Target Canada Case Discussion Brief

Target sought to expand into Canada in 2011 after developing extensive plans to aid in its venture. However, as in cases with most expansion ventures, the process was characterized by various risks and threats that impacted its success. This paper discusses pertinent aspects of the case study involving Target’s expansion into Canada, including the SWOT analysis, issues facing the company, and recommendations for the marketing strategy improvement.

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SWOT Analysis

Strengths

  • The company is the fourth largest retailer with 1767 stores in 47 states in the USA.
  • The acquisition of many smaller retail stores has enhanced their market reach.
  • Focus on budget-conscious customers.
  • Use of promotional tactics such as discounts.
  • Cost-cutting strategies have led to the reduction of the turnover velocity of merchandise.
  • Urban market positioning enables Target to capture a unique segment.
  • Online presence enables it to compete favorably with e-commerce businesses.
  • Constant revision of management styles to match the evolving needs of the workforce and markets.

Opportunities

  • The availability of low-risk international markets, such as Canada.
  • The North American Free Trade Agreement provides a suitable chance for expansion.
  • Similar consumer patterns in Canada.
  • The interconnection between Canada and the USA in terms of market relations and cultural influence.
  • Overlapping demographic features including education, small households, growing customer affluence, etc.

Weaknesses

  • The lack of experience in international expansion.
  • High cost of entry into new markets.
  • Poor cultural and social integration of the company’s strategies.
  • Poor operational judgment by the top management.
  • Misalignment of the value proposition.
  • Over-reliance on Canadian distributors limits the range of products the company is able to stock.

Threats

  • The decrease in consumer buzz following the opening of the first store.
  • The nonconformity to the ‘one-stop’ shopping concept upon which Target relied.
  • Competition from the other retail companies and e-commerce businesses.
  • Failure to guarantee employment to the formerly employed persons of the acquired businesses attracts negative public relations.
  • High bargaining power of suppliers.
  • High operational costs.

Issues

Short-term Issues

  • Reshaping shopping habits of the Canadian shoppers.
  • Decrease in the consumer buzz in Canada.
  • Deviation of cultural and social preferences in Canada.
  • Inadequate inventory and warehousing.

Long-term Issues

  • The lack of experience in expansion into the international markets.
  • Expansion of its e-commerce presence.
  • Expansion of the list of preferred suppliers.
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Problem Statement

The company must develop an effective strategy to facilitate marketing of the company products and ensure a successful breakthrough into the Canadian market, which integrates the process of reshaping consumer patterns of the new market, thus increasing the consumer buzz of the retail stores, integration of cultural and social preferences of the typical Canadian market, and solutions to the challenge of inventory.

Case Response

The biggest priority for Target at this point refers to reshaping of consumer habits in the new market. As opposed to the expectations, Canadians hardly engage in ‘one-stop’ shopping pattern as is the case in the USA. While the main intention is to integrate economies of scale tactic that has been so successful with retail stores such as Walmart, it is convenient to refocus on getting the shoppers to shop often. The implementation of this strategy necessitates decrease of consumers’ expenditures per shopping trip. It may be done through occasional discount offers.

To generate a buzz around the company, it must associate with the locally acclaimed brands. They must tailor inventory of products to suit cultural and social preferences of the company. In so doing, the company solves two of its key challenges with a single strategic move. Moreover, the sourcing of products from the local companies enables Target to establish a relationship based on loyalty with the market.

Finally, the challenge of inventory may be solved through the diversification of suppliers. The over-reliance on single suppliers increases the bargaining power of suppliers hence increasing the operational costs of the business. By diversifying suppliers, the company increases its availability of options hence reducing this bargaining power.

Conclusion

The goal of the company when expanding into Canada was the budget-conscious segment of the market. The company focused on the upscale and urban market unlike its key competitors, such as Amazon and Walmart, which concentrated on online shoppers and rural market respectively. Target’s strategy allowed it to capture a unique market. Its reach was enhanced by the acquisition of various retail stores, which it successfully integrated into its structure and framework of operation. Even so the company still struggled with various aspects of operation, such as the integration of the Canadian social and cultural preferences, inadequate inventory, and a sharp decrease in the consumer buzz. Moreover, the company did not anticipate the difference in consumer habits of the Canadians. Besides, the company had various long-term objectives, such as the increase in the online presence to enable it to favorably compete with e-commerce businesses and reduction of bargaining power of suppliers. By studying the expansion progress and the range of factors affecting the company’s entry into the new markets, Target will be able to make successful expansion ventures into the other markets in the future.
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