Ricardo Medina
Strategic Management
March 9, 2021
DISCOVERY & LEARNING FORMAT
1.1 Introduction: Provide a description of the company, the type of business it is in, the nature of its products and services, its history, stock
ticker, etc.
SECTION 1.1
Ricardo Medina
Actions Taken
INTRODUCTION
o Researched
company and
industry
description,
history, key
executives, and
Stock Ticker
Results
Reflection/ Lessons Learned
and/or Barriers to Achieve
Improvement
o Description
a) Target Corporation operates general merchandise discount
stores. The Company focuses on merchandising operations
which includes general merchandise and food discount
stores and a fully integrated online business. Target also
offers credit to qualified applicants through its branded
proprietary credit cards.
b) Operates through the following segments:
i) Beauty and Household Essentials – “Offers beauty and
personal care, baby gear, cleaning, paper products,
and pet supplies” (Bloomberg Terminal)
ii) Home furnishings and décor – Sells furniture, lighting,
storage, kitchenware, small appliances, home décor,
bed and bath, home improvement, school/office
supplies, greeting cards and party supplies, and other
seasonal merchandise. (Bloomberg Terminal)
iii) Food and Beverage – dry grocery, dairy, frozen food,
beverages, candy, snacks, deli, bakery, meat, produce,
and food service. (Bloomberg Terminal)
iv) Hardlines – Sells electronics, toys, entertainment,
sporting goods, and luggage. (Bloomberg Terminal)
v) Apparel & Accessories - Sells apparel for women, men,
boys, girls, toddlers, infants and newborns, as well as
jewelry, accessories, and shoes. (Bloomberg Terminal)
o History
a) Target – In 1881 New Yorker George D. Dayton opened the
Dayton Dry Goods Company in Minneapolis. It expanded
through the decades becoming known as Dayton
Department Stores. In 1962 the company formed a discount
chain named Target with a classic bullseye logo.
b) In 1962 Daytons’ opened its first discount store in Roseville
c) Dayton’s went public in 1966, and three years laters it
merged with the family owned Hudsons’s forming Dayton
Hudson.
i) Dayton Hudson purchased more malls and invested in
o I learned that the segments in
which Target operates are very
diverse and offer a wide array of
products for its consumers.
o Additionally, I did not know that
Target was founded under
another name.
o I also noticed how a lot of the
growth that Target has made has
been through acquisitions.
a) From the beginning Target
focused on acquiring
smaller retail stores.
b) This also helped grow their
location count since they
started from nothing.
such specialty areas as consumer electronics and hard
goods. Target had 24 stores by 1970.
d) 1970s
i) Dayton Hudson bought California-based Mervyn’s
ii) Sold nine regional malls and several other businesses
e) 1980s
i) Purchased Indianapolis-based Ayr-Way and Southern
California based Fedmart stores.
ii) Dayton Hudson took Target to Los Angeles and the
Northwest.
f) 1990s
i) Dayton Hudson opened the first Target Greatland store
ii) By 1990 it had 420 stores nationally.
iii) Bought the Marshall Field’s chain of 24 department
stores
iv) By 1950 SuperTarget was introduced
g) 2000s
i) 2000 - Dayton Hudson renamed to Target Corporation
ii) 2001 - Was the nations #2 discounter and topped the
Forbes list of America’s Most Philanthropic Companies
iii) 2002 - Opened 94 Target stores
iv) 2006 - Extended partnership with Amazon Enterprise
Solutions to provide e-commerce.
h) 2010s
i) 2014 - Suffered a major data breach compromising the
credit cards of millions.
o Key Executives
a) Brian C Cornell – CEO
b) John J Mulligan – COO & Executive Vice President
c) Michael J Fiddekle – CFO & Executive Vice President
d) Richard H Gomez – Chief Food & Beverage & Executive
Vice President
e) Christina Hennington – Chief Growth Officer & Executive
Vice President
f) Stock Ticker - TGT
DISCOVERY & LEARNING FORMAT
1.2 Industry Profile
Describe the industry in which the company operates. Who are the major competitors? What are the market shares of the major players? What trends exist within
the industry? How competitive is the industry? What major issues or events influence the industry?
SECTION 1.2
YOUR NAME
INTRODUCTION
Actions Taken
Results
Reflection/ Lessons Learned
and/or Barriers to Achieve
Improvement
o Researched
industry,
competitors,
market shares,
trends,
competitiveness,
and issues.
o Reflected on
information
researched
o Industry – Retail – General Merchandise Stores
o Major competitors –
a) Walmart – Second largest department retail store chain
b) BJ’S Wholesale Club – Warehouse club that provides home
equipment and grocery products
c) Canadian Tire Corp – Business that includes retail and
financial services division
d) Dollar General – Chain of discount retail stores
o Market Shares –
a) Target – 38%
b) Walmart – 13%
c) BJ’S Wholesale Club– 8%
d) Canadian Tire Corp – 6%
e) Dollar General – 9%
f) Other – 26%
o Trends
a) The retail industry is shifting to a selling online is nonnegotiable stance.
b) Omnichannel tools are creating more meaningful shopping
experiences-but education is key.
c) Automated technology is helping retailers get a handle on
the labor shortage.
d) With supply chain issues continuing, same-day delivery is
giving retailers a clear advantage.
e) Social commerce is one of the biggest digital trends in the
retail industry.
f) Interactive retail experiences are bridging the gap between
the online and offline parts of a store
g) Mixed use concepts like businesses selling products that do
not fall in line with their core line of business are occurring.
o I found it interesting how Target
has the largest market share of
the department store chains,
surpassing Walmart.
o I was not surprised by the
competitiveness within this
industry, but I was intrigued by
the ways that retail stores are
making efforts to diversify and
make themselves more
competitive.
o It will be interesting to see the
ways these retails stores will
adapt to the growing nature of ecommerce.
o
Industry Competitiveness
a) This industry is incredibly competitive, the number of
alternative providers is high therefore companies must go
above and beyond to capture market share.
Growth – The retail industry has grown by a margin of
7.2% which is a 12.3% increase from the year prior.
ii) Profitability – According to Vend’s Benchmark reports,
the average gross profit margin for the retail industry
worldwide is roughly 53.33%.
Major issues
a) There is an array of issues arising for the retail industry as
e-commerce has influenced the way consumers interact
with sellers. Customers are no longer forced to shop at
solely physical stores but can instead shop from hundreds
of stores online.
i) Customers are Choosing Multichannel Buying
Experiences
(1) Over 96% of Americans utilize online shopping
(2) Constantly shifting from online and offline
experiences and open to retailers who can facilitate
their transitions the best.
ii) Customers Expect a Seamless Experience
(1) If consumers are a regular customer, they want to
be treated as such.
iii) To Attract Customer Loyalty, Retailers Need an
Experience Which Stands Out
(1) Promotions are a huge factor in attracting
customers as well as personalized content.
iv) A Siloed Marketing Infrastructure Makes it Expensive
and Unwieldy to get Your Message Across
(1) So many formats to gather customer data do not
always have the same interface and can be difficult
to gather across different platforms
i)
o
DISCOVERY & LEARNING FORMAT
2.1 Mission and Values
Provide the company mission statement and any statement of values or principles it offers.
SECTION 2.1
YOUR NAME
INTRODUCTION
Actions Taken
o Research the
Target Mission
Statement
o Identify the
Purpose
Results
Reflection/ Lessons Learned
and/or Barriers to Achieve
Improvement
o We fulfill the needs and fuel the potential of our guests. That
means making Target your preferred shopping destination in all
channels by delivering outstanding value, continuous innovation
and exceptional experiences-consistently fulfilling our Expect
More. Pay Less.
o Purpose – To help all families discover the joy of everyday life.
o I think that Target’s mission
statement is a guide for the way
that they have progressed
throughout their history.
o They began as a small
department store and innovated
their way to be one of the largest
department store chains in the
U.S.
o Since then, they have become
the leader in market share of all
department stores.
o Knowing that Target’s purpose is
to make shopping as joyful and
easy as possible is a testament
to their operations and how
seamless it is to navigate their
stores.
2.2 Management
Present the president/CEO and key vice presidents. Describe any recent changes in managerial leadership.
SECTION 2.2
YOUR NAME
INTRODUCTION
Actions Taken
Results
Reflection/ Lessons Learned
and/or Barriers to Achieve
Improvement
o Researched the
Key Executives
o Identified
Changes in
Leadership
o Key Executives
a) Brian C Cornell –Chief Executive Officer & Director
i) Cornell is a graduate of the University of California, Los
Angeles and attended the UCLA Anderson School of
Management.
ii) Previous to his role as CEO of Target, Cornell serves
as the Chief Marketing Officer and Executive VP of
Safeway Inc.
iii) He also served as the CEO for Michaels, Sam’s Club,
PepsiCo. As well as holding a board position for
OfficeMax, Home Depot, Centerplate, and Polaris.
iv) Cornell succeeds Gregg Steinhafel, who worked as
CEO and chairman for 35 years.
b) John J Mulligan – Chief Operating Officer & Executive Vice
President
i) Mulligan is a graduate from the University of Wisconsin
and earned a Master of Business Administration from
the University of Minnesota
ii) He is responsible for stores, Target’s global supply
chain, merchandising operations, properties and flight
services.
iii) Mulligan joined Target in 1996, in 2012 he was
promoted to CFO and was the interim CEO in 2014.
c) Michael J Fiddekle – Chief Financial Officer & Executive
Vice President
i) Fiddekle has an M.B.A from Northwestern University’s
Kellogg School of Management
ii) He also has a Bachelor’s of Science in Industrial
Engineering from the University of Iowa
iii) Fiddekle is responsible oversees Target’s Financial and
Retail Services
d) Richard H Gomez – Chief Food & Beverage Officer &
Executive Vice President
i) Gomez received a B.A from Dartmouth College
ii) Prior to Target he served as VP of marketing at
MillerCoors and had leadership roles at PepsiCo
iii) He oversees Target’s marketing and media strategy
o While researching the key
executives, I found interesting
how Kellogg’s has their own
School of Management
o Most of the key executives had
extensive experience in the retail
industry and came from some of
the most prestigious learning
institutions in the world.
e) Christina Hennington – Chief Growth Officer and Executive
Vice President
i) Hennington received her bachelor’s degree from
Cornell University and her M.B.A from the Kellogg
School of Management at Northwestern University
ii) She has been praised for her leadership and has been
named Merchandiser of the Year
Brian Cornell
Richard Gomez
John J Mulligan
Michael J Fiddelke
Christina Hennington
DISCOVERY & LEARNING FORMAT
2.3 Financial Profile
Provide an analysis and summary of the company’s financial performance over the past several years. In this summary highlight changes in sales, profits, assets,
debts, equity, and stock price.
SECTION 2.3
YOUR NAME
INTRODUCTION
Actions Taken
o Used Bloomberg
Terminal to
identify Target
financial
performance
from 2018 2021
Results
All numbers in millions, Year ending in December
o Sales
a) 2018 – $71,786,000
b) 2019 - $74,433,000
c) 2020 - $77,130,000
d) 2021 - $92,400,000
i) TTM - $104,611,000
o Gross Margin
a) 2018 – 29.69
b) 2019 – 29.27
c) 2020 – 29.76
d) 2021 – 29.27
o ROE
a) 2018 – 25.78
b) 2019 – 25.60
c) 2020 – 28.37
d) 2021 – 33.25
o ROA
a) 2018 – 7.50
b) 2019 – 7.20
c) 2020 – 7.81
d) 2021 – 9.29
o Debt TOT Assets
a) 2018 – 33.42
b) 2019 – 32.56
c) 2020 – 32.67
d) 2021 – 29.48
o Stock Price Range
a) 2019
i) Year Open - $72.45
ii) Year High – $90.39
iii) Year Low – $60.15
iv) Year Close – $71.17
v) Annual Change - - 1.76%
Reflection/ Lessons
Learned and/or
Barriers to Achieve
Improvement
o After reviewing the
financial data, I was
pleased to see that over
the last four years there
was a positive increase in
Sales, Gross Margin,
ROE, ROA, Debt TOT
Assets
a) Looking at the
increase in Gross
Margin we can see
that Target
increased their
overall capital
retention
throughout the
years.
o Further, I was surprised
to see the large
increase in their ROE,
signifying an increase
in profit generation
without much capital.
o Stock Price
a) Finally, in terms of
stock price I was
disappointed with
the overall from
2019 – 2020 there
has been an
overall increase in
the stock price with
customers
b) 2020
i) Year Open – $71.21
ii) Year High – $130.24
iii) Year Low – $69.07
iv) Year Close – $110.74
v) Annual Change – 55.5%
c) 2021
i) Year Open – $111.14
ii) Year High – $199.96
iii) Year Low – $90.17
iv) Year Close – $181.17
v) Annual Change – 63.01%
d) Current Price (03/10/2022)
i) Open – $213.60
ii) High – $215.48
iii) Low – $210.08
iv) Close – $214.78
v) Day Change – 0.55%
continuing to shop
through the
pandemic.
b) In regards for
2022, I feel
confident Target
will continue to
tread above $200.
i) So far there
has been a
significant
annual change
of +17.89%
o
Graph illustrated Target stock price from 2018 – present.
DISCOVERY & LEARNING FORMAT
3.1 External Environment
Identify and explain the primary issues in the external environment that are influencing the company.
SECTION 3.1
YOUR NAME
INTRODUCTION
Actions Taken
Results
Reflection/ Lessons Learned
and/or Barriers to Achieve
Improvement
o Researched and
identify the
primary issues
that are
influencing the
direction that
Target is taking.
o Target believes the future of e-commerce is its stores
a) Brian Cornell focused on making stores the cornerstone of
its digital sales, using them as the fulfillment centers for
shipping items.
i) Following this decision, Target’s sales increased by
more than $15 billion. Which was larger than their last
11 years of growth combined. (a growth of 155%)
ii) In comparison
o When beginning research on this
section I was not sure what to
expect, I assumed most of the
external factors influencing
Target would be Covid. Instead,
the company was thriving
through the pandemic and
adapting where needed.
o Target does seem to understand
that when caring for a consumer
you care for every part of them,
not only what you see.
o As a retail store Target does a
phenomenal job in making the
consumer experience as
pleasant as possible.
o I think their focus on having
smaller stores and having
different delivery methods for
their customers has separated
them the most from their larger
competitors.
o Since the pandemic, Target and other retail stores were crucial
for cleaning and groceries.
a) Target having nearly 1,900 stores put the retailer within 10
miles of consumers and allowed them to compete with
Amazon.
o Curbside pick-up orders have increased by over 600%
a) The retailer has also seen a 300% increase in orders via
Shipt (a same day delivery service acquired in 2017)
b) As a result, in Q1 of 2021 its stores fulfilled 95% of its sales,
including in store purchases.
o Target focuses on a business strategy of smaller stores
a) The retailer also outperforms Walmart in both gross profit
margin and net profit margin making them more profitable
o
Reports from Seeking Alpha state that Target also has a faster
growing e-commerce business than both Walmart and Costco.
a) Their ability to outperform their larger competitors can be
simplified to these categories.
i) Being selective with its sellers – product listings are not
live until they have been thoroughly vetted
ii) Offering Multiple Ways to Shop – shoppers can select
products and have them delivered in three ways; pick
up, drive up, shipt.
o
Target is making an attempt in investing in Black Owned Media
including a partnership with REVOLT
a) The retailer plans to invest at least 5% of their annual
media budget with Black-owned media starting in 2022.
i) This is all part of their Racial Equity, Action and Change
(REACH) commitments.
ii) This project is in collaboration with REVOLT to support
Black entrepreneurs.
iii) The series is called Bet on Black, which will highlight 12
Black owned startups which are underrepresented in
venture funding.
iv) An array of celebrities and Target executives will serve
as judges to the young entrepreneurs.
v) All in, Target is providing $500,000 in funding for the
startups without any equity stakes taking place.
vi) Four finalists will then have the opportunity for one-onone meetings with a Target executive to provide
additional mentorship as they grow.
b) This partnership is one example to REACH’s commitments
to create an environment where Black guests feel more
welcomed and represented at Target.
Judge Melanie Gatewood, host Keenan Beasley, judge Zerina
Akers, and judge T-Pain
DISCOVERY & LEARNING FORMAT
3.2 Internal Environment
Identify and explain the apparent strengths and weakness of the company’s internal functional operations.
SECTION 3.2
YOUR NAME
INTRODUCTION
Actions Taken
Results
o Researched
Targets
strengths and
weaknesses
o Reflected on the
implications of
Target’s
strengths and
weaknesses
o Strengths
a) Target’s is a well-established and recognized brand
i)
Their brand has helped them to become a name
trusted and respected by customers. The retail
company has earned an international brand name.
(1) Through its corporate culture, Target has been able
to enhance their image and establish a strong and
loyal customer base.
(2) Target’s high quality and innovative products attract
customers, giving them the upper hand over its
customers.
(3) Partnering with designer apparels offers a wide
selection of clothing to customers, accounting for
20% ($15billion) of their total revenue.
(4) Partnership with Starbucks is highly effective for
increased sales as Starbucks drives traffic in store.
ii) How:
(1) Focus on giving back
(a) Philanthropy is a core value of Target
Corporation, which is evident from its
programs.
(b) This can be seen in their program sponsorships
and donations.
(i) Since 1946, the Target Foundation has
been distributing 5% of its profit ($4 million
each week) to the local communities
toward kids’ education, food drives,
disaster preparedness and relief efforts.
(2) Efficient System of Distribution, which utilizes its 40
distribution centers and collaborates with common
carriers for shipment of merchandise.
(a) Target has a strong market presence in the US,
with a total of 1844 stores in 49 states, most of
the stores being in California (49), Texas (150),
and Florida (123).
Reflection/ Lessons Learned
and/or Barriers to Achieve
Improvement
o It was interesting to see how
much Target gives back to their
community
a) It makes shopping at
Target much easier
knowing that some of my
purchase goes towards
assisting those in need.
b) Further, their commitment
to corporate citizenship is
at the center of their
business and guide daily
business decisions.
o Their mission statement guides
them in providing quality care to
their consumer.
(3) Effective Inventory Management
(a) Various forms of replenishment and inventory
management techniques (demand forecasting,
planning, vendor management, seasonality) are
adopted to minimize spoilage.
b) Digital Services App
i) Target has created Cartwheel to order online, check
store inventory, check prices, and find items by aisle
location.
c) Effective Adoption of E-Commerce
i) Target leverage e-commerce very effectively to fulfill
the needs of its customers resulting in a 195% increase
in digital sales in Q2 of 2020.
d) Robust Omnichannel Model
i) Target’s years of investment in supply chains and
inventory visibility in online and in-store channels have
delivered one of the best omnichannel models in the
retail sector.
ii) Allowed Target to pivot from the in-store model to
curbside pickup, ship from store, and other online/in
store sales methods.
o Weaknesses
a) Expensive
i) According to a study by business insider, Target
charges 15% more for groceries than Walmart.
b) Customer Data Security
i) In 2014, Target faced one of the worst data breach
incidents, 70 million customers’ credit/debit card
information was stolen. Negatively impacting their
reputation.
c) Little presence in the International Market
(1) Target has failed to expand into the international
market. From 2011-2015, Target had opened 133
stores in Canada, the expansion had failed and
soon they closed all their stores in Canada.
d) Store-Centric Approach
i) An increase in e-commerce has led to a decline in
brick-and-mortar is undercutting gains online.
(1) Target’s sales of apparel and accessories have
also declined, a decline in low margin products has
a bigger impact on profits.
e) Reliance on international vendors
(a) Changes in relationships with vendors,
changes in tax or trade policy, interruptions in
our operations can affect our operation
DISCOVERY & LEARNING FORMAT
4.1 and 4.2 Strategic Issues and Operational Questions
Identify some key strategic issues the company faces.
Identify key questions the company must answer and discuss some specific decisions (both strategic and operational) which must be made. Note: you
may combine this report with the previous report into a single page.
SECTION 4.1
YOUR NAME
INTRODUCTION
Actions Taken
Results
Reflection/ Lessons Learned
and/or Barriers to Achieve
Improvement
o Identified
strategic issues
within Target
o Identify questions
that Target must
answer.
o Issues:
a) With over 1,926 stores in the U.S and none internationally,
underrepresentation overseas is an understatement.
o Question: Should Target focus on spreading internationally or
domestic?
a) If Target ever wishes to compete more directly with
Walmart, the next move they will have to make is
establishing stores internationally. Allowing them to stay in
closer competition with Walmart.
i) To have any success in foreign markets, Target must
learn from their failure in Canada and do the proper
consumer research of that country to make it
successful.
ii) One of the mistakes Target made was relying on their
success in the U.S to translate in Canada. Opening 124
stores and having a different layout and business
strategy to their competitors ultimately drove them out
of the country.
iii) Target instead should focus on making a periodical
approach and open stores in increments of 5 per
region. Allowing them to test different layouts and rule
what suits the consumer needs best.
b) Additionally, Target could just stick to what it does best,
operating in the United States.
i) Target currently is more profitable than Walmart, by
attempting to dive into the foreign market could result in
detrimental losses that can impact their U.S base
stores.
(1) The issue with expanding is an assortment of
issues ranging from finding the correct
management teams overseas, supply chain issues,
copyright infringement issues etc.
o I think getting into the foreign
market could help Target expand
and grow as a company.
a) Ultimately Target can look
at what foreign markets
their competitors succeed
in and what approach they
took and try imitating that.
o By not being too ambitious and
attempting to reach domestic
based numbers in foreign
markets will lead them to their
same fate in Canada.
o The risk of opening foreign
stores and them potentially
failing can lead to Target losing
up to $2.1 billion in revenue if it
were to fail.
Sources:
https://bba.bloomberg.net/
https://corporate.target.com/article/2021/12/black-media-commitment
https://www.cbc.ca/news/business/target-store-closures-what-will-happen-to-17-600-employees1.2913118#:~:text=While%20the%2017%2C600%20employees%20affected,including%20wages%20and%20benefits%20coverage.
https://www.forbes.com/sites/forbestechcouncil/2022/02/03/what-target-is-doing-right-in-the-pandemic-era-e-commercerace/?sh=1e27f99613e9
https://www.oberlo.com/statistics/retail-industry-growth-rate
https://www.sec.gov/Archives/edgar/data/27419/000002741921000010/tgt-20210130.htm#i5d6e11e9e8174675a063efd3d071738e_16
https://www.winsightgrocerybusiness.com/retailers/surviving-general-merchandises-competitive-landscape