Target Corporation is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store. Target Corporation is the third-largest general merchandise retailer in the United States. Target has three main competitors which is Wal-Mart, Costco, and K-Mart. Wal-Mart is the largest retail chain in the world, its mission is “Always low-prices!”Costco is the largest wholesale club operator in the U.S. K-Mart is the number three discount retailer in the U.S. As the November meeting approaches, CFO Doug Scovanner is faced with the problem of choosing which of the five controversial projects available to accept. So this case is to evaluate each of the projects based upon two major criteria. The first is determining the firm’s financial motives by major criteria.
The first is determining the firm’s financial motives by quantifying the projected value added to the firm and the risk associated with each project. When determining to accept or reject projects based on adding value, the instruments we can use are NPV and the IRR. As we consider capital constraint problems, we also use the Profitability Index in order to determine which projects add the most value per dollar spent. Some thing we need to notice are projected sales figures, speculated variations in these sales projections, and the impact that adding a new store into the trade area has on the sales of surrounding stores. The second criterion involved in analyzing the projects is determining the firm’s business motives.
This deals with recognizing Target’s corporate goals and mission and how they accomplish this through their business strategy. Two of the greatest aspects of their strategy are a high value on brand awareness and a defined target market of college educated women with a family. The ultimate goal, therefore, is finding a healthy balance between these two criteria by integrating as much of Target’s business strategy into the fundamental financial goals of wealth maximization shared by all firms.
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