Target Corporation Case Analysis

Executive Summary

Mission:

Target Corporation is one of the top five largest discount retailers in the United States with a mission of making Target the preferred shopping destination for their guests by delivering outstanding value, continuous innovation and an exceptional guest experience by consistently fulfilling their slogan of “Expect More. Pay Less” brand promise.

Background:

Target had become a major retailing powerhouse with %52.6 billion revenues from 1,397 stores in 47 states by 2005. Its success was not one that has come easily; a major contribution to Target’s strong performance is because of its successful investment decisions and expansion. Over the past five years the company had announced its goals to continue growth by opening approximately 100 stores per year, where company’s sales growth were derived from opening new stores to access new markets and tap into a new pool of consumers and organic growth through existing stores.

Case Synopsis:

Doug Scovanner, the CFO of Target Corporation is preparing for the November meeting of the Capital Expenditure Committee (CEC). He is one of the executive officers who are members of the CEC. With the fiscal year’s end approaching in January, there was a need to determine which projects best fit Target’s future store growth and capital expenditure plans, with the knowledge that those plans would be shared with both the board and the investment community. Target has a growth strategy of opening approximately 100 new stores a year. CEC referred projects with an investment larger than $50 million to the board of directors for approval.

The five CPRs that Scovanner would present to the board are: Gopher Place, Whalen Court, The Barn, Goldie’s Square and Stadium Remodel.

Case Objective:

To analyze the long term value drivers, evaluate, and rank the five project investments on whether capital was better spent on one project or another