Corporate Structure, Strategy, and Competitive Environment
The Target Corporation is fascinating, as it has been able to grow and compete with others that are better known, such as Wal-Mart. A history of the Target Corporation is important, but it will be kept brief and to the point, as there is more of a need for analysis of the current situation with the Target Corporation than there is for a reconstruction of how it was gotten to this point in its history. Some information, however, is necessary for a more complete understanding of where the Target Corporation stands now and where it appears that it will be going in the future if it stays on the same path. The rest of the information contained herein will be an analysis of the corporate strategy that Target has and what kinds of changes should be made to it to ensure that the Target Corporation has continued profitability and success in the retail sector.
One of the things that Target has done to differentiate itself from Wal-Mart is to create an image that is more upscale (Target, 2004c). Kmart, which has not done this, has consistently had more trouble with the differentiation issue because it has not found something that it can do very differently that will set it apart. While most people think of Target Corporation as only owning Target stores, it is actually quite a large corporation and has owned many different chains of stores in the past including Marshal field, Mervyns, Dayton's, and Hudson's (Target, 2002). Headquartered in Minneapolis, Minnesota, Target Corporation only changed its name in 2000. Until then, it went by the name of Dayton-Hudson Corporation (Target, 2004a).
Target Corporation began in 1902 with one retail store and has since grown very rapidly (Target, 2004c). Its earnings have also grown rapidly with each quarter of each year making gains. This is expected to continue well into the future. The Corporation now has stores in 47 states and employs over 328,000 people across the United States (Target, 2004a). Its revenue for this year is nearing $50 million (Target, 2004c). All of this makes the Target Corporation one of the fastest growing retailers in the country and there are plans to offer paid vacations and health care benefits to employees that work part time (Cameron, 2001). Most retailers do not offer these things to employees unless they are considered to work full time.
What is most significant about the Target Corporation, however, is their corporate strategy, and this appears to be the key to their competitive advantage. They have taken their competition with Wal-Mart and other retailers and adjusted it just enough that they have set themselves apart. Mostly, they have done this by their slightly upscale image, but they have been careful with this, as well. A list of 'upscale' retailers would likely not include the Target Corporation in name, but some of the stores under their command might be there. A list of discount or general retailers might also include some of their stores -- most likely their Target stores. These Target stores make up approximately 75% of the Corporation's business and help to increase its profits (Target, 2004b).
The important thing to note is that there are stores owned by the Target Corporation in many different areas of retail. It is this corporate strategy of diversification that appears to be working so well for them. By diversifying what they have and what they do, the Corporation has ensured that it will be around for a long time yet to come. If one chain of stores or one market fails to do well, there are plenty of other stores and other markets on which the Target Corporation can rely for profit and growth. Other retailers do not seem as interested in this diversification in their field, and they rely on having a great many stores of the same kind in various locations instead of different kinds of stores in various locations.
For example, someone that is not interested in shopping at their local Target store might choose to shop at Marshal Field, not realizing that they are actually giving money to the same parent company. This diversified approach is helping the Target Corporation with its success and allowing it to go forward and grow in an economy where many businesses and retailers are struggling, even with the upcoming holiday season and the profits that are anticipated from all of the shopping that is usually done during that time.
It looks at though the Target Corporation has chosen the right strategy for the retail marketplace, but there is no way to know exactly what will become of the Corporation in the future. Even though they are doing well now and their profits are growing, economies can change quite quickly. Consumer preferences and opinions can also change quite quickly, and the Target Corporation's general attitude of being slightly more upscale than the stores that it competes with may eventually go stale in the marketplace. Granted, this has not yet happened, but the future is not something that even the best accounting and marketing individuals can predict.
For now, however, concerns about the Target Corporation can generally be laid to rest, as there are no apparent problems in sight. The diversity that the Corporation has is important, but it is not the only thing that the Target Corporation has going for it. The Corporation also appears to follow the strategy of caring about others, and this seems to be very useful. It also seems to be sincere, which is important. Customers, employees, and society in general can usually spot when a company or business is only making an effort to 'be nice' because of what they think will be in it for them. This kind of behavior usually does not go over well in the marketplace, and retailers that display this behavior will often see their profits slide and their stores avoided. However, with the Target Corporation the concern about their employees and the rest of the community appears to have sincerity behind it.
The Target Corporation has given money to cities that have been ravaged by floods, donated to many charities, and held many drawings for gift cards and other merchandise (Strategic, 2004). It appears that the Corporation sees this as an important part of doing business and values those that they have relationships with in various communities across the country. These relationships are also crucial to the success of the business. Businesses can have the best and most important merchandise in the world, but it does not matter if there are no customers. The Target Corporation knows how to bring in these customers by treating them properly, carrying the merchandise that they want, and providing that slightly more upscale image than that of Wal-Mart (Biesada, 2004).
This image also comes with slightly higher prices, but the prices are not so much different that they discourage most shoppers from patronizing the Target stores and most of the other stores that are owned by the Target Corporation. As strange as it seems to some, there are individuals that will not shop at Wal-Mart. This is largely because of the image that comes from shopping there, and the belief that Wal-Mart shoppers are typically poor and rural. While this is not technically accurate, and many people that have plenty of money shop at Wal-Mart simply because their prices tend to be lower than most places, there is still a stereotypical attitude that prevails with some individuals.
These kinds of individuals believe that they are getting better quality and a better image when they shop at stores that charge more, have different layouts, etc., and therefore they choose many of the stores that belong to the Target Corporation. It would seem that the Target Corporation has spent a great deal of time researching this issue because the Corporation is careful to ensure that its stores are upscale enough to bring in those that are not comfortable with Wal-Mart and Kmart but also not so upscale that those people without a lot of money are too intimidated to shop there (Pratt & Spencer, 2000). This is something that the Target Corporation has worked hard to balance and it is what works so well for them.
Had the Target Corporation attempted to compete directly with Wal-Mart, it is quite likely that it would not have done as well. Wal-Mart is the number one retail chain and it looks as though they will stay that way. They have competition from Kmart, but it is not a competition that Kmart appears to have any real chance of winning, as Kmart has had bankruptcy troubles and other issues that have plagued them for some time. Even though they have emerged from bankruptcy protection they are still on somewhat shaky ground when it comes to their finances and profit margins. The only problem that Wal-Mart seems to have is that their stores are not always wanted…
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