Business Strategy

 

Porters 5' Forces Model

Bargaining Power of Consumers: This force is at medium strength because consumers have options for cheaper products available, but Target offers superior products, which is why consumers keep shopping there. Most of the times consumers have to deal with the higher price point at Target because they are receiving better quality items than if they were to shop at places such as Walmart.

Threat of Substitution: This force is at medium strength because although many of Targets products can be substituted with other products to meet the same needs, Target has a unique selection of products, some of which are only sold at Target.

Bargaining Power of Suppliers: This force is at low strength because of the fact that Target is such a massive company in the retailing industry. They have a global network of suppliers from many different places across the Earth. For example, "Target imports about 500,000 shipping containers of merchandise from different countries around the world such as China, Indonesia, Vietnam, India, and Thailand." This makes it extremely difficult for suppliers to bargain because if Target wanted to they could just switch to different suppliers because they have the costs and the means to do so.

Threat of New Entrants: This force is at a low strength because it is very difficult for new businesses to enter the retail industry and to grow as big as Target is. There are many businesses across the country that operate as retailers, however a lot of the times their products are specialized. A lot of these businesses cannot compete with the wide variety of products and the scale that Target offers to its customers.

Rivalry: This force is at a medium strength. Although it is very difficult to enter this industry at the scale Target is at, there are still a group of companies that compete with Target, one of these being Walmart. Walmart competes directly with Target to offer similar products, but at a lower quality and lower price point. Therefore Target has to keep this in mind when thinking about their business strategy.

Value Chain

 The value chain deals with inbound logistics, outbound logistics, operations/manufacturing, sales and marketing, and customer service. For inbound logistics, Target has a distribution center containing multiple items, and it gets delivered to the store. The method that they follow is called the pick-and pack-strategy. “Rather than shipping full cases of a product (such as a case containing two dozen jars of pasta sauce), each store receives a tote from the distribution center containing a “mixed bag” of different items they’ve ordered”(Hugo, 2020). Workers pick up orders one at a time in bulk until everything on their shelves is completed. Next is Outbound logistics. Target has created 4 new sortation centers To hire their own deliverer. Allowing them to have a form of control over packages being delivered to customers. To add on, “These sites enable our teams to quickly sort the millions of packages”. For operations/manufacturing. Target works with multiple vendors and hires a team that will check the environment of the vendors. Also, they will check how the product is made, if the target believes the product does not meet their standard the item would not be sold in-store and won't be made any further. For sales and marketing, Target uses social media. Also, they are known for their hunt like shopping. This method will enable them to have customers search for their products and pass by many items in the hope the customer buys more than what they came for. This will cause customers to remember the products they found and now go to target regularly for that item. Lastly is customer service. Target has an in-store station and can be called. Also on their website, they have a target help section. Target can also be 2 contacted on their social media and have a thing called ask target. This is where you can ask them any questions or concerns.

Competitive Advantage

In order to succeed within the market as a business, you need to be able to implement strategies that give your business an advantage over others. Target is no exception to this as they have implemented an Industry-Wide Differentiation strategy in order to satisfy customers and set them apart from other department stores. An Industry-Wide Differentiation strategy describes in a very broad sense, a way to build a business by being different in some way to it's competitors. This varies from an Industry-Wide Low Cost strategy as a business choosing to adopt this strategy differentiate themselves based on the lower prices they offer for goods and services. 

Target is able to differentiate themselves from the competition based on their business structure. The structure they have adopted is a very community based structure as they devote effort into serving the community and creating more of a caring culture and environment for customers, employees, and stakeholders. 

More specifically, Target intends to differentiate themselves along a couple different segments. The first being the wide range of target customers that Target reaches. They offer such a wide range of products and services, they are able to target a wide range of demographics. The second has more to do with their digital sales channels and the ease of shopping online. Another example of their use in the digital world is their use of social media to connect with and inform customers.