Managing Organizational Change at Target Corporation

Introduction: The Inevitability of Organizational Change

Change is an ongoing and inevitable process. Organizations no longer have the option to avoid change; they must adapt in order to survive and remain relevant. It is quite challenging for an organization to change, let alone for a single individual. This reality places enormous and increasing pressure on management to discern and oversee the important details of change. Managers must therefore understand how to manage change effectively. There are several key aspects to consider, including questions such as: how do organizations detect when they ought to change, and what cues should a company look for?

All organizations face various forces for change, ranging from internal forces — those that emanate from within the organization — to external forces that originate outside it. Awareness of these forces can help managers decide when they ought to consider executing an organizational change. This paper examines the internal and external forces for change affecting Target Corporation and considers how such changes should be managed (UNITAR, 2010).

Primary Internal and External Forces for Change at Target

Internal forces for change come from within the organization. These forces may be understated and non-obvious — such as low motivation and morale — or they may manifest in outward signals such as internal conflict or low productivity. It is important to note that internal forces for change can stem from managerial decisions and behaviors, as well as from human resource issues. External forces for change, on the other hand, originate outside the organization. Because these forces may have broad or even international impacts, they can cause a company to reconsider the nature of the business or industry it operates in, and the practices through which its products or services are produced. Four main external forces for change are typically identified: market changes, technological advancements, demographic features, and social and political factors (UNITAR, 2010).

Target Corporation offers a wide range of products and therefore faces competition from several close substitute sellers. A more specialized retail store can act as a partial substitute for one of Target's departments. For instance, Walgreens competes in the pharmaceutical area, while Best Buy competes in electronics and also in groceries. These competitive pressures prompt the company to reconsider its organizational approach, as Target seeks to ensure that its products and services remain top-tier and that consumers do not opt for close substitutes offered by other retailers (Tongue et al., 2012).

Walmart, the leading company in the retail industry, presents intense competition to Target Corporation in terms of pricing and low operating costs. In the retail industry, buyers face little to no switching cost when moving from one rival company to another. It is very easy for consumers to shop around for the best price (Tongue et al., 2012). Companies in this industry can quickly and easily adjust their prices; furthermore, such price changes can be widely advertised and are therefore highly visible to consumers (Tongue et al., 2012).

Target Corporation's product differentiation strategy is considered one of the internal forces prompting change. Target has long positioned itself as an exciting, fashionable, and chic alternative, offering higher-end product selections. This strategy provides some protection against head-to-head price competition with Walmart. However, it remains unclear whether the company can simultaneously sustain both an upscale and a budget-friendly image. As Target continues to brand its merchandise, it increasingly appears that Target products are more costly — yet also of higher quality — than Walmart's offerings (Tongue et al., 2012).

The rapid increase in technological advancements has transformed the retail industry. Retail companies are now able to leverage social media networks to connect with consumers and offer them special discount deals. Given that multi-channel retailing is constantly evolving, there is heightened pressure on companies to keep pace with changing consumer demands and competitor developments — Target Corporation included. For instance, if one competitor advances its technology, it stands to gain increased brand recognition and greater consumer loyalty. Data security is another pressing concern. The recent increase in fraudulent online purchases and data security breaches has had an adverse impact on players across the industry. In particular, such incidents can increase costs for the company while simultaneously reducing consumer confidence and undermining brand loyalty (Tongue et al., 2012).

Large retail companies such as Target Corporation, with their wide scope of product offerings, may face product recalls, government regulation and enforcement, and litigation arising from consumer product safety concerns. This includes failure to comply with product safety standards, as well as issues such as food and drug contamination. Such challenges call for organizational change, as they can result in significant financial losses and a deterioration in consumer confidence. Operating in the United States and Canada, Target faces a range of political and legal issues, including privacy and information security laws, financial regulations such as consumer credit rules, rising interest rates, and employment regulations including minimum wage requirements (Tongue et al., 2012).

The development of a global economy is compelling companies in the United States to change the way they conduct their business operations. Corporations are building new partnerships and affiliations with suppliers in order to deliver high-quality products at lower prices. As retail companies either operate internationally or source goods from outside North America, global events directly impact the industry. For example, natural disasters such as tsunamis can drive up the cost of raw materials, reducing profit margins and adversely impacting inventory and product availability. The retail industry can also be negatively affected by financial instability, political instability, and trade restrictions. A global financial crisis or fluctuations in foreign currency exchange rates can further increase business operating costs (Tongue et al., 2012).

Target's Vision for the Next Five Years

Target Corporation is the second-largest retailer in the United States and one of the largest in the world. The company's primary vision for the next five years is to reclaim its status and reputation as a driving force in retail. Target aims to recapture its merchandising authority and re-brand itself by embracing technological advancements and entering the digital era fully in its business operations. In addition, the company must rebuild its brand image in the wake of the major data breach it experienced (Malcom, 2014). According to the organization's annual report, Target plans to reduce costs, increase profitability, and attain greater control over the quality and freshness of the products it offers (Target Corporation Website, 2015).

Conclusion

Change is an inevitable aspect of organizational life. All organizations face various forces for change — both internal forces that emanate from within the organization and external forces that originate outside it. Target is ranked as the second-largest retail company in the United States and has faced a number of significant challenges in recent years. The company's vision and primary objectives for the next five years are to reclaim its position and standing as a powerhouse in the retail industry, with particular emphasis on keeping pace with advances in digital technology.

Operating in an industry where shoppers can purchase products with the click of a button, Target is committed to avoiding obsolescence through mobile shopping applications and a robust online presence (Hadley, 2014). As noted, up until 2011 the company's website was operated by Amazon rather than Target itself — a gap that highlighted the need for urgent digital investment. Some of the political and legal issues the company faces include privacy and information security laws, consumer credit regulations, rising interest rates, and employment regulations such as minimum wage requirements (Tongue et al., 2012). Addressing both the internal and external forces driving change, and managing that change through strong leadership and clear communication, will be critical to Target's success in the years ahead.

References

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Malcom, H. (2014). With new CEO, Target ready to move forward. USA Today. Retrieved 9 July 2015 from: http://www.usatoday.com/story/money/business/2014/09/10/target-new-strategy/15385745/

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