OPPapers.com

Target Strategic Outline

I. Mission Statement:
II. External Environmental Analysis
a. Remote environment – these are the factors, which affect all businesses, and frequently, neither the business nor the industry has any control over them – examples:
i. Entry barriers
ii. Social
iii. Political
iv. Technological
v. Ecological factors
vi. Economic factors:
The economy has a major influence over the retail industry. Target's market has a very broad scope. When the economy affects the purchasing ability of its customer base, customers turn to less expensive commodities offered by discount retailers.
b. Industry environment:
i. Entry barriers
A. Economies of scale: Target can compete well against county general stores, surplus and salvage stores, Army and Navy goods stores, warehouse club stores, and catalog showroom stores because they have a significant cost advantage over any new rival.
B. Product Differentiation: Target creates high entry barriers through their high levels of advertising and promotion (Essentials of Strategic Management)
ii. Supplier power
iii. Buyer power
iv. Competitive rivalry: The increased productivity gap between Wal-Mart and Target is affecting both companies in terms of competitive stances. Wal-Mart will attempt to exploit the existing gap by lowering prices further and creating an even stronger advantage. This is highlighted through the disparity in sales per square foot; 1999 was the narrowest, with Wal-Mart selling $441 and Target selling $260; by 2002 Wal-Mart had increased this to $498 and Target to only $271 per square foot. Similarly, the operating productivity of Wal-Mart, far outstripped Target. Target must therefore address this competitive issue. Investors continue to choose K-Mart and Wal-Mart first Investors in retail are less prepared to acquire Target stock than the two other main competitors in the sector
v. Substitute availability
c. Opportunities:
i. Changes in government regulations
ii. Technological breakthroughs
iii....