Use Attached Project- Company is TargetWhen completing the "Internal and External Analysis" assignment earlier in the course project you were tasked with creating three strategic goals for your chos
Running head: SWOT ANALYSIS OF TARGET CORPORATION 0
SWOT Analysis of Target Corporation
According to Sarsby (2016), a SWOT analysis is a simple yet very powerful tool that helps managers of an entity develop its business strategy. It helps managers to prioritize what a business needs to do to ensure it succeeds. This paper presents a SWOT analysis of Target Corporation. Target Corporation, commonly referred to as “Target” is an American-based retail stores chain. Target is the second biggest retailer in the U.S. after Walmart; it offers household goods, apparel, food supplies, home furnishings, and accessories among others (Rowley, 2003).
Strengths
Strong brand
Target is among the oldest discount retailers in the U.S. It has an extensive footprint of stores all over the country and has significant brand recognition. Target has created a unique image in the otherwise competitive industry; its image of “cheap, yet stylish” has helped the company differentiate itself from other retailers such as Walmart and Kroger.
Outstanding loyalty programs
The company’s marketing programs also give it unique strengths; for example, the REDCard loyalty program, which gives regular customers a 5% discounts on their purchases has enhanced the company’s market penetration. The initiative has already reached a penetration of over 21 %. This program and others such as the Cartwheel win customer loyalty, which in turn provides business security.
Differentiation through unique merchandise
Target focuses on differentiating itself from other retailers such as Walmart by offering affordable yet stylish products. To ensure its products are more stylish than those of competing retailers are, Target partners with various dealers and designers to offer differentiating merchandise assortments. In addition, the company performs excellent outbound logistics, marketing, and sales promotion that help the company create a more upscale and chic image compared to other low-cost retailers.
Excellent vendor relationships
Target has strong bonds with its vendors and suppliers. Due to its strong presence in the American market, the company enjoys economies of scale, which enable it to request products in bulk. Due to its strong relationships with suppliers and vendors, the company is assured of timely deliveries and a streamlined distribution process.
Weaknesses
Underutilization of Target.com platform
Target offers customers an online platform where they can do item searches and even order online. Customers can find more options on this platform than even on physical stores. However, the online platform is significantly underutilized. The company needs to improve awareness of this medium.
Geographic locations
Target operates only in the U.S.A. It also does not have a presence in Vermont, Alaska, and Hawaii. This means the company does not take advantage of the opportunities available in the international market.
Over-reliance on foreign suppliers
Target sources most of its products from foreign nations. This results in business risks because changes in economic or political conditions in a country that is a key source of its merchandise can significantly impact its supplies and thus its revenues.
Electronic data breaches
Target has a high risk of being exposed by data breaches. Data breaches cost companies a lot of money to resolve and manage. In addition, they harm a company’s brand image.
Opportunities
International expansion
Target should consider expanding its operations to international markets. Although its maiden expansion into Canada failed massively, it should not deter the company from expanding to countries such as China and Japan. Doing so would decrease its exposure to business risks whenever the U.S. economy slows down.
Strong online presence
Target recognizes the increasing trend of consumers to prefer e-Commerce to the traditional “brick-and-mortar” retail stores. Online sales are increasing all over the world. The company has sufficient resources and is well equipped to exploit this growth.
Brand exclusives
The company should collaborate with more designers especially in signature products to enhance its revenue growth. Brand exclusives in categories such as apparel, health and wellness, and toys are among the reasons why sales of the company are increasing.
Private-label brands
The U.S. and Europe are witnessing an increasing demand for private label merchandise. Target, which offers a range of private labels, stands to benefit from this trend. Private-label brands provide a retailer with a touch of uniqueness as well as enhance its margins. Other competitors such as Walmart, Costco Wholesale, and Kroger have realized this and are currently investing significantly in their store brands.
Flexible format stores
The launch of smaller store formats that sell curated merchandise varieties in urban settings is a capital-efficient and cost-effective way of reaching new customers in new markets. Target should expand its flexible format stores to reach more customers.
Threats
Competition
The discount retail industry is very competitive. Competition from other brick and mortar retail stores such as Walmart, Kroger, and Costco Wholesale is stiff; in addition, online-based retailers such as Wayfair, Jet-com, and Amazon are putting more pressure in the industry.
The U.S.A. economy
Because Target is only based in the U.S.A., a slowdown of the U.S. economy could greatly affect the performance of the company.
E-Commerce
Although the company has ventured into e-commerce to grow its online sales, its main brick and mortar stores are in serious threat as more customers ditch physical stores in favor of online-based stores.
Rising labor costs
As wages rise in the U.S., labor costs too rise. Due to this, companies like Target that employ many workers in their stores are forced to spend more on salaries which affect their finances and profitability negatively.
Strategic Goals
Global expansion
Target should focus on expanding its presence in the global market. Unlike its large-scale entry into Canada that proved disastrous, the company should use smaller stores that resemble TargetExpress and CityTarget locations. Such small but densely stocked stores would particularly be successful in rising economies such as India and China which are densely populated.
Refurbish the e-Commerce strategy
Due to the potential of e-Commerce, Target should focus on revamping its strategy. The company needs more than just a website; it should launch warehouses across the globe to ensure items ordered are shipped from local stores. Currently, all items ordered online are shipped from its distribution centers in the U.S.A, which results in import duties and high shipping costs.
Reimagine the Company’s Owned Brand Portfolio
Following the success the company has had with the current portfolio of exclusive brands, it should accelerate the introduction of more exclusive brands. It should also enter into more designer collaborations.
References
Rowley, L. (2003). On target: How the world's hottest retailer hit a bull's-eye. John Wiley & Sons.
Sarsby, A. (2016). SWOT analysis. Lulu. com.