Brief Company Description and Analysis - Research Paper

Introduction

Target Corporation is an American retailer headquartered in Minneapolis, Minnesota, United States. It focuses on providing general merchandise product such as assorted foods, groceries, dairy products, and other perishable and frozen products. Target was founded by George Dayton, and it was later incorporated in 1902 (Target Corporation, 2019). It is currently headed by Brian Cornel who is the chairman of the board and the Chief executive Officer (CEO). As of 2019, Target Corporation had approximately 36,000 employees making the company the 10th largest private employer in the US. Its stocks are traded in the New York securities exchange (NYSE) market under the stock identifier TGT (Reuters Editorial, 2019). Target Corporation is guided by cover values that foster collaboration and connectedness within and outside the organization. It also participates in corporate social responsibility through community engagement, charitable events, emergency preparedness, and embracing diversity and inclusion not only among the workers but also to the customers and the entire community (Target Corporation, 2019).

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The company's mission statement is to become the most preferred shopping destination customers in all the channels. This is achieved by providing high quality products and services, creating value to the customers, integrating continuous innovation, and consistent provision of quality experience to its customers (Target Corporation, 2019). Target Corporation provides over 20 brands including Archer Farms, Merona, Sutton & Dodge, Market Pantry, Art Class, Simply Balanced, Wine Cube, and Room Essentials among others. Target's major competitors include Amazon, The Home Depot, Walmart, TJX, Best Buy, Costco, and Kohl's among others (Reuters Editorial, 2019).

Macro-Economic Analysis

Macro-economic refers to the aggregate economic aspects such as inflation, rate of economic growth, gross domestic product (GDP), level of employment, total national income, and exchange rates among others. Target Corporation operates under the retail industry which is subject to the influence of the various macro-economic aspects. For instance, the economic surge had a significant impact on both small and large retailers such as the Target Corporation. Due to the financial crisis, the levels of disposable income decreases affecting the consumption patterns. As the company strove to thrive in the adverse economic conditions, the decline in sales also added up to the economic struggle. Even though Target had opened more stores in Canada in 2015, the company later closed most of the store as they strove to cut costs due to the fluctuating demand which left thousands of people jobless (Target Corporation, 2019).

Consequently, the current increase in the level of unemployment in the United States has a significant impact on the retail industry and to Target Corporation in particular. The increase in the level of unemployment means that more people have less income and a low purchasing power. As a result, it affects the consumption patterns which in turn affects the company's demand for products and services, and finally, the total sales revenues decline. Despite these challenges, Target Corporation has shown significant growth in the stock price as well and the dividends. For example, the dividends have grown consistently from $0.36 per share in January 2013 to $0.64 per share in February 2019. Similarly, the closing stock price began at $49.51 per share in January 2013 to $82.02 per share in April 2019 (Reuters Editorial, 2019).

Company Analysis

This section will cover the STP analysis, SWOT analysis, and financial analysis of Target Corporation.

STP Model

Target Corporation serves the market segment of the customers who need consumer goods. It targets the middle class and the upper-class group of customers. In the positioning strategy, Target Corporation is headquartered in the US with various stores across the world. It attracts target customers by providing high quality products at discounted prices.

SWOT Analysis

Strengths

• It has a strong brand image
• It has over 350,000 employees
• It has over 1800 stores across the world
• It has a wide product portfolio
• It has strong customer relationships

Weaknesses

• It faces challenges to cope with the changing fashion trends
• It has faced legal actions affecting the brand image
• It does not utilize the online selling platform sufficiently
• It is resistant to change

Opportunities

• Investing more in the international markets
• Acquisition of small retail stores
• Creating an online store
• Increasing visibility through advertising and online marketing

Threats

• Strong competition in the retail industry
• Economic fluctuations
• The rise in the cost of raw materials such as fuel

Financial Analysis

Looking at the currents ratio and the quick ratio, it is evident that Target Corporation does not maintain a good liquidity position. This is because its values are below the sector and industry averages. For instance, the company's quick ratio is 0.2 while the sector average is 1.19 and the industry average is 1.04. Similarly, the current ratio is 0.83 while the sector average is 1.64 and the industry average is 1.72 (Yahoo Finance, 2019). Nonetheless, Target Corporation maintains a favorable profitability position. This is because the gross profit margin for FY 2018 was 29.27% while the sector average is 24.72$ and the industry average is 25.42% (Yahoo Finance, 2019).

References

Reuters Editorial. (2019). ${Instrument_CompanyName} ${Instrument_Ric} Financials | Reuters.com. Retrieved from https://www.reuters.com/finance/stocks/financial-highlights/TGT

Reuters Editorial. (2019). ${Instrument_CompanyName} ${Instrument_Ric} Company Profile | Reuters.com. Retrieved from https://www.reuters.com/finance/stocks/company-profile/TGT

Target Corporation. (2019). Target Corporation| About Us. Retrieved from https://corporate.target.com/about

Yahoo Finance. (2019). Target Corporation (TGT) NYSE. Retrieved from https://finance.yahoo.com/quote/TGT/history?period1=1356987600&period2=1555966800&interval=1mo&filter=history&frequency=1mo