S. economy is down, Target profits are likely to go down in response.
The main strategic problem is low employee wages, which has altered public perceptions. The retail industry is very unstable and some of the competition Target faces ebbs and flows quickly. The main competitors Target faces are Wal-Mart, K-Mart and Sears. Most cities have other smaller stores and department stores, which all compete with Target for the same customers. Wal-Mart has more locations than Target, which makes Wal-Mart more accessible to customers. In addition, Wal-Mart has tapped into the foreign market places. This competitor is well-known for its low prices and discounted prices. The goods Wal-Mart offers is not of as high a quality as Target, but most of the consumers who patronize this store is looking for the money savings. The competitors Target faces are a constant threat to the profit margin of the organization.
Currently, Target stores tend to attract younger and more educated and affluent customers than Wal-Mart, among other competitors. The median Target shopper is 41 years old, the youngest of all major discount retailers that Target competes directly against. The median household income of Target's customer base is roughly $63,000 U.S.$. Roughly, 76% of Target customers are female, and more than 45% have children at home. Lastly, about 80% have attended college and 48% have completed college (Target, 2012).
A direct correlation between profit margins and service levels exist. Causes for low wages include the need to increase profit margins, to stay competitive, and to eliminate unions. Already, Target is beginning to get some unwanted attention from labor groups that have been struggling to reform Wal-Mart's workplace practices for nearly two decades. Entry-level hourly workers in Target stores earn roughly the same pay and have more difficulty qualifying for health care coverage than its peers at Wal-Mart. Both retailers oppose unions and have taken steps to prevent organizing efforts in stores. Moreover, both have outsourced jobs overseas to save costs (Wall Street Journal, 2012).
Target does not disclose details about its compensation and benefits, but labor groups and former and current employees of Target in the Twin Cities say the retailer sometimes pays less than Wal-Mart. Target pays between $6.25 an hour to $8 an hour for entry-level, hourly positions in its Twin Cities stores, according to a recent survey of local Target workers by the UFCW. Comparatively, this is in line with what Wal-Mart pays in this market, although some starting-level Wal-Mart workers can earn $9 to $10 an hour, the UFCW said.
Overall, the Minneapolis-based retailer sales grew 5.1% to $4.61 billion for the four weeks that ended Jan. 28, which was better than expected (Stych, 2012). Hence, Target could afford to increase its compensation and benefits for its employees. Three potential solutions include for the customers and/or employees:
Conduct a quarterly Employee Survey to obtain feedback for specific areas of improvement and obtain an average of 90% or above satisfaction rate based on four quarterly Associate Surveys conducted annually.
Conduct a quarterly Customer Survey to obtain feedback for areas of improvement and obtain an average of 90% or above satisfaction rate based on four quarterly Customer Surveys conducted annually.
Conduct monthly Employee & Customer Surveys to obtain feedback for areas of improvement.
It is prudent to conduct a quarterly Employee Survey to obtain feedback for...
Employees are the background of any organization. Therefore, it is imperative to ensure its needs are met. Without employees, a business will not sustain without any customers. With feedback from the focus groups, Target must be willing to implement suggestions and changes, even if there are financial implications. Profit margins have increased beyond expectations (Associated Press, 2012). By increasing compensation packages, profit margins will decrease in the short-term. However, with happy employees, productivity and morale will have a positive effect for the employee and customer experience.
Establish employee-led focus groups to engage and solicit genuine feedback. Annually, implement two viable suggestions from focus groups. Additionally, Target should host an annual employee appreciation event. To implement this action plan will require key managers to dedicate time to the process, which is lost opportunity cost in other arenas, such as sales. This may be met with some resistance from stakeholders, such as the investors. However, investing in the employees has indirect costs that yield future dividends.
Management needs to have a full understanding of the organization's strengths, weaknesses, opportunities, threats, and trends to make the necessary decisions to maintain the good reputation it has achieved, as well as stay in competition in the leading discount retailing industry. Throughout the years, the Target Corporation has shown to be a stable and dependable company. Each day, the company's management face many challenges, resulting from customers, economy, competitors, and from its own decisions. Without the foresight and good decision-making, Target would not thrive as it is today. Insomuch, Target has proven that its management team is doing well on planning, organizing, and implementing strategic plans to keep up with the changing times in the retail industry. However, a shift in employee-focus is warranted for sustainability.
House, C. (2008). Target Corporation SWOT Analysis. London: Datamonitor Plc.
Target Corporation. (2010). Our Company. Retrieved from http://sites.target.com/site/en/company/page.jsp?contentId=WCMP04-030795
Target Corporation. (2012). Investors: Corporate overview. Retrieved from http://investors.target.com/phoenix.zhtml?c=65828&p=irol-homeprofile
Moyer, L. (2005, November 14). The most charitable companies. Retrieved from http://www.forbes.com/2005/11/11/charities-corporations-giving-cx_lm_1114charity.html
Stych, E. (2012, February 2). Target sales grow twice as fast as expected. Retrieved from http://www.bizjournals.com/twincities/news/2012/02/02/target-january-sales-strong.html
Wall Street Journal. (2012, January 20). Target turns to vendors to help in becoming more competitive. Retrieved from http://online.wsj.com/article/BT-CO-20120120-711395.html?mod=WSJ_qtnews_wsjlatest
Associated Press. (2012, February 02). Target's key revenue metric rises 4.3 pct. Retrieved from http://www.theolympian.com/2012/02/02/1973893/targets-key-revenue-metric-rises.html
Strategic Leadership and Management The link between Strategic Direction and Leadership Leadership can be described as "a process in which a number of people work together for a common task. It also covers accomplishment and eventually getting the task done." Chemers M. (1997) has defined the strategic direction (henceforth referred to as strategic management) as the process whereby one can "identify the needs and wants of an organization and achieving that particular goal
Strategic positioning is the positioning of an organization (unit) in the future, while taking into account the volatile environment, plus the systematic recognition of that positioning. The strategic positioning of an organization includes the planning of the desired future position of the organization. On the basis of present and foreseeable progress, and the making of plans to realize that positioning. The strategic positioning method is devised from the business world. The method
Target Corporation Target Organizational Structure Target Corporation operates in three major market segments. It operates the U.S. Retail segment, the U.S. credit card segment, and the Canadian credit card segment. In the U.S. Retail segment, consumers can purchase items either online or by locating them in one of its stores. Target operates in the discount general merchandise retail segment. Its credit card segment offers a Target visa, Target card, and branded Target
Strategic Planning Process Explain the basic steps in the planning process The steps included in designing a strategic plan are portrayed underneath. Although the process may appear rational and systematic, it is regularly iterative and evolves considerably over time. Furthermore, it is subject to political pressure and will be changed likewise. Some key planning efforts may not include all the steps depicted. The components and process depicted in the following segment must
Strategic PlanningManagement Strategic planning refers to an organizational management activity used in order to set priorities, focus resources and energy, strengthen organizational goals, and ensure that both the stakeholders and employees are working towards common goals. It also assists in establishing agreement around the intended results and/or outcomes, assessing and adjusting the organization's scope of responding to any possible changes within the environment. Strategic management is the inclusive collection of the
Strategic Management The concept of strategic management is one that is highly important to organizations around the world (David, 2009). It involves taking a look at the top management of a company and the resources that management team is using on behalf of the company's owners and in order to show a specific level of performance. The mission, vision, and objectives of the organization must be examined, and it is necessary