BADM $106-$ Target Peer review $-5$ marks $-$ report is due online or in person to me by April $3,$ our last class.

What follows is a team report on the failure of Target similar to the one submitted by your team: this was a good report but not perfect!

Steps to complete review:

$1.$ each team member should read and study carefully

$2.$ individually, then as a team, determine the good and in turn, the poor elements of the report

$3.$ submit a report to me $($ not to exceed $5$ pages$)$ evaluating the report and either supporting, or not supporting the report's conclusions. Provide evidence to support your "opinions"!

This is your last team assignment. Good luck!

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Target Final Consulting Report

Attn: Board of Directors

Executive Summary

This report examines the challenges Target faced during the company$$s attempted expansion into the Canadian market. Our team has identified several key issues and examined the root causes behind what happened. These key issues include: the initial real estate deal that gave impetus to the expansion into Canada; the rushed timeline on which this expansion was expected to take place; the failure of Target$$s marketing department to develop the brand in Canada and research the local consumer market; the technological issues suffered due to a new ERP system; the inventory management and supply chain failures; and the lack of appropriate workforce and staff training that took place. Each section will include a further in$-$depth discussion on the root causes behind the key issues, which give consideration to the complex and difficult nature of international expansion and business growth in general. We have also included several recommendations to ensure that such problems can be addressed and avoided in the future.

Issues & Root Cause Analysis

$1.$ High$-$risk real estate deal

The first mistake Target made in its Canadian expansion was entering into the $$1\mathrm{.}8$ billion transaction to purchase $120+$ Zellers locations. The company wanted accelerated growth into the Canadian market and thought this purchase opportunity was too good to pass up$.$ Several of the sites purchased as part of the deal were located in run$-$down shopping malls or out of the way places and they would have to invest more than $$1$B in upgrades. Furthermore, $$most Zellers stores were dumpy, poorly configured for Target$$s big$-$box layout, and were in areas not frequented by the middle$-$class customers Target covets$($Wahba$,2015).$ This transaction put significant amounts of long$-$term debt on their books and Target was losing money as the Zellers stores sat empty.

When a company is entering a geographic market for the first time, aggressive and rapid expansion is highly risky and typically avoided. Target set out to compete as a late entrant in a heavily saturated market, and the decision to open more than $120$ stores right away was beyond ambitious. This transaction put significant amounts of long$-$term debt on their books and upon entering into this agreement, Target began losing money immediately as the Zellers stores sat empty. Due to the significant financial risk posed by the real estate deal, a host of other problems ensued. Target executives did not plan this expansion all the way through and failed to perform a feasibility plan, in which they would see that buying Zellers$$ locations could harm the company strategy.

The root causes of these issues were inadequate risk assessment, poor strategic planning, and lack of risk management measures. The company wanted to grow in the Canadian market as quickly as possible and consequently, rapid expansion was prioritized above everything else. As we know, Walmart was also considering the same deal at one point, yet the company backed out of the deal. Although this should have been a red flag for Target$$s CEO as well, it was unfortunately overlooked. This lack of scrutiny led management to continually downplay the risks that came with such a deal and furthermore, the leaders neglected to take appropriate steps to mitigate such risks, such as taking the time to develop thorough and feasible plans.

$2.$ Rushed expansion timeline

This high$-$risk transaction also set in motion a timeline for expansion into Canada that was entirely unfeasible. Target's strategy to expand its business internationally was overly aggressive for such a short period of time. Global expansion is not simple, and Target underestimated the difficulty of this plan, especially in such a short term, the rushed expansion was one of the main issues that caused the company to fail. Where normally a company would take the time to conduct thorough testing of its systems and develop plans for adapting to change in this new market, Target Canada$$s employees had to cut corners anywhere they possibly could so that they could keep up with this unrealistic timeline.

Despite continuous challenges faced in all areas of