Write a 2- to 3-page memo to the CEO of the company you’ve been assessing throughout the course - Target Corporation, outlining your plan to create economic, social, and environmental value. In your m

High 

Medium 

Low 

Example

x

This is why I believe it is medium.

Threat of new entrants 

New entrant threats to Target are low due Target’s economies of scale (O’Connell, 2018). Target’s sales, and bottom line, is their greatest economic strength due to their low cost, volume of products, and customer base. Target’s customers’ preferences for the brand, and their products, are well established. Target has also strategically established stores in communities and locations where it would be difficult for competitors to come in and establish a stronghold. The last major hurdle for new entrants would be legal and governmental regulations that stand in the way such as licensing requirements.

Power of buyers 

Buyers have the most power and influence due to the availability of competitors in the U.S Market. Walmart and Amazon both compete for Target’s customer base and help drive the pricing wars between the three retailers. Customers can switch seamlessly between retailers based on pricing of items they deem necessary. The added influence of apps and online shopping has further driven the bargaining power of buyers in the retail market (Bronnenberg & Ellickson, 2015).

Power of suppliers 

Suppliers are very dependent on large retail stores such as Target for much of their business and growth. Contracts and agreements are very lucrative. Target uses several different suppliers which makes them independent of suppliers’ attempts to press an advantage. Target holds the power to go out and negotiate and re-negotiate costs, delivery schedules, and merchandising on a continual basis. The retail giant prides themselves on their standards of merchandise and expect the same values and quality from each company they partner with to bring items into their stores (A Bullseye View, 2023).

Power of substitutes 

Target is in the business of meeting customers’ needs, and if they fail to do so customers will find other means of meeting such needs through other retailers or online merchandisers. Target competes with Costco, Home Depot, Walmart, and Amazon for sales and customers. Target has done well with competitively priced items, following trends that other retailers such as Walmart haven’t been willing to keep up with, and continuing their emphasis on customers’ experience while in store. By continually understanding the needs of their customers, Target can reduce the risk of customers moving on to their competitors for better pricing or merchandise.

Rivalry among competitors 

Rivalry in the retail sector will always be high. Each big box store is competing for a limited pool of customers. By remaining customer driven, keeping prices low, continuing their commitment to sustainable practices, serving the communities they’re in, and dedication to social responsibility through corporate culture and open support of allies with important causes.

Complementors 

Target’s partnerships with Ulta Cosmetics, Starbucks, and seasonal fashion designers makes this an important force for them. Target has strategically brought these companies and their products and services into their stores to benefit their customers and increase profitability for all involved. It allows for a “one stop shop” and a stronghold on the experience and accessibility for customers. These partnerships have set Target apart from Amazon and Walmart, who have not implemented the same strategies and convenience (Wikipedia, 2023, Complementary products and services).

References:

O'Connell, B. (2018, November 6). Economies of Scale: Definitions, Types and Examples. The Street. https://www.thestreet.com/personal-finance/economies-of-scale-14769645

Bronnenberg, B. J., & Ellickson, P. B. (2015). Adolescence and the path to maturity in global retail. Journal of Economic Perspectives, 29(4), 113-134.

A Bullseye View (2023). Suppliers. Target Brands, Inc. https://corporate.target.com/about/products-services/suppliers

Wikipedia (2023). Porters five forces analysis. Wikipedia. https://en.wikipedia.org/wiki/Porter%27s_five_forces_analysis