Strategic Management Analysis: Target Australia's Retail Strategy

This report provides a strategic analysis of Target Australia within the Australian retail industry, examining market size, trends, and financial performance. It includes an internal environmental analysis using SWOT to identify competitive advantages and disadvantages. The report explores strategic options for Target Australia, focusing on online operations, multichannel retailing, in-store experience, and cost leadership. Recommendations are provided to enhance profitability, improve service quality, and implement a balanced cost leadership and differentiation strategy. The analysis highlights the importance of adapting to market challenges and leveraging strengths to maintain a competitive position. Desklib offers a variety of study tools and solved assignments for students.

Running head: STRATEGIC MANAGEMENT ANALYSIS
STRATEGIC MANAGEMENT ANALYSIS
Name of the Student
Name of the University
Author Note

1STRATEGIC MANAGEMENT ANALYSIS
Executive Summary
The report is based on the analysis of an organization named Target Australia that operates in
the retail industry of Australia. The different aspects of the organization that has been taken
into consideration for the analysis are, the market size and existing trends, financial
performance, internal environment analysis and competitive advantage. The strategic options
to be taken by the company are also considered in the analysis. The recommendations are
provided for future development of the operations of Target in country.

2STRATEGIC MANAGEMENT ANALYSIS
Market size and trends
Market size refers to the total number of individuals in a particular market segment
who are considered to be the potential buyers. The department stores sector in Australia as
per the report of September 2018 has grew by 3.7% as compared to 2 years ago. The industry
has witnessed a positive and productive growth, despite of significantly low increase in terms
of wages and rise in the household debt. It is expected to increase by 20% in order to reach
1.1 trillion U.S dollars by the year 2020. However, as per Fleming, Nguyen and Ruela
(2019), the shrinking in the market size and the intense competition would reduce the
department store sector in Australia which in turn will affect the business operation of Target
Australia to a significant level. The operators in the Department stores industry have faced
some significant challenges over the last five years because of the weak retail environment as
well as the highly negative customer sentiments. One of the key trends that have influenced
this condition in Australian market is the fact that customers in Australia have become highly
price sensitive and reluctant for spending their discretionary income, instead of preferring to
pay down the debt and for boosting their savings. Moreover, it is also to mention that as per
the recent data, the departmental store industry revenue is expected to fall at a yearly 0.2%
over the 5 years within 2019 to 2020, to 18.8 billion dollars (Bailey, 2017). The uncertainty
in the economic conditions along with the intensified external online competition among the
other players in the market are likely to aid to a 0.5% of decline in the total revenue of the
departmental stores sector very soon in the present year. It is also to note that this industry is
notably concentrated in Australia, with the top players expected to account for about 95% of
the total industry revenue very recently.
Financial and corporate performance

3STRATEGIC MANAGEMENT ANALYSIS
The financial performance that has been depicted by Target Australia is not
considered to be highly effective and also has a negative impact on the profitability levels
that have been gained by the Australian retail industry. Target had faced a huge drop in the
sales of revenues in the year 2018. The organization has not been able to maintain the levels
of profitability effectively due to lack of proper support offered by the employees. Further the
organization has tried to improve the revenue levels with the help of a huge portfolio of
products (Durand, Grant & Madsen, 2017). The earnings of Target have been stabilised and
the organization has aimed at continuing the process of leveraging the Department Stores in
order to support the future levels of performance. The progress that has been made by Target
in the retail industry with the help of proper impairment due to the tough trade based
conditions in the highly competitive market. Target has tried to develop a position in the
industry in such a manner that will be able to support the organization in order to maintain its
future operations in the retail industry (Hitt, Ireland & Hoskisson, 2016). However, the
activities that have been performed by the organization have not been able to improve the
levels of revenues and position of Target in the industry. The discount department based store
like Target still has a long way to go in order to gain a profitable position in the retail
industry of the country. The retail experts have been able to state that the huge drops in the
revenues have been able to affect the ways by which Target had aimed at providing tough
competition to the other retail organizations (Morschett, Schramm-Klein & Zentes, 2015).
SWOT and competitive advantage
Strengths Weaknesses
a) Target Australia operates as a subsidiary
of the Wesfarmers, a globally reputed
and well-known brand (McCormack,
2017).
a) Target Australia has very limited
demographic and it has very less
international presence (available in
Australia and America only).

4STRATEGIC MANAGEMENT ANALYSIS
b) It is the 2nd largest general merchandise
retailer with more than 1100 stores
located all over the country.
c) It has provide employment to more than
two lakhs people.
d) Has online presence and its website is
user friendly
e) It aims at “consistency of experience”
f) Has wide range of product portfolio
g) Have engaged into some exclusive
partnerships in recent years
h) It is widely known for providing quality
products.
b) The price of its many of the products are
known to be higher than the other
competitors in the market
c) It is not at all appealing to the
consumers who are “shop local”
(Patmore & Balnave, 2017).
d) Although it has online presence but it is
very small and limited.
e) There is a notable rate of employee
turnover in the company.
Opportunities Threats
a) One of the significant opportunities for
Target Australia is to expand its
business to international borders. This
will help it in gaining global awareness
and high rate of sales and revenue
stream.
b) The company can also work for
diversifying its grocery department.
a) There is a very strong competition
present within this industry in Australia.
Some of its major competitors are
Kmart, Walmart, Costco and Amazon.
b) The increase and growth of the “shop
local” movement is also a threat for
Target Australia.
c) Very difficult Australian economy.

5STRATEGIC MANAGEMENT ANALYSIS
c) The company can also increase its
private label products.
d) The company can reduce the prices of
its products so that it can match the
present competition and this will also
ensure that people are not going for any
other alternative for their needs just for
the product price.
e) The company can expand its
environmental platform and can engage
in CSR activities which will attract more
consumers as majority of the consumers
today are health and environment
conscious.
f) It can increase the level of advertisement
for its private brands.
d) The negative word of mouth promotion
from the consumers who have
experienced poor services (Rouliez,
Tojib & Tsarenko, 2019).
e) Macro-environment factors like legal
issues and government regulations like
increase in rate of interest and annual
government taxes can influence the
business operation of the company
negatively.
f) Highly dependent on the market of
United States.
Competitive advantage
Target Australia represent low prices and quality products along with enjoyable
shopping experience for the consumers. It supplies very rare combination of products. Also,
its brand name is very hard for others to imitate. With the same, the company also
understands that low wages can never satisfy an employee and this can reflect back
negatively (Bugeja eta l., 2017). This is why it provides its employees with sufficient wages

6STRATEGIC MANAGEMENT ANALYSIS
adhering to the present labour laws in Australia. Furthermore, it operates at a national level
and reach customers with the products that appeal to their needs and requirements. Also, the
trend predicting and inventory management is constantly being upgraded at Target Australia.
Strategic options
The major strategic options that have been developed by the organization in order to
maintain its position in the industry are as follows,
 The online operations based strategies of Target are considered to be an
important part of the operations that have been developed by the organization
in the Australian retail industry.
 The multichannel retailing activities have been considered to be highly
important for the ways by which the organization aims to offer its products to
the customers in different parts of the world (Wheelen et al., 2017).
 The development of the experience that is provided by Target in the stores is
an important part of the operations that are performed by the organization in
the competitive retail industry.
 The cost leadership strategy has been followed by Target Australia in order to
maintain its operations in the industry by gaining a huge customer base
(Morschett, Schramm-Klein & Zentes, 2015).
Recommendations
The major recommendations that can provided to Target Australia in order to improve
the levels of profitability are as follows,
The development of high levels of services in the stores so that more
customers can be attracted.

7STRATEGIC MANAGEMENT ANALYSIS
The improvement in quality of the products in order to maintain the
profitability levels along with the reputation.
To implement a strategy that can be a perfect mix of cost leadership and broad
differentiation. This will help the organization to maintain a profitable position
in the industry for longer period of time.

8STRATEGIC MANAGEMENT ANALYSIS
References
Bailey, M. (2017). Absorptive capacity, international business knowledge transfer, and local
adaptation: establishing discount department stores in Australia. Australian Economic
History Review, 57(2), 194-216.
Bugeja, M., da Silva Rosa, R., Izan, H. Y., & Ngan, S. (2017). Choice of acquisition form in
Australia and the post‐takeover employment of target firm directors on the acquiring
firm board. Accounting & Finance.
Durand, R., Grant, R. M., & Madsen, T. L. (2017). The expanding domain of strategic
management research and the quest for integration. Strategic Management
Journal, 38(1), 4-16.
Fleming, M. J., Nguyen, G., & Ruela, F. (2019). Tick size change and market quality in the
US treasury market. FRB of New York Staff Report, (886).
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management: Concepts and
cases: Competitiveness and globalization. Cengage Learning.
McCormack, C. (2017). US target goes' gender neutral'; pays the price. News Weekly, (2997),
7.
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international
management (pp. 978-3658078836). Springer.
Patmore, G., & Balnave, N. (2017). Managing Consumer Co-Operatives: A Historical
Perspective. In A Global History of Consumer Co-operation since 1850 (pp. 413-
430). Brill.

9STRATEGIC MANAGEMENT ANALYSIS
Rouliez, P., Tojib, D., & Tsarenko, Y. (2019). The Influence of Online Review Exposure on
Reviewers’ Intensity Level of Negative Word of Mouth. Journal of Hospitality &
Tourism Research, 1096348019840798.
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic
management and business policy (p. 55). Boston: pearson.