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Strategic planning is a vital component of any organization’s yearbook business plan. A strategic plan involves amount of components. Besides analyzing the strengths and weaknesses of a company’s, a strategic plan also comprises implementation and controlling techniques. This may sometimes seem easy enough, but in real sense applying a strategic plan into an organization can be puzzling.
Target corporation being an environmentally friendly company, superiorities itself on the charitable contributions it has so far achieved. This is one of Target Corporation’s many strong characteristics. Their strengths include innovative techniques, branding, and design. With strengths, there come weaknesses for companies. Target’s weaknesses include the lack of geographic locations and numerous litigation cases. Competitor competition, together with aimproving economy, poses as threats to the industry of retailing. The vast opportunities Target Corporation has like the expansion into the international market, private label steady growth and wideningits target demographic so as to escalateits market share.
Target Corporation opened their first store in the year 1962 by Dayton Dry Goods Company situated in Minnesota. Target is one of the few franchises to have been established for such a long period. In the year 2002, Target Corporationwas ranked the second biggest retailer in United States (Target, 2013). Target could do this by adapting to the changing environment and meeting customers’ needs and wants. Target Corporation being second from Walmart in terms of revenue, their customer base is appealed to the fashionable and most affordable range of merchandise (Hays, 2002, pg. 2). From Target’s inception, the strategy was to position Target to be an upscale discount franchise with considerable low prices. Target Corporation’s value and mission statements statesthat ‘make Target your preferred shopping destination in all channels by delivering outstanding value, continuous innovation and exceptional guest experiences by consistently fulfilling our Expect More. Pay Less. Brand promise.(Target, 2014). The vision statement also states that Target Corporation wants to provide a fast, fun, and friendly experience for their guests (Target, 2014).
The most common method used to analyze a company’s external environment is to use a PEST analysis. The PEST analysis splits the environment into four maincategories which are: political, sociological, economic and technological (PEST Analysis, 2010). Politics can have a negative or positive effect on the Target Corporation. Regulations in the retail industry can lead to a negative impact because the regulations could be changed to affect the established limit and adversely affect the business. In return, Target Corporation would have higher expense costs because of the changes. Economics are the most important factor for the Target Corporation. There are many factors that could affect the company in many ways. A major issue facing the world today is the price of fuel. Because of the fluctuating price of fuel, Target must find ways to reduce delivery costs and become a company more involved in the natural environment. Another factor that would affect Target’s external environment is the economic growth of the United States. Depending on how rapid or slow growth could have a negative or positive effect. The faster the economic growth, the more figures stay in the black. The slower the economic growth, the more figures stay in the red. Sociologically, using cheap labor from the Hispanic population and other immigrants will affect American workers because these workers are willing to accept any amount of money. Because of this, Target would rather employ these individuals than Americans. Technologically, the use of new software and technology will produce faster production and marketing. This is helpful because the job of the employee is easier and error free.
Target Corporation has numerous strengths that makes it afloat in the industry. Target’s products include chic and fashionable wear at low and discount prices. The company has established relationships with designers that are well recognized in the fashion industry, Designers like Isaac Mizrahi and Michael Graves has helped the company in advertisements and also aided in other partnerships. Target also has a well-established reputation with its well-known logo. Target Corporation’s logo is one of the most peculiar component in the industry worldwide. Target also has stores in almost every state in the contiguous United States. This helps with acquiring knowledge to expand globally.
Along with strengths, Target also has some weaknesses to the company. Most Target locations are in urban areas. This causes an issue for those customers who live in rural areas. Because of the rising costs of fuel, customers will choose to shop with organizations closer to their residence. The sizes of stores are lowered compared to the competitors. If Target would increase the area of stores and add more food and retail centers, Target’s bottom line would increase. The image of the company also needs to be changed. Target Corporation suppliesmost of housewares items, and this has been a hindrance to the market in other places of the retail industry.
Target is in the second largest retailer in the nation. This company has the potential to become the largest retailer in the nation if the organization would change some of the focus of the company. One of those changes would be becoming more involved in the retail/food industry. Wal-Mart, Target’s biggest competitor, has multiple locations of Super Wal-Mart’s that include general merchandise and food. This helps for those in areas that do not have access to fresh food or do not want to pay the high prices a general grocery store has. Wal-Mart also utilizes their own gas stations with discounts for using gift cards or Wal-Mart cards. Considering Target has the highest selling gift card ratio, Target could implement the idea of using gas stations as well. Retail is also a free trade zone. If the government were to enter into a free trade agreement with another country, this could result in an expansion in the global markets for Target.
Successful companies choose one of the three value disciplines to focus on: operational excellence, product leadership, and customer intimacy (Horwath, 2006). Operational excellence is used to create the best cost for customers through competitive pricing and delivering this method in an efficient manner (Horwath, 2006). Customer intimacy is using a strategy to accommodate customer requests to ensure individual satisfaction. Product leadership creates a continual line of new and innovative products and services (Pearce & Robinson, 2011).
Target’s strategy includes providing the best value for customers to create customer loyalty and product differentiation. According to the HBS Working Knowledge, 2004 “In the retailing, the brand is the full experience combined with the value for money. Great advertising gets shoppers into the store once if the experience and value for money doesn’t meet their expectations” Target’s strategy is gravitating toward leading the industry in price and merchandising by following a trend to focus on efficient and lean operations (Pearce & Robinson, 2011). The best value discipline for Target is the operational excellence because of the steps Target is making toward reducing overhead and transaction costs, eliminating intermediate production steps, and optimizing business processes across functional and organizational boundaries (Pearce & Robinson, 2011). Operational excellence is the driving force for Target’s revenue up and cutting costs in half.
Generic strategy is the implementation of a long-term goal based on a core idea of how the company can compete in the industry. There exists threeuniversal strategies which are: striving for the lowcost leadership in the industry, striving to produce and market the unique products for diverse customer cluster through diversity, and striving to have superior appeal to one or more domain groups of consumer, focusing on their cost or diversityapprehensions (Pearce & Robinson, 2011). To understand better the need of the generic strategy, Target will use four strategies to encourage growth. First, Target has announced a revamp of the growth strategies currently used to increase store counts and acquisitions. Second, Target will create new products and services with improved technology. With a successful marketing campaign, this will help Target to shine over competitors. Third, Target acknowledges the need for marketing a differentiation of products and trademarking. The icon most symbolic for Target is the red and white bulls’ eye logos with the tagline “expect more, pay less.” Using this logo has provided Target with the distinction of developing the logo most recognized by those in the United States. When customers know your logo and the types of products and costs sold, the revenue will tend to rise. The fourth strategy for Target is expansion to the global market. Target plans to open multiple stores in Canada in the next two years because of the ownership of leasehold interest in other property. Opening stores in the international market will boost the bottom line and improve cash flow. This strategy is what one should recommend for the Target Corporation.
Inspecting the long-term goals and objectives, Target must take the interests of the stakeholders to create a grand strategy that could affect monthly and annual planning of the company. Pursuing an expansion of the grand strategy would be an option for Target. This option would cause for Target to open multiple locations across and outside the United States. When the grand strategy expansion is complete and future goals and objectives are defined, each department will take the strategies made and implement them in their goals and objectives set for the employees. Sales, budgeting, and costs will be synchronized to fit into the grand strategy expansion once it is put in place.
Implementation planthe in depth listing of events/activities, expenses, projectedchallenges and programs that are needed to attain the objectives of the strategic plans (Pearce & Robinson, 2011). The implementation plan used for Target Corporation is to increase the market share by targeting a particular demographic to gain more revenue. The management team will create a plan including the following: objectives, functional tactics, action items, nonessential functions, and an effective reward.
According to Pearce & Robinson, (2011) theseare the specific and typicallyquantifiableresults operating management set out to achieve/attain in the immediate future. Target Corporation’s primary objective is to provide a high quality product for a lower price than the competitor. This company plans to do this by targeting demographics of their customers. This demographic includes middle aged women in the middle-class with either college aged children or children still at home. These are the people who may not shop at the competitor companies. Target Corporation’s other objectives include the following:
-Creating more “Super Targets” with the selling of more consumables/perishables to make just one stop instead of multiple stops to different stores, cutting the spending cost of gas for the consumer.
– Offering the Target Red and Target Visa cards for those who desire to have a credit card with the company. With the use of these cards, customers can earn in-store credit toward purchases.
– The creation of Target Rewards and Target Pharmacy Rewards programs to get more customer involvement.
These are detailed statements of ‘means’ or actions that shall be used by a company to attain the short-term objectives and come up with the competitive advantage” (Pearce & Robinson, 2011). For the functional tactics to be implemented, management involvement is a must. The functional areas of an organization include marketing, finance, operations, research and development (R&D), and human resources. These areas will need to be looked at so the change can occur in areas of the business operation (Pearce & Robinson, 2011). This Department is very importantin that it helps to accomplish the Rewards programs and the Visa cards usage. R&D will determine how to use the technology to enhance the current product. This department will also determine what features are most important to the consumer. The finance department will be the foundation of the collective efforts of the other departments. This division will ensure the projected and actual costs do not exceed the allocated company resources.
Pinpointing the consumer wants and making it practical and profitable is the basis for focusing on the action. The customer is the focus of the action plan and the key to the company’s success. Providing staff with enough resources and raw materials while empowering their minds is the key to successful implementation. Staff must be empowered to make decision on behalf of the company without fear of any consequences, provided the choices fit into the blueprint of the company. The marketing department will have two responsibilities: (1) predict the customers’ needs and wants and providing this information to the management team and R&D department and (2) implementing a campaign to attract more consumers to the store.
Milestones and deadlines must be achievable. The focus should be evenly divided among the different products the company will try to use to entice the consumer. The product development should take up to a six-month period. When the prototype is produced, the product will be reviewed to determine if it will be profitable for the company. The Rewards programs and development of a “Super Target” will be completed in phases over a 12-month period. During months one to three, the focus will be placed on the customer traffic in the area the company wants to place the “Super Target” and the amount of participation the Rewards program would receive. The second phase at month four to six will involve promoting both ideas through print and social media. The third phase in month seven to 12 will focus on using consumer surveys to see what is needed to improve the two ideas.
To meet deadlines, tasks must be assigned and completed in a specific time frame. Task ownership is very vital when it comes to employees’ motivationsince itguaranteesaccountability. This makes employees responsible in ensuring that the work is completed (Pearce & Robinson, 2011). The marketing department will have a big part in completing the tasks set for each goal for the Target Corporation. This department will take on the responsibility for branding the new products the organization puts forth. As the stores are revamped and expansions are made, it is critical for the marketing department to create unique promotional ideas. The use of print and ad campaigns will ensure the consumer of the organization’s commitment to providing access to the same high quality product at the same low price.
Company resources will be distributed on an as-needed basis to make sure employees are equipped with the correct tools necessary to be successful. All departments will have access to the materials, technological resources, and manpower needed to get the job completed within the budgetary confinements. The marketing budget will be funded to support the print and ad campaigns as well as strategically placed advertisements on the Internet. With the usage of social media networks, such as Facebook and Twitter, using these avenues of advertising will cost the company little to nothing.
Through the mission and vision statements, operational excellence is the most valued disciplined aligned with the Target Corporation. Operational excellence will boost the company’s competitive advantage against its competitors. Aligning the company with the needs and the expectations of the consumer and the company’s target demographic will cause for the processes of the company to excel and more efficient. Using strategic controls will allow the company to measure the success and failures of the implementation process at its critical points. Creating strategic thrusts will determine if there is any progress according to the company standards or if any adjustments will need to be made.
Understanding the availability of financial resources is important when implementing a strategy. Figure 1 shows the Quarterly Sales Revenue Forecast in 2013. Based upon the information shown, there is a steady increase in sales through each quarter.
|1st quarter||2nd quarter||3rd quarter||4th quarter||Total|
|Cost of Sales||(433.68)||(867.36)||(1,301.04)||(2,335.20)||(4,937.28)|
|Selling, general, and administrative expenses||(127.73)||(255.47)||(383.20)||(687.79)||(1,454.19)|
Risk can be an issue or a something helpful in all business operations. Risk Management is the process that an organization identifies and sorts risks and creates solutions to lessen the probability of harmful events and maximizes opportunities (Pearce & Robinson, 2011). Risk Management should be a continuous process and not one time. The process is needed throughout the lifetime of an organization to keep everything flowing smoothly. If risk management is not used thoroughly, the company could be placed in a situation with a negative impact.
The strategic plan of Target Corporation is framed to expand the market share of the company for consumers that offer the innovative and best quality products with are of lesser prices than the department stores. Innovation is not only limited to in-store locations but also to all products Target plans to manufacture. Managing the success of Target’s strategic plan will be difficult because of the volume of information collected during the year nationwide. Financial and public awareness evaluation will measure the success of this marketing plan. These evaluations will have sections asking specific questions that will need to be answered to provide a larger aspect of the financial and public awareness success or failure of the Target Corporation.
Questions include the following:
-Did we make a profit?
-Have we seen a positive input/output from our contributions through charities and the environment?
-How many in-store visits were made throughout the year?
-How many clicks did our online advertisements receive?
Target Corporation’s risk mitigation and contingency plan confronts the possible risks with the hope of avoiding issues before they occur. For Target Corporation to gain an increase of the market share there must be changes in promotion and the target market must be made. Target will have to market themselves to a wider demographic, such as men, lower income customers, and younger consumers. The following preventative measure will be implemented to make sure consumer needs and wants are met:
-Implementing a direct mailing program with coupons and other incentives to shop at any Target store.
-Using advertisements on the Internet more regularly.
These changes will allow Target the opportunity to gain a more diverse and bigger market share.
Barney, J. B. (2007). Gaining and sustaining competitive advantage (3rd ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
Harvard Business School (2004). “Bullseye: Target’s cheap chic strategy.” Retrieved from http://hbswk.hbs.edu/archive/4319.html
Hays, C.L. (2002). “”Can target thrive in wal-mart’s cross hairs?” Retrieved from http://www.nytimes.com/2002/06/09/business/can-target-thrive-in-walmart-s-cross-hairs.html?pagewanted=all&scr=pm
Horwath, R (2006). “Strategy & value: The customer’s treasure chest”. Retrieved from www.strategyskills.com
Mintzberg, H., Ghoshal, S., Lampel, J., & Quinn, J. B. (2003). The strategy process: Concepts, contexts, cases (4th ed.). Upper Saddle River, NJ: Prentice Hall.
Pearce, J. A., II, & Robinson, R. B. (2011). Strategic management: Formulation, implementation, and control (12th ed.). Boston, MA: McGraw-Hill/Irwin.
QuickMBA (2010). “PEST analysis.” Retrieved from http://www.quickmba.com/strategy/pest/
Target Corporation,(2013). Retrieved from http://www.target.com/
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