Target Canada's Failed Expansion

This assignment analyzes the failure of Target Canada's expansion into the Canadian market. It explores key factors contributing to their downfall, including inadequate market research, an overly ambitious growth strategy, implementation of an unsuitable business model, and a failure to build strong community relationships. The analysis provides insights into the importance of careful planning, understanding local markets, and fostering positive community engagement for successful retail expansion.

Target Canada
Institutional Affiliation
Name
Date
TARGET CANADA 1

Executive Summary
This report explores the concept of project failure with a case study of Target Canada. In
particular, it explores the failures by the Retail outlet including the failure to undertake a prior
market research, failure to consider former Zellers employees for employment opportunities and
having an overambitious plan which was not implementable. The report also explores the options
that the retails would have considered.
TARGET CANADA 2

Introduction
Different organizations come up with different projects to meet certain predetermined objectives.
However, a project can meet or fail to meet its objectives depending on how it is carried out.
Project failure can be as a result of avoidable or unavoidable circumstances (Bolland, 2017).
Among the common factors that lead to project failure are, having a poorly defined project
scope, lack of sufficient risk management strategies, ineffective project leadership, failure to
track progress and requirements, underestimation of project complexities and lack of project
documentation. A good example of a failed project in Canada is Target Canada Co.
Canada Co is a Subsidiary of Target Corporation which is the second largest discount retailer in
the United States of America established in the year 2011.The corporation opened its doors in
Canada in 2013 Target Canada opened its first store in 2013, and by January 2015 it had
approximately 133 stores in different locations. Despite having an aggressive expansion initiative
Target Canada finally collapsed after recording a loss of up to $2.1 billion, was declared
bankrupt and officially closed all its stores by April 2015 It has since been termed viewed as a
case study of what retailers should not do upon entering new markets (Daft, 2017).
TARGET CANADA 3

What went wrong
Target Canada failed to carry out sufficient market research before penetrating the Canadian
market and also failed to offer Canadian consumers similar prices to those enjoyed by its
American customers.
Failure to study the Canadian Market
Before entering a new market, businesses are required undertaking sufficient market research to
identify the best business models that can work in those new markets. By taking a business
model that has worked successfully the in the USA and transferring it to the Canadian market in
Target corporation seemed to have underestimated the importance of the Canadian consumer to
their success (Rowley, 2013). The retail took Canada as small American version in which they
only needed to open stores with target logs and Customers would automatically come. It was a
worse undoing for the retail store was transferring its American business model to Canada
merely because it had succeeded in America. The store charged higher prices and did no avail
variety of products for the Canadian consumers. The failed to give consumers a reason of
shopping at their stores giving Wal-mart an opportunity to tap into huge consumer groups of
Chinese and South Asians (Stephens,2013).
Having an over-ambitious expansion plan
Another undoing for the company had an over-ambitious plan in which they intended to achieve
too much within a very short time. Despite being new in the Canadian Market, the retailer went
ahead to open a record of 124 stores in barely ten months a move which they aimed would seal
the gap that was left after the dissolution of Zellers (Kerzner & Learning,2013). The retail store
failed to consider the fact that some of the stores initially belonging to Zellers were located in
areas not accessible by middle-class consumers. Despite having big expectations by entering the
TARGET CANADA 4

Canadian Market as displayed by the number of stores opened in a small duration the Target
failed to attract customers through its offerings. Customers had many expectations of getting
variety best quality products at rock bottom prices just as the American consumers, but it came
as a shocker when the prices they were introduced to did not resonate with the American prices.
The Retail outlet, therefore, failed to meet the expectations of consumers in its new market
segment. The over-ambitious expansion plan worked for the company in that it created supply
problems due to having many stores, denied it an opportunity to offer a variety that was available
in American stores and finally made it unable to compete in the competitive Canadian Market
effectively (Hitt, Ireland & Hoskisson,2017).
Failure to build strong relationships with the local communities
The retail store also failed to recognize the important role played by local communities in the
success of an organization and went ahead to foster ill-will immediately after entering the
Canadian market (Heagney,2011). The retail entered the Canadian market just as Zellers was
edging out of the market and thus went ahead to snatch most of the stores previously occupied by
Zellers across Canada and laid off over 25000 employees who formerly worked for Zellers, and
promised to hire them later.However, upon opening their stores, the retail store ignored the
former Zellers and went ahead to hire new staff only hiring a mere 1% of the 25000 at entry pay
level. The Retail also let go of the immediate staff without any prior notice. The impact of this
move was the creation of ill- will with the immediate Zellers employees and the wider
community as it was viewed to have treated the former employees unfairly (Elms,World Trade
Organization., & Temasek Foundation,2013).
These undoing’s by the retail store led to its collapse barely a year after opening its doors in the
Canadian Market.
TARGET CANADA 5

What it could have done
Undertaking market research
The retail should have taken time to undertake market research on the Canadian market before
opening their branches. Market research is concerned with the identification of consumer needs
and preferences (Thomsett, 2010). Market research would have enabled Target Canada identify
existing gaps in the Canadian market and enabled it to understand the expectations of its current
customers which would have informed the adoption of the appropriate business model to enable
it deal with competitors such as Wal-Mart and Giant Tiger. Research would also have enabled it
to understand the ideal location for setting up their locations (Lowe & Graves,2016).
Systematic market penetration
Some of the challenges associated with supply and availability of a variety of goods for
consumers were as a result of the overambitious expansion plan for the retail outlet. Being in a
new market, the Company should have undertaken a systematic penetration by only opening a
only a few stores instead of opening 133 stores in short span of time.This would have solved the
problems associated with a shortage of supplies (McKenzie-Mohr,2011).
Maintaining strong relationships with the community
With the significant role played by communities, it would be suicidal for an organization to
ignore them. The retail outlet would have retained most if not all former Zellers Employees and
offer them fresh training if need be instead of terminating their employment contracts
(Harned,2017).
TARGET CANADA 6

Conclusion
In conclusion Target case can be summarized as the case of failure due to circumstances which
could have been avoided. Among the cause of the failure of the retail chain, were the failure to
undertake market research, having an over-ambitious plan, implementation of the wrong
business model and failure to strengthen relationships with the local communities.
TARGET CANADA 7

Reference List
Bolland, E. R. I. C. J. (2017). COMPREHENSIVE STRATEGIC MANAGEMENT. Place of
publication not identified: EMERALD Group Publishing.
Daft, R. L. (2017). Management. Boston, MA, USA ; Cengage Learning
Elms, D. K., Low, P., World Trade Organization., & Temasek Foundation. (2013). Global value
chains in a changing world. Geneva : World Trade Organization
Harned, B. (2017). Project Management for Humans. Rosenfeld Media. Rosenfeld Media
Heagney, J. (2011). Fundamentals of Project Management. Amacom
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2017). Strategic management: Competitiveness
et globalization : concepts and cases. Boston, MA Cengage Learning
Kerzner, H. R., & Learning, I. I. (2013). Project management - best practices: Achieving global
excellence. Hoboken, N.J: Wiley
Lowe, G. S., & Graves, F. (2016). Redesigning work: A blueprint for Canada's future well-being
and prosperity. Toronto ; Buffalo ; London : University of Toronto Press
McKenzie-Mohr, D. (2011). Fostering Sustainable Behavior: An Introduction to Community-
Based Social Marketing. New York: New Society Publishers.
TARGET CANADA 8

Stephens, D. (2013). The retail revival: Reimagining business in the new age of consumerism.
Toronto: J. Wiley & Sons Canada.
Rowley, L. (2013). On Target: How the world's hottest retailer hit a bullseye. Hoboken, N.J: J.
Wiley
Thomsett, M. C. (2010). The little black book of project management. New York: American
Management Association.
TARGET CANADA 9