Target: Responding to the Recession SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Target: Responding to the Recession
Within 10 months of Gregg Steinhafel's taking over as CEO at Target, the U.S. was mired in the most significant economic downturn in 50 years. Top competitor Wal-Mart had positioned itself well for the crisis, while Target's same store sales began to slide. While Steinhafel believed that Target's long-term strategy and positioning were right, he pondered a set of strategic and operational challenges. Did Target have the right mix of offensive and defensive tactics to weather the downturn and position itself for the economy's eventual recovery? How far could Target go in emphasizing low price-the "pay less" side of its slogan-without eroding the company's core promise of offering unique and upscale products that customers would not see at other low-priced retailers? Would the benefits of adding fresh food to Target's general merchandise stores outweigh the associated challenges?
Authors :: Ranjay Gulati, Rajiv Lal, Catherine Ross
Swot Analysis of "Target: Responding to the Recession" written by Ranjay Gulati, Rajiv Lal, Catherine Ross includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Target's Target facing as an external strategic factors. Some of the topics covered in Target: Responding to the Recession case study are - Strategic Management Strategies, Competitive strategy, Leadership and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Target: Responding to the Recession casestudy better are - – talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels,
technology disruption, there is backlash against globalization, etc
Introduction to SWOT Analysis of Target: Responding to the Recession
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Target: Responding to the Recession case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Target's Target, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Target's Target operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Target: Responding to the Recession can be done for the following purposes –
1. Strategic planning using facts provided in Target: Responding to the Recession case study
2. Improving business portfolio management of Target's Target
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Target's Target
Strengths Target: Responding to the Recession | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Target's Target in Target: Responding to the Recession Harvard Business Review case study are -
High switching costs
– The high switching costs that Target's Target has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to lead change in Leadership & Managing People field
– Target's Target is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Target's Target in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Target's Target is present in almost all the verticals within the industry. This has provided firm in Target: Responding to the Recession case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High brand equity
– Target's Target has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Target's Target to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Target's Target are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Target's Target digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Target's Target has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Low bargaining power of suppliers
– Suppliers of Target's Target in the sector have low bargaining power. Target: Responding to the Recession has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Target's Target to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Target's Target has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Target: Responding to the Recession - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Leadership & Managing People industry
– Target: Responding to the Recession firm has clearly differentiated products in the market place. This has enabled Target's Target to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Target's Target to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Target's Target in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Target's Target is one of the most innovative firm in sector. Manager in Target: Responding to the Recession Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Target's Target has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Target: Responding to the Recession Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses Target: Responding to the Recession | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Target: Responding to the Recession are -
Workers concerns about automation
– As automation is fast increasing in the segment, Target's Target needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Target's Target supply chain. Even after few cautionary changes mentioned in the HBR case study - Target: Responding to the Recession, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Target's Target vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Target: Responding to the Recession, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Target's Target is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Target's Target needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Target's Target to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Target's Target has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Target: Responding to the Recession should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Target's Target has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Target: Responding to the Recession, is just above the industry average. Target's Target needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Target's Target is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Target: Responding to the Recession can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Target's Target has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Target: Responding to the Recession, in the dynamic environment Target's Target has struggled to respond to the nimble upstart competition. Target's Target has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Target: Responding to the Recession HBR case study mentions - Target's Target takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Target: Responding to the Recession | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Target: Responding to the Recession are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Target's Target to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Target's Target to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Target's Target can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Target's Target is facing challenges because of the dominance of functional experts in the organization. Target: Responding to the Recession case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Buying journey improvements
– Target's Target can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Target: Responding to the Recession suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Using analytics as competitive advantage
– Target's Target has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Target: Responding to the Recession - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Target's Target to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Target's Target in the consumer business. Now Target's Target can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Target's Target to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Target's Target in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Target's Target to increase its market reach. Target's Target will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Target's Target can use these opportunities to build new business models that can help the communities that Target's Target operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Developing new processes and practices
– Target's Target can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Creating value in data economy
– The success of analytics program of Target's Target has opened avenues for new revenue streams for the organization in the industry. This can help Target's Target to build a more holistic ecosystem as suggested in the Target: Responding to the Recession case study. Target's Target can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Target's Target can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Threats Target: Responding to the Recession External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Target: Responding to the Recession are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Target: Responding to the Recession, Target's Target may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Target's Target can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Target's Target in the Leadership & Managing People sector and impact the bottomline of the organization.
Consumer confidence and its impact on Target's Target demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Target's Target will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Stagnating economy with rate increase
– Target's Target can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Regulatory challenges
– Target's Target needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Target's Target with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Target's Target
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Target's Target.
Technology acceleration in Forth Industrial Revolution
– Target's Target has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Target's Target needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Target's Target can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Target: Responding to the Recession .
Weighted SWOT Analysis of Target: Responding to the Recession Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Target: Responding to the Recession needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Target: Responding to the Recession is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Target: Responding to the Recession is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Target: Responding to the Recession is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Target's Target needs to make to build a sustainable competitive advantage.
