Strategic Planning at Wal-Mart and Target
The strategic planning has been defined as the ability to engage in long-range planning that focuses on the organization as a whole (Certo & Certo, 2012). The strategic planning is essentially a process through which the organization defines its strategy and takes measures so as to achieve its goals. The purpose of the essay is to evaluate the strategic planning of two competing organizations and conclude as to which organization has a more robust strategic plan in place. This will also indicate towards which is more likely to hold a competitive advantage and thus stay ahead of its rival. Recommendations to improve the strategic plan shall also be made through suggestions based on personal assessment. The two rival companies chosen for the assessment are Wal-Mart and Target.
An effective evaluation of the strategic plan of each of the two companies shall be incomplete without the study of the mission statement, vision and values of the organization. A thorough study of each of the three elements shall be made. Also the most effective tool for strategic planning, SWOT analysis shall be put to practice. The SWOT analysis tool is used to assess the strength, weakness, opportunity and threats that the firm faces. This tool provides a focused analysis on how the firm is managing the external challenges and using the opportunities (Zaheer, 1995).
Mission Statements
Wal-Mart’s Mission statement can be summed up as their advertising campaign “We save people money so they can live better” (Wal-Mart Stores, 2012). The Mission statement of Target as per their corporate website is “Our mission is to make Target your preferred shopping destination in all channels by delivering outstanding value, continuous innovation and exceptional guest experiences by consistently fulfilling our Expect More. Pay Less.® brand promise”.(Target Brands, 2012)
The mission statement of Wal-Mart is precise and sums up the whole philosophy of the retail giants in a single sentence. The slogan is the same as that of their advertising campaign. The use of mission statement as the advertising slogan is a clear enough signal from Wal-Mart about how serious their commitment of low pricing is. The mission of the organization is thus to try and offer same products at the cheapest price possible to the consumer. This is the driving philosophy of the organization and through various techniques of innovation and supply chain management, Wal-Mart keeps the prices down of the commodities, and thus are the most favored retailers among the consumers worldwide. Wal-Mart believes that offering the same product at a lower price shall help in retaining the customer and thus help in the organization in being profitable.
The mission statement of Target meanwhile takes a more descriptive direction. It lays down, plain English what the organization wishes to achieve. Target wishes to be most preferred shopping destination of the consumer through offering an unmatched experience. They also include their slogan of “Expect more, pay less” in their statement. It is a well rounded statement covering all the key elements towards being a desirable retail chain. It touches on all the aspects that contribute towards a favored retail store, those being value, innovation and customer experience. The means of achieving this for Target is through offering more at lesser price, evident from their slogan.
The mission statement of Target says a lot of things, as compared to Wal-Mart which just in a single sentence sums up its mission. The minimalistic yet to the point approach of Wal-Mart provides a very powerful impact on the consumer. Everyone who has heard of Wal-Mart recognizes it as the retailer offering unmatched pricing. Target, whereas provides a descriptive treatment to its mission. It tries to present itself as the most desirable retailer for reasons beyond just pricing. However, it should be noted that the essence of the mission statements of each of the two companies is essentially the same. Both the retailers try to present themselves as stores offering unbeatable prices on their products.
Suggestions for Wal-Mart on its mission statement could be made on its singular focus on pricing. Having a formal statement stating the importance of a satisfactory experience at their stores shall not be a bad idea. As store experiences are not solely driven by pricing of the products and commodities, having other aspects like customer friendliness or variety of products and options available are some of the ideas for Wal-Mart to consider.
Suggestions for Target may include their need to send a different message as that of its rival Wal-Mart. The brand strength and differentiation are the biggest USP’s of Target, which are underutilized in its mission statement. Target tries to emulate Wal-Mart in its statement by offering its commitment on lower pricing. However, the pricing of Target is considerably more than Wal-Mart, and it should suit them well to focus on their strengths and present itself differently from the competition.
Vision of the Organization
The vision of the two companies is remarkably alike. We shall now look into the vision of Wal-Mart and then compare it with Target. A comparative study in terms of the strategic and tactical plans of one organization is measured with the responses of the other. This research in competitive dynamics helps in isolating the factors that exist in the industry that affect competitive action (Chen, Su & Tsai, 2007)
Vision of Wal-Mart
The vision of Wal-Mart is to retain its position in the retail industry as the “World’s largest retailer”. The means of achieving this for Wal-Mart is through strong and dedicated focus towards building a specific culture across all stores. The culture of Wal-Mart is based on 3 simple beliefs:
Respect for the Individual
Service to our Customers
Through the use of such strong and influential culture, Wal-Mart wishes to retain its no. 1 status. The strategic plan is the retention of existing customers and entering new markets to spread its geographical presence.
The short term tactical plans are made to help the organization with its long term strategic goals. Those are schemes like everyday low pricing, rollback (Prices reduced even further at certain times identified with mascot of yellow smiley) and Special Buy (A product sold at very low price for certain period or one product free with another or more quantity for same price). Such innovative schemes and other initiatives like supplier tie ups etc. helps it achieve the low pricing and retain its image as the store offering the most discounts.
Vision of Target
Target Corporation’s goal is to be the desired retailer for the consumer in all channels. The organization has goals that are similar to that of Wal-Mart, as both wish to either obtain or retain the status of being the largest retailers in whichever geographical locations they operate in. However, one key element of Target’s vision that is different from Wal-Mart is that it’s focus on design, of stores and the clothes it sells.
The tactical initiatives of Target Corporation include giving added incentives through discounts. Also it has now diversified and opened grocery outlets in most stores (Shannon, 2011). Target also has a REDcard credit and debit card that offers an additional 5% discount (Shannon, 2011). The store also presents itself as a cleaner place offering a better experience to the guests. Note that all the initiatives outlined are responses to the price advantage that Wal-Mart had gained over its competitor.
The similarities in the vision and direction of the two companies are evident. Target has now emulated the low pricing philosophy of Wal-Mart quite successfully (Shannon, 2011). It also has become a more one stop shop for all the needs of a consumer by opening grocery section in its stores (Shannon, 2011).
The comparison of the mission and vision has provided a fair idea as to where each of the companies stands in terms of strategic planning. We shall now focus on Target Corporation and try to further evaluate its strategic planning initiatives by looking at its corporate social activities and SWOT analysis.
Social Responsibilities of Target
Both the companies take the social responsibilities very seriously and have put in place many programs to have a favorable public image as an ethical and sustainable organization. However
The initiatives of Target revolve around the values of inclusion and diversity in workplace and service to community. The initiatives of Target Corporation towards social responsibility are rather scanty, when compared to the ones from Wal-Mart. Wal-Mart has a world renowned image of being a socially responsible company and has many charitable programs where most of its employees actively participate. The same cannot be said about Target however, and it needs to put more programs in place.
SWOT Analysis
Strengths:
Established Brand image and wide presence due to a large number of chains
Stronger merchandising and differentiation provides edge over Wal-Mart (Datamonitor, 2011)
Weaknesses
Rising write-offs in its cards program
Higher prices as compared to Wal-Mart
Higher dependence on China for its product has created an impression of its product being of inferior quality (Datamonitor, 2011)
Opportunities
Expansion into Electronics and video games
Increased presence in grocery and food retail (Datamonitor, 2011)
Threat
Lower consumer confidence due to prevailing economic conditions
Overlap in product types can lead to cannibalization and mitigate competitive advantage
Increasing the regulation on cards issued by the corporation (Datamonitor, 2011)
The weaknesses and threats of Target can be turned around into its strengths and opportunities.
The biggest weakness of Target was the price disadvantage. However many initiatives and tactical measures offering incentives and discounts have enabled it to gain considerable ground. In fact post the revival of economy, Target has had better sales figures and profit margins than Wal-Mart (Shannon, 2011).
The threat of lower consumer confidence is best mitigated by the greater discounts that target was able to offer. Ensuring the quality of the products remains optimum, through more stringent QA measures is one way through which the image of Chinese products being of inferior quality can be eradicated.
The strategic planning elements of Wal-Mart and target reveal that the two corporations are neck and neck when it comes to being the desired retailer in the United States of America. Target has been gaining a lot of ground on Wal-Mart by direct competition and opening grocery outlets in the stores, and offering better pricing on its products. The more favorable store design and better overall customer experience has also helped in Target catching up with Wal-Mart, which due to its international presence, still remains the largest and most profitable retailer. Target lags behind considerably in its social responsibility duties and must take more steps as having a favorable image in public. This is so as it is of high importance for a company whose customer happens to a common man.
Works Cited
Certo, S.C. & Certo, S.T. (2012). Modern Management: Concepts and Skills.(12th ed.). New York: Prentice Hall.
Chen, M.J., Su, K.H. & Tsai, W. (2007). Competitive tension: The awareness-motivation capability perspective. Academy of Management Journal, 50, 101-118.
DATAMONITOR: Target Corporation. (2011). Target Corporation SWOT Analysis, 1-11.
Shannon, K. (2011, Aug 25). Target Corp. (NYSE: TGT) Has Dethroned Wal-Mart as the Discount King. Money Morning. Retrieved from http://moneymorning.com/2011/08/25/target-corp-nyse-tgt-has-dethroned-wal-mart-as-the-discount-king/
Target Brands. (2012). Mission and values. Retrieved from http://corporate.target.com/about/mission-values
Wal-Mart Stores. (2012). Walmart. Retrieved from http://corporate.walmart.com/
Zaheer, S. (1995). Overcoming the liability of foreignness. Academy of Management Journal, 38(2), 341-363.
