Environmental analysis of Target Corporation

Environmental analysis of Target Corporation

            Target Corporation is one of the leading retailers in the world. According to  (2006) it is the sixth largest retailer in the United States. In the paper of  (2003) she discussed that the company was founded in Minneapolis, Minnesota in the year 1902by George Dayton the founder of Dayton’s department store chain, wherein he built a six-story building in Minneapolis and then the owner of the R.S. Goodfellow Company sold his interests in the new store of George Dayton. In the year 1962, the first Target discount store was opened in Roseville, Minnesota. And in the year 2000, the Dayton Hudson Corporation changes the name to Target Corporation ( 2000).

            This paper conducts an Environmental Analysis of Target Corporation. An analysis of the external environment will be made which includes the remote environment, industry environment, and operating environment through PEST analysis. The Economic Factors, Social Factors, Political Factors, and Technological Factors that may affect the business of Target Corporation will also be discussed. And finally, a SWOT analysis will also be discussed.

            PEST Analysis

            According to  (2001) a PEST Analysis is a common method utilised for the analysis of the external environment wherein it divides the overall environment into four areas and covers the factors that could affect the organisation. In addition according 321books (2006)  it develops an overall look at the main external impacts on the company, PEST stands for Political, Economic, sociological and technological, in Target Corporation the following external factors will have a great effect whether negatively or positively in the near future.

Political: In the political aspect, changes and transformation in overtime regulations and the share of the retail stores in the healthcare bill.  It has a huge effect on Target Corporation negatively or positively. In the case of the regulations in the retail industry it has negative impacts because the regulations in the retail industry could easily be changed beyond the established limit and will affect the business adversely, in addition companies such as target will obtain higher costs in expenses due to the changes. The healthcare bill, on the other hand, will have positive effects on Target Corporation because the bill will aid in controlling the prices of the medicines in the market which in return will help the consumers, as well as the company.

Economic: The increase on the price of fuel in the international market, and because of the increase of prices in fuel Target Corporation must find ways to reduce the cost of delivery by the fleets as well as aid in saving the environment. In the long run the measures that Target Corporation will employ would be beneficial to the organisation because it cuts down the company’s expenditures. Another factor that would affect the external environment of Target is the US economic growth; the rapid or slow growth may have a positive or negative impact on the business. If the growth is fast then consumers will have higher purchasing power, on the other hand, if the economy is very slow then it will also have an effect on the attitude towards purchasing products. Another is the low-cost destinations sourcing; it will either affect the economy positively or negatively. Positive, in the sense wherein the company will have more consumers because of the cheaper products offered. On the other hand, the local suppliers would be affected because the company prefers outsourced products.

Sociological: The influx of cheap labour from the Hispanic population and other immigrants, this would affect the American workers because the pay for these workers is relatively cheaper therefore companies like Target Corporation would rather employ these workers than the locals. Another factor is the rise of the population of the retiree, companies such as Target Corporation wherein it has numerous employees will have a hard time obtaining more employees, the retirement of employees is rapidly getting higher while the replacement does not increase.

Technological: The utilisation of new software and technology for faster production and marketing, which is more helpful and useful because it makes the job of the employees and management easier and error free.

SWOT Analysis of Target Corporation

            According to (2001) SWOT Analysis is a general method utilised to find proper application across diverse management activities, and functions, it is specifically proper to use in the early stage of strategic planning and marketing. It includes recording the strengths, weaknesses, opportunities, and threats of the organisation, and in this case Target Corporation.   

Strengths: the target corporation has a number of strengths such as the products of the company is equivalent to chic and fashionable at low and discount prices for a highly heterogeneous mix of products. Moreover, the company has established a relationship with the younger consumers due to its ads and partnerships with designers such as Mossimo, Issac Mizrahi, Liz Lange, Amy Coe, and Michael Graves. Another is the company has already established a reputation and has a very well-known target logo which aids in the recognition of the company by the consumers.

Weaknesses: the weaknesses of the target company includes the fact that the organisation has not yet expanded to rural areas in the United States because the company is still developing their presences in the urban communities across the United States. In addition, the size of the stores of Target Corporation is lower compare to other retail companies in the United States. Lastly, the image of the company which is a retail store that caters to house wares hinders the ability to obtain market share in other aspects of the retail business.

Opportunities: there are a number of opportunities for Target Corporation to grow and these are the retail food industry, Target must give more emphasis on this sector because consumers buy food products that have low prices and is closer to home wherein Target has the characteristics. Second, is having gas stations wherein it could potentially obtain more consumers. And Target Company must establish a strong bridal registry; currently the company is on top in the retail industry in terms of registration in gift items.

Threats: the threats in the business of Target Corporation is the increase of prices of fuel in the international market, the company must be able to efficiently handle the effects of the increase in the prices of oil such as having a good network distribution of goods among the stores. Another threat is merging of Sears and Kmart wherein it is a strong competitor for Target Corporation.

 

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