BUS 600: Target Corporation Finance Case Study Analysis

This case study provides a comprehensive financial analysis of Target Corporation, examining its investment strategies, both internal and external, and assessing its future profitability and competitive performance. The analysis delves into how Target plans to allocate funds, including investments in technology and store formats, to support its business unit strategy and achieve long-term objectives. It explores the company's funding sources, including retained earnings, share repurchases, and debt capital markets, and evaluates its approach to managing liquidity and debt maturities. The study also considers Target's competitive advantages, market trends, and strategies for sustaining its market position and increasing profits, such as enhancing digital experiences and offering competitive pricing. The conclusion highlights the importance of aligning strategies with forecasted sales and revenue targets to ensure future success.

Running Head: TAGET CORPORATION FINANCE CASE STUDY
TARGET CORPORATION FINANCE CASE STUDY

TARGET CORPORATION FINANCE CASE STUDY
INTRODUCTION
Target Corporation is the second largest departmental store in USA in terms of earnings
(Grant, 2016). Target Corporation is a publicly traded company that was found in the year
1902 and serving entire USA with its 1822 stores. So, in this report, financial analysis that is
evaluating company’s future financial health is done.
MAIN BODY
Target Corporation is an American departmental store operating in USA and having
hypermarkets which is having the concept of flexible format and discount stores. Motto of firm
is the need of younger and image conscious shoppers which is different from its biggest
competitor i.e. Walmart.
Investments to Support the Business Unit Strategy or Strategies
It is required that Target Corporation is stating their goals and long-term objectives in
way of surviving into the market so that they could then aim at dealing with their business
investment strategy (The Sources of Investment Funds, 2018). TC should also be evaluating
many options that are available for sourcing their fund and investing in coming future. they
will be determining their investment strategy that will be supporting the overall strategy of the
business. Like from where to grab fund, how much actually will be needed and how much
company is already having. TC will also be taking out the retained earnings and profit of last
year so that company is able to source their budget or cost. Giving out shares of the company
will also be another example of an investment that is supporting business unit strategy. With
the help of raising shares in market TC will be getting an increased amount of investment that
is made by the general public.
They will be requiring a huge sum of investments in way of account receivable, plants,
equipment, acquisition, raw material and others as well. so, TC needs to predict the amount
that would be needed by them which is as per the assets and sales growth of the firm. there are
many methods or sources through which company could be able to obtain funds and will be
suitable if the first make the proposal of budgets. Budgeting will be very much essential for TC
so that they are been able to determine what they need to purchase and how much amount will
be required as well.
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TARGET CORPORATION FINANCE CASE STUDY
External investment- all type of funds which TC will be obtaining from outside its business
operations will be termed to as external investment of it. They are providing their customers
with fashionable and essential day to day goods and service which is required by them that too
as discounted rates. TC had planned to invest about $100 million in order to equip their
proprietary REDcards into all their US store with having facility of chip enabled smart card
technology this will be planned investment. With this company will be accelerating additional
investment within their information technology as well but its estimated amount of investment
is unknown to them due to changing nature of IT sector. The company repurchased its share in
year 2012 with amount of about $10 billion that is included within external investment for
company. The financing strategy for company will be conserving with access to capital market
and ensuring liquidity so that debt maturities could be managed. The long term commercial
paper market will also be providing Target Corporation with sufficient of debt capital market.
Internal investment-
The operations for company will be funded with internal funds as well which is generated
with sale of consumer credit card receivable portfolio. The cash flow for year 2013 was $6.5
million while in 2012 it was $5.3 million this is in combination with previous year ending cash
position. For year 2013 TC had funded their sales for that season by all working capital need
with internally generated funds and issue of CP. So company will also continue to do the same
in coming years as well that will be helpful for them in financing their operations as well.
Future Profitability and Competitive Performance
In the coming future, it is required that TC is gaining more profits which are better for
their expansion and growth strategies. The future profitability of TC will be regulated with the
availability of funds, a proper strategy, and planning for the company. So, they should also be
gaining competitive advantage in the market that is helpful for them to compete with their
rivals who are there within the market. The competitive performance of the company is
determining their ability to use resources, funds and other tools or tactics that help them to
penetrate into the market. They need to look into that whether investment which they are doing
is profitable in the coming future or not.
Competitiveness of any company is set through their ability to time knowing their
strength, overcoming weakness, lowering down the threads or risk and grabbing all available
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TARGET CORPORATION FINANCE CASE STUDY
opportunity form market. thus, this will allow TC to join their hands with other rivals in way of
forming strategic alliance or partnership thus gaining competitive advantage and increasing
performance (Bryson, 2018). thus, gaining more knowledge on the current and future trend of
the company will also be helping them to complete within the agreed target market. it is very
much essential that TC is analysing the current and future trends within the market which will
be helping them to analyse the level of profits that they could be gaining from the marketing
trends. It is essential that TC is undertaking many strategies of identifying its market
competition which will help them to overcome all sort of threads.
There are many ways by which TC will be able to address intended profits for coming
next 3-5 years and simultaneously sustaining its competitive edge as well which is very much
important. As they are having long term vision of investing within business this is done by
putting their digital technology as very first and foremost with evolving their whole store,
supply chain and digital channel as well. So there are many ways by which TC will be able to
sustain its competitive advantages and increasing or making profits for coming 3-5 years. This
includes enhancing their digital experience with improving speed, capability and stability that
is growing their digital infrastructure so that their digital sales for year 2019-2022 would be
increased or doubled. Their more than 600+ location of stores which is making it very critical
or important part will also is of huge advantage for TC. The company had started their whole
new store in small format in year 2017 which was about 30 in number thus making presence of
company in urban area more strong. TC is offering competitive price for every day to their
customers so that they could be able to shop at Target. Their promotional strategy and use of
all sort of marketing tactics will be helping them to improve their focus on competitive price.
TC is making its investment into operating profits that is helping them to save their excess
amount of profits.
CONCLUSION
From the above report it could be concluded that Target Corporation is having strategies
to invest for the company future profitability. Company must be making their efforts in
working according to their forecasted sales and revenue target.
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TARGET CORPORATION FINANCE CASE STUDY
REFERENCES
Attix, F. H., & Tochilin, E. (Eds.). (2016). Sources, Fields, Measurements, and Applications:
Radiation Dosimetry (Vol. 3). Academic Press.
Bryson, J. M. (2018). Strategic planning for public and nonprofit organizations: A guide to
strengthening and sustaining organizational achievement. John Wiley & Sons.
Cusumano, M. A., Kahl, S. J., & Suarez, F. F. (2015). Services, industry evolution, and the
competitive strategies of product firms. Strategic management journal. 36(4). 559-
575. Retrieved from. <https://onlinelibrary.wiley.com/doi/abs/10.1002/smj.2235
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Target Earnings: What to Expect From TGT Stock. 2018. Retrieved from.
<https://money.usnews.com/investing/stock-market-news/articles/2018-08-20/target-
corporation-tgt-stock>.
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