Target Case Study

Be prepared to describe and critique Target’s capital budgeting system. Give specific consideration to the role of the real-estate managers and the makeup of the CEC.
Target’s capital Budgeting System, by 2006, Target was targeting to create a lot of outlets and they were termed as projects, each project contains a set of procedures to be followed that are then approved by the CEC (capital Expenditure committee) in order to get the store up and running.
There specific consideration for the role of real-estate managers is because, those people will have the GEOGRAPHICAL IDEA about the area in which they are managing prior sending to the CEC. These Managers will be responsible if a new store proposal comes, so that they will review the GEOGRAPHY of that location and the possibilities of having a Target Outlet at that locality.
CEC was started as an approval class, whose approvals are needed to get the store up and running if there is a chance for starting up a new store in any geography (Real-estate managers are responsible for this)
Which of the five CPRs should Doug Scovanner accept? Be prepared to explain how each of the considerations that follow influenced your decision:
Out of the 8 choices available, I would tell that Scovanner will accept NPV/IRR, Size of the project, Customer demographics, Brand‐awareness impact, Cannibalization of other stores’ sales, because,
• NPV and IRR are two main things when coming to Captial Budgeting and the
• size of the project, the higher the size, the maximum will be the returns and yes, it involves risk but the returns will be huge if the project is a success ,
• Brand-awareness impact – Because, nowadays people are driven by the brands rather than for products… it’s the belief that they have on those brands that they will be good,
• Customer Demographies also plays an important role because,