Financial Case

By choosing the correct purports to get in in, localise Corporation can continue their growth and competitiveness in the retail Indus try. Executive Summary butt was first founded in 1 962, opening their first inject in Roseville, Imines tot. The store was designed to speciate themselves from the existing upscale store sees in the bea. The companys idea flourished and by 2005, target area became a study retailing pop rouses, recording revenues of over $52 billion from stores located in 47 different states.One of the main reasons drive was able to be devolve as successful as they are, is the idea of steering o the shopping experience as a whole, and not safe focusing on meeker prices compared to thee r competitors. By embracing this idea, Target has been able to successfully attract their target d anemographic, a medaled, collateralized female, with children. In todays market, Target faces 2 main competitors Walter and woo. W exclusively Mart ope calculates their stores similar to how Targets stores are operated, and their SST ores are mostly in competing areas of another.Walter focuses on driving their prices as low a s possible, creating a very small profit moulding on their items, but makes a wide-ranging profit du to their large 1 amount of sales. Cost is a warehouse retailer that charges a rank and file f e in order to receive their discounted prices. The company relies heavily on these fees, as they ma eke up 72. 8% of operating income. Cost attracts many of the same customers Target attract s, but the companies are generally not in the same fixs.Targets Capital Expenditure Committee is do up of top executives who me et monthly to review all capital rove requests compriseing more than $100,000. This commit tee could approve any and all contrives, unless the switchs were worth more than $50 million an in this case, the project would hire approval from the board of directors. If the project involve sees openings new hole, a satis fying estate manager, located in that specific geographic area, was r expansible for the proposal and presentation Of the proposal. The committee uses different fact Ores when analyzing the capital project requests.The factors are NP and denude, the size and cost of the project, the effect this project has on other Target stores sales, store sensitivities, variance e to prototype, customer demographics, and the tinct it has on the Target defacement. By care Ely analyzing each of these factors and locations, we were able to come up with a decision for EAI chi location. Analysis and Recommendations The first project we will discuss is the Gopher Place location. The proposal is f or $23 million to build a POP Target Store. This location has a very satisfying NP and IR R in terms to the expense of the project.With the prototype NP achievable with sales of 5. 3% below R &038 P forecast, we would expect this store to be financially stable. The size of the pr Eject is reasonable, and with the strong NP and AIR the cost should be redeemed. The biggest factor against this location is the centralization of sales from preexisting Target stop rest. In this location, there are five Target stores already established and plans of two Inc miming Walter 2 Superstores. 19% of our sales are anticipate to come from existing Target stop rest in the area, not benefiting the corporation.This location has a relatively small existence, thou ugh they have been experiencing the largest state growth of the five projects. Only 12 % of the population fits our target demographic of adults with 4+ years of college education. The median salary is also on the higher(prenominal) end of the remaining projects and does not fit our target d anemographic. This location doesnt bring any new brand awareness to the Target brand and is go inning into a very crowded area of competition. The Whalen court project is by removed the most expensive project, costing $1 19. Million to build a unique, ane floor Target store. This project has a project NP of $25. 9 million and an AIR of 9. 8%. With the large amount of investment, the NP and AIR figures AR .NET necessarily that strong but are still positive and could see growth. This is by far the large SST size project, with the largest expense by far. The expense alone makes us worried about the pr Eject. There are currently 45 other stores in the area, but this store would be the only one in a n urban center off major metropolitan area.This location would not have a major collision on Sal sees from other Target stores, but could take away customers from competitors that are cure .NET in the Metropolitan area. The population of 632,000 is by far the largest population and 45% of them fit our demographic of collateralized adults. This location also brings a nun buoy queue branding and advertising advantage and the expense could be balance against the brand wariness. The Barn is a proposal for a POP store costing $13 million an d can reach its NP V with sales 18. 1% below the projected. The small investment allows for a large return run, even if sales fall below the projected.There are no other Target stores in the area and the strong population of 3 151 ,OHO people fits our target median income. This project should have been passed already if it werent for a disagreement with the developer. Soldiers Square is a project for a Supermarket costing $23. 9 million. In order t o achieve the forecasted NP and AIR of $300,000 and 8. 1 % respectively, sales would en d to be at 45. 1% above the forecasted sales level. The area is largely populated with other rate leers and currently 12 Target stores, with plans of building another 12.