Target Corporation Harvard Case Solution & Analysis

Target Corporation

In this case, the Capital Expenditure Committee is reviewing the Capital Project requests that are put forward in order to scrutinize the requests on the basis of consistency with the company’s growth trajectory.

Recommendations

Target Corporation has been facing intense competition from the rivals, therefore consistent growth is required to stay in the industry and to keep shareholders satisfy. Target’s main focus should be on increasing its sales in order to keep up with the market and by planning ahead. Even though it has plans to open 100 new stores almost every year till foreseeable future, and that it requires a huge capital expenditure, how ever investing in the right area and at the right time is imperative.

Target has five requests that make up to $200 million of capital. Target should start with investing in the barn because it will allow Target to pursue its goal towards growing the sales and opening new stores.It is a new market and therefore, it can open more stores in this area if they successfully capture the share of the market. The barn requires less investment;how ever it gives good returns, which are better than all other projects.Although the growth of population is low in this area, how ever the area has the capability to provide opportunity growth opportunity to Target (Refer to excel file).

The company should also invest in Whal en court even though it requires huge investment;how ever it will save some of Target’s advertisement expense due to its location in the major metropolitan area, which will improve Targets brand image which will help target grow through increasing sales.

Target should also focus on areas where population growth is high, as it is directly proportional to the growth of sales. Gopher Place has the population growth rate of 27% and a very good median household income, which is favorable for sales and business value to grow.

The company only has 24% market share in the Gopher Place market while Wall-mart has 76% share. Target should try to capture more market share by opening new stores and advertisement as it is a long term project to invest in.

The Goldie Square is a risky investment with no short term growth and very little long term growth.Although the population growth is 16%, how ever that too will not help in growing the sales in the near future, there fore the company should consider other options before opting for Goldie Square.

The remodeling of the stadium is important for Target, because if it does not do it, then it will compromise the quality of service that it has promised to the customers which will tarnish the brand image. Moreover, the remodeling of the stadium will also stop the lagging of the sales, which might not help Target grow by opening more stores, but will certainly increase sales by 17% from -0.9 of YTD sales. Target is facing a very tough competition by Wall-mart in every area, therefore it should also focus on low prices and other business models like Costco is following to capture more share in the market.

Another option that Target has is to extend its operations outside the USA, like Wal-Mart that has operations in over 9 countries.These countries include the United Kingdom, Japan, and Canada, where the strategy of attracting style-conscious people can give good return on investment.............................

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