Target Porter's Five Forces

Target’s Industry
According to Michael Porter’s five forces model, the Target brand proves to be capable of making a high profit. Target’s industry faces several barriers to entry. First, Target and its current nation-wide competitors enjoy significant economies of scale. Purchasing inputs in bulk enables Target to reduce pricing in their stores. Also Target benefits from brand loyalty with their customer which makes it difficult for competitors to gain customers. Due to its high level of power as a buyer, Target purchases large quantities of products, has many choices between equivalent products, and the corporation can easily switch between the offerings of different firms. Target is able to demand a decrease in prices from the sellers
As far as barriers to entry, Targets ability to purchase large quantities and its superior brand loyalty makes it very difficult for new enterprises to enter into its industry and be as successful on a national level as Target. It would cost a significant amount of money from the competitor to attempt Target’s success. Target’s success also comes from the company’s ability to carry various products at a low price. This occurs due to Target’s high level of bargaining power as a buyer in the industry. Therefore, Target’s power enables them to sell products at lower prices than competitors and therefore earn greater revenue from the product. Furthermore, due to Target’s high level of power it has a high level of bargaining power over the suppliers. As a company, Target can demand certain things from their suppliers because it can choose between multiple suppliers. To increase its revenue target has been working towards incorporating new brands to bring in new customers. For example, in the past few years Target has brought in more designer lines such as Converse, to help their store stand out. The enterprise can do this because it is not dependant on any one single supplier for important inputs. In the past years in order to reduce the company’s threat of substitutes and the intensity of its rivalries Target has worked to bring in new brands and items to eliminate the threat of substitute products and commodity products. As mentioned before, the enterprise has been working to bring in more designer labels to attract more high end customers. Also some stores have brought in food items as well as patio furniture to differentiate from its competitors. Target supplies customers with not only nation-wide brands but also store owned brands such as Merona and Xhilaration so that the company itself may create new and different