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Team analysis of the Target company, including internal and external analysis. Content prepared by group, powerpoint presentation done by myself.
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Target Chihiro YamaguchiKai-Jen Shih (David)
Diana ColgroveYuxiao Li
Linyu Chang
Group 4
Agenda
Internal AnalysisHistory and PerformanceCulture/Ethics Analysis
Industry AnalysisSWOT/Trend AnalysisRecommendations
Who shops at Target?
Why do you shop at Target?
Question…
Low-price, high-quality,
well-designed merchandise
Comfortable, fun, and safe
shopping environment
One-stop shop, large selection
History & Performance
History
1902Dayton Dry
Goods
1962Target
Discount store
2000Target
Corporation
2011Target
Canada & City Target
Current Status
2nd Largest Discount Department Store
1,763 Stores
3 Branches
Expanded Offerings: PFresh, Target Clinic
How Does Target Define Performance?
Market Player Brand Recognition
Community Giving
Service Performance
Financial Performance
Financial Performance
2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
10000
20000
30000
40000
50000
60000
70000
Total Revenue (Millions)
Total Revenue
Financial Performance
2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
500
1000
1500
2000
2500
3000
3500
Yearly Total Net Income
Total Net Income
Product Categories
• Pharmacy, beauty, personal careHousehold
• Toys, electronics, music, movies, books, sporting goodsHardlines
• Apparel for women, men, boys, girlsApparel and Accessories
• Dry grocery, dairy, frozen food, beveragesFood and Pet Supplies
• Furniture, lighting, kitchenware, small appliances, home decor, bed and bath
Home Furnishings and Décor
Service Category: REDcard
Financial service: Debit/Credit cardTarget REDcard
Offers great discount Free shipping Donation to education Extra savings on prescriptions No annual fee
Competitive Space
TargetToys
ToysRus, Disney Store, Amazon, EBay, Learning
Express , U.S. Toy Co., Inc., Barnes &
Noble Inc.
ApparelRoss, Kohl’s,
TJ MAXX, Marshall’s, Costco
GroceryCostco, Ralphs,
Albertsons, Food 4 Less, Vons, Stater Bros
PharmacyCVS, Costco, Rite Aid, Walgreens,
Clinic Pharmacies
Culture/Ethics Analysis
Employee Interview
Mission Statement:“Our mission is 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.”
Major Commitment:
Mission
Meet the guests’ needs
Continuously cater to the
guest experience
Diversity Teamwork Community Innovation Service
Values
= most important moral value
Within the company, culture is transferred to all:Vendors, Part Times, Seasonals, Etc.
“Fast, Fun, and Friendly”
Integrity
Core Values:
Fifty”
these values are ingrained in the culture
Organizational Structure
General Manager
Senior Group Leader
Group Leader
Team Member
Team Member
Senior Group Leader
Group Leader
Team Member
Team Member
Group Leader
Team Member
Team Member
Team Member
Distribution Center:
• One GM per building• SGL: Performance,
Strategic Planning• GL: 2-12+ Team
Members, Monitor Performance and Development
• Team Members
Structure transfers to all areas ERA 1
Organizational Culture
Process-Oriented Concern with getting things done with integrity
Employee-Oriented Deeply concerned with the wellbeing of employees
Professional Embrace diversity in the hiring process
Open System Welcoming to new employees, orientation persistence
Loose/Tight Control Improvisation welcomed, yet training programs enforced
Pragmatic Orientation Driven by the market, desire to meet guests’ needs
Fulfilling Target’s Values
Customer Satisfaction Action Plans: Message + Training Orientation Overviews Modeled Top-Down Working on a Team No Guesswork Involved Guest Service Departments
Diversity
To promote diversity:• Embrace team member differences
Individual and Community
• Foster a feedback culture Weekly meetings Upward Communication
• Diversity Events Ex: Chinese New Year at Downtown Riverside
Second Nature, Inclusive
Artifacts
• Symbols• Language
Customers = Guests Employees = Team Members
• Heros• Rituals
Ethical Climate
Ethical Criteria: Benevolence
• Team Interest
• Social Responsibility
Wellbeing Pillars
Individual
SafetyHealthy Living
Exercise
Community
OutreachService
Social
CelebrationsRecognition
Events
Financial
Tuition Reimbursement
Financial Planning
Sustainability/Social Responsibility
• Volunteer Events
• Community Giving/Support Commitment to Education 5% of Income Given Back
• “Here For Good”
Here For Good
• Sustainable Living• Energy Smart
• Smart Development• Green roofs, Urban Stores
• Sustainable Products• Traceable seafood, Packaging
• Efficient Operations• LED lights, motion centers
Partnerships
Partnership
LocalAuthorities
Going Green
RecycleSave EnergyReduce WasteReduce Water UsageTransportation EfficienciesENERGY STAR CertificationsReduce Greenhouse Gas Emissions
Trends to Watch
Social Consciousness Longer Life SpanGreen Practices
Target is on track to staying ahead of these trends with their commitment to individual and environmental sustainability
Industry Analysis
Market Positioning Analysis
Industry Classification = Discount Department Store
Market Share
Walmart54%
Target14%
Costco13%
Kmart3%
Dollar General
3%
Others14%
Discount Department Store Market Share, 2010
2010 Sales (in billions)
Walmart 258
Target 67
Costco 60
Kmart 16
Dollar General 13
Others 66
Prospector, Analyzer, or Defender?
Target = Analyzer Stable, routine, and efficient in its product market domains Closely watches competitors and rapidly adopts promising new ideas
BCG Matrix
Slow growth industry Relatively high market shareHigh sales
Discount Department Store Industry
• Toy industry is expected to shrink
• Target is among the top 3 toy retailers
• Target is in a leading position in this segment
BCG Matrix
Toys
For 2009-2014, the estimated growth rate is 2%Target’s sales in 2009 were 6.7B, representing a 4% market shareTarget’s market share in the industry is not dominant, but the market is fragmented
BCG Matrix
Apparel
Grocery retailing is a mature, saturated market in the USTarget’s grocery sales in 2011 was 13.27B, representing a 1.6% market share
Grocery
BCG Matrix
The US pharmaceutical industry is expected to grow at a rate of 6.4% in the next 5 years The industry growing fast but Target’s share in this market is small.
Pharmacy
BCG Matrix
Bargaining Power of Suppliers
Apparel: ModeratePharmacy: HighToys: Moderate
Grocery: Low
Threat of New Entrants Apparel: High
Pharmacy: ModerateToys: High
Grocery: High
Bargaining Power of
CustomersHigh
Threat of Substitutes Apparel: High
Pharmacy: LowToys: High
Grocery: Moderate
Rivalry: High
5 Forces Analysis
Threat of New Entrants Apparel: High
Pharmacy: ModerateToys: High
Grocery: High
Threat of New Entrants
Capital Market Share
Bargaining Power of Suppliers Apparel: Moderate
Pharmacy: HighToys: Moderate
Grocery: Low
Bargaining Power of Suppliers
Exclusive BrandsCommodities
Threat of Substitutes Apparel: High
Pharmacy: LowToys: High
Grocery: Moderate
Threat of Substitutes
Designer/Used ClothingMusic/Video Games
Grocery DeliveryRestaurants
Gaming Population
2009 201155
57
59
61
63
65
67
69
71
73
Gaming Population vs. Actual Population(Ages 2-17) in the US in Millions
Gaming Population (Ages 2-17) in the US (In Mil-lions)
Population (Ages 2-17) in the US (In Millions)Po
pula
tion
in M
illio
ns
Bargaining Power of Customers
Bargaining Power of Customers
High
Variety of Discount Stores is Large
Low Switching Costs
Internal Rivalry
Rivalry: High
02/03/2
007
02/02/2
008
01/31/2
009
01/30/2
010
01/29/2
011
01/28/2
01230.0030.5031.0031.5032.0032.5033.0033.5034.0034.50
Gross Margin(%)
Report Date 02/03/2007 02/02/2008 01/31/2009 01/30/2010 01/29/2011 01/28/2012
Total Revenues 59,490 63,367 64,948 65,357 67,390 69,865Net Earnings (Loss) 2,787 2,849 2,214 2,488 2,221 2,849
Product Life Cycle
Product Life Cycle
Has reached high domestic market share
Product prices in Target are beginning to drop
Executing differentiation strategy
Target
Leap Frog Opportunities: PFresh, City Target, Target Canada
Product Life Cycle
Factors to Watch For
GDP Consumer Confidence CPI Income
Macroeconomic Conditions:
Other Factors:
Online Retail Sales Growth
Population Growth
Birth Rates
Current US Economy
US GDP Growth Rate
Consumer Confidence
Consumer Confidence
CPI: Food & Beverage
CPI: Apparel
2009 2010 20110
50000
100000
150000
200000
250000
300000
DomesticInternationalTarget
Going Global: Competitor Sales
(in millions)
Strengths• Superior Customer Service• Positive Customer Perception• Strong Leadership Program/Training• Product Design – Low Price, Stylish• Exclusive Brands -> Brand Equity• Continuous Improvement• Strong Marketing Initiatives• One Stop Shop• Synergy Creation
Weaknesses• Geographic Concentration• Not Low Price Leader
Opportunities• Canadian Market• Global Expansion• “Going Green” Trend• Growth of Pharmacy• Vertical Integration
Threats• Severe Competition• U.S. Economy• Mature Industries
SWOT Analysis
Expand business globally Continue to establish exclusive brandsGrow/expand online marketIncrease grocery selection Vertical integration
Recommendations
Thank you!
Questions?