The multi-billion dollar enterprise known today as Target Corporation has grown Into what It Is because of the combined efforts of hundreds of thousands of dedicated employees, and over one hundred years of expansion. George Draper Dayton was a man of humble beginnings who had an ambitious dream, and made his dream a reality due too determined work ethic. Dayton was born in New York in 1857 and relocated to Minnesota In 1883, which is where his success originated. Dayton was not fortunate enough to be able to afford college, so he went into banking.
Ten years after moving to Minnesota, the Panic of 1893 struck the United States, and a church that Dayton attended burned to the ground. The recession caused extremely low property values, so Dayton bought the property and erected his first business, the Goodwill Dry Goods Store. This first store that would later create an empire was opened in 1902, and renamed the Dayton Dry Goods Company in 1903. World War I and the Great Depression offered challenges for the company, but Dayton ran it based on strict ethics and ambition that were Inherent to him, which led the company past these obstacles.
Also, consumer goods were very scarce, so as long as there was inventory, the store became profitable. This combination was the recipe for Damson’s future success. George Draper Dayton died of cancer in 1938, and his son Nelson Dayton took over the business and continued the cautious and strict management style that had been effective with his father. Nelson Dayton continued the businesses expansion, and following his death, the business turned from a sole proprietorship to a partnership, with five Dayton cousins named owners and operators. By 1950, upon this switch of ownership, Dayton Company had grown too fifty million dollar company.
The tests was a decade of further expansion of the company, both in terms of profit and nominal locations. Dayton company branched out from Minnesota to Arizona, Massachusetts, Oregon, and Pennsylvania, with stores now selling jewelry, books, and several department stores were bought. Due to the many acquisitions of the sass’s, Dayton Company became the fourteenth largest retailer in the united States listed on the New York Stock Exchange (Shelton 434). The company became a corporation due to its public offering for stock and large size, and created the Dayton Foundation.
This was a charitable fund in which the company gave five percent of its profit to charitable organizations. To this day, the company still donates five percent back to the community. Dayton Company was able to give back in this way due to its continued expansion. Merman’s department stores of California merged with Dayton Company in 1978. The first Target store opened on May 1, 1962, and by 1978, the Target chain became Damson’s largest component of revenue, eclipsing the department stores on which the firm had been founded.
While other components of the business, such as the jewelry stores ND department stores offered consumers more sophisticated merchandise, Target catered to the budget-conscious consumer, which made it hugely popular. After the first Target opened In 1962 and continued to expand and build more stores, the company opened Its first Super Target In 1995 to compete with Wall-Mart and Smart. The early sass’s was recessionary in the business cycle, which greatly helped the company introduced the Target Guest Card, which was the first store credit card in the discount retail industry (Shelton 436).
In 1994, Target executive Robert J. Lurch was named chairman and CEO of Dayton Corporation. Throughout the sass’s, the company consisted of three components. The first component was the Merman’s chain, which had three hundred stores in sixteen states. The second component was the array of department stores, which were the higher-end stores that were operated under various names. The third component, and biggest, was Target. In 2000, the company dropped the Dayton name and became Target Corporation. Under this new title and Larch’s great influence, the company introduced its Take Charge of Education Program.
This program was philanthropic in nature, and it was a system in which Target Guest Card elders had the ability to choose any elementary or secondary school in the country, and that school received one percent of the profits of that Guest Card holder’s personal spending. Lurch made sure that, in addition to giving back to the community, Target was still one step ahead of competition. This included contemporary, high-quality goods at competitive prices. This recipe allowed for continued growth of seventy stores per year on average (Craft 687).
The Target Guest Cards were transferred to Target Visa credit cards, and by 2003, six million customers were using Target Visa credit cards (Craft 688). This helped Target as a business due to free advertisement and brand recognition. Also in the sass’s, Lurch pushed to divest the Merman’s and Marshall Field’s department stores, because they were negatively affecting sales. Currently, Marshall Field’s is owned by Mac Corporation, and Merman’s went bankrupt and is no longer in business. Target Corporation has produced many effective marketing and advertisement campaigns, focusing on vivid colors and bold products.
One particular marketing campaign was especially significant because it drew in much more attention than originally paid for. On August 22, 2005, Target bought out all the available advertising slots in an issue of the New Yorker magazine. The New Yorker magazine draws in a mostly upper-class, urban crowd, which is to whom Target wanted to appeal. The advertisements themselves were twenty-one different illustrations all by different artists (Soloist 1599). The advertisement spaces cost over $1 million, which did not include the wages paid to the artists and designers.
Target Corporation wanted to sell an artistic, urban impression of the business so that a sophisticated population who would read the magazine would be more likely to shop at Target. This marketing strategy was very successful because it generated a large buzz in the media. In a New York Times article dated August 12, 2005, vice president and creative director at Target called the ad campaign a “breakthrough”. These free benefits to the initial costly advertisement were significant because they got the word out about the company. Another savvy marketing campaign was Target’s Take Charge of Education campaign.
As stated before, the Take Charge of Education program allowed Target Guest Card holders, and later Target Visa credit card owners, to choose an elementary or secondary school of their choice. One percent of their spending on that card would go towards funding for that school. Total spending for television, The company was selling the fact that they were philanthropic and aware of the community outside their business. The Target brand was associated with giving back to the community, which made consumers feel good about their choice of Target as a retailer.
By 2006, the Take Charge of Education program had donated nearly $1 55 million to more than 108,000 schools (Soloist 1063). Since Dayton Corporation’s first public stock offering in 1967, consumers have been able to witness the company grow at impressive rates. Target stock today is at a comparatively high level, with prices for one share of stock ranging from $47. 25 – 65. 80 over the past fifty-two week period (Investor Guide). Our group would consider right now a good time to invest in Target stock because of both the time of the year and the growth rate of the business.
Since Target is a discount retailer, it caters to families and other consumers on a budget. The fourth quarter of this fiscal year began on October 1, 2012, and discount retailers tend to do more business during the fourth quarter than any of the others, according to Businesslike. This boost in business may be because of Christmas, which helps the company. The holidays bring in extra revenue. We also determined that now would be a good time to buy Target stock because of the company’s expansion into Canada.
Target is aiming to be a $100 Billion company by the year 2017 according to the Target team members who presented at Bryant University this fall. Canada is projected to account for between $6 and 7 Billion of the company’s revenue. Target’s expansion into Canada is beneficial to the health of the company, which is why we determined that it would be mart and financially beneficial to invest in Target stock. Although Target has never expanded outside of the United States’ borders, their domestic achievements and impressive profits have given them relative confidence in success outside of the United States.
Target will be taking over buildings that were formerly Seller’s store locations. Consequently, they will have to overcome the problems that previous companies could not achieve before. Therefore, the American retail company must wisely plan a way to meet foreign needs, while also portraying the true, core values they offer. Similar to other retailing companies, Target’s expansion must contemplate the cultural, demographic, economic, and government differences Canada presents.
Although Target is straightening, Wall-Mart and other discount companies are making a high end risk had to strategies as well. However, these large retailing corporations will have to compete against each other as well abroad. Many of these difficulties will pose as threats to Target’s investments. In order for Target to be successful, they must first study the different culture in which they are planning on expanding. Although the most prominent ethnic group n both countries is Caucasian, Canada is populated with 2. 2 times more Asians and 3. Times more Native Americans. These numbers may not show their importance in terms of percentages, but when 125 different stores are spread throughout the country, they will need to stabilize the products in order to meet needs for all ethnic groups. This statement goes hand in hand with language as well. Just as Caucasian is the most common ethnicity, English is the most common language. Approximately sixty-five percent of Canadians speak the English language compared to an secondary language is much different in these two countries.
In the United States, the secondary language is Spanish, with 12. 2 percent of the population speaking Spanish, whereas Canada has 21. 9 percent of its people speaking French (United States Statistics Division). The difference in language will be a very important aspect of change when expanding their company. Not only will products and stores need to be more language friendly, the employees themselves may encounter difficulties communicating with customers who do not share a common language with them.
When expanding a large corporation into a foreign country, it is important to make ere that the consumers will demand the same quality and quantity of goods. When you compare the GAP per capita in the two countries, it is hard to find a difference in the average. Although Canada stands at a small 0. 97 percent higher, this difference is not sufficient enough to prove that it will skew sales at all (Bureau of Economic Analysis). In fact in both GAP per capita and the unemployment rate of these two countries, Canada has the advantage. With an approximate 8. Percent of people unemployed in Canada, their number stands better than the United States, who currently has an unemployment rate of 8. Percent (Bureau of Economic Analysis). These numbers should both prove to be positive effects on projected sales. Unfortunately, Canada is not inhabited in the same density as the United States. With only 33,910,000 people living in Canada, they are only about one ninth of the United States population. This drastic change in population can certainly cause problems when opening up well over one hundred new stores spread throughout the country.
In order to be successful, Target’s team will need to research areas with the greatest population in order to increase sales within stores. With about 5. 3 Million people living in the Toronto area, the large retailing company must take advantage of this location. With strategic placement of stores and widespread variety throughout the country, Target should be able to increase profit. While Target grows into Canada, retail becomes a large question of discussion. In the United States, Target carries several different brand name clothes such as Decries, Wrangler, Converse, and Merino, as well as many more (Target).
Unfortunately, style does not run the same in all areas of the world. What has been popularized in the United States may not catch on in Canada. Therefore, Target will need to research more into what clothes will sell in Canada, and find ways to produce revenue that way. It may take time to determine what type of product the Canadian market wants to see, and adjust inventories and product lines if the desires of Canadians differ from desires of Americans. Economy and government taxes differ as one travels from country to country around the world.
As Target begins to spread stores outside of America, they will need to study the economy and government of these countries. Sales tax in Canada is 1 5 percent, which is one change that the brand must face. Although Canadians are used to the high level of sales tax, Americans are not, which may present problems to Target as an American company compared to Target as a Canadian company. It is fortunate that the Canadian dollar (CAD) and the American dollar (USED) are close to being equivalent, because this will make prices easier to determine in Canada.
The minimal difference in the value of American and Canadian currency is important to Transportation of goods is a key component in starting a widespread corporation. During Target’s expansion to Canada, only three distribution centers will be used. The three centers are in Toronto, Calgary, and Vancouver. This differs greatly from the twenty-six distribution centers across twenty-one states that the United States uses. Although this was planned by the company, it presents difficulties that American Target stores do not face.
With over 100 stores being brought into production and only three distribution centers, most of the products will be shipped through the air. Fuel prices are increasing and projected to increase over the next year, according to the U. S Energy Information Association. With higher prices of fuel, ND air being the most expensive means of transportation, prices of the goods may be driven up with this third party transporting the goods. As Target moves towards Canada to create a larger corporation and bring in more money, they also bring along many strengths that will help them succeed.
They have many assets that lead people to believe it will work. The large company provides affordable and quality goods that people love to buy. Target also has a large assortment of products such as home care, personal care, and clothing, and food. With these products, a vast majority of people will be attracted to the store to buy everyday products. Target is a one-stop-shopping venue, and convenience is an asset to the business. Target’s product line is vast and able to satiate almost all necessary shopping needs.
Not only does Target have strength in wide product variations due to an impressive product line, but customers are also very attracted to the simple yet recognizable logo that they provide. Target’s “Expect more, pay less” slogan is nationally recognizable, so international expansion will be easier due to its widespread success in the United States. Target is very consistent with their color chem. and logo around the nation in all of their stores. This allows all people to see a store, and know exactly what they are getting.
Customers are drawn to Target over their main competitors, Wall-Mart, Cost, and Smart, due to the brand’s impressive consistency. Target’s significant expansion has a good head start due to the fact many Canadian citizens have traveled over the border and may have experienced or been able to witness what Target is willing to offer. No business is without weaknesses to combat strengths, and Target is no exception. Three of Target’s biggest weaknesses as they move towards the expansion onto Canada are their possible increases in prices, lack of international experience, and store locations.
As Target centers most of their thought and care around good quality products for customers, they may not be able to focus yet on the fact that low prices win consumers. Target is known to have slightly higher prices on products than its main competitors. This is due to the higher quality goods that Target produces. Although Target has planned very specifically its entry into Canada, the company’s lack of international experience may be a hindrance to its initial success as well. The company may need to employ a trial-and error system to determine what works in Canada as opposed to the United States, which may be a problem in the expansion.
Also, the actually store locations that were formerly Seller’s are smaller than desirable for the Target brand. Target in Canada will not have pharmacies or a produce section, which may present problems. One of the reasons that American building sizes, Target will have to cut back on some of the products that people in America have become accustomed to. This transition into Canada brings many opportunities Target’s way as well. With Canadians coming across the border into the United States, they have already proven to have interest in the company.
Hopefully by opening up over one hundred stores in a new country, Target will grow amongst people and become even larger as a corporation. As quoted by online portfolio ZEN Portfolios, “Canadians tend to spend 11% – 20% more on capital products than Americans, they will likely buy more products from Target than American citizens do. ” ZEN Portfolios also states that fifty- seven percent of current Canadian Wall-Mart shoppers would lean towards Target as heir main shopping source if it was available to them.
If these numbers continue to stay consistent as they transfer over to Canada, then Target has a very good opportunity. As stated previously, weaknesses and threats are always a real danger to corporations looking to expand. Since Target will only be operating three distribution centers, there is logic that flying products from store to store across the country will cost more than in the United States. Fuel costs are very prominent, so one of Target’s main threats is keeping low, impressive prices to appeal to consumers, the way the rand has done in the United States.