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STR 581 Week 4 Strategic Choices and Evaluation

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STR 581 Week 4 Strategic Choices and Evaluation
Strategic Choices and Evaluation
STR/581
Strategic Choices and Evaluation
Target Stores Strategic Choice and Evaluation
The first Target Store was opened in 1962 by the Dayton Company. Though
there were other discount chains in the US at that point of time, many of them
do not exist today. Target was able to adapt itself to the changing environment
and by 2002; it was the second largest discount retailer in the US (Target.com,
2012)
http://www.icmrindia.org/casestudies/catalogue/Business
%20Strategy/BSTR164.htm]
In June 2002, Target Corporation (Target) had 1,330 retail stores in 47 states of
the United States. Even though it only had a fifth of the sales and profits of Wal-
Mart, it had a loyal customer base that was looking for a trendy, yet, affordable
range of merchandise (Hays, 2002 pg. 2). Target's customers, whom it referred
to as 'Guests', were younger and more affluent than that of its rival Wal-Mart
| |
An early strategic choice to build a brand around the Target name fostered the
company's steady growth. From the very beginning, George Dayton's strategy
was to position Target as an upscale discount chain at which the prices would be
just above the lowest prices. To achieve this upscale image, it offered trendy and
stylish goods in an environment that was bright and attractive, unlike other
discount stores of the time (HBS Working Knowledge, 2004 para 2). Once a
generic strategy is selected Target will also need to consider how to implement
its grand strategy to ensure it correlates with its long term goals. In the
following paragraphs it describes how Target has identified its best value, and

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how it has selected a strategy to ensure the company can achieve its long term
goals.
Identify the Best Value Discipline
Successful companies anchor on to one of the three value disciplines to pursue;
operational excellence, product leadership, and customer intimacy (Horwath,
2006). Operational excellence focuses on creating the best total cost for
customers, offering customers competitive pricing and delivering this value in
an efficient manner (Horwath, 2006). Customer intimacy includes a strategy
that accommodates the customer tailored requests to ensure individual customer
satisfaction and product leadership strives to provide a continuous stream of
state of the art products and services (Pearce & Robinson, 2011).
Target's positioning was based on more than just pricing; it encompassed
quality, style, and trend. This was the differentiation strategy that was
consistently applied since the launch of the chain. To achieve this upscale
image, it offered trendy and stylish goods in an environment that was bright and
attractive, unlike other discount stores of the time.
Target’s strategy incorporates providing the best value for customers to build
consumer loyalty and product differentiation. “In retailing, the brand is the full
experience plus value for money. Great advertising might get shoppers into the
store once but only once if the experience and value for money do not meet
expectations” (HBS Working Knowledge, 2004 para 3).
Target’s strategy gravitates toward leading the industry in price, merchandising
and convenience by pursuing a focus on lean and efficient operations (Pearce &
Robinson, 2011).
Operational excellence is the best value discipline for Target because they are
working to minimize costs through reduced overhead, eliminating intermediate
production steps, reducing transaction costs, and optimizing business processes
across functional and organizational boundaries (Pearce & Robinson, 2011).
Operational excellence is the driving force behind Target’s strategy to continue
focusing on decreasing consumer costs, increasing customer value, and
simplifying overall company operational costs.
Identification of a generic strategy
Generic strategy is implementing a long term or grand strategy that is based on
a core idea about how the firm can best compete in the marketplace. There are
three generic strategies: striving for overall low-cost leadership in the industry;

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