Target Corporation: Company Policies, Structure of Organization and The Financial Strategies

Introduction

Target Corporation is a chain of retail stores in the United States. They offer a variety of items, such as household essentials, food, pet supplies, office supplies, apparel, accessories, and home furnishing. This section will provide background on Target Corporation, as well as their objectives, which highlight their mission statement and values.

Background

Target Corporation was founded in 1902 by George Draper Dayton. Originally from New York, Dayton decided to explore markets in the Midwest. After a few years, he purchased a piece of land in Minneapolis and forms the Dayton Dry Goods Company - known as Target Corporation today. His store became known for having dependable merchandise and fair business practices. Dayton managed the store until his death in 1938, when his son and grandsons take over and continue to grow the company into a nationwide retailer.

In 1961, The Dayton Company reveals plans to form a new chain discount store. Stewart K. Widdess, the company’s Director of Publicity is given the task of naming and defining the new chain. They eventually come up with the name Target, the reasoning being “As a marksman's goal is to hit the center bulls-eye, the new store would do much the same in terms of retail goods, services, commitment to the community, price, value and overall experience.” In 1962, the first Target store opened in Roseville, Minnesota.

Today, Target Corporation is ranked the 8th largest retailer in the United States, and the 11th in the world. They are also ranked the 10th largest private employer in the United States, 89th in the World’s Most Valuable Brands list in 2017, and 53rd in Forbes’ Just 100 list. Not only are they profitable, Americans believe that the corporation pays workers fairly, treat customers well, produce quality, and give back to community.

As of June 2016, the published Target Stores Mission Statement, which Target refers to as its “Purpose”, is: “We fulfill the needs and fuel the potential of our guests. That means making Target your preferred shopping destination in all channels by delivering outstanding value, continuous innovation and exceptional experiences—consistently fulfilling our Expect More. Pay Less.® brand promise.”

Along with the mission statement, Target leaders and employees also follow six core values, which are also the company’s objective goals. The refers to them as “What We Believe In”. 

Market Analysis

In this section, the industry, competition, strengths, weaknesses, opportunities and threats to Target Corporation will assessed.

Industry and Competition

Target Corporation is a discount retail store that offers a variety of goods for a lower price. Companies that are similar to Target are their competition, with the most prominent two being Walmart and Costco Wholesale. The discount retail industry in general has to compete with online shopping sites such as Amazon. Since they rely on outside suppliers for their products, they must compete with Amazon, which offer more convenience for the suppliers as well as comparative pricing.

Strengths and Weaknesses

Target Corporation has many strengths, being one of the largest retailers in the United States. In fact, that is one of the strengths; it’s strong presence in the US gives the company enormous buying power, allowing them to enforce lower prices on items. Another strength is that Target offers different merchandise than other retailers, creating loyal customers. Target is dedicated to style in addition to affordable pricing, and has teamed up with famous designers and dealers in the past. By presenting themselves as more passionable, they have been able to appeal to younger audiences, which has been hard for other similar retailers, like Walmart, to do. Lastly, Target corporation has a loyalty program, REDcard®, which will help to attract regular customers and provide business security.

Target Corporation also houses some weaknesses. A large portion of Target’s merchandise is sources from foreign countries. Dependence on these suppliers is risky, as any change in political conditions and the global economy can affect the supplies, and therefore the revenue. In addition, Target has not been successful at integrating with companies of different work culture though they have no problem merging with small companies.

Opportunities and Threats

Many opportunities exist for Target Corporation. Being one of the largest retailers in the United States, Target is looking to further expand by opening as many stores as possible in the US’ largest cities. They have also gained new customers from their online market. Recently, the company has invested a lot of effort and finances into developing their online platform.

With e-commerce being a huge area of growth in recent years, Target is equipped to take advantage of this market.

Threats to Target Corporation include an overlap in products offered by Target and its competitors, the growth of online shoppers, rising labor costs, and no regular supply in innovative products. Many of the products Target offer are also available in the stores of its competitors. This puts pressure on the pricing of items and may force prices to increase. The growing number of people shopping online is a threat to many brick and mortar retailers. Although Target has also ventured into an online website and app, they still have fierce competition such as Amazon. Rising labor costs in recent years directly make it so the overall costs increase, and affects the profitability of the company. Lastly, Target has no regular supply in their innovative products, which is an issue. Over the years, many of their products are in response to products their competition is coming up with. The supply of new, innovative items, is random, leading to peaks and dips in the number of sale over time.

Company Policies and Procedures

A company’s policies and procedures establish the rules of conduct within an organization. They outline the responsibilities of employees and employers, and help to protect the rights of workers and the business interests of employers.

Public Policy

Target Corporation’s Public Policy is listed under the civic activity in corporate responsibility. They believe that engaging in legislative and public policy activity allows them become a more diverse retail business. Target works with officials of both political parties to shape public policy solutions that will help improve their business, team, customers and communities. They aim to align their public policy activities with their business interests and maintain transparency. The upkeep of this policy is overseen by Target’s Nominating & Governance Committee on their Board of Directors. They have also launched Citizens@Target, the legislative action centre for the team and customers. It allows civic engagement that focuses on improving Target’s business and allow for team members and the community to be involved.

Labor and Human Rights Policy

This policy focuses on the company’s hiring process, wages of employees, and the safety of employees.

Hiring practices are essential to any business. When proper hiring processes are not well-formulated, they are at risk of using unethical practices. Target ensures that all their facilities have a human resources department that ensures no worker can be hired without the approval by human resources. Target also has no tolerance for underage labor, and all candidates will be properly screened. If underage workers are found in any factories, they will work with a 3rd party to establish a remediation plan that is in line with internally defined best practices. Should the plan fail, the factory will be deactivated for non-compliance. Furthermore, Target will not tolerate factories or vendors who do not pay fair wages to their workers. Audits will be conducted, where thorough review of time card and payrolls will be looked at, and the wage policy will be discussed with management and employees. Lastly, the health and safety of employees in Target’s facilities is a major focus of auditing processes. They believe it is of the utmost importance that measures are in place in case of any emergencies in the working environment. Target was a found member of the Alliance for Bangladesh Worker Safety, which helped to improve fire and electrical safety as well as provided worker training on the same subjects.

Code of Ethics

Target Corporation has established their own Code of Ethics, which provides expectations for the conduct of team members and ethical decision making. They demonstrate strong ethical culture by modeling the company’s values and behaviors through their decisions and actions, being honest and respectful through any interaction, understanding and following company policies and procedures, obeying all laws, and reporting any suspected violations or crimes.

Structure of Organization  

Target Corporation has a decentralized organizational structure, meaning various individuals are delegated responsibilities for making businesses decisions. At the top of the chain, the CEO, Brian Cornwell delegated different responsibilities to his executives. In any Target store, there are also people who are responsible for different tasks. Target Corporation relies on a team environment at different levels in the business. 

Financial Strategy

Plans were laid out in 2018 that included improving store experience and generating more digital sales. Early in that year, Target Corporation announced several initiatives as part of its multi-year strategy. This includes significantly expanding its fulfillment options and increasing the minimum wage to $12 later in the year. Their fulfillment options now include free two-day shipping from its website, expanding their Drive Up program from 50 to 1,000 stories. Drive Up is a program allowing customers to place orders through the Target app and have it delivered to their car in a Target store parking lot. In addition, Target told investors they would use $7 billion towards redesigning stores, extend their exclusive brands and lower prices on items.

The new strategies Target started implementing paid off, with Target’s stock jumping 47% last year. Their new, faster delivery system allowed them to stay competitive with companies like Amazon, and their digital sales grew 41% in 2018 compared to 2017. Target has also taken advantage of the demise of several competitors, such as Toys ‘R’ Us, by taking away their customers.

Conclusion

Target Corporation has grown its business tremendously from it’s opening in 1902 to today. Their values and work culture has allowed them to establish a loyal customer base as well as form a dedicated team. This report highlights the strengths and weaknesses, opportunities and threats, company policies and procedures, structure of organization and the financial strategies that are the central components to the company.