The economic climate of Canada and prospective operations in Canada by Target Co.
Teacher Instructions: Each team will choose a domestic or multinational company to study. The team should become familiar with the company’s nature and scope of (international) operations. Then, the team is to choose a country in which the company is NOT operating, and study this country based on concepts and material we will cover in class. Finally, the team is to prepare an executive report presentation to the board of directors that outlines the insights from the research conducted, with a focus on whether, why, and how the company should enter the examined country. You will submit an executive report to the chairman of the board. This report will summarize the most pertinent insights that guide your decisions for the company’s strategy.
Our Proposal:
A. The company is Target Corporation (TGT).
B. Target is a general merchandise retailer offering “high-quality, on-trend merchandise at
discounted prices” across all 50 United States and the District of Columbia. They carry a
wide array of merchandise including food and beverage, household essentials, home decor,
furniture, personal care, electronics, and much more. It has expanded into one of the most
reliable U.S. retail stores since its foundation in 1962. It is currently operating 51
distribution centers and 1,938 Target locations with nearly 75% of Americans living within
a 10-mile radius of one.
Although Target does not have any stores outside the U.S., they do offer international
shipping to over 200 countries through their international website www.intl.target.com.
Established in October 2015, the website only carries about half of its U.S. inventory. They
also operate around 20 sourcing offices globally and 1 global capability office located in
Bangalore, India. (Farrington, 2022)
C. Our country of choice is Canada. In 2021, retail trade sales in Canada amounted to
approximately 674 billion Canadian dollars, an 11 percent increase from 2019. Retail sales
in supermarkets, building materials, and garden equipment suppliers saw a positive impact
in 2020. Sales at supermarkets and other grocery stores increased by nearly 12 percent.
(Sabanoglu, 2022) In 2013, Target attempted to enter the Canadian market by purchasing
220 stores from Zellers. Not wanting to pass up the opportunity to acquire the Zellers
locations led Target to launch with a “bigger footprint than advisable.” (Dahlhoff, 2015)
This massive undertaking led to distribution challenges, poorly stocked shelves, store
aesthetics that were not in line with the Target brand, and higher prices than U.S. stores.
Target’s poorly executed expansion failed, and the Canadian stores closed. Target was not
offering sharp enough pricing in Canada; therefore, products became more expensive. The
prices were not necessary, and it didn’t sit well with customers. The consumers in the
Canadian market have a different culture when it comes to buying. The low discounts were
an eye-opener but there was no long-term plan as to how it will grow. (Marig, 2018) Since
then, Target has turned its focus away from international expansion and worked on other
goals. International expansion should not be entirely off-the-table for Target, one of the
most successful U.S. retail companies. In our report, our team will detail how and why
Target should return to Canada and profitably launch a successful international expansion.
***I will discuss ECONOMIC CLIMATE (my section of this project). This section effectively analyzes the economic systems, foreign direct investments, trade and foreign exchange regime. Lastly, provide an analysis based on research and to determine whether the country is ideal for investment.***
