Target Corporation: Business Model Canvas (BMC)
Before the course starts: Choose a company you are particularly excited about and would like to work for after graduation. The company can be located anywhere in the world.
Start analyzing its given industry by searching for insights and trends online, and then concentrate on the aspects you find particularly interesting in terms of innovation, business models, and growth opportunities while analyzing the following nine building blocks of a Business Model Canvas (see course literature: Ostewalder & Pigneur, 2013Links to an external site., here is a template of their canvas. In terms of conclusions, check out Ten Types of Innovation Links to an external site. and the innovation tactics as inspiration to propose how the company should transform moving forward.
1.Background- State the underlying problem or challenge this company is facing now or about to face, and back up your argument with sound reasoning and references.
2.Customer Segments – An organization serves one or several customer segments.
3.Value Propositions – It seeks to solve customer problems and satisfy customer needs with value propositions.
4.Channels – Value propositions are delivered to customers through communication, distribution, and sales Channels.
5.Customer Relationships – Customer relationships are established and maintained with each customer segment.
6.Revenue Streams – Revenue streams result from value propositions successfully offered to customers.
7.Key Resources are the assets required to offer and deliver the previously described elements…
8.Key Activities – …by performing several key activities.
9.Key Partnerships – Some activities are outsourced, and some resources are acquired outside the enterprise.
10.Cost Structure – The business model elements result in the cost structure.
11.Conclusions: Proposals for updating the business model - Propose, based on your research with the supper of the Ten Types of Innovation and by updating the Business Model Canvas, how the company should proceed to sustain and succeed in the future.
Appendices: Complete Business Model Canvas One-Pager
Structure: Use Times New Roman or similar font 12 points, 1.5 spacing. The core report should not exceed three pages of referenced text, excluding the one-page business model canvas and any other appendices referenced in core text (unlimited number). APA referencing throughout the paper references course materials presented under Modules and any sources you think are helpful. In case you plan to use AI-generated text, clearly mark these sections as references or direct citations. I am all for advanced research methods yet mostly interested in seeing how you frame problems and seek solutions to them.
NOTE: In addition to submitting the complete assignment, ensure you have access to an electronic copy of your company logo and the business model canvas in a PDF document with your name to show and share in class. We will upload these on Friday to a discussion board.
Target Corporation: Business Model Canvas (BMC)
Student
Professor
Course
Date
1. Background
Target Corporation (Target Co) was founded in 1902 as a general merchandising and food assortment retailer in the United States of America (US). The portfolio includes fast-moving consumable products (FMCG), perishable commodities, apparel, dairy items, accessories, and household essentials. The company has over 450,000 employees and 1,950 retail stores in its home country. Under the leadership of Brian Cornell, the Chief Executive Officer (CEO) and Chairman of the company, Target Co established 56 supply chain facilities and a global market presence in more than 28 countries (Forbes, 2023). Target Co generated USD109 billion in revenue in FY2022, making the company a market leader in the American retail industry (Target Co, 2023). Target Co’s fiscal performance in FY2022 was attractive for investors, generating optimistic speculations about the company’s performance and digital leadership.
Nonetheless, Target Co underperformed in New York Stock Exchange (NYSE) due to inflationary impacts on food and gas commodities. The company lost a price war with Walmart and Kruger. Target Co mismanaged inventory since the strategy team needs to be aligned with rapid transitions in consumer behavior. The share prices were reduced by 28% on NYSE regardless of attractive footfall in physical and digital stores (Isidore, 2022). Target Co requires revising its Business Model Canvas (BMC) to respond to the situation in the long run and retain industrial growth.
2. Customer Segments
Customer segments are one of the building blocks of BMC. Customer segments focus on specific target markets focused by a brand to push its products and services as a proposition (Ostewalder & Pigneur, 2013). According to Reuter (2023), a Target Co shopper is a millennial suburban mother with an annual income of USD80,000. The identified customer would visit Target Co’s store during weekends and spend USD50 on average. The company enjoys substantial brand loyalty from customers compared to retailers like Walmart. Statistics confirm that more than 4% of weekly American retail shopping incurs in Target Co stores, valued at USD30 billion (Reuter, 2023). The customer segment is loyal and repeated for Target Co compared to Walmart and Kruger.
3. Value Propositions
The value proposition is a point of differentiation (POD) for brands. Value proposition refers to the benefits and solutions offered to customers to satisfy needs (Ostewalder & Pigneur, 2013). Target Co has an excellent brand reputation among American households. The company offers a reliable brand reputation to customers with flexible product return policies. The physical stores are in prime locations with high accessibility for households in 50 states. Target Co claims that 75% of American households reside within 10 miles radius of the physical stores. The geographical density offers convenient access to customers. Besides, Target Co claims to run a mini-mall structure for customers, providing different products and services under one roof (AoS, 2022). The value proposition offered by Target attracts more customer footfall compared to Walmart and Costco.
4. Channels
Channels are an essential component for brands while delivering value propositions to customers. Channels could be physical, digital, or Omni (Ostewalder & Pigneur, 2013). Target Co follows an Omnichannel structure to distribute its products, services, and marketing communications while reaching customers to generate sales. According to Gao et al. (2021), Target Co invested USD7 billion in Omni-channel to offer products and services through physical and digital stores. Customers could visit physical stores in 50 states within a 10 miles radius, followed by a mobile application store (App-Store) and web store administered by the company. Customers could purchase and return through the Omni-channel network established by Target Co to offer convenience and accessibility to the customers (Gao et al., 2021). Target Co has commendable control over retail channels to achieve growth and ensure sustainable profitability.
5. Customer Relationships
Customer relationships are essential notions for brands to achieve growth sustainability. Brands create a culture to connect customers, employees, and investors in a healthy relationship to drive long-term growth (Ries, 2017). Target Co functions as a big box retailer in the US. The company reinvented the shopping experience for customers. The company offers loyalty programs, reward programs, and data security to attract more customers for an entertaining and secure shopping experience. Besides, the flexible return policy allows customers to rely more on the brand's servicescape. Target Co offers convenience, accessibility, reliability, and security as core features in the servicescape to build a sustainable relationship with customers (WMS, 2021). Hence, customer relationship is more robust for Target Co compared to Walmart and other competitors.
6. Revenue Streams
Revenue streams refer to the sources owned by brands for generating sales in a fiscal period. Brands would establish revenue streams to make the business model scalable for investors (Nielsen & Lund, 2018). Target Co has different revenue streams to diversify risks and sustain profitability. The primary source is physical stores. Target Co sells different products and services, launches promotional campaigns, and introduces reward programs to generate sales through physical stores. Target Co generates further sales in online stores. Online stores include App-Store and web store. Customers can log in to the virtual stores and shop, receiving similar services and product ranges offered in physical stores. Target Co generated USD31.4 billion in FY2022 through a digital revenue stream (Target Co, 2023a). Target Co has strategic and reliable revenue streams to lead the American retail sector through physical and digital channel efficacies.
7. Key Resources
Successful companies have resources at their disposal to achieve short and long-term objectives. Resources are essential for brands to combine, experiment, and generate profitability for stakeholders in the long run (Davila & Epstein, 2014). Target Co's business model is the primary resource owned by the company. Target Co functions in four segments: discount stores, hypermarkets, express stores, and digital stores. The business model diversifies risks for Target Co by combining resources through strategic prospects, particularly during uncertainties (Pereira, 2023).
Standards and certifications are the second essential resource owned by Target Co. Target Co has certifications from Marine Stewardship Council (MSC), Fair Trade US, Best Aquaculture Practices, and Forest Stewardship Council (FSC). The certifications ensure that Target Co has a responsible operational framework to satisfy stakeholders in the global retail industry (Target Co, 2023b). Lastly, Target Co has a global sourcing channel in Mainland China. Global sourcing connects Target Co with Southeast Asian and African regions to procure affordable and effective raw materials for further production (Target Co, 2023c). The essential resources allow Target Co to lead the American retail sector with sustainability, accountability, and diversity toward stakeholders.
8. Key Activities
Key activities involve business functions that a company performs to generate revenue. Target Co s...