Target Corporation (TGT), traditionally an American leader in the retail industry, is faced with forces of a maturing industry. From outside the industry, current competitors, potential competitors, and global industries forces are putting pressure on their core business, which is seen as too complacent in an opportunistic environment. They need to make changes to adapt to these changing conditions. I recommend that TGT pursue a strategy called "Hitting our Target- International Expansion- which recognizes these macro conditions- industry saturation and move towards prime foreign direct investment- while at the same time maintaining the same operation domestically. It will rely more heavily on taking advantage of its cash cow, rely more on Store leadership and multi-global strategies rather than Product/Store mix and differentiation strategies around its less established, high profit international regions. .
Background.
The Retail (Department & Discount) Industry is in the mature stage of the industry life cycle (See exhibit 1). As such, companies are successful based on their ability to expand, advertise, and differentiate their style of merchandise and service. This can be accomplished through taking advantage of economies of scale, cost leadership, differentiation, and focus strategies. .
Exhibit 1.
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While there are many specialty department stores which deal with differentiation or customization, TGT, founded in 1902 by George Dayton in downtown, Minneapolis, has traditionally always chosen to compete in the Department & Discount (D&D) sector, focusing on bringing in 5% profit since 1946, and to provide exceptional value to American consumers through multiple retail formats ranging from upscale discount and moderate-priced to full-service department stores. The barriers to entry have been lowered, due to among other things, the emergence of specialty dept stores that focus on particular niches such as one stop shops for electronic equipment (Best Buy), shoes (DSC Warehouse), bulk groceries (Costco's), etc.
