Target’s Failed Expansion Project to Canada
Background of the Company
Target is a retailer in the United States which began in the year 1515. It has grown to be a leading retailer in the United States over the years considering the fact that the store survived the great depression and the world wars. The retailer has given the other retails stores in the United States market a run for their money by being efficient and having variety. In the 20th century, the Target store expanded greatly to reach their levels of current success. Prior to their decision to venture into international markets by expanding to Canada, the operations processes were well coordinated and at no time was target short of stock or experiencing delivery problems. The growth of the company was remarkable and was the second largest retailer in the United States with turn overs being as high as $59.4 billion (Market Place, 2009). At this point in the year 2008, the retailer was at the top of the retail business and everything was going well. Target had introduced grocery departments in their stores and they failed due to extremely aggressive competition by other smaller retailers in their specific locations. Eventually the groceries were closed down but were slowly revived later in the year 2010.
In 2011, Target began plans to expand into the Canadian market. The strategy was straight to the point and well executed. However, the project failed miserably and the retailer lost a staggering $7 billion in investment in Canada. The failure of this project set back the retailer a lot of development because the losses affected their existing retail chains in the United States in a bid to recover the lost money. A mid this crisis, their information database was hacked and the information on customer’s credit cards and from vendor’s accounts as well. This breach in the security did not come at a good time seeing that technical problems brought down the multibillion dollar investment in Canada. For this study, the focus is on the failed project by Target in succeeding in establishing the business in the Canadian market.
Standard criteria for a failed or successful project
A Failed Project.
A failed project by the project management team’s standards is one which goes above and beyond the allocated budget. This means that the budgetary allocation for the project cannot exceed and the project is considered a total success. There is the time factors as well; a failed project will exceed the time frame that was set by a big margin. The extra time spent makes it a failed project if the causes were not something beyond human control like heavy rains or mudslides in cases of constructions. A failed project will not serve the purpose for which it was intended or have any benefit to the target clients and beneficiaries. The three aspects are the most important in judging the success of the project (Kogan Page, 2015).
A successful project.
A successful project is completed in time, within the allocated budget and serves the purpose for which it was being developed. A project may also be considered a success if it surpasses expectations in terms of delivery of services or products to the target beneficiaries. A project can be considered successful if it is completed in less time and utilizes the allocated funds well and at the end of the day achieves its objectives for which it was intended. The success of a project can also be judged by its end product whereby the benefits or profits generated from it are greater than the expectations and targets (Kogan Page, 2015).
Critical analysis on Target’s Entry to Canada.
Target went into the Canadian Market with the desire to replicate its success in the United States as well. This was a viable project and the plan was also achievable. The retailer purchased 189 stores from a Canadian retailer, Zellers where they had managed to get ready to use premises and eliminated one competitor in the process. It was a fair venture and was likely to boost the profits of the retailer. The project took off with Target delivering products well until the movement of the goods overwhelmed the supplies department. In addition to the lack of good supply and purchases coordination, Target did not offer overly competitive prices to the Canadian people (Peterson, 2015). As a result, they did not achieve consumer loyalty in Canada. This was a set back because the initial investment was done correctly except for the part of delivering timely supplies. This was a failure on the part of the project planner that Target enlisted.
Target had a timeline of generating profits the end of the year 2013. Due to the issues of pricing and the fact that Target had replaced Zellers in the retail market, little was affected in terms of competition and market shares for the retail industry. This means that Target’s ambitious goals were already suffering blows (Wahba, 2015). Additionally, Target’s failure to maintain appropriate supply in their store resulted in the clients who they had acquired going back to Canadian stores to purchase their products. Eventually, the media and social media got wind of the situation and Target’s fate was sealed. The expansion project was a billion dollar fail.
Identification Criteria for the Failure of Target’s Expansion Project
Target had a timeline within which to start generating profits. This timeline was met by huge losses to the tune of up to $2 billion yearly (Peterson, 2015). This is the biggest sign of a failed project by the criteria developed above. The goals of Target to dominate the Canadian market was also a big fail because the store did not make it attractive for shoppers. Their prices were relatively similar to the rest of the retailers in Canada. This failed to meet the expectations of the Canadian people and it became obvious that the research on the Canadian market had not been conducted thoroughly. The risk management plans and responses were greatly under developed. This means that the risks tied to the supply chains had not been foreseen. The failure to foresee such risks meant that the retailer did not have a quick contingency plan. It resulted in the shoppers failing to get enough supplies as was characterised by pictures of empty shelves sprawled all over the media. Lack of proper risk management led to the prompt collapse of Target in Canada (Kogan Page, 2015).
The problem solving qualities in the expansion project by Target was poor. This is because, the communication to the shoppers should have been issued in good time the moment the first supply breakdown happened and the retailer found a permanent solution. Had they responded to the problem in a time and professional fashion, the retailer would still have its doors open in Canada (Collins & Baccarini, n.d.). The problem of the supply chain being broken can be attributed to failed team work and good coordination between the project managers and the company’s top officials. The decision making team failed on their part in ensuring the success of the expansion. Ultimately, the results of the project were not impressive to the target market and this means that the project failed.
The conclusion that the project failed comes about because it meets the three crucial thresholds. The time frame was not achieved with the estimated time frame based on the facts on the ground when Target was operational in Canada being that profits will be realised form the year 2021. The time margin was big because it was going to happen eight years later than the initial plan. This means that the business was not making economic sense at the time. The project went above the budget by a big margin. The total cost of the initial expansion was $4.4 billion which was followed by an estimated $2 billion losses (Wahba, 2015). This means that the project expenditure was well above and beyond the allocated funds for the project. The final failure criteria is failure to meet the desired goal of satisfying the shoppers who often cross over to the United States to purchase items. The pricing and the supply problem was the final blow for Target in Canada.
Conclusions from the Failure of Target to succeed in Canada
Target failed in Canada as a result of many things. The project was well understood but all the dynamics that would come with entering a new market were not factored in. This means that the project for expansion was understood as being the desire for the retailer to reach out to the Canadian market but did not take the trouble to study the market and evaluate the expectations of the shoppers in Canada. The project team lacked in competence. This is evident in the supply break down chain and the failure to arrest the problem before it became too big. This trickles down to the lack of proper communication and coordination. This may have been a result of the company taking on an ambitious expansion project. Opening 124 stores in one market in the space of one year was an overly ambitious move (Wahba, 2015). This is why the supply problems could not be contained because of the size of the stock needed. It was difficult for target to get emergency supplies for all the stores in such a short time ultimately failing to deliver quality products and in a timely fashion.
The time and cost allocations for Target in Canada were unrealistic. Venturing into a new market cannot generate profits in less than two years without having studied the market appropriately before establishing the ventures. The retailer was able to launch 124 stores in one year. This was equal to going into a new market and dominating the retail business from the first day. The magnitude of the investment should have been gradual after the success of the first maybe fifty stores. The project control was poor. This is tied to the supply mismanagement. By taking on the expansion project, the supply issues should have been factored in appropriately and alternatives set up at every level of the same (Peterson, 2015). This would mean that products would never run short and the logistical problems of transportation would be sorted without affecting the shoppers in terms of product availability. The biggest fail for Target remains to be the supply problems. Non-competitive prices can suffice in any market because it will have the retailer operating just like the other retailers but lack of products to sell breaks the trust of clients. The Canadian clients stopped going to target because they lacked assurance that they would get all the items they wanted under one roof, which is the purpose of general retailers.
The top management and the project managers failed to take the usual steps of entering new markets and they paid the price for it. There was also a problem with the usual retail chain operations. The Canadian chapter had different suppliers, different logistics companies and generally different management approaches. All this means that Target was only using the brand name to get to the Canadian Market.
Recommendation for Target in the Event that they intend to take on a Similar Project in Future
Collins, A. & Baccarini, D., n.d. Critical Success Factors for Projects, East Perth: Curtin University of Technology.
Kogan Page, 2015. Project Success and Project Failure: How Can it be Judged?. [Online]
Available at: www.koganpage.com/article/project-success-and-project-failure-how-can-it-be-judged#region
[Accessed 20 March 2018].
Market Place, 2009. Target Corporate History. [Online]
Available at: www.marketplace.org/2009/05/20/business/target-corporate-history
[Accessed 20 March 2018].
Peterson, H., 2015. 5 Reasons target failed in Canada. [Online]
Available at: www.businessinsider.com/why-target-canada-failed-2015-1?IR=
[Accessed 20 March 2018].
Wahba, P., 2015. Why Target Failed in Canada. [Online]
Available at: fortune.com/2015/01/15/target-canada-fail/
[Accessed 20 March 2018].
Walker, D. H. & Steinfort, P., 2007. Critical success factors in project management globally and how they may be applied to aid projects, Brisbane: 4th Annual Project Management Australia Conference.
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