External/Internal Factors
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EXTERNAL/INTERNAL FACTORS
External/Internal Factors Paper
External/Internal Factors Paper
In 1962, the Dayton Corporation opened Target, a discount chain store in Minnesota. Through the years, Target has grown considerably so that in January 2000, the Dayton Hudson Corporation changed to Target Corporation. The Target Corporation Annual Report 2007 states that 118 new stores opened in 2007, 33 of them being SuperTarget stores. Nearly 1,600 stores are operating in 47 states, with plans to have 2,000 stores by 2010. Target is currently ranked as the fifth largest retailer following Wal-Mart, Home Depot, Kroger, and Costco (Stores, 2007). Target could not be successful if it did not deal with external and internal factors that can help or hinder the four functions of management.
Internal and external factors can have quite an effect on the four functions of management. For example, Target has been involved in merging or acquiring other companies. Employees have the risk of department restructuring or lay-offs. New plans and strategies will need to put in place as well as organizing the resources, or additional employees, acquired from a merger. Occasionally executives or top managers may suddenly resign, which can also cause problems if the person left under suspicious circumstances. The remaining managers will have to adjust for possible increased workloads, or managing a new department.
External factors that may have profound effect on Target could be the economy. With increased prices for gas, dairy, and other items, consumers may spend less, and often look for the best price. Competition from other retail stores also has an effect. The management of Target will need to devise new strategies to stay competitive and lure consumers into spending money at Target. An additional external factor may be demographics; college age students, working to supplement school costs, will eventually leave their jobs upon college graduation.
Globalization
Globalization can be defined in economic terms as the closer integration of the countries by the huge reduction of costs in transportation, the flows of goods, services, capital, knowledge, and people across borders. Even though Target remained conservative for many years and slowly transitioned into expanding its market to foreign countries, it maintained a solid strategic position with an aggressive growth market. As of May 2005 Target crossed borders and opened its market to India. In order to effectively and efficiently deliver the best products to its customers Target created a global compliance department. The global compliance department is responsible to make sure that all policies are universally imposed. Due to the diverse products that Target offers its customers the corporation takes part in educating the vendors they outsource from with compliance policies. The global compliance team requires its vendors, including suppliers and manufacturers to provide employees with safety, healthy, non-discrimination principles, pay fair wages, refrain from child labor, and limit work hours with policies such as Standards of Vendor Engagement . By carefully selecting vendors and educating the vendors and suppliers, Target ensures that all standards are being met effectively. This promotes and builds successful vendor relationships. This strategy allows Target to deliver valued products that are outsourced through Target Sourcing Services (TSS) from other countries. The global compliance team focuses on building a dynamic relationship between vendors by asking vendors to agree to Target’s Standards of Engagement policy, which includes: register all factories used in production of merchandise, authorize unannounced audits, maintain accurate information on all their factories, allowing for tours, and employee interviews. The global compliance team is made up of 40 team leaders that are committed to reinforce and make sure that the Standards of Engagement are implemented and in compliance. Target’s culture of fashion, trend, and diversified products has greatly benefited the discount image of the corporation. Several factors contribute to Target continuing to exploit and achieve its high growth surge such as: Price- Target utilizes higher advertising/marketing costs to promote competitive prices with other discounters; Food — the core strategy of supplementing the older discount stores with the new supercenters that generate a higher volume of traffic and generates higher sales; Brands — Target continues to accomplish its own proprietary brands and strategic alliances with additional services; Online — internet retailing efforts and its partnership with other resources generates revenue; Loyalty — Target has captured most of its core consumers, with direct marketing, promotions, gift registries, and credit card programs; International — Target crossing borders into India will open a new market that will generate an enormous leverage in numerous ways. Targets team controls and maintains the changing trends in retail and global market by educating the vendors and offering training sessions that discuss global policies. Part of additional training includes meetings to discuss results and opportunities for growth or improvements. It provides additional training and information online which includes a vendor guidebook used by all factories in nine languages. This method of delegation allows the global compliance team to focus on more important facets of the corporation and build relationships with other sources.
Innovation
To be competitive in a retail market, Target must be innovative. From a fashion show featuring holograms, to its new plastic cereal containers, Target continues to be original in its products and advertising. However, what is the impact upon planning, organizing, leading, and controlling? The fashion show featuring holograms was held at Grand Central Terminal in New York City. A rotating series of 10-minute shows featured clothing from exclusive Target designers (Endless Innovation, 2007).
A fashion show consisting of holograms cannot be an easy task. Much thought and planning must be given to such an event. The impact on planning is staging the show at the Grand Central Terminal; putting electronic devices into place to show the holograms. The time of day to hold the fashion show must be determined. Optimum viewing by people is achieved when the show is displayed with a high volume of people in the terminal.