Case Study – Target Canada

• – In      2012, Target expanded its business into Canada.  The proximity to the      U.S. as well as Canadians’ familiarity with the brand made expansion      across the border seem like a natural step for the retail powerhouse.  However,      after only two years, Target faced $2 billion in losses and announced      plans to close all of its Canadian stores.  Here are some of the      reasons the global expansion led to an exit decision:
• – Target      was initially able to minimize its capital costs by purchasing obsolete      stores from a former Canadian discount chain.  While this gave Target      quick and affordable access to a high number of locations, the stores were      not designed for Target’s big box format.  Also, the association      created by locating the new Targets in outdated spaces damaged its “Expect      More, Pay Less” brand reputation.
• – Target      compromised quality for speed to market. The company opened 124 stores in      only two years, and essential parts of the business, such as inventory      planning, could not keep up with that pace.  As a result, empty      shelves and stock outs were an issue.  This was especially      disappointing for Canadian consumers, who were accustomed to seeing      abundant merchandise in U.S. stores.
• – Target      faced stiff competition from Walmart, which has been present in Canada      since 1994. Historically, Target’s trendy and more fashionable merchandise      had helped the brand distinguish itself.  However, its Canadian      assortment lacked these qualities, which put Target in the position of      having to compete on price, which is Walmart’s sustainable competitive      advantage.  Walmart responded with a price war that they appear to      have won.
• – Each      of these factors put Target’s brand equity, one of its most precious      assets, at risk, and ultimately it was left with little choice but to pull      out of the market.  While opportunity may still exist in the future      for Target to re-enter Canada, its failed first attempt is a good lesson      for companies considering expanding operations into new global regions.

Questions:

1) Evaluate the three conditions for divestment (according to the textbook) for Target Canada. Did Target Canada meet each one? Explain.

2) Imagine you were president of Target Canada at the time when Walmart started the price war. How would you respond to the war? Was there any way to win? Be sure to explain your answer here. Should they try to win? Explain why or why not. Please be specific in your answers.

Grading Criteria:
Content:
The essay answers the question clearly with sufficient explanation. It reflects original thought, sound logic and provides ample supporting detail, which needs references and citations. This will make for a strong, convincing response. The writer projects a consistent and mature voice throughout the response.

Presents Specifics from the Applicable Chapter/Content

The essay provides multiple references to specific information presented in the chapter and/or learning materials.

Sentence Structure, Grammar, Mechanics, and Spelling

All sentences are well constructed and have varied structure and length. The author makes no errors in grammar, mechanics, and/or spelling.

Submission adheres to the 2 page maximum limit for content.  All citations and references are properly formatted according to APA or MLA.