Target corporation case study solution
The one major bonus is the nearest Target is 80 miles away, the large potential losses and competition make this a less desirable project.
Target capital project request
Add in the fact that Target usually owns their store property and this project is already out of the ordinary. There are already 12 Target store currently in this market and could possibly go up to The fourth alternative for Target Corporation is the project Goldies Square. February 6, Executive Summary: This case study analyzed five different projects Target Corporation had to decide on capital spent for which project created the most value and the most growth for the company and its shareholders. However, because this project offers the least amount of shareholder value, we do not believe it is a good investment. We believe the primary reason was because of their different cost of capital. Costco targets the same type of customer but their business model is different than that of Target. It answers four specific questions as required by this case study. Also because the members are all executives, there is a chance they will be more concerned with short term investments versus long term wealth. However, this project has been delayed almost 5 years and does not have the correct demographic or income level that is ideal for a Target store. However, it is estimated that the new store will fully recover in 5 years. Therefore, this location isnt exactly the customers Target usually tries to attract. This is important because Target focuses on creating a shopping experience that attracts college-educated woman whom have children and are more affluent than the standard Wal-Mart customer. The process begins with real estate managers distributed throughout the United States and ends being reviewed by the CEC. Also Gopher Place has a high population increase, which could translate into sales growth.
In addition, it has the lowest IRR of all the projects at 8. They will weigh the benefits of the project and make a decision whether to accept or reject. They give the capital expenditure committee data about the prospective store location including tax considerations and real estate incentives.
Next, the firm will discuss and rank the five projects under review by the CEC.
Second, by implementing this project it continues the strong brand image Target has with its customers. In addition to maintaining a strong brand image, Target wont have to use much of its budget for capital expenditure.
However, if a request meets the requirement to be reviewed, the CEC must review and make the best decision for the company.
Target corporation capital budgeting and resource allocation
The main difference is that Target aims to provide a better shopping experience while Wal-Mart aims to provide the lowest possible prices. This is a higher risk then some of the other projects that have to be considered. In addition, it has the lowest IRR of all the projects at 8. The positives of this project are lower investment size, lower building cost, affluent and faster growing population. It answers four specific questions as required by this case study. We give this project a green light because of the low costs, NPV and great location for growth. They will weigh the benefits of the project and make a decision whether to accept or reject. Wal-Mart uses much more debt to finance their investment projects, which is riskier for them if the project does not translate into profits. By analyzing the financial statements and exhibits of each project, I was able to determine the positives and negatives of each of these alternatives. This project is necessary in order to compete with Wal-Mart which is expected to open two stores in the vicinity. We believe the primary reason was because of their different cost of capital. The additional members primary focus will be the long term wealth of the company. February 6, Executive Summary: This case study analyzed five different projects Target Corporation had to decide on capital spent for which project created the most value and the most growth for the company and its shareholders. Targets strategy was to consider the shopping experience of the customer as a whole. The closest stores were 80 miles and 90 miles away.
The low investment allows for a larger return on investments for Target. The corporation refers to customers as guest do there best to fulfill the slogan, Expect more. However, with Target, this process can take anywhere from 12 to 24 months just to make it to the CEC for review which can be cumbersome if a vanishing opportunity is made available.
Therefore, the lower cost of this project will make it still possible for Target to keep its goal of trying to open new stores annually. I can help in any courses Finance, Management, Strategy, Marketing, Human Resources, Organization Behavior, Economics, Excel, Dissertation, CAPSIM, Online Test and any other kind of projects This is case study analyzed five different projects Target Corporation had to decide on capital spent for which project created the most value and the most growth for the company and its shareholders.
The committee reviews only 10 to 15 requests and only meets once a month.
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