Target Case Review

In: Business and Management

Submitted By kaide4
Words 630
Pages 3
Target Case
Kevin R Davis
EMBA 7200

1. Gopher Place: Accept
The Gopher Place project should be accepted because of its low risk based in the sensitivity assessment. It has a high NPV of $16,800, strong IRR of 12.3% and the sales decline for nearby stores is low at $4,722. Target would own this property which is in line with its long term strategic goals. The area is projected to see the largest growth rate of the other 5 projects at 27%. This market is also projected to add two new Walmart and Target’s presence is low at five stores. It is in Target’s best interests to build stores and increase brand awareness.

2. Whalen Court: Reject
The Whalen Court project should be rejected. The cost of the project is extremely high at $119M. With an overall NPV projected at $9.3M, and sales declining; the IRR is lower than other projects at 9.8%. With a slow growth rate of 3% compared to other Additionally, this project is a lease. Target prefers to purchase its property. Furthermore, the market is saturated with forty-five stores in this market. Based on the high cost, low market growth, and market saturation it would be best to reject this deal for now.

3. The Barn: Accept
The Barn project should be accepted because of its low the investment of $13M and NPV of $16.4M. The exceeds the project cost. The IRR is the highest of all of the projects at 16.4%. The market is small and this location would be almost 80 miles from the closet sister location. Additionally, this location is projected to take roughly 13% market share. Taking roughly 10% from Walmart, 3% from Kmart and 1% from Sam’s Club. Furthermore, this project was reviewed before and accepted but was later put on hold. While the investment costs increased since the approval in 2001 but the sales, NPV and IRR projections have increased as well indicating that this is still a good…...

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