The report aims at understanding the Target Canada case study and how it becomes a retail model for the other companies in the world market. Its emphasis on the major problem experienced by the company along with the project management technique that would helped it to establish a successful Target store in Canada. The report is generated to realize the factors that failed so that in the UK the company can go with a full proof plan for establishing it in that country. It also discusses the project plan along with the risk constraints, communication plan and the resources required for developing a retail store. It even gives detailed information on performance management. At last, it concludes all the findings of the case study for future considerations.
Major planning problems.
Project management techniques.
Proper planning of the expansion.
Understanding the external environment
Improved Supply chain and logistics.
Resources used in project
The UK has a lot of supermarket chain in the country. Planning for another one in theUnited Kingdom requires analysis so that if the company establishes its store in the UK, it can generate revenue by selling products to its customer. Target is one of the eight largest merchandise in the United States. It has become a model of US retail in the country. The company is known for transforming even when they are performing in the market. It indicates that the company is preparing itself for an uncertain future. There was a time when the company was flourishing in the world market but due to retail apocalypse the company had to suffer but it came roaring back with new initiatives and policies to retain customers in the shop. It is battling in the field with though competitors that are Walmart and Amazon.
If we ponder back, the company's international expansion in Canada was not found to be fruitful. Its aim with Canada was high but it failed in capturing the Canadian market. Although there was a tie, when the families in Canada used to purchase household and electric items from Target US but since its establishment n the country, the people were not satisfied with the store. They were expecting the low prices as were in the US but the prices of the commodities were similar to the local retailer and the store was facing inventory issues as well. The customers did not like the shop because the product which they want to be was not in the store. Target store was a performance in Canada was to up to the mark. It suffered through losses and there was a time when the company declared itself as bankrupt.
The objective of this project is to understand the problems experienced by the company in Canada and how a company can overcome these problems by planning a similar expansion in the United Kingdom.
Kurnianto et al. (2019) stated that the success of any company depends on how it plans and how it implements the plans that it has made. The company can flourish in the world market when it through analyzes every aspect required before establishing into any territory. It is often seen that the companies who did not plan things before failed in achieving the profits.
Pigni et al. (2018) stated that many mergers and questions have failed in the history just because proper execution of the planning was not done or the company did not understand the importance of planning things at the beginning and they just carried out the operation without thinking over its consequences.
One of the biggest problems of the company was that it missed the mark in the beginning by being too fast. The company was quickly expanding its stores in the country without understanding the market response towards them. It never paid attention to the fact that why Canadians loved Target US stores.
Another reason for the failure was that the company was unable to understand what ticks the Canadians to shop for things. It is due to this Target failed in the pricing strategy. There was a huge price discrepancy between the American and Canadian stores. Moreover, it was also found that the company could not make up to its tagline that is "Payless and Expects more". The Target store was inferior to US stores when compared with the prices. American stores were offering products at low prices than the Canadian ones.
It was found in a study that 70 per cent of the customers have shopped items from the US Target stores. These customers not only know about what Target is but also know about its brand image. The statistics depicted that people in Canada were not happy with the Target store as they did not get the same experience that they used to get in the US. Target Canada failed to understand the customer expectations it only emphasized the perception about the brand (Fornell et al. 2018). Target expansion would have become successful if it would have engaged Canadian shoppers by understanding more about their shopping experience with the store.
Target empty shelves were another setback for the company. The company failed to create an adequate distribution system. It is because of this the customers started complaining about the empty shelves in the store. The company even failed to serve its customers through online shopping. It increased more frustration for the store in the minds of the customers. The only way to retain the trust of the people in Canada was to tap into the customer intelligent mind and better anticipate the demand of them (Fernie and Sparks 2018). It was found in the study conducted in 2015 that 41 per cent of people stated that Target Canada was not as good as Target US. Some of them even stated that the home furnishing of Target Canada could not meet the same stylings as of US target. The company’s product selection was not good; it could have been better if the company would have tied to understand why shoppers visit the stores.
The technology used by the company was not upgraded according to the foreign country. The language, price of the commodity was the same as that for the US. In Unites states the company was using custom based software that was meeting the needs of the people in the country. But it was not suitable for Canada as the people here are different. The company needed to customize its software to deal with the people in Canada(Troutman et al. 2016). To make these changes would require time and the company was not ready to implement the changes required as it did not have time. Thus, it used the same software for the people of Canada.
Here are some project management techniques or success factors that the company should have taken before the expansion of its stores in a foreign country.
The company when planning to expand its business overseas must understand what all resources it will require at which location it will establish its business and to whom it would target and so on. Without planning just looking at the demand and launching stores without thinking anything would result in a similar loss as experienced in Canada. While expanding the business to a completely new city the very first step a company should take is to understand its consumers by analyzing their shopping style and why they visit a certain shop, at what price they purchase the product and will it be feasible to launch a similar store which is already present at the location. All these questions should be seriously taken into consideration (Sanchez and Haas 2018). As it would help in creating a good project plans with schedules, cost, budget and resources.
It is also important to understand the external environment factors before expanding the company in the foreign market. It can be conducted through carrying political, social, economic, environmental, technological and legal analysis. Political factors will help in understanding the political situation of the country like which party is currently ruling and which one in the opposition. It will also help to determine up to what per cent the governmental policy would impact the organization. It will further help to know the trade, fiscal and taxation policies.
Economic factors, on the other hand, will help to know how the economy will have an impact on the organization profitability. The economic factors that will affect the company would include unemployment rates, raw material cost, inflation rates, interest rate and foreign exchange rates. The social factors of the company help to understand the social environment in which the people lives(Yusop 2018). It helps in emphasizing the emerging trends of the people. It would help the company to understand the customer expectations and their demands. The changing needs and wants of the customer are difficult to predict and thus it becomes more difficult to target a specific demographic. The culture change and the change in attitudes and lifestyle of the customer could be learnt in this category.
Technology keeps on evolving; it has a direct impact on the shape of the company. It can be positive or negative. The digital era, cloud computing are some factors that urge the industry to start its business on the online platforms rather than establishing a brick and mortar industry. The influence of the surrounding environment is also important as it helps the company to understand their social corporate responsibility (Pupo Kairuz et al. 2020)The environmental factors affecting organization include waste generation, recycling methods, carbon footprint and so on. Apart from all these, legal factors also play an important role. It tells the organization what legal formality they need to complete to operate in the country and which regulations they need to follow like health and safety measures of the employees, consumer law and so on. There are international trade restrictions and regulations as well which are too followed by the companies to establish themselves in the internet market.
The company also need to emphasis on its distribution network as everything in the business depends on it that is from tracking delivery to sale strategy all the work is linked to it. By using a holistic approach, the company can improve its distribution network. It is observed that the supply chain is complex and sensitive cause it depends on the changing customers to overcome the issue logistics does its part by providing information to the supply chain through a software about what all inventory is required to keep in the stock and which ones are already present and there is no need of them currently (Schönsleben 2016). It is due to logistic and information system that the company can provide superior services to its customers. It is identified that without a proper logistics the movement of goods cannot take place across and if it is done it would not be smooth. Customers nowadays indulge in impulse shopping and they are equally impatient for receiving their order. Companies with the organized logistic system can meet the short duration demands of the customer. It keeps the customer satisfied and makes them happy by providing the product that they want.
Target never paid attention to the performance management and it is due to this reason the company got bankrupted in Canada. To avoid such a situation in the UK the company must understand that it is very important to measure financial performance. Reviewing the financial performance of the company regularly would help it to determine whether it can meet the goals and objectives effectively or not. When assessing the financial condition, the company must measure operating margin, gross profit margin, net profit margin and the return on the capital. Besides this, the company must also measure the customer retention rate, employee performance measurement and competitor analysis. It is observed that the more a company understand its customer the more it becomes easy for it to attract them towards their products. To know whether the customer is happy with the service of the company, it can develop a customer feedback form or else check the sales data, number of complaints and presence of the company on social media. All these will help in improving the product and services offered to the customer ad thereby help the company to generate the revenue percentage (Bianchi 2016). Moreover, the company must also measure the performance of the employee. It is important because it would help the company to know who much sales are done by an employee and who much profit it provides to the company. At last, the company must also analyze its competitors. It would help the company to be prepared of them and find out a competitive advantage over the others.
Every project has a certain impact on people and employee of the organization. The company if would have identified its stakeholders and their interest level. It could have flourished even in the foreign market (Cuppen 2016). But it failed in analyzing its stakeholders and it due to this reason it was not able to manage the relationship and communication between them.
Project plan opening a retail store in the UK will require 10 months of deep research into all the areas depicted below(Kurnianto et al. 2019).
Execution or implementation of the plan
Various resources are used for establishing any industry or store in the market these include human resource, financial resource, tangible resource and non-tangible resources. Human resources help in running the business whereas financial resources help to establish a business, tangible resources are physical things that the company needs and is planning to provide it o the customers and non-tangible resources are the legal formalities that the company does to start the business in a foreign land(Davidovitch et al. 2017). Apart from the basic resources, there are technical resources as well which helps the company to monitor logistics or financial reports.
Many different types of risks constraints may appear in a retail store these are: -
The physical goods of the company can be theft by the employees or the customer who visits the store.
The goods and services that the company is selling may be adulterated or is full of contamination (Jiao et al. 2017).
It affects most business especially the retail ones because these have wet and icy surfaces both outside and inside the store.
Communication is a source by which the company can spread awareness about its brand in the market. It is also required to provide useful information to the employees. It is found that a communication gap in the employees can lead to misunderstanding or sometimes it may even lead to conflicts. It is thus said that the organization must maintain the information flow correctly.
It can be concluded from the above findings that if a company is planning out expansion in the national or international market it must first create a plan and work accordingly. It must analyze the political, social, legal, environmental, economic and technological factors before taking any step forward in the market. Besides this, it must also gain knowledge of its competitors who are going to give it a though competition to sustain in the environment. It must conduct stakeholder analysis as well because it will help the company to understand the needs of its employees and expectations of its customers who are responsible for generating profits. If the company ignore all the above essential project management plan then the chances of the company to fail becomes high as was in the case of Target Canada. The company failed to understand the importance of planning as a result it has faced huge losses later.
Target the US despite having a good reputation between the Canadian families could not resist in the environment for long because it could not understand the needs and expectations of its customers. The company was looking for a rapid profit and growth without understanding that its growth and profit are inked on customer satisfaction and sales percentage. If the customer would not purchase goods from the store it would have to suffer later. Target Canada failed but it was a model of the retail corporation for the other companies. It can be clearly stated from the entire report that if the investor is looking for establishing a company in the UK market then it must thoroughly plan out everything in detail to avoid such loss of the company again.
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