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Organizational Assessment-Target Corporation

Organizational Assessment-Target Corporation

Introduction of the Organization

Target Corporation is a retail company formed in 1902. The company is the second-largest in the retail industry in the United States. It has been expanding operations outside the United States to gain a competitive advantage over Walmart, which is its main competitor. Currently, the company is the largest subsidiary and source of revenue for Dayton Hudson Corporation, its parent company (Eades & Yeaton, 2009). The company has various departmental stores in Canada, Ontario, and Mississauga. One of its main subsidiaries is the Financial and Retail Service, also referred to as Target REDcard.The subsidiary issues Target debit and credit cards. Customers can use debit cards to deposit 5% of every purchase and gain pharmacy rewards (Eades & Yeaton, 2009). The second subsidiary is Target Sourcing Services, which is used to locate merchandise worldwide and import it to the United States. The third subsidiary is Target Commercial Interiors, which offers office space furniture and design services. The fourth subsidiary is Target Brands, which manages and owns the company’s private label products, such as the market pantry, archer, and Sutton & Dodge.

Leadership Analysis

Target Corporation’s success is attributed to good leadership and corporate governance. The company strongly supports solid corporate governance practices and considers good governance as its managerial philosophy. The company is led by a Board of Directors who believe that corporate governance practices should focus on balancing the interests of shareholders, the Board, and management to serve customers effectively, referred to as guests, shareholders, team members, and the community (Wilson, 2010). The Board of Directors serves as the delegates of the shareholders and is the company’s main force. The Board takes the responsibilities of planning, leading, and organizing to help the company achieve organizational goals and become successful. It consists of twelve knowledgeable, successful, and experienced members from various organizations and fields. Target Corporation’s leadership also includes five committees (Wilson, 2010). One of the committees is the audit committee in charge of accounting and reporting and auditor compliance oversight. The second committee is the compensation committee, which reviews all compensation for the company’s CEO, Board, and Executive Officers. The third committee is the nominating and governance committee, which ensures that the Corporation has a strong Board of Directors to help achieve long-term and short-term goals. The fourth committee is the corporate social responsibility committee, which presses the Corporation towards being an excellent example to society by approving policies and assessing the performance of the Corporation in its interaction with the environment. The fifth committee is the finance committee, which ensures that the financial condition and policies of the Corporation support its long-term objectives. The Corporation’s leadership also incorporates a centralized decision-making approach, which improves efficiency.

Ethical Factors

Target Corporation has maintained proper ethical conduct over the years to the extent of being labeled as the most ethical company in the world. The Corporation is committed to complying with all laws and regulations and ethically conducting business. The Corporation also upholds its values and delivers on its purpose by doing the right thing for the Corporation, customers, and team. Regardless of entity, role, or location, every team member is required to follow the Corporation’s code of ethics, the law, and the company’s policies and procedures. Team members are also required to report any actual or suspected ethical concerns and always make ethical business decisions aligning with the Corporation’s values and purpose. The ethics code provides expectations of how team members are required to behave and guide ethical decision-making. Target Corporation is also involved in various ethical programs, including making stores more accessible to people with disabilities. Target meets and exceeds the requirements of the American Disabilities Act. Target also features models with disabilities in its advertisements to create equal opportunities. Recently, the company introduced the anti-aging program in California. The store also identifies items that become symbols used by gangs and eliminates them from the catalog scheduled for sale in the region. Such products are gang-affiliated.

Strategic Analysis

Target Corporation’s strategic analysis can be interpreted by reviewing its strengths, weaknesses, opportunities, threats, and the political, economic, technological, social, environmental, and legal factors affecting the company. One of the strengths is that the company has a wide range of items for sale. The Corporation offers a one-stop shopping experience, including grocery, pharmaceutical products, accessories, designer clothes, sporting gear, electronics, and home décor. The company also offers items via its digital platforms and complementary assortment. The one-stop-shop nature of the company’s shops has played a significant role in increasing sales, particularly in March 2020 when there was a wave of panic shopping due to the spread of the Covid-19 pandemic. The second strength is effective brand positioning. The Corporation provides fashionable, trendy, high-quality products at discounted prices. The third strength is a favorable shopping experience (Eades & Yeaton, 2009). Target Corporation delivers a better experience to customers compared to competitors such as Walmart by giving an improved floor plan to enable customers to move around the shop when looking for products freely, a clean store environment, better shopping carts, and well-marked and organized aisles. The company also provides same-day delivery services, hence increasing convenience for the customers. The fourth strength is providing genuine designer clothes.

Target Corporation has partnered with various fashion designers to offer genuine designer clothes to customers. The high cost of designer clothes enables the company to generate more revenue and create a large profit margin. The fifth strength is its partnership with Starbucks, which has enabled the company to enlarge its customer base. The sixth strength is goodwill from the community due to charity work in the community. One of the company’s main values is philanthropy, which is portrayed in donations and sponsorships (Eades & Yeaton, 2009). The company has been distributing 5% of its profit since 1946 to local communities to fund children’s education, disaster preparedness, food drives, and relief efforts. The seventh strength is an efficient distribution system. The company uses 40 distribution centers to allocate most of its merchandise and collaborates with carriers to ship its general merchandise.

Another strength is its wide market presence. Target Corporation has established a strong market presence in the United States market, with stores distributed across different regions such as California, Florida, and Texas. The ninth strength is the effective management of the company’s inventory. The company uses planning, demand forecasting, seasonality, and vendor management to minimize lost sales, spoilage, and markdowns in inventory. The company also introduced inventory planning software in 2019 to maintain the highest levels of inventory without creating stockouts or interfering with the flow of backroom operations. The other strength is the application of the cartwheel app, which enables customers to order items online, check product prices, check store inventory, access coupons, find products by where they are located in the aisle, manage a credit card, check, and scan items. The company has also maintained strong financial growth due to a sustainable business model.

One of the main weaknesses is the high cost of items. Target Corporation has set high prices for its products, including charging 15% more for groceries compared to what Walmart charges. The second weakness is poor data security measures. The Corporation experienced a data breach in 2014 where almost 70 million customers’ debit/credit card information was stolen, thus affecting the company’s reputation and causing a series of class-action lawsuits (Belock et al., 2013). The third weakness is a lesser presence in the global market, hence limiting its customer base. The fourth weakness is the adoption of a store-centric approach. The store-centric approach has significantly reduced sales because the decline in sales made via brick-and-mortar undercut online sales. The company needs to consider expanding its operations online, including reaching customers outside where physical stores are located.

One of the opportunities that the company could take advantage of is its partnership with CVS Health. Target Corporation’s pharmacy and clinic business was acquired by CVS Health in December 2015 for almost $1.9 billion, thus giving the Corporation’s customers a great opportunity to access high-quality healthcare services. The second opportunity is small-format stores. The Corporation has been opening small stores and learning institutions located in highly populated areas, hence increasing the customer base. The Corporation introduced its first compressed small-format store in 2021 in highly populated college campuses and neighborhoods. The third opportunity is the RED card Rewards loyalty program, which enables the Corporation to gain insights about altering customer habits and what they prefer. The company can also use the program to access customer information for promotions and marketing. The fourth opportunity is same-day delivery. According to Rabello de Castro (2019), same-day delivery increases customer loyalty due to convenience. The Corporation introduced same-day delivery to improve order fulfillment. In 2020, it began adding drive-ups for grocery pickup in most small stores to improve same-day delivery services. The fifth opportunity is expanding private-label brands to differentiate themselves from other retailers. Target Corporation also has the opportunity to increase its market presence by expanding to new markets globally. Another opportunity is remodeling its stores to accommodate more products in a small space.

The main threat Target Corporation is facing is intense competition from local retailers. The Corporation’s main competitors are Costco, Walmart, Home Depot, and Kroger. The competitors have many stores located in different locations, hence creating competition for customers. The intense competition has forced the Corporation to adjust its sales criteria through strategies such as introducing holiday season deals earlier than its competitors. The second threat is changes in customer preferences. Online shopping is gaining popularity, and retailers such as Amazon are taking advantage of this trend, hence forcing Target Corporation to adjust to online retailing to increase sales (Mirmirani, 2011). The third threat is the failure to embrace differentiation. Target Corporation does not differentiate its products from what competitors offer, hence creating the threat of losing brand loyalty because of the shift of many shoppers towards price-sensitive and emotionless online shopping. The fourth threat is vulnerability to economic conditions. Target Corporation’s sales are highly dependent on the country’s economic environment, hence creating the threat of reduced sales in case of poor economic conditions. The fifth threat is market uncertainties in both global and local markets, which have made the Corporation downsize its remodeling plans.

Target Corporation has focused on creating a sustainable environment by sourcing its energy entirely from renewable energy sources by 2030 (Danigelis, 2019; A Bullseye View, 2021). The company intends to use renewable energy in its distribution centers, stores, and corporate offices. The Corporation has invested in wind and solar energy and constructed important renewable energy sources such as the LLC and Sand for Solar, Leeward Renewable Energy, and Lone Tree Wind Project. It has also installed LED lights across over 1500 stores, reducing energy use by more than 8%(A Bullseye View, 2021). The company has also invested in souring its products responsibly. For instance, it has maintained social compliance and gained sustainability in its supply chain to utilize resources efficiently and safely and create ethical work environments. The Corporation has additionally invested in modernizing existing operations to enhance efficiency. For instance, it invested over $6 billion in remodeling its stores and has primarily focused on building stores with a friendly shopping experience to create customer fulfillment. Most of the Corporation’s funds have been directed towards creating an infrastructure that would support more speed and a larger scale (Eades & Yeaton, 2009). It has additionally built the Corporation’s data and focused on analytical sections to target and personalize data.

The company has also invested in enhancing convenience by establishing many distribution centers to distribute merchandise to stores across the United States. The company takes great pride in establishing a corporate culture where employees prefer working and loving the work. It prefers creating high expectations for everything the Corporation engages in and proudly recognizes itself as a respected and responsible company. The Corporation also encourages teamwork among its employees to ensure that employees remain engaged in the workplace (Tuleja, 2021). It also promotes diversity, inclusion, and sharing of ideas to foster organizational growth. The company additionally puts the interests of its customers first by creating memorable shopping experiences and engaging employees with customers to create a lasting impression and a friendly environment where customers can freely make inquiries on various products and services and give honest feedback without fear of intimidation. The company also values diversity and portrays diversity by providing a wide range of products and employing workers with different backgrounds. Target Corporation has invested in various short-term investments and securities to pay long-term debt obligations. It analyzes prices to maintain a competitive advantage in the market and earn profit due to the retail industry’s competitive nature, especially in the United States. It has also established strong relations with China because the Chinese market is the leading supplier. However, the trade war between China and the United States significantly affected the company by increasing business complexity and uncertainty. However, it has managed to deal with the uncertainty through innovation and changes such as remodeling to reduce operational costs without affecting the supply of merchandise to customers across the United States.

Economic Analysis

Target Corporation has been experiencing a rise in revenue over the past three years as the client base continues to expand due to offers such as same-day delivery. The COVID-19 pandemic increased the company’s sales of essential services and products because of fast delivery. According to A Bullseye View (2020), the company’s revenue since the onset of the COVID-19 pandemic increased to $93561 million as a result of an increase in the general sale of different products and services. Initially, the company had recorded sales amounting to $78112 million. The revenue from selling household essentials and beauty products also increased to $ 24,461 million from $ 20,616 million, indicating an increase in demand for different household and beauty products during the pandemic. There was also a significant increase in the demand for beverages and food based on the fact that the revenue generated from selling beverages and food rose to $18,135 million. The increase in the demand for products offered by the Corporation is also evident in the rise in profitability. In 2020, the Corporation’s net profit increased to $5206 million.

Demand Analysis

Demand is one of the main factors that dictate a company’s success. An increase in demand indicates that a company is highly likely to be successful because it increases sales, thus increasing revenue and profitability, while a decrease in demand can be an indicator that the company or organization is headed toward failure due to reduced sales and profitability. According to Knight & McGee (2015), demand analysis revolves around the relationship between price and quantity and the different ways this relationship is portrayed. Quantity and price are the main determinants of revenue generated from sales. In contrast, sales volume dictates the volume produced, the extent of the operations considered in production, and the capital needed for production. Target Corporation has been experiencing a rise in the demand for its products and services. In the third quarter of 2021, the company indicated that there was a 12.7% increase in its comparable sales. The growth demonstrated a 29% increase in similar online sales and a 9.7% increase in similar sales in physical stores. There was also a 60% increase in same-day deliveries over three months. The company also stated that its physical stores fulfilled more than 95% of its sales during the third quarter of 2021.

Financial Factors

The onset of the current COVID-19 pandemic impacted the retail industry due to disruptions arising from lockdowns and changing purchasing behavior. There was also a rise in the preference for online shopping, mainly due to movement restrictions (Nicolaï & Grange, 2020). Most people also lost their source of income, hence prompting them to look for cheaper foods and essential services. This could have had a major impact on Target Corporation’s sales because its products are highly priced. The GDP in the United States is, however, favoring the Corporation because customers have money to purchase its products despite the price. A report prepared by Cox (2021) indicates that the GDP in the United States increased at a yearly rate of 6.6% in the second quarter of 2021, thus demonstrating economic recovery. Sales in the retail industry have also increased by 15.8% since 2020, with an increase in online sales and customer spending.

Overall Assessment and Conclusion

The discount retail industry is among the most competitive sectors, thus exposing Target to intense competition from companies such as Walmart, Safeway, and Costco. Low prices are currently the primary motive in the retail industry as retailers focus on gaining a large customer base. Target Corporation has focused on quality and reliability to create a competitive advantage by introducing unique services such as same-day delivery. The company has also managed to reduce costs, increase profitability, and gain control of the freshness and quality of its merchandise. Target Corporation is also taking advantage of technological advancements to create a competitive advantage by embracing technologies such as mobile phones, social media, and the company’s website to enable customers to view its merchandise and provide feedback on areas of improvement. The company is also gaining more control over its distribution avenues by acquiring distribution centers from third parties to limit inconsistencies in inventory and maintain control over quality. The company has also focused on generating its revenue within the United States, hence posing a competitive threat due to a limited customer base. However, there are efforts to remain competitive by remodeling smaller stores to manage the increase in the cost of real estate in urban centers and offering attractive displays to enhance customer shopping experiences. The company’s success is likely to be long-lived because it has already established a strong image and brand position in the United States and can transfer that to neighboring markets such as Canada. There is, however, a need to consider more strategies to cope with the rising competition because intense competition in the retail sector may limit the Corporation’s growth. The Corporation needs to consider international expansion to exploit potential economies of scale and meet growth targets. The Corporation should also focus on programs that enhance customer loyalty, such as coupons and discounts. Coupons can also be used to attract more customers by rewarding new customers and existing customers who refer new customers.

References

Belock, B., Fasheh, F., McKeever, A., & O’Rourke, J. S. (2013). Target Corporation: Predictive analytics and customer privacy. https://doi.org/10.4135/9781526403568

A Bullseye View. (2020). Target Corporation reports fourth-quarter and full-year 2020 earnings. Target Corporation. https://investors.target.com/news-releases/news-release-details/target-corporation-reports-fourth-quarter-and-full-year-2020

A Bullseye View. (2021). These new solar and wind projects are big strides toward the target’s renewable energy goals. Target Corporate. https://corporate.target.com/article/2021/03/renewable-projects

Cox, J. (2021). U.S. GDP rose 6.5% last quarter, well below expectations. CNBC. https://www.cnbc.com/2021/07/29/q2-gdp-rises-at-6point5percent-vs-8point4percent-estimate.html

Danigelis, A. (2019, November 15). Target Corporation goes for 100% renewable electricity by 2030. Environment + Energy Leader. https://www.environmentalleader.com/2019/06/target-corporation-renewable-2030/

Eades, K. M., & Yeaton, S. (2009). Target Corporation. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1418909

Knight, B., & McGee, J. (2015). Demand analysis in practice. Wiley Encyclopedia of Management, 1-4. https://doi.org/10.1002/9781118785317.weom120229

Mirmirani, S. (2011). Changing the landscape of the retail industry in the United States and Wal-Mart phenomenon: A brief review. Journal of Business & Economics Research (JBER), 4(12). https://doi.org/10.19030/jber.v4i12.2720

Nicolaï, M., & Grange, C. (2020). The digital transformation of retail during the COVID-19 pandemic: A comparative study in Canada, China, and France. The Impact of COVID-19 on E-Commerce. https://doi.org/10.51432/978-1-8381524-8-2_1

Rabello de Castro, V. (2019). The value of same-day delivery. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3323536

Tuleja, E. A. (2021). Target Corporation. Intercultural Communication for Global Business, 180-185. https://doi.org/10.4324/9780367423827-13

Wilson, R. E. (2010). Target Corporation: Maintaining relevance in the 21st-century gaming market. https://doi.org/10.4135/9781473995253

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Question 


The organizational assessment of Target will proceed by analyzing factors such as leadership, ethics, strategy, and economic and financial factors.

Organizational Assessment-Target Corporation

Organizational Assessment-Target Corporation

The final project should be APA style, with one-inch margins and 12-point font.
Subject: Target
sections to be covered:
Introduction of the organization
Leadership Analysis
Ethical Factors
Strategic Analysis
Economic Analysis
Demand Analysis
Financial Factors
Overall Assessment and Conclusion

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