Publicly Traded Company Analysis One of the Essay
- Length: 7 pages
- Sources: 5
- Subject: Business
- Type: Essay
- Paper: #65694122
Excerpt from Essay :
Publicly Traded Company Analysis
One of the largest retailing companies in America, Target Corporation (known simply as Target) is a NYSE listed publicly traded entity. Currently, in terms of size, Target takes the number two slot after Wal-Mart. In this text, I come up with a concise analysis of the company with a special emphasis on its vision and mission, how it is impacted upon by Porter's five forces of competition, its SWOT and strategies it may utilize to enhance both its profitability and competitiveness. Further, I also highlight the various corporate governance issues affecting the decisions of the entity and how they can be handled.
Target's Mission, Vision and Key Stakeholders
It is important to note from the onset that Target prefers to conduct its retail business with both a large vision and an insistence on well-founded community values. In its Website, Target gives its mission as "to make Target the preferred shopping destination for our guests by delivering outstanding value, continuous innovation and an exceptional guest experience by consistently fulfilling our 'Expect More. Pay Less.' brand promise" (Target, 2012). Though it does not have a well-defined vision, the company further notes that it is driven by its commitments to the environment, diversity, community as well as great value in its resolve to support its mission.
Some of the key stakeholders of Target include but are not in any way limited to its shareholders, suppliers, customers as well as employees. By virtue of being a publicly traded company, Target's shareholders are members of the public holding the company's stock. The company's suppliers include all those who supply the entity with goods and services which are either resold or used to facilitate the running of the business. Target's customers are all those individuals who purchase the goods offered for sale by the company. Employees on the other hand include all those men and women who are on the company's payroll and who are hired to perform specific duties meant to support Target's core business.
Porter's Five Forces of Competition and How their Impact on Target
Porter's five forces of competition according to Henry (2008) should be regarded "a tool of analysis to assess the attractiveness of an industry based on the strengths of five competitive forces." In the section below, I highlight the five forces of competition and their impact on target.
In this case, it is important to note that an industry's overall profitability as well as its competitive state is largely determined by the intensity of competition between the players in such an industry. Target happens to be in the Discount, Variety Stores industry. In a way, Target's industry can be said to be highly competitive with the market leader currently being Wal-Mart. Though target takes the number two slot after Wal-Mart, other worthy competitors in the industry include but are not in any way limited to Kmart Corporation and Costco Wholesale Corporation. All these firms impact negatively on Target's profitability given that the products they offer for sale are largely similar or identical to those of Target. According to Hitt, Ireland, and Hoskisson (2010), "pricing aggressively is at the core of what Wal-Mart does…" Such aggressive pricing by its main competitor impacts negatively on Target's bottom-line as the firm may from time to time be forced to review its prices downwards.
2. New Entrants
As Henry (2008) notes, the threat of new entrants has mainly got to do with the possibility of new entrants or competitors gaining entry into a given market or industry in which case incumbent entities may end up loosing out in terms of profitability. This therefore means that Target could be impacted upon by both incumbent and new competitors. However, it can be noted that the threat of entry of new competitors in the Discount, Variety Stores industry is rather minimal. My assertion in this case is founded on the significant capital outlay and investment needed for both stocking as well as acquisition of prime locations. Further, the return on capital is not guaranteed given the level of competition in the industry. Hence as an incumbent, the threat posed by new entrants to Target is rather minimal.
3. Threat of Substitutes
In this case, the threat does not emanate from new entrants but rather from those goods as well as services which may be used as alternatives. In this case, it can be noted that Target has quite a number of substitute sellers given the broad range of goods it offers for sale. For instance, apart from other general sellers, all those stores which are in one way or the other specialized can be seen as Target's partial substitutes. Here, stores specializing in groceries, apparel and home goods etc. can be regarded partial substitutes for a number of Target's departments. However, the threat of substitutes in this case cannot be said to be serious as those who shop at Target still have the convenience of accessing a wide range of products from a central position i.e. In one store as opposed to having to visit several specialized stores.
4. Suppliers' Bargaining Power
According to Henry (2008), "suppliers can exert bargaining power over participants in an industry by raising prices or reducing the quality of purchased goods and services." In Target's case, the retailer's extensive assortment of goods can be seen as an asset of sorts especially when it comes to how the company relates with suppliers. This is to say that the company has a variety of suppliers and hence no significant portion of the company's inputs or products are sourced from any single supplier.
5. Buyer Power
It is possible for buyers to impact upon an industry given their ability to demand goods and services of a higher quality, choose where to source their products and services from as well as exert a downward pressure on goods and services. However, it is important to note that Target does not have any single buyer who wields significant influence on the retailer. My assertion in this case is based on the fact that each of Target's clients purchases only a small amount of products from the retailer in relation to the entity's total sales volume. Further, most of the products Target offers for sale are essentially basic necessities like food. However, it should be noted that the products Target offers for sale are considered more 'upscale' in comparison to those offered by the competition. This essentially means that when compared to some of its competitors like Wal-Mart, Target would be hit the worst incase of economic fluctuations. My assertion in this case is founded on the fact that in such circumstances, reduced disposable incomes would discourage customers from paying more for the company's goods which are in one way or the other differentiated on the basis of their quality and stylishness.
Target's SWOT Analysis
In this case, Target's internal environment is highlighted using the firm's strength and weaknesses while on the other hand, the retailer's external environment is highlighted using opportunities and threats.
One of Target's main strengths is its well-known brand. Indeed, most Americans are familiar with the company's Bulls eye logo. Closely related to this is its relative size. Being second to only Wal-Mart in terms of size, Target is ranked among the top Fortune 500 companies. Secondly, taking into consideration some of the retailer's subsidiaries, Target can be said to be well diversified. The company's subsidiaries in this case include but are not limited to Target Sourcing Services, Target Commercial Interiors as well as Target Financial Services. Further, still on strengths, the company's market share is relatively huge given its geographical coverage. Lastly, Target's products are perceived to be of superior quality.
When it comes to weaknesses, in comparison to Wal-Mart, Target has not pursued international expansion aggressively. This means that the company still has a relatively low international presence. Next, yet another weakness of Target is its failure to play music in any of its stores. Its failure to use low cost as a competitive advantage can also be seen as a disadvantage especially during turbulent economic times like the recent downturn in economic activity.
In this case, Target has an opportunity of expanding to emerging markets most particularly in the Asian economies. I view this as an opportunity given the existing growth potential of such markets. Yet another important opportunity for Target is e-commerce. Today, the world is increasingly becoming a global village and this effectively means that firms have an opportunity to offer their goods and services for sale to a global clientele. Lastly, the ongoing recovery of both the U.S. And global economy after the recent downturn in economic activity can be seen as yet another opportunity for Target to enhance its profitability.
When it comes to threats, Target faces a significant level of competition not only from Wal-Mart but also from other emerging as well as existing stores including Kmart Corporation and Costco Wholesale Corporation. Next, issues to do with…