CASE 28
Target Corp’s Tarnished Reputation: Failure in Canada and a
Massive Data Breach
28–14
▪ Branding (S)
• Positioned as a high-style brand despite low
prices.
• Partnered with high-profile designers.
• Finance
o Q1 FY15
▪ Sales $21.75 billion (4.1 percent increase from Q4
• Research and Development (R&D)
• Operations and Logistics
o Canadian operations (W)
o Voluntary cash contribution of $59 million to an Employee
Trust.
o Realigned to a primary objective to operate as a single
segment throughout U.S (S).
▪ Each store had seven managers each with a strategic
• Human Resources Management (HRM)
o Goal: offer a wide variety of job opportunities.
▪ Diversity (S)
• Intrinsic to every aspect of Target’s business.
▪ Community Giving (S)
CASE 28
Target Corp’s Tarnished Reputation: Failure in Canada and a
Massive Data Breach
28–15
▪ Information Systems (IS)
• Credit card system hacked in 2013 (W)
V. Analysis of Strategic Factors
A. Situational Analysis
• See SFAS Table
B. Review of Mission and Objectives
• Mission and objectives are appropriate in terms of the key
strategic factors and problems.
VI. Strategic Alternatives and Recommended Strategy
A. Strategic Alternatives
1. Objectives seem like they may be challenging to hit with the
current strategies for growth but seem like the objectives
necessary to remain competitive in the market.
a. Not a huge focus on IT excellence despite the omnichannel
2. Alternative Strategies
a. Cost Leadership—not currently employed
i. Pros
1. Possible increase in market shares against
CASE 28
Target Corp’s Tarnished Reputation: Failure in Canada and a
Massive Data Breach
28–16
1. Lessen the brand image of “discount luxury.“
b. Differentiation—part of current strategy
i. Pros
1. Provides a more positive experience to
customers.
ii. Cons
1. Harder to gain market share in less affluent
regions.
c. Stability—not currently employed
i. Pros
1. Ability for company to recover from Target CA
losses.
ii. Cons
1. Challenging market may impact perception
absent steady growth.
d. Growth—currently employed, focus on channel growth as
opposed to regional.
i. Pros
1. Continue to grow revenues.
2. Better able to keep pace with competitors.
ii. Cons
1. Costs associated with continued growth.
2. Unsuccessful growth can damage brand image.
e. Retrenchment—currently employed, vacating Canadian market
i. Pros
CASE 28
Target Corp’s Tarnished Reputation: Failure in Canada and a
Massive Data Breach
28–17
f. Functional—IT Excellence as a Differentiator.
i. Pros
1. Long-term cost savings.
2. Competitiveness in the online space.
B. Recommended Strategy
1. Growth/Retrenchment/Differentiation
a. Target should continue its strategy of differentiation at
b. Both Growth and Retrenchment strategies should be
continued at Target, with the growth focused domestically
and retrenchment portion focused on a continued exit from
Canada.
i. Expansion into Canada was not handled well and
ultimately proved to be largely unsuccessful.
c. A key functional strategy that needs to be adopted in
support of business and corporate strategies is one of IT
excellence. Target has current challenges in IT that have
caused issues over the past several years and a key
competitor, Walmart, is able to use IT as a
differentiator.
i. Lack of IT strength has led to major cost
2. Policies
a. New market expansion.
i. Keep market expansion relegated to domestic markets
for the short-term future. Focus on growth in urban
areas.
b. IT Integration for omnichannel support
CASE 28
Target Corp’s Tarnished Reputation: Failure in Canada and a
Massive Data Breach
28–18
c. IT Excellence
i. IT should be considered as mission-critical in all
cases. All business decisions should include an IT
3. Impact on Core Competencies
a. The new changes should not have a negative impact on
existing core competencies however, IT should eventually
be a resulting addition to core competencies.
VII. Implementation
A. Changes Required
a. Organizational Structure:
i. Restructuring is not necessary.
ii. The strategies discussed in the previous section
should not require any massive restructuring.
b. Programs
i. IT: challenges with current logistics and inventory
B. Feasibility
c. Financial
i. The budgets should be feasible as Target has already
put aside money for IT and supply chain improvements.
d. Budgets
i. An estimate of $1 billion has been made for IT and
CASE 28
Target Corp’s Tarnished Reputation: Failure in Canada and a
Massive Data Breach
28–19
ii. Funds have already been put aside to finish the
Canadian wind-down and total $59 million.
e. Priorities and Timetables
i. Tying up any loose ends in CA should be the number one
priority as this is almost complete.
1. Major impact should be realized within two years.
f. Standard Operating Procedures
i. Standard operating procedures are generally effective
and should remain unchanged with few exceptions.
VIII. Evaluation and Control
A. Performance measurement is only mentioned briefly throughout the
course of the case. It does appear that these systems will need
to be supplemented in some capacity as the organization rolls out
B. While no formal reward system is mentioned in the case, it is
recommended that one be conceived in order to emphasize IT as an
enabler.
External Factors EFAS Table
Key External
Factor
Weight
Rating
Wgt
Score
Comments
CASE 28
Target Corp’s Tarnished Reputation: Failure in Canada and a
Massive Data Breach
Opportunities
Demand for
Organic/Eco–
Friendly
Products
0.05
4
0.2
Target has made substantial
commitments in this area.
Prevalence of
0.15
2
0.3
Target has set a goal of
Economic Boom
Consumers are willing to buy
High Barriers
to Entry
0.15
4
0.6
To compete with Target and its
competitors, prices requires
massive capital investment and
prime locations.
Increased
Diversity of
American
Society
0.025
5
0.125
Target instituted specific
recruiting efforts to hire
diverse teams.
Threats
Bargaining
Power of
Buyers
Consumers can use Target as a
Discount
0.15
3
0.45
Great downward pressure on
CASE 28
Target Corp’s Tarnished Reputation: Failure in Canada and a
Massive Data Breach
28–21
Data Breaches
0.025
3
0.075
Target offered a free year of
credit monitoring and identity
theft protection and $10
million settlement.
Total Score
1
2.75
Internal Factors IFAS Table
Key Internal Factor
Weight
Wgt.
Score
Comments
Strengths
Ability to Do Outbound
Logistics
0.1
0.5
Described as its
greatest strength.
CASE 28
Target Corp’s Tarnished Reputation: Failure in Canada and a
Massive Data Breach
Products
overall sales.
Strong Product/Service
Assortment
0.1
0.4
Leads to wide spectrum
of customers.
Spectrum of
Demographics
Competitors
industry.
Successful Mobile App
0.025
0.075
Counteracts Target’s
weak online presence.
High Employee
Satisfaction
0.025
0.075
Important for customer
satisfaction.
Weaknesses
Inefficient and Costly
Inventory Management
System
0.15
0.15
Has a direct negative
impact on
customers/brand
perception.
CASE 28
Target Corp’s Tarnished Reputation: Failure in Canada and a
Massive Data Breach
28–23
Difficulty Accurately
Forecasting Consumer
Demand
0.05
0.1
Leads to lost sales
and disappointed
customers.
Key
Strategic
Factors
Weight
Ratin
g
Wgt
Scor
e
Short
Dur.
Med.
Dur.
Long
Dur.
Comments
Ability to
Do Outbound
Logistics
0.15
5
0.75
x
x
Targets greatest
strength could
evaporate if its
inventory
management
system isn’t
improved.
CASE 28
Target Corp’s Tarnished Reputation: Failure in Canada and a
Massive Data Breach
28–24
Entry
investments
required for
discount
retailers will
not disappear.
Widely
Recognized
Brand in
the U.S.
0.05
5
0.25
x
x
A widely
recognized brand
is a key
advantage, but
no guarantee of
long–term
success.
Management
target can
Inability
to Scale
Inventory
Up/Down in
Response to
Demand
0.1
1
0.1
x
x
Target can learn
from Wal–Mart
and become more
flexible in
inventory.
CASE 28
Target Corp’s Tarnished Reputation: Failure in Canada and a
Massive Data Breach
Assortment
grows.
Weak Online
Presence
0.1
3
0.3
x
x
Target has the
ability to
greatly enhance
its online
presence over
the long–term.
2.9