This paper tries to explain on how Capstone project can be used to illustrate the theoretical concepts examined in studies to analyze the performance of a public corporation. This is an approach that tries to examine whether the corporation meets certain requirements of the capstone matrix by analyzing the economic, social, technological and political factors that affect its performance, which is called PEST analysis. The corporation selected for this study is Target Corporation, the second largest discount outlet in the U.S. after Walmart. This paper explains that there is a need to know the threats, weaknesses, opportunities and strengths of a corporation in order to understand where variations need to be included in order to improve its profitability. Such an analysis is called SWOT analysis. By using capstone competency matrix, we are able to see the competency of the corporation and the likelihood of its success in the retail market, based on internal and external effects. This allows for remedial actions such as making use of strengths, accepting the weaknesses, taking advantages of opportunities and developing countermeasures against any threats.
The use of competence matrix gives the information regarding economic factors that affect the performance of the corporation and its vulnerabilities that can be used to structure operation arrangements for profitability purposes.
Development of a competency matrix is fundamental to this study in determining the competencies demonstrated in the capstone. This paper illustrates the understanding of the competencies leant in theory from the analysis of the strengths, weaknesses, opportunities and threats that the organization faces in its operations. The competency measures in this article involve those in the domains of economic factors affecting the operations of the corporation, technological factors, social factors and political considerations.
The use of capstone competency matrix in this study can be justified by the need to show the skills of management in such areas as planning and implementation of management skills learnt in theory. Furthermore, this matrix has been selected because it demonstrates the user’s competency in developing active learning techniques and preparing written work in an organized way. This paper shows the understanding of the areas of management that have been studied in class and how they can be applied in management as well as the ability of the user to consult; it also demonstrates the ability of the user to consult various sources of information that assist in the accomplishment of the project.
The capstone project involved in this case also demonstrates understanding of the composition of the task and techniques of its implementation as well as the amount of effort that needs to be incorporated into the project. It shows the ability of the user to structure the work and develop time schedule for all activities of the project. This article demonstrates the ability to apply all theories leant in management lessons to analyze management structures of corporations such as Target Corporation. It also includes the recognizing of the theories and their application in SWOT analysis.
Target Corporation is among the most successful retail outlets in the United States, having 1556 outlets within the U.S. and operating in 47 states. Initially, it was referred to as Hudson Corporation, and it has three major retail divisions: Target Stores, Mervyns and Marshall Fields. It is also the second largest discount retail outlet after Walmart Stores and it is distinguished from its counterparts by offering high quality, fashion oriented products at least costs. About 1225 outlets distributed in 47 states contribute to approximately 85 per cent of the cumulative gains of the corporation. The stores are mainly larger compared with typical retail stores with sizes of about 140000 square feet versus 125000 square feet. Mervyn, one of its outlets located in San Francisco provides averagely estimated, family focused prices for the people in the neighborhood.
In the year 1902, after John Dayton had completed the construction of a six-storey building in Minneapolis, he opted to rent the building to R.S. Good fellow Company. Movement of stress followed this to Dayton’s premises. Subsequently, the owner of the store relinquished ownership of the company to Dayton. In the year 1903, Dayton renamed the company; Dayton Dry Goods Company.
There was a success of operation of the company in Minneapolis in 1950. This resulted in the purchase of Lippmann branch of Stores in Oregon. Dayton did not operate it in the same manner as other existing enterprises but operated it as an independent company. He later opened a personal store in Edina, Minnesota. This was the first fully enclosed department store in the world.
Dayton then invested in discount merchandising in 1962 with the first store being located in Roseville, Minnesota. Later in the year, another branch was formed, and it was named Target stores. In 1968, Target Stores were opened in Missouri, allowing the operations of two stores in St. Louis. There were management difficulties that contributed to development of Venture stores and the ownership of Lechmere chains that mainly focused on retail of electrical goods. In 1969, the first outlet of Target company, Dayton combined with J.L. Hudson Company and was renamed Dayton-Hudson Corporation. This corporation expanded and owned a number of departments in the West Coast. As a result of increased expansion and scarcity of competent executives in the management areas of the subsidiaries, there were reduced sales in the year 1971. The option of selling it out was prevented by intervention of Stephen Pister and Kenneth A. Macke. Currently, Target stores and its holding counterpart, Dayton-Hudson, perform well in the industry in which they operate.
In 1997, a number of Dayton outlets were sold. This included all stores in Florida and Georgia. There were also cases of retrenchment of store personnel following the sale of Marshall Field Stores in Texas and closure of its stores in Milwaukee.
Efforts were also put in place to assist the community served by the company. In this regard, in 1997, the corporation made grants totaling $39 million in which $ 28 million went to the provision of scholarships that were awarded to high school students who had participated in their activities. The same year saw the launch of Take Charge of Education program, which finally became the leading community assisting effort. Through the program, Guest card holders could select the schools they would like to enroll in and get education. Within a period of two years, about 300000 schools had enrolled into the program, and a total of $800000 had been disbursed to these schools.
In the year 1999, the revenues of the corporation reached $33.7 billion, passing the $1 billion record for the initial moment and contributing to a profit margin of 3.4 per cent. This was more than three times the profits realized in 1996 and a double of the profit margin to 1.8 percent in the same year. The main cause of these profits was the Target chains that had gained popularity from retail outlets in the region.
In the year 1999, the corporation launched the sale of top-end Calphalon cookware and other appliances as well as household goods developed by Michael Graves. This ensured Target Corporation was able to compete well with its discount competitors. In the meantime, the growth rate of the corporation was at a rate of 70 stores per year covering areas such as Chicago and the New York City and making successful coverage in the Northeastern states (Kuklick, 2008). There was growth in dominance of the corporation chain and this resulted into the renaming of the corporation into Target Corporation in the year 2000. The same year saw the corporation develop an e-commerce approach, in which distribution was managed online. The corporation bought River town trading company at a cost of $120 million to assist in handling marketing and distribution of e-commerce services of the retail units of the corporation. There was an increased level of online trading in the early 2000 with the incorporation of an e-commerce sector referred to as Target Direct. A number of new store brands web sites were formed in the same year.
Target Guest Cards were also being used. However, the use of visa cards and master cards reduced their popularity. Testing was done on a target Visa Card in 2000 and in the year 2003, a total of 6 million Guest card accounts had been changed into the new Visa Card. There were observable expansions of Target Stores in 2000s, contributing to additional 62 discount stores on top of 32 stores that existed in the year 2002. This made the overall number of stores reach 1150, while Super Target Stores totaled to 100. Despite the challenges faced by Mervyn’s and Marshall Field’s Divisions, profits reached $1.7 billion (Ferguson, 1984). There were rumors that these divisions would be divested because of lack of contribution to the profitability of the corporation.
Target Corporation is mainly managed by a board of directors comprising of the President, advisors, marketing officers, chairpersons of its branches, financial directors and executive officers. Currently, the President and CEO of Target Corporation is Gregg W. Steinhafel.
In this section, a number of situations inside and outside the organization that affect decision making capacity of the management have been analysed. They include trends in demographic, political effects, ecological conditions, economic factors and socio-cultural factors that affect the performance of the organization (Korom, 2000). It also involves SWOT analysis of the operations of the company where strengths, weaknesses, opportunities and threats are analyzed.
These refer to factors within the immediate environment of Target Corporation that affect its performance and management decisions. They include the suppliers, marketing intermediaries, the public, competitors and customers. They are regarded as more linked to the company in comparison with external factors affecting the performance of a business organization. Some of the micro factors are only concerned with the operations of Target Corporation and not all corporations in the industry (Ward, 2003). For instance, Target Corporation may select its suppliers from a different environment from those used by other corporations.
Target Corporation considers suppliers as chief internal force in its operations. This is due to the lack of certainty regarding constraint of suppliers’ forces for the company to incur high costs of inventory. Target Corporation keeps inventories 3-4 months to ensure that the supply of goods is compensated in the case where supply is low. Due to the importance of suppliers, Target Corporation gives high preference to supplier development. They do not rely on a single supplier because any lock, strike or any difficulty related to supplier always affects the company (Milner, 1993). They have also made provisions to deal with a change in the attitude of suppliers. By using several sources of supply, the risk of shortage in supplies is eliminated. The supply management organ has placed more emphasis on scarcity in the environment to ensure that scarcity issues are addressed. The purchasing agents have put measures that are pleasing to the suppliers to ensure they get the right bargain during shortages of supply. This has been achieved by marketing themselves to the suppliers.
Ordinarily, the main aim of a business is to ensure that customers are retained and made loyal to the company. Target Corporation is aware that its existence is supported by its customers. In this regard, the company has ensured that the sensitivity of customers is monitored to ensure success in satisfying their needs. The customers of this corporation fall into different categories: individuals, families, other companies and commercial organizations as well as government institutions (Kuklick, 2008). More specifically, some of its customers include individual consumers of products, manufacturers of other products, public sector organizations and government institutions.
Relying on a single customer is always not recommended at Target Corporation because the management knows that this strategy can result in poor sales. This is because a company may experience reduced sales volume due to the reduction in the customers’ base, as some customers switch to competitors (Roseberry, 1997). Target Corporation makes choice of customers by ensuring that factors such as the likely profitability, loyalty, maintenance of demand and likelihood of growth are taken into account.
Target Corporation management is aware that their competitors are not only firms that sell similar products as theirs, but also those involved in trying to attract the income of the consumers. For instance, the competition for its TV sets may not only be experienced from other retail outlets dealing with the sale of TV’s but also from other distributors of products such as refrigerators, radio sets as well as firms involved in offering savings and investment opportunities such as banks (Korom, 2000). Target Corporation is located in U.S where desire competition is high while incomes are low among certain groups of people.
Target Corporation has also ensured that customers are well informed to prevent generic competition. This is the case where the customer is confronted with a number of alternatives to choose from when he intends to spend his income (Milner, 1993). By providing customer service effectively, the Corporation has always ensured that its customers are focused on buying its products, rather than the competitors’.
Furthermore, this is a case where customers have difficulty in choosing products of different brands. In order to meet this challenge, Target Corporation has put in place a number of measures which ensure that they sell products of different brands that customers can choose from.
Target Corporation has put measures that ensure its products are marketed well and distributed to the final consumers. It has employed middlemen and agents who assist in distributing its products from the origin to the required place such as stores or transport firms. They have also employed market service agencies to assist them in targeting and ensuring their products and services are promoted in the required markets (Roseberry, 1997). They have also ensured that they use services of advertising agencies and marketing research institutions or consulting institutions as well as financial intermediaries, which ensure their market is well served. These intermediaries have provided a link between the company and its customers. The management has been aware that if this link is dislocated, higher costs may be incurred, thereby affecting the profitability adversely.
External factors usually refer to those factors in the external environment. As opposed to internal factors; which can easily be controlled by a firm, external factors are difficult and sometimes impossible to control. Another line of departure that exists between internal and external environment is that each firm usually has a unique internal environment. On the other hand, external environment is arguably similar across firms in an industry. To clearly understand the external environment of any particular firm, it is important to perform a PEST analysis. This is an economic framework that was developed by Michael Porter and has been found useful in analyzing external forces that affects a firm; political, economic, social and technological factors.
Target Corporation’s operations are done with consideration to laws that control the conduct and operations of businesses. The legal framework covers areas such as the standards of products that need to be produced, packaging requirements and the promotion techniques. In addition, the company has ensured that its products meet government requirements for protecting the interests of consumers and ensuring environmental purity as well as preserving ecological conditions. These regulations have ensured that the operations of the corporation are carried out within these limits (Korom, 2000). The packaging processes have also been done according to the recommendations of the government.
The manners in which advertisements are carried out are also under the control of the government. Therefore, the company has ensured that certain restrictions which are not allowed by the government are not violated. For instance, the corporation has always ensured that prices of its products are charged according to Federal Trade Commission requirements.
The government has also ensured that companies disclose the knowledge regarding side effects of certain types of foods such as drugs, food additives or cosmetics. Other government policies that have had impact on the operations of Target Corporation are industrial policies, fiscal policies and tariffs policies. These policies have resulted into creation of both threats and opportunities.
Some of the economic conditions that affect the operations of Target Corporation are economic policies and economic systems. Economic conditions that affect the performance of Target Corporation include the income of the people in the areas where they operate. This requires that management develop policies for the sale of goods that can be afforded by people in areas where their outlets are located (Kuklick, 2008). It also ensures policies are placed to ensure that sold goods are highly demanded. This is because the purchasing power of the customers cannot be affected by generating the willingness of customers to buy the products. In certain cases, the company may have to reduce the price of its products to meet the purchasing power of its products. The other economical factor that affects the operation of Target Corporation is income of the people in the surrounding areas. The company has ensured that the products sold are those that can be afforded by people living in the surrounding areas based on what they can afford (Ferguson, 1984). By developing products, which are cost effective, customers are likely to be pleased to purchase products without fear of overspending.
Furthermore, government economic policies in the U.S. have contributed significantly in affecting the operations of Target Corporation. These include restriction of import of certain products or provision of incentives from the government. The success of the corporation in giving back to the community has resulted in recognition by the government through the provision of incentives in terms of reduced taxes of operations. However, the company has been restricted from selling certain products which are not legalized by the government of U.S. (Milner, 1993).
The Corporation also operates on a free market economy where factors of production are controlled by the entrepreneurs and transactions take place in monetary form. People are allowed to buy what they need for consumption and whether they need to save their income and there is no control by the government. It is also not involved in competition with the government.
These include the customs, cultures, taboos and traditions of people in areas where the business is being operated. Target Corporation has ensured that the products and services sold to customers conform to their buying or consumption culture, tastes and preferences and education. Marketing mix has also been designed to meet the requirements in the areas where the company is operating. The corporation has also ensured that there are varied methods of presentation, positioning and promotion methods for the products to meet the preferences, tastes and attitudes of people in the surrounding environment. Naming of products has been done to suit a particular language used by the people in areas where the company has outlets. Various products have also been produced with different colors based on their beliefs concerning those colors. For instance, areas where Muslims are the most common customers have been supplied with green products due to their preference for that color.
There is a number of demographic characteristics that affect the performance of Target Corporation. These include size, expansion, age and sex characteristics of the population. Others include levels of education, economic stratification of the people and languages spoken by the people (Ward, 2003).
There are also demographic factors that affect the operation of the corporation such as population size, levels of occupation, patterns of employment and the levels of demand for goods and services. The company has been forced to reduce its supply for goods and services due to a decline in birth rates that has contributed to low levels of demand. These changes in demographic characteristics have also resulted in the shift of selling certain types of products to those favoring majority of the population. In areas where there is a rise in population due to the increased birth rate, there has been an increased demand for products produced by the company as well as availability of labor for the operations of the company.
The SWOT analysis of Target Corporation was done to provide the top management with data and information that would be useful in effective management of the corporations. It was carried out by evaluating the Corporation’s business constitution and operations, history, products and a summary of its revenue lines strategies.
The goal of SWOT study is to give information concerning the company required for operations and retail management. It also involves the study of internal and external factors that affect the company such as SWOT analysis and the overall evaluation of vital product streams.
From the analysis of the external and internal factors affecting the performance of the corporation, the capstone competency matrix indicates the following strengths:
- Ability to compete favorably with other companies in the same areas of operation
- Ability to expand operations to other areas of the country and other regions of the world
- Ability to finance its operations without the assistance of the government or experiencing financial constraints
- Capability of the corporation to handle a range of products that require different handling requirements
Target Corporation can make use of these strengths by increasing the level of advertisement of its products to create better consumer awareness than its competitors. It also needs to ensure it expands its operations to cover wider area of operation. The corporation also needs to take advantage of its strong financial position to invest in more profitable products and services or diversify its production to include other profitable investments, which do not involve retailing operations. The corporation also needs to use its capacity to manage a wide variety of products to ensure that more training is provided to product handlers so that the processes of handling products are effective.
There is also a number of the corporation weaknesses based on literature review of the factors that affect its performance in the geographical region in which it is operating. Some of the weaknesses observed include:
- Inability to conform to the level of quality of products and services that are recommended by the government;
- Lack of incentives to carry out certain tasks such as assisting the community;
- The obligation to produce products and services that are required by the public irrespective of their level of profitability.
It is recommended that these weaknesses be resolved to ensure the company is effective in its operations and customers are made confident when they go to their store. For instance, the constraint of commitment to government requirements and regulations can be accomplished by designing products which meet these regulations (Ferguson, 1984). The inputs for production of these products need to be of high quality to ensure high quality output is realized. This eliminates the possibility of producing low quality of products or those that are rejected due to low quality. The staffs of the corporation also need to be motivated by being given bonuses and other recognitions for their service to the company.
The limitation of having to produce the goods that is recommended by the public needs to be addressed by studying demographic characteristics of the people such as death rates, birth rates and population distribution in terms of sex and age. This ensures that products meet the requirements of the majority of the population.
Based on the outcome of the situation analysis, a number of opportunities can be deduced for target Corporation. By making use of these opportunities, it is possible to develop a management structure that ensures these opportunities are beneficial to the corporation. Some of the opportunities are illustrated below:
- Possibility of using market intermediaries to reach more customers;
- Ability to open more outlets in areas that have not been reached by many corporations;
- Existence of legislation that ensures operations of the company are not restricted.
The management of the corporation needs to make use market intermediaries such as suppliers and marketers to reach more potential customers. This approach will ensure more niches are reached to improve the level of demand for products produced by the company. Also, taking advantage of availability of high demand areas and opening more outlets would be beneficial to the corporation (Ward, 2003). It will ensure that more customers are able to buy the products and services of the company in all parts of the country.
The results of the situational analysis also indicate that the corporation faces a number of challenges and threats in its operation. In order to maintain high level of profitability, these threats need to be addressed and the right action taken. Some of the threats likely to be experienced include:
- Competition from other companies and corporations in the same filed;
- Restriction to trade in certain goods by the government;
- Remoteness of certain areas where outlets have been opened.
Competition from other companies can be addressed by improving advertisement for the company’s products and improving the quality of services provided by the company. This will result in customers’ loyalty and retention (Kuklick, 2008). There is also need to ensure alternative goods that are allowed by the government are traded in. It may be accomplished by carrying out a research regarding goods and eservices that have higher demands in certain areas so they are availed to the public in those areas.
Understanding of strengths and weaknesses of a business is a significant knowledge in the present world. The awareness and sufficient knowledge concerning the factors that affect the operation of a business are necessary for multinational corporations, trading company’s individual consumers or exporters (Dawson, 1997).
In the global arena, it would involve better knowledge regarding business environment. This is because the multi-national operation involves expanding areas covered in trading across a number of boundaries. The ideas of internal and external factors with consideration of political, legal and cultural background need to be considered as factors that affect the management of a company. There is a need to do a thorough investigation in order to understand international business conditions (Milner, 1993). This research could be better fulfilled by having a superior understanding of the framework for investigating international business conditions and the management considerations that need to be taken into account in ensuring the business is profitable.