Target Corporation
Target Corporation
Strategic Report
Linda Hahn Lisa Kwak John Palys April 20, 2005
Target Corporation
Table of Contents
Executive Summary .......................................................................... 2 Company History .............................................................................. 3 Financial Analysis ............................................................................. 5 Competitive Analysis: Porter’s Forces............................................... 8
Internal Rivalry........................................................................................8 Entry ........................................................................................................9 Substitutes and Complements................................................................ 10 Supplier Power ...................................................................................... 10 Buyer Power .......................................................................................... 11
Strategic Recommendation............................................................. 12 Conclusion ...................................................................................... 16 References ..................................................................................... 17
SageGroup, LLP
1
Target Corporation
Executive Summary
Target Corporation has no new imminent threats on its horizon. Its greatest challenge continues to be the problem of competing with Wal-Mart. In order to reduce the threat posed to profits by internal rivalry in the discount retailing industry, Target should focus on two key issues: growth and differentiation. Target has grown consistently in the past. The obvious areas in which Target should concentrate its expansion are markets in the South and Northeast, where there are plenty of attractive locations with no Target stores. New territory also exists in the form of urban areas. Due to size
Strategic Report
Linda Hahn Lisa Kwak John Palys April 20, 2005
Target Corporation
Table of Contents
Executive Summary .......................................................................... 2 Company History .............................................................................. 3 Financial Analysis ............................................................................. 5 Competitive Analysis: Porter’s Forces............................................... 8
Internal Rivalry........................................................................................8 Entry ........................................................................................................9 Substitutes and Complements................................................................ 10 Supplier Power ...................................................................................... 10 Buyer Power .......................................................................................... 11
Strategic Recommendation............................................................. 12 Conclusion ...................................................................................... 16 References ..................................................................................... 17
SageGroup, LLP
1
Target Corporation
Executive Summary
Target Corporation has no new imminent threats on its horizon. Its greatest challenge continues to be the problem of competing with Wal-Mart. In order to reduce the threat posed to profits by internal rivalry in the discount retailing industry, Target should focus on two key issues: growth and differentiation. Target has grown consistently in the past. The obvious areas in which Target should concentrate its expansion are markets in the South and Northeast, where there are plenty of attractive locations with no Target stores. New territory also exists in the form of urban areas. Due to size
References: Heller, Laura. “Wal-Mart remains the price leader, but competitors are closing the gap.” DSN Retailing Today 2 Aug. 2004: 8-10. Klinefelter, Jeffrey, Neely Tamminga, and Melissa Mullikin. “Target Corporation.” Piper Jaffray 22 Sep. 2004. Kozloff, Emme, Ian Gordon, and Robert Higginbotham. “A Look at the Stand-Alone Target.” Bernstein Research Call 23 Sep. 2004. Kozloff, Emme, Ian Gordon, and Robert Higginbotham. “Discount Retail.” Bernstein Research Call 16 Oct. 2004. Lightfoot, Paul. “Wal-Martification.” ALsysinc.com 1 Jun. 2003. Schlosser, Julie. “How Target Does It.” Fortune 18 Oct. 2004: 100. Stinson, Jeff. FTN Midwest Research. 29 Sep. 2004. “Target Corp. Fighting a War on Two Fronts.” CIBC World Markets Equity Research 24 Mar. 2003. “Target Corporation.” International Directory of Company Histories Vol. 61, St. James Press, 2004. Weinswig, Deborah. Target Corporation November Credit Review, Smith Barney. 27 Dec. 2004. SageGroup, LLP 17