I need help with the attached assignment and have included the PDF
I need help with the attached assignment and have included the PDF
of the chapter reading. I appreciate your assistance.
Saylor URL:http://www.saylor.org/booksSaylor.org135Chapter 5Selecting Business-Level StrategiesLEARNING OBJECTIVESAfter reading this chapter, you should be able to understand and articulate answers to the followingquestions:1.Why is an examination of generic strategies valuable?2.What are the four main generic strategies?3.What is a best-cost strategy?4.What does it mean to be “stuck in the middle”?The Competition Takes Aim at TargetOn January 13, 2011, Target Corporation announced its intentions to operate stores outside the UnitedStates for the first time. The plan called for Target to enter Canada by purchasing existing leases from aCanadian retailer and then opening 100 to 150 stores in 2013 and 2014.[1]The chain already includedmore than 1,700 stores in forty-nine states. Given the close physical and cultural ties between the UnitedStates and Canada, entering the Canadian market seemed to be a logical move for Target.In addition to making its initial move beyond the United States, Target had several other sources of pridein early 2011. The company claimed that 96 percent of American consumers recognized its signature logo,surpassing the percentages enjoyed by famous brands such as Apple and Nike. InMarch,Fortunemagazine ranked Target twenty-second on its list of the “World’s Most AdmiredCompanies.” In May, Target reported that its sales and earnings for the first quarter of 2011 (sales: $15.6billion; earnings: $689 million) were stronger than they had been in the first quarter of 2010 (sales: $15.2billion; earnings: $671 million). Yet there were serious causes for concern, too. News stories in the secondhalf of 2010 about Target’s donations to political candidates had created controversy and unwantedpublicity. And despite increasing sales and profits, Target’s stock price fell about 20 percent during thefirst quarter of 2011.
Saylor URL:http://www.saylor.org/booksSaylor.org136Concern also surrounded Target’s possible vulnerability to competition within the retail industry. Since itscreation in the early 1960s, Target executives had carved out a lucrative position for the firm. Target offersrelatively low prices on brand-name consumer staples such as cleaning supplies and paper products, but italso offers chic clothing and household goods. This unique combination helps Target to appeal to fairlyaffluent customers. Although Target counts many college students and senior citizens among its devotees,the typical Target shopper is forty-one years old and has a household income of about $63,000 per year.Approximately 45 percent of Target customers have children at home, and about 48 percent have a collegedegree.[2]Perhaps the most tangible reflection of Target’s upscale position among large retailers is thetendency of some customers to jokingly pronounce its name as if it were a French boutique: “Tar-zhay.”Target’s lucrative position was far from guaranteed, however. Indeed, a variety of competitors seemed tobe taking aim at Target. Retail chains such as Kohl’s and Old Navy offered fashionable clothing at pricessimilar to Target’s. Discounters like T.J. Maxx, Marshalls, and Ross offered designer clothing and chichousehold goods for prices that often were lower than Target’s. Closeout stores such as Big Lots offered alimited selection of electronics, apparel, and household goods but at deeply discounted prices. All thesestores threatened to steal business from Target.Walmart was perhaps Target’s most worrisome competitor. After some struggles in the 2000s, themammoth retailer’s performance was strong enough that it ranked well above Target onFortune’s list ofthe “World’s Most Admired Companies” (eleventh vs. twenty-second). Walmart also was much biggerthan Target. The resulting economies of scale meant that Walmart could undercut Target’s prices anytimeit desired. Just such a scenario had unfolded before. A few years ago, Walmart’s victory in a price war overKmart led the latter into bankruptcy.One important difference between Kmart and Target is that Target is viewed by consumers as offeringrelatively high-quality goods. But this difference might not protect Target. Although Walmart’s productstended to lack the chic appeal of Target’s, Walmart had begun offering better products during therecession of the late 2000s in an effort to expand its customer base. If Walmart executives chose to matchTarget’s quality while charging lower prices, Target could find itself without a unique appeal forcustomers. As 2011 continued, a big question loomed: could Target maintain its unique appeal to
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