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Target's Investment Strategy Comparison Paper

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Target is finding itself in an interesting position due to changes in the market. We are in a transitioning period where the market is becoming internet based. As younger generations get more tech savvy, retail stores are losing sales due to online companies like amazon who are capable of two day shipping and membership benefits. We are capable of seeing the effects in analysis of both of these companies. Part a) Investment strategy and cost of capital Target has many components that create a more pleasant experience for a customer in comparison to Walmart. The famous red bulls-eye company attracts customers not by its prices, but its customer service and employee helpfulness. According to an article, by shephyken, “the company may not be …show more content…

Walmart emphasis on price cuts. According to an article, “Walmart has maintained its low-price leadership position due to its continued focus on suppliers” (HowWalmartMakesMoney). This gives Walmart bargaining powers to its suppliers. This is one of the factors that keeps Walmart as one of the largest companies in the world. Another strategy remains investing in their stores. The company wants to improve the shopper’s accessibility to go to their physical store. The company was recognized as a traditional grocery, but they are being pushed to the side by other competitors. (HowWalmartMakesMoney). The company plans to open offer fresh food, or prepared food to improve shoppers experience. The company wants to make their website more user friendly to increase their sales. Walmart’s “E-commerce sales were $12.2 billion in the fiscal year 2015” (HowWalmartMakesMoney). The company has to compete with Amazon which holds a difficult job but plans to make several technology developments. Walmart’s biggest investment strategy is to deliver a great experience for the customers and the employees themselves. The article continued to argue, “Historically Walmart was criticized for its employee unfriendly policies, which include lower minimum wages, minimal reskilling and training programs, and unclear career growth” (HowWalmartMakesMoney ). If the workers aren’t taken well care of, that rubs off onto the customers. The employees see …show more content…

The tax rate was solved by, the income tax deducted, divided by earnings before tax. The cost of debt was calculated by adding the total debt of years 2017 and 2016, and then dividing the calculated number by two. Then the interest expense found in the income statement was divided by the number that was added and divided by two. Target’s cost of debt was 2.48% while Walmart’s cost of debt was 2.39%. Capital asset pricing model (CAPM) was used to find the cost of equity. The beta for each company was found in Yahoo finance. The risk-free rate was selected on a 10-year hold off the government’s site, which was 3.06%. The expected market return is 11%. The cost of equity for Target is 7.89% and Walmart’s cost of equity is 5.38%. This helps companies decide on whenever to take a project or not. The weighted cost of equity for a company was found by dividing the total equity by the total value of the company. To find the total equity, the outstanding shares need to multiply with the share price. The total debt is located in the income statement. Add the total equity and total debt of the company, and the total value of the respective company is found. Target has a weight of equity of 58.17% and weight of debt of 41.83%. Walmart has a weight of equity of 65.77% and weight of debt of 34.23% With all the missing pieces solved the weighted average cost of capital

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Technology Development includes technology development to support the value chain activities, such as research and development, process automation, design and redesign. The Technology Development activity at Target Corp is utilized by having the responsibility of delivering a seamless and engaging shopping experience across digital platforms. Creating strategies and solutions that enrich the online experience, making the shopping journey easy and inspiring for guests. technology development including knowing all guests and striving to deliver a personalized experience with digital solutions – online and across all stores. Procurement includes activities of purchasing the raw materials, servicing, spare parts, buildings, machines and other

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Target Corporation (TGT) is an international general merchandise and grocery retailer founded in Minneapolis, Minnesota that works to ensure that the customer is provided with the opportunity to purchase a wide variety of goods such as household products, electronics, pharmacy, personal care products, grocery goods, clothing apparel, and sporting goods in order to achieve customer satisfaction at a discounted price in order to remain competitive within the industry. The primary goal for Target is to overcome their various competitors within the industry in order to generate profit through continuous innovation and delivering outstanding value at each Target location in order to be the preferred shopping destination amongst the customer. In

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is a company that’s is economically efficient. They need to meet the demand of their customers at the lowest cost possible. “Economically efficient is the method that produces a given level of output at the lowest cost possible,” (Colander, 2017). Target is definitely working on their technological advances to be able to complete with their competitors as well as be as economically efficient as possible. These advances in technology can also build up revenue both online and in stores which will make Target very efficient.

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Target Corporation is the second largest discount store retailer in the United States following Walmart. Target provides high-quality, trendy merchandise at logical prices. As of today, Target has more than 1800 retail stores and 38 distribution centers in the United States. The first official store was opened in 1962 in Roseville Minnesota and have thrived every since. I will be analyzing Target’s financial statements and communicating the results to our decision makers (Target 2017).

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Over the 5 years looked at they had a range of 66%-70% in liabilities and 29%-33% in stockholders’ equity. There gross profit never got above 30% in the 5 years and there total net income available to common stockholders was right around 4%, except for the year in which they closed all of their Canadian stores. There weren’t too many surprises in Target’s percentage change statement, again, except the year they close the Canadian stores. Cash went up 83%, while Net income shot up the year after they had to pay for all those stores. Looking at both statements, Target’s future look bright with slight percentage increases in almost every category.

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This report will examine all aspects of Target Corporation and the retail industry with a focus on customer service and innovative sales strategies. It analyzes both the internal and external environment of Target Corporation and identifies the economic trends and factors that influence the industry in key areas such as innovation, technology, political, social cultural and global factors. Moreover, this report will also discuss the core competencies, and resources of Target Corporation which differentiate the company from other competitors. The purpose of this report is to analyze Target Corporation’s current market position; financial strengths and business strategies, internal and external factors that affect the company and ways to

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The mission statement for Target Corporation is to become better than another shopping destination in all range of activity or interest by furnishing outstanding value, endless innovation and remarkable guest experiences by frequently achieving their “Expect More, Pay Less” brand pledge. (Cite 4 – Target’s Mission Statement). Considering Target is one of the better discount retail chains in the U.S., and one of the greater retail businesses in the world, this merchant’s focal point is on the managers and laborers on carrying out this commitment of the Target brand. The Target Corporation provides an exceptional benefit because of the outstanding prices. While they are presenting daily specials, these market boosts are just for you with

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To be able to calculate this information, we use the cost of goods sold formula: Cost of Goods Sold = Ending Merchandise Inventory ($2,737,000) + Cost of Goods Sold ($48,872,000) – Beginning Merchandise Inventory ($3,363,000) = Net Purchases $48,246,000 totaled for 2016 fiscal year.

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The company is a well-established and recognized brand name that is highly respected by customers after Walmart for the discounted retails of the item displayed. Target is viewed as a fun place to shop such like position as IKEA; people can play around,

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Wal-Mart stores are one of the most successful retailing chains in the world and have an advantage over its competitors. Its low prices, size, and power are what makes Wal-Mart so helpful to Canadians. A few companies, like Walmart, create such controversies when it comes to managing low costs and high profits. So why do some people believe that Walmart is so bad for Canadians? Residents either love shopping at Walmart or they despise it.

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4. Implementation Plan Target Corporation has an aggressive sales goal of 2-3% growth each year for the next five consecutive years. There are several strategies in place that will assist in meeting these sales goals. Target will be enhancing the guest experience through the retail, online and mobile channels.

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In May 2016, shares of Target fell 13.5% according to data from S&P Global Market Intelligence. Some of this slump was of Target's own doing and some of it wasn't. The stock first took a 5.5% dive on May 11th due to a bevy of disappointing earnings reports from Target's sector rivals. Target investors took this wave of retail weakness as a bad sign for their own holdings. Then, Target's first-quarter report came in, showing a 5.4% year-over-year revenue decline despite slightly higher comparable sales.

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In summary, Target explains that by creating a diverse and inclusive environment, it feels and believes that those practices make it a champion of its craft. It represents the foundation and culture of its business and engages diversely in its customers. Customers appreciate and acknowledge companies such as Target and these practices can be one of the motivating factors that cause customers to want to visit and consume from

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Target also invests chairs and tables for customers who want to have meals or drinks in food location which is comfortable for customers. In addition, Target invests computers to help customers who want to print or design their picture and document. Moreover, Target also has modern machines and software technology which support customers create and edit by the effective way in their work. Additionally, Target always has staffs who are willing to give customers a hand to design or fix their work. Clothes are displayed in Target is high quality with special design, so it is easy to attract the customers.

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Now, Cost of equity (Re) = 8.95% + 1.21×7.43% = 17.94% While determining the cost of debt we again used 8.95%,30 year U.S. Government Interest Rate given in Table B as the risk free rate plus 1.10% debt rate premium above Government rate, which is given in Table A. Cost of debt (Rd) = 8.95% + 1.10% =

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