Target Corporation Strategic Management Analysis

Company Mission Statement

Target Corporation is a retailing American company which was established in 1902. Target is the second biggest United States’ discount retailer after Wal-Mart Stores. The company main mission is to make Target the customers’ preferred destination for shopping in all channels by providing exceptional value, remarkable guest experiences, and continuous innovation by fulfilling the company’s brand promise of “Pay Less. Expect More”, consistently.  The company’s mission statement focuses on making the company useful in the globe and treasured by the society by assisting in lifting the humanity level (Makingafortune.biz, 2015). The mission statement guides the company’s employees in providing quality services that attracts its customers to come back for more. It also guides the company in developing modern technologies of reducing the operation cost to ensure that they are able to provide more to the customers at a lower cost. This assists in attracting higher revenues in the company and thus, enhancing its level of valuation among investors, and also enhancing its competitive advantage among the company’s competitors (Farfan, 2016).

Corporate Governance

Analyzing Goals

Corporate governance refers to the set of techniques employed to manage the association among stakeholders and to control and establish the strategic performance and direction of organization. Target corporate governance has a number of goals which guide them in their daily operations. The first goal is to safeguard the interest public investors, upholding confidence in the company listed firms and facilitating is international reputation as a trusted retail store. The company governance fulfill this goal by ensuring that the company demonstrates a high level of accountability by defining various committees which include finance, audit, and compensation committees among others as a way of enhancing a high level of accountability and transparency in the company operation. The second corporate governance goal is to permit flexibility in the duties and rights enforcement of various corporate constituents.

Corporate governance ensures proper implementation of the country laws defined to govern corporate companies in the United States. This include the according laws that governance on how to present financial information to the shareholders, and other laws governing committee formations, committee membership and all other in corporate companies in the united states.  The third corporate governance goal is to approve the board of directors and to acknowledge the need for directors’ independence. This goal focuses on tightening the independence director definition where the shareholders and management relationship as well as the relationship between the CEO and the chairman, tenure length and multiple directorship (Target.com, 2017).

Board of Directors

Board of Directors refers to a group of voted persons whose prime responsibility is to act in the best interest of the owners by formally controlling and monitoring the top level managers of a company.  The company has a total of 12 members of board of directors which include five women and eight men. Among them only one; the chairman of board and chief executive officer in Target corporation is an employee of the Target company. The rest works in different place, while others are former employees of other companies.  The company majors on independent members of directors with business and professional background that will be important to the company’s operation.

The board of director can thus be said to source most of its members outside the company. This is anticipated to assist the company in developing new and innovative ideas of handling problems in the company. All committee members of the company also comprises of independent director only. The board of directors participates effectively to their responsibilities to the company. So far the company has not experienced any issue with its board of directors. On the contrary they have proved to be very beneficial to the company. A high number of external directors may be of great benefit in the company; however, it can as well initiate conflict of interests among them.

The Company’s Ownership Structure

Target Company is highly owned by institutions. Mutual funds and institutions account for 88.40% of the company ownership, with institution with the highest percentage ownership being State Street Group with 9.11% and Vanguard Group Inc with 7.23%.  The rest own less than 5% of the company’s shares each. Target is owned by 1230 institutions that hold shares in the company. The company insiders own 0.11% of the company shares, where most of these insiders are executive officers of the company who include Timothy R. Baer, Kathryn A. Tesija, and Brian C. Cornell (Yahoo Finance, 2017).

The Top Management Team

The company has twelve executive officers and 40 other senior officers. The company executive officers have academic qualification equitable to their specific position of operation in the company. Most of them possess bachelor degrees from reputable universities in the United States. They also have previous experiences from different companies where they worked at equal position or slightly lower position in other companies in the past. Although most of the executive officers are considerably young and hence do not have wide range of previous experience, they at least have a history of working in one or two previous position before their current role in the company. They also have a good performance track in the past. Their young age gives them an opportunity to employ new modern technology and to be innovative and flexible in the company management. In this regard, they have the ability of taking the company into greater length in the future. Their great vigor will definitely give the company a chance work into taking the company through its future success.

SWOT Analysis

Strengths & Weaknesses

The company main strength is its brand. Target is among the oldest and biggest discount retail company to function in the United States. Thus, the company contains a big store footprint and benefits from substantial brand recognition. The portfolio of the company exclusive and owned brans is in addition a main strength, permitting the retailer a prized differentiating tool in a very competitive retail setting. The company also has programs of marketing that include Cartwheel and REDCard which are main opportunities and strength for Target. The penetration of REDCard is increasing and it is currently provides cardholders a discount of 5% in each card made purchase. Another major company’s strength is the application of Omni-channel model. About three-quarters of customers targeted by the company start their searches of item on their mobile devices. The target website has online assortment which provides extra choices to customers, part of which are only stocked in specific stores.

The store network of the company permits for greater options of fulfillment that include store pickup and delivery. The store pickup can also create higher traffic at physical stores, stimulating sales. Another major company’s strength is the use of the company is the selection of external, independent board of directors who add value to the company especially in enhancing its effective methods of operation and ensuring accountability and transparency. The employment of young, vibrant, and well skilled and knowledgeable executive officers also assist in enhancing effective and innovative business operation and management techniques. This assists in enhancing its competitive advantage (Soni, 2016).

Weaknesses

The main company weakness is that the products of Target frequently fall under the category of consumer discretionary. Consequently, the results of the company are susceptible to macroeconomic aspects that include growth rate of the gross domestic product (GDP), sending trends of consumer, as well as income and employment. Operations of Targets are restricted to the market of the United States. This makes the financial performance of the company to be extra vulnerable to the United States economic cycles. Target has just recently employed aggressive move to online retail. Nevertheless, it still lags behind in ecommerce compared to its competitors that include Walmart and Amazon.com.

Moreover, Target is not as big as its competitors and it is also less diversified compared to them. This makes the company to be more susceptible to economic challenges compared to its competitors. Target has also been unable to tap some probably lucrative retail areas which include financial services and filling stations, unlike Kroger and Walmart which provide extra services to add value to their services. The company has also been unable to modify its business model with time. People currently prefer shopping in small store and the company has just managed to open eight while its competitor Walmart is targeting 300 such stores to address the customers change in preference (Soni, 2016).

Opportunities

The company still has a large distribution area to cover and thus it has an opportunity to grow even further by increasing its stores in the regions it has not covered. This can be done by creating more small stores like the customers prefer. The company also has a chance to expand internationally even further, particularly in western regions. This will help the company to expand its distribution area even further and gain more market shares. The company has a chance of expanding its business further by strengthening on its e-commerce business, particularly on fashion section. The reputation of Target as a retailer for fashion contains strong appeal to its online customers. Extra effort on this section would attract a big traffic to the company’s website.

Target is highly preferred by middle class individuals in the United State and declining incomes for middle-class individuals in the United States could augment the company’s customers since individual with less cash are highly probable to do their shopping at discount stores. The company has a chance to expand extra services provided to add value to its services, the company can expand on its current services that include Visa Card and Red Card financial services, and super target. Expansion of these services can increase customers’ preference to shop in this particular store.  The company also has a chance to diversify its technology even further by employing cellphone apps such as Cartwheel that allows coupons and discounts. The company can also increase its sales through exclusive deals to Target.com, and being active via social media. The company can also opt to employ social media to enhance customer services and products promotion and marketing (Target Corporation, 2014).

 Threats

The company competitors have a larger distribution area and stores across the world and hence they are able to acquire more market shares compared to Target Company. Another threat is that competitors such as Walmart have in their prices managed to eliminate the negatives by giving price matches for similar products. Another major threat is the security issues experienced in the online cards transactions where credit card information and social security information has been intercepted by hackers. Another major threat is economic challenges which have resulted to inflation, aspect that affects people spending especially on luxurious products.  This affects the volume of sales and hence the company productivity (Pestle Analysis, 2015).

Strategic Posture

Target Competitive Position and Cooperative Strategies

Target main competitor in the market is Walmart. The two are the main retail chain industry players and they do share high market commonality levels. Although their target customers and strategies are different, they however provide similar services that include express outlets, pharmacy centers, and discounted products. Moreover, the two companies compete globally with each other in countries such as Canada and India. Despite massive size of Walmart, Walmart and Target contain similar resources that include location, equal quantity of human capital, and equitable recognition of brand.

Nevertheless, they are inclined to vary in principle that target workers are dexterous in leadership skills and project management while staff of Walmart concentrates on creating its pharmacy retail knowledge and sales. Target in addition places a higher focus on product quality and innovation in contrast to lowest price strategy of Walmart. Moreover, Target contains superior practices of advertising. Thus, they have moderate level of resource similarity. Walmart and Target contain high market commonality levels and a moderate resource similarity level. Therefore, their each other awareness is temperately high. The level of competitive actions consequences and one response will highly contain an effect on the other as witnessed when Walmart Express met with City Target later rebuttal (Brown, 2015).

It is important to note that Walmart and Target contain comparatively similar resources and they are both big players in the retail industry. Therefore they contain the aptitude to attack competitors including each other if need be. However, Walmart threat is clearly felt internationally by all competitors due to its large size. With regard to comparative strategies, the two companies consider building more powerful store to enhance their extensibility in the market. Walmart initially began protecting its competitive advantage by constructing Walmart express stores that were considerably small compared to supercenters.

These kinds of stores are constructed in urban regions. Since then, Target has constructed a number of City Target or Target Express, though these are located directly in cities focusing on city goers. However, Walmart is considerably big compared to Target and thus, Walmart has managed to employ a number of strategic actions such as constructing new stores in various regions compared to Target without much strain. Nevertheless, Target appears to have the control with regard to quality. Target partners with designers every year to provide high end product at good prices. However, Walmart is not recognize for its quality, though it is known for little rollback prices (Target.com, 2017).

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