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Strategy of Wesfarmers Target

What is the strategy? Describing the strategy and how it was developed to overcome a specific difficulty within the environment.

Wesfarmers discount retailer Target has been experiencing steady decline in the profit. The reason for this steady decline is primarily dues to higher stock clearances and an ongoing decline in the sales growth. Target’s profits have fallen 32% in the last two years before Mr. Machin has joined the Target to revitalize the company, but after the joining the company the situation of Target has further decorated as the profits are in continuous decline and has dropped 63% since then (Johnson et al., 2013).

In order to improve the business situation of the Target the company has implemented several strategies. In order to re-establish in the market, the company has adopted the strategy of differentiating itself from the other players in the market. One of the major strategies adopted by the company is the changes in the physical and service environment at its stores as well as in the business operations. The various changes implemented by the company are –

Online business mode - In the present context, technology is major factor that influences every aspect of the life and the use of technology in the business cannot be undermined. In order to improve the business situation Target has implemented online business model in its existing business model to attract technologically savvy customers. With the help of online business model Target aims at improving its sales figure and reposition itself in the retail segment. Online business model of Target has enabled the company to attract more customers and also provided an opportunity to improve visibility of the brand. Other benefits include 24/7 business operation and better service delivery to the customers (Verbeke, 2013). 

Selling more products at first price rather than at discounted price - Target has been selling its product at discounted rates to the customers. This business strategy has resulted in poor performance for the company in terms of sales revenue. Therefore, to improve profit margins and overall performance of the company, Target has changed its pricing strategy by selling products at first price rather than at a discounted price. This would enable the company to avoid high stock clearances and strengthen the company’s revenue generation (Cavusgil et al., 2012).

With these strategic changes, Target aims at improving the business situation by improving sales of the company products and repositioning or reestablishing company’s presence within the Australian retail segment through differentiation (Cheng et al., 2014).    

Competitive advantage achieved by these strategic changes

Stocking global trends – Target is one of the biggest retailer in the Australian market that provides solutions to the customers apparels, home wares and general merchandise. As a part of strategy change, Target is providing customers more assortment of various products or merchandises that are in line with the global trends and demands of the customers. In addition, Target is planning to hire in-house designers that would design apparels exclusively for the customers of Target by considering the preferences of their customers and also the international trends. This would improve the brand loyalty among the customers and also the profits for the company (Hubbard et al., 2014).

Additional store services – another strategic change that Wesfarmers Target has implemented is broadening the services spectrum that is provided by the company to its customers and improving the quality of service delivery to the customers. The service speed of service delivery provided to the customer at the store is faster and efficient; it has enabled the customers to have favorable impression of business as whole. In addition, the changed structure of the store, ambience and additional facilities at the store such in-house coffee shops has enhanced the image of the brand in the minds of the customers (Booth & Coveney, 2015). 

The objective of the strategic change adopted by the company is to enable the company to gain competitive advantage over its rivals. Competitive advantage refers to the ability of the company to attract and retain more customers based on various characteristics or attributes that the company provides to its customers that allows a company to outperform its competitors (Vernon, 2012).

The company has adopted differential business strategy to regain its market share by providing better assortment of products and merchandise as per the global trends, better service delivery to the customers and integrated online and bricks and mortar business model. Since, many well-established players offer similar products to the customers, it is important to differentiate the business model of Target from the rivals in order to succeed in the market crow the retail segment. As the company has undergone some strategic change to improve its business situation, it has achieved following competitive advantage –

Differentiation through unique business model – Competitive advantage refers to those qualities that cannot be imitated by competitors and provides the company a sustainable competitive advantage in the market. Through the successful collaboration of online and bricks and mortar business model Target has create a unique opportunity in the market. Most of the companies in the retail sector relies either on the physical business units or online business models to market their products. Thus, by creating a unique business model that has advantages of both physical store as well as online presence, Target has created unique opportunity in the market and has provided customers to select their products as per their convenience (Sharma et al., 2015). The benefits of online and bricks and mortar business models has created a competitive advantage for the Target as the company has presence in physical as well as virtual world that the competitors lacks. The 24/7 availability of the business to meet the demands of the customers providing them home delivery is beneficial for the business and crates competitive advantage in the maket.

Differentiation through product differentiation - Target has focused on providing customers with products in line with the global trends. This has enabled the company to differentiate itself from the competitors as Target has better understanding of the demands and latest trends in the international market. The product assortment of Target has more products and merchandises that allow the customers to have more options to choose from. In addition, the company has created its own range of apparels and merchandises with the help of well renowned fashion designers that keep track of the global trends, customer preferences and provides value to the customers (Bhatnagar & Syam, 2014). The wide range of products that matches international standards as well as satisfies the demands of the customers in the most economical manner creates a competitive advantage for the company as it attracts more customers and generates customer loyalty.

Cost advantage – Target has reduced its reliance on the discounts and focused more on providing better quality products at a reasonable price. However, it seems like the strategy of the company to reduce merchandise discounts is bound to fail in the market, but the fact is the company has focused on providing customers high quality products. The customers have also responded to this strategic favorably as they demand better value products at a considerable price rather than buying inferior quality products. Therefore, it can be said that by reducing the discounts the company has improved its business situation and attained cost advantage in the market.

Value creation – Value creation is one of the competitive advantages that Target has achieved by changing its business strategy. Target has achieved competitive advantage in the form of value creation. Value creation refers to providing customers with better products at a affordable price than their competitors. Target has created value for its customers as they provide high-end merchandises that are at line with the global trends (Kellner et al., 2014).  The company utilizes the services of designers that design high quality products and merchandises at an affordable price for their customers. In addition, the company provides better service quality to its customers in the store as well as after the post purchase to retain the customer and increase value preposition for the company. The company provides value to the customers by offering personal styling options, in store clothing attentions, t-shirt printing, wider range of specialty products, better store layout, visual merchandising and coffee shops to encourage customers to linger (Swoboda et al., 2014). 

From the above discussion and analysis of the strategy implemented by the company, it is important to understand the effectiveness of the strategy adopted by the Target. In this part, it is required to focus on the usefulness of the adopted strategy of the company Wesfarmers Target. Initially it has been seen that the company must rely on adopting new online business model, as the present day scenario helps any of the organizations to drag the attention of the customers. Unlike traditional models of running a business in the bricks and the mortar world, the innovative techniques are generating more revenue in the online process to evolve and be defined (Slack, 2012). It has been seen that most of the customers in the present day scenario relies hugely on the internet and thus revising the existing business policy is highly essential for the management of the company to drag the attention of both the new and the existing customers (Amit & Zott, 2012). It can be stated that the online business model of the company would enable the customers to interact with the employees of Wesfarmers regarding any of their grievances and this would help the company to build a positive relationship with their valuable customers. Apart from that, it can be stated that the online business model of Wesfarmers would enable the customers to select from a wide range of products and this would made the buying experience of the customers more lively (Slack, 2012). Therefore, it can be stated that the suggested incorporation of the online business model would help the corporation to revive their existing policies and this modified business policy would enable the corporation to gain more profits than previous and thus the selection of this strategy is justified enough (Anandarajan, Anandarajan & Srinivasan, 2012).

Besides that, it has been seen that the company has recommended selling more products at a first price rather than at the discounted price. It has been seen that previously the company was selling their products in a discounted price and this business policy resulted in poor performance of the company. Thus, it can be stated that to enhance and increase the price margin, Wesfarmers must revise their existing market policy by selling the products at the first price rather than the discounted prices. Barnes and Hunt (2013) have stated that the pricing can be challenging as well complex and offers no shortcuts to the company and thus this part is required to look carefully from the viewpoint of the management. The target of the company must not to accumulate products and initially and after that selling the products in a discounted rate. This revised pricing policy makes sure that the corporation must avoid high stock clearances and at the same time strengthen the revenue generation of the corporation (Slack, 2012). This would help the company to company to reestablish their presence in the existing retail market. It can be stated that at the time of poor market presence, the company must revise their pricing strategies, as this is one of the most significant business decisions that assists the company to revive from the struggling market position (Casadesusâ€ÂMasanell & Zhu, 2013). Therefore, it can be stated that at the time of setting the prices, the management of the company must make sure that the price and the sales level allow the business of the company to be advantageous. Thus, selection of this pricing strategy is justified enough and thus the company must rely on this.

In order to stay competitive in the market, companies are required to stock the global changes in the retailer industry. It has been recommended that the design of the products must have a different brand look and this would attract the attention of the customers. Keeping this global style trend in mind, it can be stated that the management of the company must hire a designer group, who would be engaged in designing exclusive design of the products for the revised target segment (Anandarajan, Anandarajan & Srinivasan, 2012). It is expected that the exclusive designing of the products would increase the brand loyalty among the customers and this might help the company to revive their present marketing position in the existing retail industry (DaSilva & Trkman, 2014). The overall business of Target had been less than K-Mart over the past few times and thus they must immediately hire a group of the in-house designers and monitoring the designs keeping in mind the global trends, as this would help the company to attract the attention of both the existing and the new customers (Lambert & Davidson, 2013).

The numbers of the stores of Wesfarmers are less in the market and to gain the attraction of the customers, it is highly necessary to expand the numbers of the stores in the market. If the customers find that the numbers of the stores are less, they must rely on some other companies that are more available to them. Therefore, raising the numbers of the stores in the market is one of the effective means for the company to get the attention of wide range of target customers. Apart from that, it can be stated that the management and the marketing team of the company must have a close watch to the global trends in the retail market and revise the existing policies based on the market trends (McCoy et al., 2012). Global market trends of the retailers give the customers more payment options and at the time of the incorporating the online business model, the company must widen this section to increase the level of customer satisfaction. More facilities must be added to the click and pay facility of the mobile phone initiatives and this part would help the company to get more number of the online customers. Apart from that, it can be stated that the retailers must unify their online and offline data collection and these parts in the online business model are required to focus on immediately to revive the existing market position in the retail industry (Osterwalder & Pigneur, 2013). Therefore, going through all these strategies of the company, it can be stated that the selection of these strategies are justified enough and it is expected that the company would rejuvenate with the help of these adopted strategies. 

References

Amit, R., & Zott, C. (2012). Creating value through business model innovation. MIT Sloan Management Review, 53(3), 41.

Anandarajan, M., Anandarajan, A., & Srinivasan, C. A. (Eds.). (2012).Business intelligence techniques: a perspective from accounting and finance. Springer Science & Business Media.

Barnes, S., & Hunt, B. (Eds.). (2013). E-commerce and v-business. Routledge.

Bhatnagar, A., & Syam, S. S. (2014). Allocating a hybrid retailer's assortment across retail stores: Bricks-and-mortar vs online. Journal of Business Research, 67(6), 1293-1302.

Booth, S., & Coveney, J. (2015). ‘Big Food’—The Industrial Food System. InFood Democracy (pp. 3-11). Springer Singapore.

Casadesusâ€ÂMasanell, R., & Zhu, F. (2013). Business model innovation and competitive imitation: The case of sponsorâ€Âbased business models.Strategic management journal, 34(4), 464-482.

Cavusgil, S. T., Knight, G., & Riesenberger, J. (2012). A Framework of International Business. Pearson Higher Ed.

Cheng, M. M., Green, W. J., & Ko, J. C. W. (2014). The impact of strategic relevance and assurance of sustainability indicators on investors' decisions.Auditing: A Journal of Practice & Theory, 34(1), 131-162.

DaSilva, C. M., & Trkman, P. (2014). Business model: what it is and what it is not. Long Range Planning, 47(6), 379-389.

Hubbard, G., Rice, J., & Galvin, P. (2014). Strategic management. Pearson Australia.

Johnson, G., Whittington, R., Scholes, K., Angwin, D., & RegnŽr, P. (2013).Exploring strategy text & cases. Pearson Higher Ed.

Kellner, J., Wagner, G., & Toporowski, W. (2014). Differentiation in Online Retailing from a Consumer’s Perspective–A Repertory Grid Approach. InEuropean Retail Research (pp. 43-57). Springer Fachmedien Wiesbaden.

Lambert, S. C., & Davidson, R. A. (2013). Applications of the business model in studies of enterprise success, innovation and classification: An analysis of empirical research from 1996 to 2010. European Management Journal, 31(6), 668-681.

McCoy, D., Pitsillidis, A., Grant, J., Weaver, N., Kreibich, C., Krebs, B., ... & Levchenko, K. (2012). Pharmaleaks: Understanding the business of online pharmaceutical affiliate programs. In Presented as part of the 21st USENIX Security Symposium (USENIX Security 12) (pp. 1-16).

Osterwalder, A., & Pigneur, Y. (2013). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

Sharma, D., Chowhan, D., Singh, S., Gupta, D., & Srivastava, M. (2015). Consumer perception on online-business: a marketing strategy for new entrepreneur. Sudhinder Singh and Gupta, Dr. Devesh and Srivastava, Mr. Vishal, Consumer Perception on Online-Business: A Marketing Strategy for New Entrepreneur (January 15, 2015).

Slack, K. (2012). Mission impossible?: Adopting a CSR-based business model for extractive industries in developing countries. Resources Policy,37(2), 179-184.

Swoboda, B., Elsner, S., & Morschett, D. (2014). Preferences and performance of international strategies in retail sectors: an empirical study.Long Range Planning, 47(6), 319-336.

Verbeke, A. (2013). International business strategy. Cambridge University Press.

Vernon, P. (2012). Shopping Towns Australia. Fabrications, 22(1), 102-121.

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