There is only one boss, the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else. ” Target and Wal-Mart are very similar in many business aspects, but in my findings, it was apparent that target had a higher profit margin, this doesn’t necessarily mean that their business is better but rather it is attacking a different strategy.
In order to find the differences in both of hese businesses in the following paper, I will compare the business models, structure, and financial statements of these two companies. OFirst is the business model comparison of these two companies. Looking at Wal-Mart and researching their business model it is easy to see that they are selling a wide assortment of goods at the lowest possible cost on the market. This would make them a low cost strategy. When it comes to cheaper, faster, or better, Wal-Mart is definitely number one in cheaper and faster.
In 2007, they even implemented their site to store incentive, where you could order free hipping online for any product to be shipped directly to the customers nearest store. Wal-Mart was also one of the very first stores ever to introduce the idea of greeters, who would greet customers as they walked through the front door, many other retailers have copied this since the first Walton’s opened their doors in 1962. In their cost model, they have also implemented a very interesting strategy of removing their slotting costs to their suppliers. This strategy allows Wal-Mart to focus on selling products that are more popular to their customers.
Now looking at Target, when we see their usiness model it is the same as Wal-Mart when they first got started in the market in 1962. The goal was to have a wide assortment of goods that were cost effective to the consumer. OThrough the years, Target has become more expensive and this reflection is seen in their profit margin for 2014 at 29. 5% compared to Wal-Marts at 24. 4%. They are gone from a low cost business model to more of a niche. OThey have implemented their own clothing line, which they are trying to make into a high fashion line.
In 2005 target reached a huge corporate milestone by hitting 50 billion dollars in annual sales. Much like Wal-Mart target introduces a new check card that you do not need any credit to get. They offered a 5 percent discount to anyone who gets one of these cards, smart strategy on their end. When it comes to cheaper, faster, or better, target is usually better and faster. Over the years target has become much more expensive than your average department store. OTargets human resources strategy also includes their treatment of employees, which is of higher quality than Wal-Mart.
This may have been true years ago but labor groups today have found they are not different at all in the way they treat heir employees, and if anything, Wal-Mart is now treating their employees better due to the difficulty in obtaining health care through target. Secondly, when looking at both of these businesses cultures, their values, selection, and Structure are very similar but have their differences. Wal-Marts values within their business and shared beliefs are that the customer should get the best product for the lowest prices. Target believes that supplementation of costs is not as important as high sales and stock prices.
As far as the selection between the two companies, they are also not very different. Wal-Mart does not hold as high of standards in the employees that they hire, and it generally tends to be older aged employees, whereas target employees make up mostly young college part time employees. In addition to employees that work for Target another smart strategy that Targets advertising and marking has made them appear to be a well-rounded citizen store to shop at that is hip. This strategy has been proven to work because the stigma with Wal-Mart is very negative whereas the stigma with target is much more positive.
Both Target and Wal-Mart have done a great job when they first started their ompanies with their research and benchmarking because they overtook the market by offered a diverse and vast amount of general goods, at the lowest cost possible. Growth with these two has been accomplished with product mix expansion. By offering a large variety of items, groceries, and other everyday items in a fast-paced world today, they have driven a huge amount of growth over the United States. Target and Wal-Mart have maintained the same distribution channels throughout their stores, and both use the same suppliers for much of their items.
OFinanciaI statements of both companies rove just how successful they have been over the years. By implementing proper customer relations, vendors, and distributers that are all constant, they have taken over the market place at extremely high rates. When looking at the financial statements, assessing both companies for the year of 2013, you can see that they both were profitable and hit major milestones. Targets total revenues in million this year were $72,596 where as Wal-Mart’s revenue was 0$476. 29 billion. Wal-Mart is up from last year’s revenue by 7. 13 billion making their shares increase 10. 6 percent.
They are now a $466 billion dollar ompany. Target was not as fortunate this year and they actually fell 1. 0 percent from lastyear’s revenue of $72,596 million. See chart below for a more in depth comparison of the two companies. Wal-Mart Target Basic Strategy Low Cost & Geographic Coverage Revenue Model Sources Groceries, General Goods, Electronics, clothing Cost Model Outsourcing, creation of own brands, distribution Outsourcing, creation Of own brands, distribution Core Customers People on the move, middle class, people on a budget, any age People on the move, middle class, college students, modern seekers, any age Competitive Advantage
Locations everywhere, low cost goods, one stop shopping Locations are almost everywhere, not the most expensive but has higher appeal to general public, one stop shopping Growth Strategy Geographic Expansion & Product Mix Expansion In conclusion, it is easy to see that both of these companies have been very successful throughout history. In researching the business models, structure, and financial Statements Of these two companies, I have found that Wal-Mart has the upper hand and is more successful than Target as of today.
There are many challenges, different strategies, tactics, and growth opportunities for oth Wal-Mart and Target in the near future. If they continue to go the path that they have been following, they will continue to be a profitable organization. In addition, although Wal-Mart and Target are very similar and have an extremely close profit margin their style and brand are two completely different entities. While Wal-Mart continues to provide low prices, and a vast variety of items, target is closing in on the market to be more of a trendy, hip, and neighborhood friendly organization.