Module Activities
Identify the unique elements of Target’s and Walmart’s strategies. How do these two firms’ strategies differ?
Walmart still dominates the market with its sheer size as far as big-box discount stores are concerned. On the other hand, its closest rival, Target, has been carving out the market share with hip design partnerships and catchy advertising campaigns (Asperti et al. 2020). On top of that, the two companies differ in their business models. Target prefers a youthful image and profit margin, while Walmart angles more toward the lowest cost. Both companies are low-cost retail stores with massive revenues. According to the data released in 2019, Walmart is approximately twenty times the Target’s size. Walmart gearshifts supercenters at times over 180,000 square feet, targeting to provide the possible lowest price. Similarly, Target controls large stores. However, its stores are more fixated to profit margins via the supply chain, thus reporting higher profit margins but lower revenues.
Using Porter’s (Porter, 1996) definition describes the strategic positioning of each firm. How do these firms differ in their strategic positioning?
Strategic positioning can be referred to as how a company in one piece makes a distinction in itself in a beneficial manner and delivers value to particular client segments (Porter 65). Walmart’s strategic positioning is “satisfied customer service” and “low price,” including a pleasant shopping experience, convenient hours, friendly service, and a large collection of high-quality products. According to Porter’s description of strategic positioning, the company offered both value and low prices to clients. On the other hand, Target is focusing on its core clients, young families. The company is strategizing on offering a collection tailored to the needs of this group at a lower price. Additionally, Target is investing in store improvement and technology to increase the capabilities of offering better services. The company has also invested heavily in innovation to outperform its competitors in terms of fashion ultimately.
Based on your analysis above, does one or both firms have a clearly articulated strategy? Explain why or why not.
According to the above analysis, both companies have a clearly expressed strategy. Walmart aims at ensuring that it is offering its merchandise at a lower price. On top of that, the company is focused on the satisfaction of the clients. Those two elements do not only attract new customers but also helps in retaining the current clientele base. On the other hand, Target aims to provide its commodities to a specific target market, young families, at a lower price. This strategy helps ensure the satisfaction of this target market, thus attracting more clients at the end of the day and retaining the current ones.
The table presents a competitor analysis for general merchandise and grocery retailers. Based on these comparisons, which firm(s) have a competitive advantage? Explain your answer using concepts from the Module 1 lesson on how you know a firm has a competitive advantage.
Competitive advantage can be measured by several concepts: sales growth, net income, and cost/price (Kharub et al. 53). Comparisons reveal that Target and Amazon have a competitive advantage. Their gross margin percentage is higher than the competitor average. On top of that, the profit margin is higher than the competitor average. The operating margin is also higher than the competitor average.
Work Cited
Asperti, Nico, Gabriele Vedovati, and Luca Vuerich. “Enterprise Risk Management in Walmart and Target.” Available at SSRN 3581698 (2020).
Corporate.target.com. 2020. Form 10-K: 10-K Report: Target 2019 Annual Report | Target Corporate. [online] Available at: <https://corporate.target.com/annual-reports/2019/10-K/10-K-cover> [Accessed 31 August 2020].
Kharub, Manjeet, and Rajiv Sharma. “Comparative analyses of competitive advantage using the Porter diamond model (the case of MSMEs in Himachal Pradesh).” Competitiveness Review: An International Business Journal (2017): 52-56.
Porter, Michael E. “What is strategy?.” Harvard business review 74.6 (1996): 61-78.
Filings, S. and (WMT), W., 2020. Walmart Inc. (WMT) 10K Annual Reports & 10Q SEC Filings | Last10k. [online] Last10k.com. Available at: <https://last10k.com/sec-filings/wmt> [Accessed 31 August 2020].