High political stability ensures a stable and friendly business environment with predictable market growth trends. In turn, political chaos scares away investors and erodes customer confidence. Target Corporation is currently present in different countries, each with its political strains. Growing tensions and instability in the global political environment can affect trade and limit the growth opportunities available to companies.
In this aspect, it is advisable to pay attention to the ties with China. Target Corporation must have a strong working relationship with China as most of its products come from Chinese markets. If a conflict occurs between China and the United States, Target Co.’s operations are negatively impacted. The trade war between the US and China has seriously affected Target Co.’s business, and the current situation created an atmosphere of uncertainty and complexity for its business.
Changing the course of politics
Frequent changes in government policy are detrimental to business performance by increasing uncertainty in the environment. It is essential for Target Corporation to study current trends in the development of the country’s political scenario since changes in government can transform the priorities of the government about the development of various sectors of the economy, including trade.
The principles of taxation
Going to high-tax countries will directly impact the profitability of Target Corporation, as high taxes affect international trade and discourage exports. Target Corporation can enter low tax markets and benefit from the high returns that can be invested in research and development activities. The organization may also examine sectoral tax policies to understand the priorities and interests of the host government in developing sectors.
Economic Factors
The rate of GDP growth will determine the Target Corporation’s ability to pursue its long-term growth strategies. High GDP also signals the ability of consumers to spend more on the products on offer. High unemployment signals a surplus labor force with relatively low wages. Operating in such a market can reduce the cost of Target Co. products. An entity should also carefully consider the interest rate and its effect on borrowing capacity and investment attitudes. The high-interest rate will stimulate investment attitudes and increase growth opportunities for Target Corporation. Finally, exchange rate fluctuations can also affect profitability and international trade. High fluctuations in the exchange rate of the national currency may cause serious concern for Target Co.
The state of the economy
The economic development of the country directly affects the efficiency of the organization. Emerging economies provide Target Corporation with ample room for growth. Likewise, it is essential to understand the stage of an industry’s life cycle. Entry into mature industries can be more challenging than growth-stage industries due to market saturation. Moreover, Target Co. also depends on how the host government spends funds on the development of basic infrastructure. A well-developed infrastructure alleviates the business environment and increases the industry’s growth potential in the respective country.
Social Factors
Target Co. values and respects different ethnic groups, which is reflected in the diverse range of products that the company provides. For example, people have a wide variety of styling products to choose from, as the company offers a diverse selection of products for African American hair. Thus, Target Co.’s production various for many ethnic groups and nationalities. It is one of the reasons why buyers support Target Corporation.
The impact of stratification
Observing the stratification of social class is also vital for Target Corporation. Offering luxury goods at premium prices in a market where the high-end market is significantly small will require Target Co. to adopt niche marketing strategies. Similarly, market segmentation based on social class may be ineffective where social stratification is low.
Cost structure and behavior
The purchasing power of money affects the structure of consumer spending. Studying and forecasting the purchasing power of consumers based on relevant economic indicators is essential for analyzing the interests and structure of consumer spending. In some societies, the proposed product’s consumption is considered a status symbol, while many people use the same products for functional aspects. The Target Corporation should carefully examine the impact of consumption motives and social trends on consumer behavior.
Shopping trends at specific times
Retailers are generally subject to cyclical shopping habits. Most of the revenue is generated during the Christmas season when sales peak between Thanksgiving and the end of December. Therefore, success during this period can make or break the entire financial year of the retailer.
Technological Factors
The growing popularity of social media has transformed the discount retail industry. It helps the industry to deliver relevant and differentiated shopping solutions at all times, and these solutions are seen as personal, affordable, and straightforward. Social media also allows two-way dialogue to improve customer service. Target Co. strives to be tech-savvy on social media. It communicates with consumers through social media platforms such as Twitter, Facebook, Instagram, Linkedin, and Tumblr. Therefore, Target Corporation should use the opportunities provided by social media marketing to improve business performance.
Technological innovation
Target Corporation should carefully consider current technological innovation to stay ahead of the competition. Analyzes of 5G should be closely monitored to determine its potential to deliver positive business outcomes through improved user experience, faster speeds, and increased access. Furthermore, it is crucial to consider the level of development and maturity of technologies in the relevant market. Entering markets where technological progress has not yet reached maturity means that Target Co. can increase market share by focusing on new technological innovations.
Investment in technology
Target Co. needs to consider the investments made by competitors at the micro and macro levels to understand how new technologies affect the firm’s value chain and the prevailing cost structure. Research and development activities are significant. The CEO of Target Corporation firmly believes that investments in technology today will benefit them over the next few years. According to the 2020 Annual Report Target Corporation (2020), last five years, the company has invested $ 7 billion in capital and $ 1 billion annually in operating expenses to modernize existing operations.
Legal Factors
Giant retailers must comply with a wide range of laws and regulations to avoid incurring significant legal fees.
Employee protection laws
Target Corporation must comply with employee health and safety laws as it is an ethical and moral duty of the company to provide a safe work environment for employees. Likewise, anti-discrimination laws also need to be scrutinized when developing human resources practices, as discriminatory claims against employers damage the corporate image and affect the ability of organizations to attract and retain talented employees.
Consumer protection laws
Data protection has become an essential issue due to consumer privacy and safety concerns. For Target Co., it is necessary to study the data protection rules to protect customer data. Moreover, some laws set the maximum price, ensure a certain quality standard, and protect consumers from fraudulent marketing claims. Target Corporation needs to consider these factors to ensure compliance with consumer protection laws.
Intellectual property laws
Intellectual property rules are designed to protect a company’s patents and valuable ideas. Failure to protect intellectual property rights can lead to a loss of competitive advantage, which could weaken Target Co. against other market players. Thus, the company must assess the level of protection of intellectual property rights within the legal system of the country.
Environmental Factors
Excessive resource depletion Target Co. can cause adverse reactions from the media, environmental groups, clients, and the general public. According to the 2020 Annual Report Target Corporation (2020), Target Corporation has pledged to produce energy from renewable sources by 2030 fully. It is one of the initiatives it has taken to achieve its sustainable development goal. The energy will be used for their stores, distribution centers, and corporate offices.
Renewable energy investments
Some countries offer subsidies to encourage investment in renewable technologies. Target Corporation can benefit from this and invest in renewable technologies to ensure long-term sustainability. These investments will also increase stakeholder satisfaction and expand the customer base through enhanced brand image. According to the 2020 Annual Report Target Corporation (2020), Target Co. has invested in solar and wind energy in recent years. They have recently taken up the construction of essential sources such as the Lone Tree Wind Project in Illinois in partnership with Leeward Renewable Energy, LLC and Sand Fork Solar in Texas with ENGIE.
Attitude towards environmentally friendly products
There is an increasing trend towards the use of environmentally friendly products. Target Co. can take this as an opportunity and adopt green business practices to gain the trust of stakeholders. The company needs to prioritize and focus on marketing the green nature of its products rather than conventional value propositions. Today Target offers organic and fresh products for health-conscious consumers.
Reference
2020 Annual Report Target Corporation. Web.