 were
6.7B, representing a 4%
market share
Target’s market share in the
industry is not
dominant, but the market is
fragmented
BCG Matrix

                 Grocery

Grocery retailing is a
mature, saturated
market in the US
Target’s grocery sales
in 2011 was
13.27B, representing
a 1.6% market share
BCG Matrix

                Pharmacy

The US pharmaceutical
industry is expected to
grow at a rate of 6.4%
in the next 5 years
The industry growing
fast but Target’s share
in this market is small.
5 Forces Analysis
                    Threat of New Entrants
                        Apparel: High
                     Pharmacy: Moderate
                          Toys: High
                        Grocery: High


 Bargaining Power                            Bargaining
    of Suppliers                              Power of
Apparel: Moderate                            Customers
  Pharmacy: High       Rivalry: High
                                                High
  Toys: Moderate
   Grocery: Low


                     Threat of Substitutes
                        Apparel: High
                       Pharmacy: Low
                          Toys: High
                      Grocery: Moderate
Threat of New Entrants

 Threat of New Entrants
     Apparel: High
  Pharmacy: Moderate
       Toys: High
     Grocery: High




  Capital
Market Share
Bargaining Power of Suppliers


Bargaining Power of Suppliers
     Apparel: Moderate          Exclusive Brands
       Pharmacy: High
       Toys: Moderate            Commodities
        Grocery: Low
Threat of Substitutes

Designer/Used Clothing
 Music/Video Games
   Grocery Delivery
     Restaurants



    Threat of Substitutes
       Apparel: High
      Pharmacy: Low
         Toys: High
     Grocery: Moderate
Gaming Population
                              Gaming Population vs. Actual Population
                                 (Ages 2-17) in the US in Millions
                         73


                         71


                         69


                         67                                             Gaming Population
Population in Millions




                         65
                                                                        (Ages 2-17) in the US (In
                                                                        Millions)
                         63
                                                                        Population (Ages 2-17)
                         61                                             in the US (In Millions)
                         59


                         57


                         55
                                      2009                  2011
Bargaining Power of Customers


 Variety of Discount
                       Bargaining Power
   Stores is Large       of Customers
                             High
Low Switching Costs
Internal Rivalry




Rivalry: High
Product Life Cycle
                                         Gross Margin(%)
    34.50
    34.00
    33.50
    33.00
    32.50
    32.00
    31.50
    31.00
    30.50
    30.00




  Report Date    02/03/2007   02/02/2008 01/31/2009 01/30/2010 01/29/2011 01/28/2012
Total Revenues     59,490       63,367     64,948     65,357     67,390     69,865
Net Earnings
(Loss)             2,787        2,849      2,214      2,488      2,221      2,849
Product Life Cycle


  Has reached high domestic market share


    Product prices in Target are beginning to
    drop


  Executing differentiation strategy
Product Life Cycle
Leap Frog Opportunities:
PFresh, City Target, Target Canada



                            Target
Factors to Watch For

Macroeconomic Conditions:

                  Consumer
    GDP           Confidence           CPI      Income




Other Factors:

          Online Retail        Population    Birth
          Sales Growth          Growth       Rates
Current US Economy
US GDP Growth Rate
Consumer Confidence
Consumer Confidence
CPI: Food & Beverage
CPI: Apparel
Going Global: Competitor Sales

300000

250000

200000

                               Domestic
150000
                               International
100000                         Target

                               (in millions)
50000

     0
         2009   2010    2011
SWOT Analysis
             Strengths                         Weaknesses
• Superior Customer Service             • Geographic
• Positive Customer Perception
• Strong Leadership Program/Training
                                          Concentration
• Product Design – Low Price, Stylish   • Not Low Price Leader
• Exclusive Brands -> Brand Equity
• Continuous Improvement
• Strong Marketing Initiatives
• One Stop Shop
• Synergy Creation



          Opportunities                          Threats
•   Canadian Market                     • Severe Competition
•   Global Expansion
•   “Going Green” Trend                 • U.S. Economy
•   Growth of Pharmacy                  • Mature Industries
•   Vertical Integration
Recommendations

Expand business globally
Continue to establish exclusive brands
Grow/expand online market
Increase grocery selection
Vertical integration
Thank you!
Questions?

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Capstone Analysis: Target

  • 1. Target Chihiro Yamaguchi Kai-Jen Shih (David) Group 4 Diana Colgrove Yuxiao Li Linyu Chang /Users/dianacolgrove/Desktop/50.png
  • 2. Agenda Internal Analysis History and Performance Culture/Ethics Analysis Industry Analysis SWOT/Trend Analysis Recommendations
  • 3. Question… Who shops at Target? Why do you shop at Target? Low-price, Comfortable, high-quality, One-stop shop, fun, and safe well-designed large selection shopping merchandise environment
  • 6. History 1902 2000 Dayton Dry Target Goods Corporation 1962 2011 Target Target Discount Canada & store City Target
  • 7. Current Status 2nd Largest Discount Department Store 1,763 Stores 3 Branches Expanded Offerings: PFresh, Target Clinic
  • 8. How Does Target Define Performance? Brand Community Market Player Recognition Giving Service Financial Performance Performance
  • 9. Financial Performance Total Revenue (Millions) 70000 60000 50000 40000 30000 Total Revenue 20000 10000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
  • 10. Financial Performance Yearly Total Net Income 3500 3000 2500 2000 1500 Total Net Income 1000 500 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
  • 11. Product Categories Household • Pharmacy, beauty, personal care • Toys, electronics, music, movies, books, sporting Hardlines goods Apparel and • Apparel for women, men, boys, girls Accessories Food and Pet Supplies • Dry grocery, dairy, frozen food, beverages Home Furnishings • Furniture, lighting, kitchenware, small and Décor appliances, home decor, bed and bath
  • 12. Service Category: REDcard  Financial service: Debit/Credit card  Target REDcard Offers great discount Free shipping Donation to education Extra savings on prescriptions No annual fee
  • 13. Competitive Space Apparel Ross, Kohl’s, T J MAXX, Marshall’s, Costco Toys Pharmacy ToysRus, Disney CVS, Costco, Rite Aid, Walgreens, Cli Target Store, Amazon, EBay , Learning nic Pharmacies Express , U.S. Toy Co., Inc., Barnes & Noble Inc. Grocery Costco, Ralphs, Al bertsons, Food 4 Less, Vons, Stater Bros
  • 14. Culture/Ethics Analysis
  • 16. Mission Mission Statement: “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.” Major Commitment: Continuously Meet the cater to the guests’ needs guest experience
  • 17. Values Core Values: Diversity Teamwork Community Innovation Service these values are ingrained in the culture Integrity = most important moral value Within the company, culture is transferred to all: Vendors, Part Times, Seasonals, Etc. Fifty” “Fast, Fun, and Friendly”
  • 18. Organizational Structure Distribution Center: General Manager Senior Group Senior Group • One GM per building Leader Leader • SGL: Group Group Group Performance, Strategic Leader Leader Leader Planning • GL: 2-12+ Team Team Member Team Member Team Member Members, Monitor Performance and Team Team Team Member Member Member Development • Team Members Team Member ERA 1 Structure transfers to all areas
  • 19. Organizational Culture Process-Oriented Concern with getting things done with integrity Employee-Oriented Deeply concerned with the wellbeing of employees Professional Embrace diversity in the hiring process Open System Welcoming to new employees, orientation persistence Loose/Tight Control Improvisation welcomed, yet training programs enforced Pragmatic Orientation Driven by the market, desire to meet guests’ needs
  • 20. Fulfilling Target’s Values Customer Satisfaction Action Plans: Message + Training Orientation Overviews Modeled Top-Down Working on a Team No Guesswork Involved Guest Service Departments
  • 21. Diversity To promote diversity: • Embrace team member differences Individual and Community • Foster a feedback culture Weekly meetings Upward Communication • Diversity Events Ex: Chinese New Year at Downtown Riverside Second Nature, Inclusive
  • 22. Artifacts • Symbols • Language Customers = Guests Employees = Team Members • Heros • Rituals
  • 23. Ethical Climate Ethical Criteria: Benevolence • Team Interest • Social Responsibility
  • 24. Wellbeing Pillars Individual Community Social Financial Safety Outreach Celebrations Tuition Healthy Living Service Recognition Reimbursement Exercise Events Financial Planning
  • 25. Sustainability/Social Responsibility • Volunteer Events • Community Giving/Support Commitment to Education 5% of Income Given Back • “Here For Good”
  • 26. Here For Good • Sustainable Living • Energy Smart • Smart Development • Green roofs, Urban Stores • Sustainable Products • Traceable seafood, Packaging • Efficient Operations • LED lights, motion centers
  • 27. Partnerships Partnership Local Authorities
  • 28. Going Green Recycle Save Energy Reduce Waste Reduce Water Usage Transportation Efficiencies ENERGY STAR Certifications Reduce Greenhouse Gas Emissions
  • 29. Trends to Watch Social Consciousness Longer Life Span Green Practices Target is on track to staying ahead of these trends with their commitment to individual and environmental sustainability
  • 31. Market Positioning Analysis Industry Classification = Discount Department Store
  • 32. Market Share Discount Department Store Market Share, 2010 Dollar General 2010 Sales (in billions) 3% Others Walmart 258 Kmart 14% 3% Target 67 Costco Walmart Costco 60 12% 54% Kmart 16 Target 14% Dollar General 13 Others 66
  • 33. Prospector, Analyzer, or Defender? Target = Analyzer Stable, routine, and efficient in its product market domains Closely watches competitors and rapidly adopts promising new ideas
  • 34. BCG Matrix Discount Department Store Industry Slow growth industry Relatively high market share High sales
  • 35. BCG Matrix Toys • Toy industry is expected to shrink • Target is among the top 3 toy retailers • Target is in a leading position in this segment
  • 36. BCG Matrix Apparel For 2009-2014, the estimated growth rate is 2% Target’s sales in 2009 were 6.7B, representing a 4% market share Target’s market share in the industry is not dominant, but the market is fragmented
  • 37. BCG Matrix Grocery Grocery retailing is a mature, saturated market in the US Target’s grocery sales in 2011 was 13.27B, representing a 1.6% market share
  • 38. BCG Matrix Pharmacy The US pharmaceutical industry is expected to grow at a rate of 6.4% in the next 5 years The industry growing fast but Target’s share in this market is small.
  • 39. 5 Forces Analysis Threat of New Entrants Apparel: High Pharmacy: Moderate Toys: High Grocery: High Bargaining Power Bargaining of Suppliers Power of Apparel: Moderate Customers Pharmacy: High Rivalry: High High Toys: Moderate Grocery: Low Threat of Substitutes Apparel: High Pharmacy: Low Toys: High Grocery: Moderate
  • 40. Threat of New Entrants Threat of New Entrants Apparel: High Pharmacy: Moderate Toys: High Grocery: High Capital Market Share
  • 41. Bargaining Power of Suppliers Bargaining Power of Suppliers Apparel: Moderate Exclusive Brands Pharmacy: High Toys: Moderate Commodities Grocery: Low
  • 42. Threat of Substitutes Designer/Used Clothing Music/Video Games Grocery Delivery Restaurants Threat of Substitutes Apparel: High Pharmacy: Low Toys: High Grocery: Moderate
  • 43. Gaming Population Gaming Population vs. Actual Population (Ages 2-17) in the US in Millions 73 71 69 67 Gaming Population Population in Millions 65 (Ages 2-17) in the US (In Millions) 63 Population (Ages 2-17) 61 in the US (In Millions) 59 57 55 2009 2011
  • 44. Bargaining Power of Customers Variety of Discount Bargaining Power Stores is Large of Customers High Low Switching Costs
  • 46. Product Life Cycle Gross Margin(%) 34.50 34.00 33.50 33.00 32.50 32.00 31.50 31.00 30.50 30.00 Report Date 02/03/2007 02/02/2008 01/31/2009 01/30/2010 01/29/2011 01/28/2012 Total Revenues 59,490 63,367 64,948 65,357 67,390 69,865 Net Earnings (Loss) 2,787 2,849 2,214 2,488 2,221 2,849
  • 47. Product Life Cycle Has reached high domestic market share Product prices in Target are beginning to drop Executing differentiation strategy
  • 48. Product Life Cycle Leap Frog Opportunities: PFresh, City Target, Target Canada Target
  • 49. Factors to Watch For Macroeconomic Conditions: Consumer GDP Confidence CPI Income Other Factors: Online Retail Population Birth Sales Growth Growth Rates
  • 54. CPI: Food & Beverage
  • 56. Going Global: Competitor Sales 300000 250000 200000 Domestic 150000 International 100000 Target (in millions) 50000 0 2009 2010 2011
  • 57. SWOT Analysis Strengths Weaknesses • Superior Customer Service • Geographic • Positive Customer Perception • Strong Leadership Program/Training Concentration • Product Design – Low Price, Stylish • Not Low Price Leader • Exclusive Brands -> Brand Equity • Continuous Improvement • Strong Marketing Initiatives • One Stop Shop • Synergy Creation Opportunities Threats • Canadian Market • Severe Competition • Global Expansion • “Going Green” Trend • U.S. Economy • Growth of Pharmacy • Mature Industries • Vertical Integration
  • 58. Recommendations Expand business globally Continue to establish exclusive brands Grow/expand online market Increase grocery selection Vertical integration

Editor's Notes

  1. Three bubbles = distinctive competencies *High-Quality and well-designed merchandise at low price*Comfortable and fun shopping environment. The comfortable environment also includes in good customer service.*Created Synergy: Target Redcard=> guest loyalty, sense of commitment, and motivation, Target Gift cards=> Target higher sales.Target sells more gift cards than any other retailer in the United States and is one of the top sellers, by dollars and units, in the world. The unique designs of their cards contribute to their higher sales, as well as Target's policy of no expiration dates or service fees.*Good brand reputation because of charity and community giving. People think Target as philanthropic company, so they are more willing to go to Target store to purchase its products. *Organized company inside training systems to develop more outstanding leaders and employees. Leadership training program. For example. Nomination-based leadership development programs for high-potential leaders at a variety of levels throughout the company include week-long assessments, year-long development series and shorter development programs.*Rigid criteria for selecting suppliers.Target Corporation Supplier Diversity Initiative requires that you be registered with us as an identified or certified as diverse business enterprise for assistance from the Supplier Diversity team, such as: National or Regional Minority Supplier Development Councils (NMSDC),Women’s Business Enterprise National Council (WBENC)U.S. Small Business Administration (SBA),Veteran/Disabled Veterans(VOB). It also has self-certification such as: History of proven successful projects, Financial Stability,Understanding of Target Corporation’s business and practices, and Ability to provide high quality, cost competitive goods Electronic Data Interchange Capabilities (EDI)
  2. In 1902, George Dayton build Dayton Dry Goods Company in downtown Minneapolis as department store. In 1962, the Dayton Companyopened its first Target discount storeTarget founded. In 1970-2000, Target experience turnaround and nationwide expansion periods and in 2000, Target discount stores transfer to Target Corporation as discount store focuses on USA discount retail market. In 2011, Target Cor. expanded into Canada to launch its new stores.
  3. Target Corporation is the 2nd largest of discount retailer at US market and totally owns 1763 stores in 6 branches. Target Corporation is the 2nd largest of discount retailer at US market and totally owns 1763 stores in 3 branches. 3 branches of  Target stores: Target, Super Target, City Target. Target store is a chain of discount store and when it adds Pfresh concept (perishable and frozen foods, meat, and dairy), it was developed into general merchandise stores.In 1990, Target had one branch “ Target Greatland which was the former of Super Target. Super Target is a chain of hypermarkets (superstore combining a supermarket and a department store).City Target stores is the latest branches, started from 2011 and uses urban store concept to open the stores.In 2009, Target start to add Pfresh concept into Target store or Super Target. For Target Clinic, it only provides this service in Florida, Illinois, Maryland and Minnesota, these four states.
  4. As I mention that Target is the 2nd largest discounted department store, it really cares about market player. In addition, it also focus on financial performance, brand recognition, community giving and service performance, these criteria. Market player: (2nd place of discount retailer in US)Brand recognition: (97% of American consumers can recognize the Target Bullseye logo.)Community giving: Target Corporation is consistently ranked as one of the most philanthropic companies. Financial Performance: comparable-store salesService Performance: guest perceptions of questionnaire
  5. According to Target annual report from 2002 to 2011, its total revenue keep increases. In 2011, Target opened 21 more stores and increase  2475M revenues.
  6. However, if you compare the total net income from 2002 to 2011, you may find another story. It is more fluctuated. In 2008, because of a series of economy crisis at second half year, Target face unprecedented economic challenge. However, it overcome it very soon; because it add Pfresh concept with Target store and Super Target. In 2010, it still grew up but in 2011, because it launches stores at Canada, its net income only increase 0.9B.In millions?
  7. In 2008, Target change the method of production classification so its products categories became into 5 categories: Household, Hardlines, Apparel and accessories, Food and pet supplies, and home furnishings and décor. In household category, Target has pharmacy, beauty, and personal care products. In hadlliess, Target provides toys, electronics such as video games hardware and software, movies, and sports goods. In apparel category, Target has apparel which targeted different segment such as women, men, boys, girls, and infants. For food category, Target provides dry grocery, dairy, frozen foods, and beverages these products to its customers. In home furnishings, Target has furniture, lighting, kitchenware etc . Target also provides financial service to its customers. Target creates Target debit card and credit cards to its customers.
  8. Target also provides financial service to its customers. Now Target focus on its REDcard. This card can be used as credit card and debit card. It has several features such as 5% with total purchase and provide free shipping service. It will donate 1% of the amount of total REDcard purchase to K-12 school of your choice. When you fill your prescription at Target store, you may get an extra 5% discount for one day of Target shopping, in addition to your existing 5%. It also didn’t charge you annual fee.
  9. Clothing: Ross, Kohl’s, TJ MAXX, Marshall’s, online stores, Costco, used cloth stores e.g. Goodwill Pharmacy: CVS, Costco, Rite Aid, Walgreens, clinic pharmacy Toys: Toys&Rus, Disney store, Amazon, EBay, other online stores, Learning Express , U.S. Toy Co., Inc., Barnes & Noble Inc.Groceries: Costco, Ralphs, Albertson, Food 4 less ,Vons, Starter brosIn order to do a thorough internal and external analysis on target, we needed to look at their competitive space due to the fact that they offer such a wide range of products. After looking at the categories, we considered these 4 areas to be targets main revenue and the company’s main focus. We chose to look at these 4 categories in further detail for our analysis and these are targets competitors within these categories.
  10. Lencioni
  11. Hofstede
  12. Cullen’s Model of Ethical Climate:
  13. Catie sees herself staying here for a long time
  14. NAICS (North American Industry Classification System)
  15. Target is an analyzer. It is relatively stable and efficient in its general merchandising department. But it closely watched its competitors. When Wal-mart entered the grocery market, it rapidly followed up. It is currently experiment on small factor stores.Chi Can we combine this slide to previous one? Just mention Target is analyzer because I don’t think this point is really important to show in the presentation.
  16. Discount retail is a slow grow industry. The demand for the products it sells, including apparels, groceries, toys and etc., is relatively stable. Although Target’s market share is relatively low comparing with the industry leader Walmart, its brand recognition is strong. The absolute number of Target’s sales is huge as well. Both factors will ensure Target to generate enough cash flow. So it is better to categorize Target as a “Cow” company instead of “Dog” company.ChiCan you adjust the circle size based on Target market share?? If market share is big, you use relatively bigger circle. If small, use smaller circle (For all BCG Matrix slides)
  17. Toy industry is expected to shrink with an annual rate of 2.7% in next few years.Target is in the top 3 toy retailers and grabs about 17% market share in 2011. The industry is declining but Target is in a leading position in this segment. Target can be categorized as a “cow” company in the industry.
  18. Apparel In 2009, the apparel retail industry in the United States had revenue totaling $160 B, 3% growth rate has been achieved from 2005 to 2009. 2009-2014 the estimated growth rate is 2%. Target’s sales of apparel in 2009 is 6.7B, representing a 4% market share. This is a mature industry. Although Target’s market share in the industry is not dominant but the market is pretty fragmented. So it can be categorized as a “cow” company.
  19. GroceryThe U.S. grocery store industryis extremely competitive.Wal-Mart leads in grocery retailing, with 24% value share in 2011. Following Wal-Mart, the second and third leading grocery retailers in the US are Kroger and Safeway with 7% and 4% value shares, respectively. Grocery retailing is a mature, saturated market in the US.The need for food is ubiquitous, so the channel will continue to grow over the forecast period,. Walmart and Target, are a recent evolution in the supermarket vein. Target’s grocery sales in 2011 is 13.27B, representing a 1.6% market share. Based on industry characters and its market share, Target should be categarized as a “dog” company in this industry.
  20. PharmacyUS pharmaceutical sales reached 307B in 2010 and is expected to grow with a rate of 6.4% in the next 5 years. The dominant players in the pharmaceutical retail industry are Walgreen and CVS. The industry is fast growing but Target’s share in this market is small. If Target can not win the market share, it will become a Dog when the market growth decline. Target should be categorized as a “question mark” company currently.
  21. Overall, Threat of new entrants for target is High since New entrants are required only Capital to open the store, and they must achieve a substantial market share to realize economies of scale in order to set price lower but have profit. Otherwise they maybe at a significant cost disadvantageHowever, for pharmacy category, stores are required to have permit to carry drugs, therefore the threat of new entrants is moderate.Makes Rivalry high
  22. Bargaining power of suppliers vary depends on the categories.Apparel and Toy are moderate because Target carry brands. For Apparel, The introduction of brand cloth Mossimo was a big success. And Target needs kind of these brand to maintain its reputation as “Stylish” , However, at the same time. there are many alternatives brands which Target can choose from. Therefore those categories have moderate power.Pharmacy are high because on top of the fact that Target carry popular brands, Pharmaceutical manufacturer industry is concentrated due to pharmaceutical manufacturer industry’s high barrier to entry. Therefore, competition in the industry is not high, which allow them to have more power over buyers, such as Target. Groceries are low. Many Alternatives, commodityDoesn’t increase Rivalry
  23. Apparel: High Possible substitutes: is the high end clothes or any cloth which doesn’t fit the category of new, moderate brand perception, moderately low price. Such as Macy’s, bloomingdales, Loehmann's,JCpenny’s, nordstrom, saks fifth avenue, H&M, Forever21,used cloth stores e.g. Goodwill, online stores that directly from manufacturer or designersPharmacy: LowLittle to non substituteToy: highSubstitute: High-Possible substitutes: Anything that takes kid’s interest away from toys. Such as Music instrument e.g guitar center, reading, sports, video game For example, Nowadays, kids prefer to play Video game, such as Play station, Wii, Xbox. As technology advanced, there might be a chance that electronic devices completely take over the needs for toys. Please take a look at this graph. Next slidesGroceries:Possible substitutes are the Online delivery service, restaurants, especially fast food restaurants.Nowadays people become more and more busy. For those who doesn’t have time to go shopping groceries, online grocery stores which offer door to door service will be attractive. However, due to the price of the service, this is not competitive in the grocery store industry. Also the restaurants, especially fast food restaurants are the big substitute for the Groceries. People start to go to restaurants instead of buying food at grocery stores and cook themselves.Can we find chart of trend of population change for fast food restaurantsIncrease Rivalry
  24. Since 2009,  the population growth of kids ages 2-17 increased 1.54 percent in the U.S., while the gaming population of that age group has grown 12.68 percent. This growth in kids’ gaming population is far outpacing the growth experienced by the population of 2-17 year olds in the country. the fastest growth has been among kids ages 2-5, with an increase of 17 points in gaming incidence when compared to 2009.
  25. For all category: High Although Target offers more designer brands at cheap price, other many discount storesoffer similar products. Therefore customer can choose other stores’ clothes without any switching cost. Increase Rivalry
  26. Therefore rivalry is high-all the factors indicates that the industry that Target operates in is highly competitive-Many competitors in the market-market growth in this Industry is stagnantThus, price competition in this industry is high, Therefore nonprice competition can threaten industry profit
  27. For Target trend analysis, we found target’s both revenue and net profit increased in the past 5 years. However, its gross profit margin continually drop. This may shows Target is taking lots of price pressures from its competitors, like wal-mart, amazon.Titled product life cycle?
  28. When we saw discount department store industry, which target belong to, fierce competition is continuing. In order to maintain growth and increase market share, target executed differentiation strategy to drive profitability. Titled product life cycle?Time frame
  29. Draw leapfrog lines
  30. Macroeconomic condition in U.S. GDPConsumer confidenceCPIIncomeOthers: online retail sale growth, population growth, birth rate
  31. What other factors should they be scanning for? Firstly, we look at macroeconomic condition in U.S. From a survey of top economics bloggers conducted in Jan. 2012, the frequently words they used to assess US economy are uncertain, fragile, growing.
  32. Now, we saw U.S. GDP has a positive percentage change, which is good.
  33. From this chart, we saw customer confidence has a positive correlation with retail sales.
  34. And until 2012, customer confidence has an upward tendency, which could positively affect Target’s sale.
  35. Blue line represents consumer price for adjusted inflation. Consumer price of food and beverage for adjusted inflation is slightly increasing in the past ten years
  36. Consumer price of Apparel for adjusted inflation is slightly decreasing in the past ten years
  37. In millions
  38. Vertical integration: Cell phone service and IT project, food distribution
  39. Wal-mart beats target in online customer satisfation – recently created own platformExpand business globally – as seen in trend of walmarts international sales, doing well – foundation in north americca – Vertical integration: : Cell phone service and IT project, food distribution