Environmental analysis and strategic planning for Target Corporation

Environmental Analysis: Target Corporation

The objective of this work is to complete an environmental scan and economic analysis on Target and to identify any major changes expected to affect the remote, industry, and operating environments. This work will refine the analysis of the forces and trends, utilize a macroeconomic forecast of economic indicators affecting Target in the future and analyze the noneconomic factors in the remote environment including: (1) social/cultural; (2) political; (3) technological; and (4) demographic. This work will complete a competitive analysis of the organization's position from a microeconomic perspective based on the pricing of the organization's primary product or service line, an assessment of its cost structure, and an assessment of the market in which the organization competes. Finally, this work will develop a summary of the current situation of target including its mission, business overview, current competitive position and the forces and trends in its industry. Three to six current opportunities and issues that strategic planning processes are required to address will also be identified in this study.

II. Introduction

Target is the second largest discount retailer in the United States and is an innovative and large retail stores that carries everything from household items, to clothing, shoes, jewelry, accessories, toys, sporting goods, and even food items. The mission statement of target has as its focus four core factors including: (1) providing great service; (2) having merchandise in stock; (3) a clean store; and (4) speedy checkout. Target aims to produce new ideas and to stock exclusive products. As well, target strategically locates their stores where they are accessible to both current and potential guests.

Organizational Strategies

Target has signed agreements with top designers to sell the designer items at prices that are affordable and under a name that has been agreed upon. The example stated is that of Victoria's Secret which produces the lingerie line of Gillian O'Malley. (Lydersen, 2006)

Target has a reputation for new product development and creativity. (Lydersen, 2006)

Gift cards can be used in the store or online (Lydersen, 2006);

There is no grocery department at Target which presents a threat to retailer including Wal-Mart whose majority of stores are now Super centers (Lydersen, 2006);

Gift cards can now be used in both the store and on the Internet, thus leading to more sales and reaching the computer literate market (Lydersen, 2006);

More and more Targets are attaching to trendy malls in different market segments. (Lydersen, 2006)

Managerial Traits

• 7% of Target's total sales are accounted for by pharmacy customers. The turnover rate for pharmacists is quite high and these individuals work 12-hour workday schedules.

• The police department in some states will depend on Target's Asset Protection systems to catch thieves and monitor fraudulent activity.

Macroeconomic Analysis

The macroeconomic analysis measures four aspects of Target's strategy including the (1) social/cultural; (2) political; (3) technological; and (4) demographic aspects. In the social/cultural aspect of Target's industry, Target is a leader and this is evidenced by its community-friendly programs such as wedding registration where brides and grooms register with the store, make selections of items they would like to receive as wedding gifts and their friends and family and guests to the wedding. Individuals are then able to choose a gift from the store registry, which tracks the gifts chosen so that gifts are not duplicated.

The store additionally has a baby registry where parents-to-be are able to choose gifts from the store for their friends and family to chose from for the newborn baby and this registry is additionally tracked by Target to ensure that gifts are not duplicated. Target stores carry the latest and trendiest home furnishings and clothing, which attracts individuals of all ages to the store. The political aspect of Target's industry is such that places Target in a sound competitive position in that the prices are competitive and the items stocked by Target are comparable to its competitors.

Technologically speaking Target is competitively sound offering the same technological applications in serving its customers as do competitors. Demographically, Target stocks items that attract all age, racial and ethnic groups as evidenced when shopping in the store by the diverse customers that shop at Target.

Microeconomic Competitive Analysis

According to one report Target when compared to Wal-Mart is "more urban and sophisticated,…" however the report states that "in contrast to this image…critics say that in terms of wages and benefits, working conditions, sweatshop style foreign suppliers and effects on local retain communities, big box Target stores are very much like Wal-Mart, just in a prettier package." (Lydersen, 2006) It is additionally reported that of more than 1,400 Target stores which employee 300,000 individuals throughout the U.S., not one Target store has a union, and in fact, employees are reportedly told that if they are caught participating in union organizing activities that they will be fired. In comparison, Wal-Mart has 3800 stores throughout the U.S. And 2,600 internationally and employs approximately 1.6 million people throughout the world.

Target sells a wide range of consumer goods including "clothing, household items, office supplies, toys, sports equipment, furniture, art, and electronics; and the stores often have photo laboratories and pharmacies. About 160 SuperTargets nationwide also sell "upscale" groceries, as the company's website describes them, and often contain banks, Starbucks, and Pizza Hut Express outlets. Total revenue was up 12.3% in 2005 -- $52.6 billion compared to $46.8 billion in 2004." (Lydersen, 2006) It is reported that a survey by the UFCW found that starting wages at Target and Wal-Mart are similar although Wal-Mart's wages were found to be higher overall than were Target's wages. (Lydersen, 2006, paraphrased)

It was reported that one Target employee states that after three years employment with Target that he had only received $1 an hour in raises although he does report that he loves his job due to the "camaraderie with his co-workers" but he states "we are never compensated and rarely even recognized for meeting our goals." (Lydersen, 2006)

According to this report the starting wage at Target would "put a single parent with two kids working full time at Target just slightly above the poverty line; someone with more children or working fewer hours would fall below the poverty line." (Lydersen, 2006)

However, different views exist on the pay Target gives its employees and specifically stated in the report is that employees of Target "praise the "flexible" corporate structure that offers "frequent chances for promotion." "The upward mobility is the best part of working here," reports one insider, "I have increased my income 25% in the past year!" While advancement "sometimes requires relocation," the size of Target's chains enables employees to stay "committed to a single geographic region." (Vault, 2011) It is additionally reported that due to the size of the company, it is difficult to generalize as "Pay, dress, and hours vary by location and department. While one insider in Information Services reports, "the job pays really well" and another insider describes it as "very competitive," others call the pay scale "unimpressive." (Vault, 2011)

A negative view is taken by many would-be customers of Target due to the fact that Target & #8230; "…itself sources its products in India, Indonesia, Guatemala, Mexico, Bangladesh, Kenya, Sri Lanka, the Philippines, Vietnam, Cambodia and other low-wage, developing countries." (Vault, 2011) Workers report that they are required to fill multi-job roles and that stores are understaffed.

The microeconomic scan indicates that Target employees are overworked and perhaps underpaid and Target employees report lack of appreciation even when their goals and objectives are met.

Target stores are reported to be stocked with products from countries known to employ child labor, which is illegal for production and manufacture of goods. This creates a problem for Target's image in the public view. (Vault, 2011)

Strategies for the Future

Target needs to work on its' social image in terms of the public view of Target as well as working on its treatment of employees. Needed in Target's strategy is what is referred to as the "old social contract where if you work hard and give them full time, they have to treat you with some degree of dignity and pay you enough that you don't need to worry about your basic needs all of the time." (Lydersen, 2006)

Target stores need to formulate some type of employee-reward programs for long-term employees and top-notch employees to show that they appreciate their employees. This type of programs goes a long way in binding the store with the community as it honors and notes the performance of its employees who are community members in the area where the Target store is located.

If the Target chain intend to avoid the union coming into its stores then restructuring of its employee hiring and retaining policies is necessary in addition to keeping the pay for store employees competitive. It would be advisable that Target focus on hiring more pharmacy staff so that the turnover rate is not so high. Ending the high turnover rate will result in less hours required to be worked by employees of Target's pharmacy and ultimately more satisfied employees.