Background and Description of Major Issues Target actually began as Dayton Dry Goods, a department store - focus on high quality feel at lower prices - Customers have a more pleasurable shopping experience • However, many customers are willing to forgo aesthetics for lower costs in tough economic times. o Because Target is following a “Cost Leadership” strategy, it is important to play the game, because the target market will not respond to largely excessively higher costs in the name of differentiation. • Additionally, it is important to make sure that an efficient supply chain is maintained and that inventory is turned over as quickly as possible. Target’s gross margin is higher than the industry average and Wal-Mart’s, which implies that Target is relatively efficient in this area. o Wal-Mart’s large amount of stores, both within the United States and internationally, help the low-cost retailer bring in revenues. ▪ Target could improve by stepping up against this strategy. • As the world becomes more inter-connected, Target needs to stay on board o For example, the potential revenues gained by reaching foreign markets can be seen as an opportunity. ▪ However, PEST analysis shows that this can also pose problems: • U.S. Export Tariff on Chinese goods • Risk of instability in other countries o Both politically and financially ▪ Labor strikes ▪ Changes in value of U.S. dollar • Too much dependency on foreign suppliers can cause problems o For example, week-long traffic jam in China caused supply chain inefficiencies.
2. Situation Analysis • A: Current Internal Situation and