Target Swot Analysis

SWOT Analysis - Target Corporation

I Introduction

Target is America's second-largest general merchandise retailer, with over 1,100 stores across the country; it employs over 220,000 people. It has recently begun electronic marketing through its Target.com subsidiary. (Pergiovanni, PG).

This paper is a SWOT analysis of the corporation. It concentrates on the Target stores themselves.

II Strengths

I've scanned a listing of newspaper articles with "Target Corporation" as the headline, and a pattern has emerged: Target has consistently grown while many other companies are losing ground. To take just three examples: in August 2002, Target sales grew 7.5% ("Target Corporation August Sales Up 7.5 Percent," PG); In October 2002, they were up 9.8% ("Target Corporation October Sales Up 9.8 Percent," PG); and the most recent article cites a 7.7 percent increase in January 2003. ("Target Corporation January Sales Up 7.7 Percent," PG). This is an impressive record for a company in a country mired in a deepening recession.

The company has declared dividends for its shareholders every quarter as well, making it a good investment. It's also begun to sell its goods via the Internet, and its Website is very user friendly and is proving to be a success.

The company has chosen its approach to retailing very carefully. It aims for "consistency of experience" for its customers by making all its stores nearly identical. It also has to differentiate itself from Wal-Mart, the market leader. Target executives opined there were three choices open to them: "to specialize, to become the low-cost producer or to differentiate ourselves." The first would have made them a niche marketer, and Wal-Mart has a lock on the second option. That left differentiation, and Target has succeeded in making themselves distinct from other low-cost retailers. ("A Tale of Two Stories," PG). We've already noted above the success of their strategy.

Finally, the corporation gives five percent of its pre-tax profits to philanthropic causes. ("External- Focused Tactics Used by Business," PG). This policy has made Target a welcome presence in the communities it serves.

III Weaknesses

Some of Target Corporation's weaknesses are intrinsic to their business style, but most become apparent only when compared to Wal-Mart.

One of Target's trademarks is its attention to customer service, which takes a long period of training. The emphasis on teamwork, and the long training periods, "can be frustrating to the ambitious individuals." (Bell, PG).

With regard to Wal-Mart, Target's 401(k) plan is inferior; there is no profit-sharing plan; and there are no employee stock option plans. Wal-Mart managers receive more vacation time (though Target managers have more perks overall). (Bell, PG).

Target lags far behind Wal-Mart in market share with little chance of ever catching up, let alone surpassing the leader. Finally, Target doesn't have the capital to expand overseas. (Bell, PG).

IV Opportunities

Since Target has so carefully chosen its market strategy, it would seem that its best option is "more of the same." Currently they operate in 47 of the 50 states; logic would suggest that expansion into the other three states would be the most effective next step in increasing their market share.

In addition, they have made a good start on e-commerce by creating an attractive and user-friendly website. They should continue to explore Internet marketing.

V Threats

The biggest