Target Corporation Harvard Case Solution & Analysis

Introduction

Behind Walmart, Target Corporationis known as the second largest discount store in the United States. Target Corporation has become dominantin the retail industry because the company has made strong and successful investment decisions in the earlier years. Target Corporation has established itself as the highest profitability firm due to its relentless efforts in providing the utmost and exceptional quality products to its customers. The company has owned several department stores chains and has continually generated massive profit returns. Over the period of time, the company has flexible fulfillment capabilities and has made improvements in its channels. Target Corporation has been connected with its customers through mobile and online platforms. Most importantly, the company has been incentivized its mediums through cost saving options. The company has a flexible fulfillment system which has been allowing its customers to buy online, in stores and in-app.

The company has been intending to provide the customers with maximum discounted values. Presently, the company is operating 1,888 stores. Even though it is ranked as the second largest retailer worldwide, the competitors such as Costco and Walmart have been posing threats to the company. The similar customer base has been attracted by both the competitors. Additionally, the assortments of the merchandise tends to be same.Thus, the company needs to adjust the capital budgeting process(Target_Corporation, 2017)

Target Corporation Harvard Case Solution & Analysis

Analysis of Financial Statements

In the year 2006, the CFO of Target Corporation,along with the capital expenditure committee (CEC) has proposed five projects representing closely $200 million in the capitalinvestment of theproposals. The company has a strong position in the retail industry due to its positive and effective investment decisions.

The year 2006 had become a lackluster year for the shareholders of the company.It has been contemplated to make good and healthy investments that would be aligned with the growth strategy of the company.

The financial statementsanalysis tends to gives understanding of the financial situation of the company, which can be done by reviewing the financial statements. The identification of the many items over a series of the reporting period time. Thus, it is the most exceptional power measure.

The income statement of Target Corporation shows that the customer tends to be confined to using credit cards while making payments. The mobile point POS has been considered as aneffective technology due to which, the abandonment rates have been declining and it seems as anopportunity for the company to pursue. The practice has also made the customers close to the sales, this practice has driven the growth of the sales. The revenue generated from the credit cards has been increasing year to year.This practice has increase the overall profits/revenue. However, the credit card expensehas been increasing from 2005 to 2007, therevenue has been increased in 2007. After deducting tax and interest expense, the net earning has increased in 2007 year.

Furthermore, the diluted earnings per share tends to be higher as compared to the basic earnings per share, which shows that the company has taken all the convertible and common shares outstanding. Since the diluted earnings per share are more as compared to thebasic earnings per share, it can be said that the company did not have convertible securities (Beers, 2018)....................

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