Target Express (A) Harvard Case Solution & Analysis

Target Express (A) Case Study Help

Question 1

Target Express is the UK based package/freight company, with annual sales of around £120 million. Target Express has been continuously investing in facilities, improving its service quality, vigorously focusing on the customer satisfaction in order to improve its financial performance at an optimal level. The two companies, including Gresham Private Equity and 3i acquired the Target Express, in the fiscal year 2000. These companies purchased the entire parcel delivery business of Target Express from its 3 entrepreneurs for £220 million. At the time of being acquired by these two companies;Target had the 135 million pound turnover with its strong focus on business to business marketing strategies. According to 3i and Gresham; the B2C market is comparatively more profitable than the business to business (B2B) market, due to which they decided to push the company towards the growing and evolving the business in consumer market. Soon after the company ambitious moved into the business to consumer, by taking on the computer deliveries of Dell Corporation; the company got confronted with a variety of problems, including lack of financial resources, and Gresham stated that the company was not able to start the process until and unless it has limited turnover or resources.

The private equity investor had made numerous mistakes, out of which the most notable being its focus on growing turnover to make the company more profitable. At the time when 3i and Gresham made investment in Target Express; the business to consumer was considered as the reliable growth driver, and it was believed that if the company stressed over the significance of online shopping business; it would go on to have huge profits. Additionally, a serious challenge was posed by the reverse logistics to the company, which was barely required in the operations of Business to Business market.

The management team was deficient in the competence as well as knowledge regarding the process of decision making, related to the ways of maintaining the profitability levels. When  3icame to know that the management team of the company was ineffective; it dismissed the sales manager, operational manager and finance director. However, it did not dismiss the CEO of the company as he had extensive amount of knowledge and expertise regarding the business, and had the capabilities to improve the financial standing of the company. On account of the lack of sufficient resources &knowledgeto accommodate the process; the operations were unsuccessful & the disappointment grew over shipment of Dell among both employees as well as the customers of the company.

Question 2

There are many stakeholders that should be considered by David, including mezzanine provider, the International Capital Group (ICG) as well as the banking syndicate, as they have structured the buyout deal of 220 million pounds and allowed 3i to obtain 70 percent equity stakes in the Target Express. With the stakeholders mapping; David needs to consider and better assess the objectives as well as the requirements of the International Capital Group (ICG) and  the banking syndicate. Additionally, the co-investor of 3i, i.e. Gresham Private Equity’s requirements and objectives should also be considered by David, in order to have their objectives and requirement efficiently aligned with the goals stated in the corporate renewal process. He could also seek advice and support from these stakeholders, in order to come up with better and effective ways of converting the loss-making company into profitable one. In addition to this, David should consider the interest of employees, because of the fact that the employees are the make or break factors in any strategy. Furthermore, the company’s services were deteriorating due to which it was concerned about the customers’ dissatisfaction. The well-planned and effectively developed turnaround strategy should be designed by making gains in availability as well as quality of services & satisfaction of customer as well. David should draw support from all the stakeholders in a way that the company could evaluate what is important for them and keep them informed throughout the turnaround process................................


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