How important is sedulous Project Management for any corporation?

What happens when corporates fail to device an effective Work Breakdown Structure for a plan?

How important it is to discern the technical and socio-cultural aspects of a new project?

How can a company with more than a 100 years of experience loose billions because of a weak supply
chain management?

One such failure story that shook the world was US$70-billion American titan Target’s Canadian venture,
which costed 17600 jobs and devastating loss of $5.6 billion. (Castaldo, 2016). Its dramatic story
revolves around a weak objective and an even weaker execution of the project, which was anticipated
by company as well as Canadians to be a big hit.

Target’s history dates back to 1902, when George D. Dayton established the “Dayton Dry Goods
Company” in Minneapolis; selling general merchandise and it was because of his belief in the principle
"the higher ground of stewardship" that transformed a small merchandise store into a multi billion-
dollar titan-Target.

With its moto “always low price”; Target is the second largest Retailer in North America, just after
Walmart. The fortune 500 giant, as of 2017, operates 1,806 stores throughout the United States and has
a net revenue of $69, 475 billion (in 2016) (Corportion, 2016).

Companies turmoil arose when the company attempted to expand out of US and establish itself as a
global brand. It chose Canada as its first market outside US hoping to entice the Canadian neighbours
who share many similarities with Americans.

The idea of establishing as a global brand is not new. Many great case studies have studied the success
of globalisation. While other stories described how many companies doomed trying the same.

Company became a great example of how unplanned Objective setting and weak project management
can render even the biggest company to dust. It reflected flaws in every stage of the project from
initiation(defining)

Footsteps into Canada;

Ever since Walmart entered into Canadian soil, Canada shined as a lucrative market for other US
corporates. This turn was mainly due to various technological and sociocultural reasons. The American
market had reached saturation point and stores want to stem out of US. Besides, the Canadian dollar
market multiplied from 62 cents U.S. in 2002 to around $1.03 U.S in 2012 and so Corporates found
Canada irresistible. Thirdly, various surveys and research data showed that Canadians were way behind
in online shopping as compared to U.S. counterparts and hence the scope for retailers was far high in
Canada. Other factors included Canadians owning more disposable income as compared to Americans
and also figures showed that Canadians were relatively behind in bargaining and therefore making more
dollars for the retailer. (Tencer, U.S. Retailers In Canada: 7 Reasons They're Suddenly All Showing Up,
2012) . All these reasons led to American companies to gush into Canadian market and establish
themselves outside US.

international expansion is challenging, even for the biggest retail brand names. Tesco’s Fresh & Easy
stores in the U.S. went bankrupt; Best Buy failed and closed its stores in the UK within less two years of
launch; Wal-Mart had to withdraw from Germany and South Korea; and Carrefour pulled out from
Algeria and Thailand.

But there are plenty other stories that successfully established themselves in the global market outside
their parent country. Apple, Michael Kors, Louis Vuitton, Galeries Lafayette) or cost/price leadership
(Wal-Mart, Amazon, IKEA, Aldi, H&M, Zara, Uniqlo). (Dahlhoff, 2015) By 2011, Marshalls, J.Crew opened
multiple stores across Canada and proved a great success. In same year, Target announced its interests
in Canadian Retail (Target Corporation, 2011), along with other big brand names like Ann Taylor and
Nordstrom. (Tencer, U.S. Retailers In Canada: 7 Reasons They're Suddenly All Showing Up, 2012). With
expansion as the main objective, the company announced Tony Fisher as the president and head of
Canadian expansion project. (Target Corporation, 2011)

With its experience, knowledgeable staff and great discounts and an elaborate supply change system it
assumed to touch Canadian household challenging Walmart in Canada as well. (Leinbach-Reyhle, 2014).

In the planning stage of the project, the company in a press release announced it will lease 220 Zellers
stores from Hudson’s Bay Company for C$1.825 billion in an attempt to open 100-150 stores in Canada
by 2013. (Target Corporation, 2011). Tony Fisher, taking the responsibility announced that Target has
analyzed extensive data on Canadian retail performance, demographics, competition and market
potential to identify trade areas which would be well-served by a Target store. (Target Corporation,
2011). Target Canada soon announced the launch of a new website, Target.ca/careers with a vision to
employee nearly 100 employees in its proposed Headquarter in Mississauga and around 125-135 store
associates. (Target Canada, 2011)

By January 2013, company started the execution stage of the project by releasing its famous Red Cards
(giving all the members a 5%dicount on all purchases under the slogan ““Expect More. Pay Less.”, Target
Debit/Credit Master Cards in collaboration with Royal Bank of Canada. (Target Corporation, 2013) This
move clearly indicated that they will be opening a store soon. Finally, on March 5th, 2013 Target opened
its first 3 stores, which was a big success looking at the huge lineup from the crowd to get their hands on
the great deals.

Surprisingly, story after the grand opening got registered in academic papers and history as one of the
biggest corporate failures. It revealed how Target suffered with a poor leadership, major flaws in
planning and its work breakdown structure, weaker analysis of demographics and miscalculation of
project timeline. It exposed how target fell mile short of estimating basic sociocultural aspects, supply
chain management informatics and technical agendas that crippled the company’s big expansion plan in
a matter of just 2 years.

The excitement and curiosity of the Canadian customers were angry and financial and media analysts
thrashed Target’s image when they were welcomed into poorly renovated stores with empty shelves
complimented by fairly high prices as compared to other local Canadian stores. Some customers
responded on Target Canada’s Facebook website (“totally heartbroken,” “please don’t go,” “good
riddance,” “you obviously don’t understand Canadians”). (Dahlhoff, 2015)

Even after a total awry opening, it appeared as if the Target still had no control over the situation and
company got marred by poor execution resulting in the situation to go from bad to worse. By November
2013 company opened its 124th store as planned to avoid paying rent on stores that weren’t operational
and leaving landlords without anchor tenants. The move seemed logical but unless Target had fixed its
existing issues, the move proved to be disastrous. Target registered a loss of US$941-million for year
2013. (Castaldo, 2016)

This brought forward all sorts of inside news that revealed a lot of back ground story of the big
disastrous opening. From poor choice of Technology to untrained store associates to overpaid price for
Zeller lease; Target did it all wrong!! It went so bad that the project that opened in 2013 had to be
totally shut down by 2015 incurring huge financial, job and emotional losses.

Categorising the reasons for the sudden and failure is important to analyse what could have target done
to undo the scenario and to be a huge success.

Technical flaws in the Project, highlighted a poor Scope management by Target. Target’s CEO Gregg
Steinhafel bought Zellers and leased all Zellers store from HBC for $1.8 billion which was way higher
than anticipated by Market analyst as well as Zellers. Zellers CEO Mark Foote quoted “When the
numbers got up as high as they did, we found that pretty surprising.” It appeared they went higher to
prevent Walmart to acquire Zellers at the first place. Target became so competitive in Zellers deal that
they missed out completely on the fact that Zellers were not upper end stores and existed in not-so-
famous locations. Besides Target needed much bigger stores to keep up their American-standard store
reputation which clearly wasn’t possible from the size of basic Zellers stores. (Castaldo, 2016)

Target fell into ill fate even with its Work Breakdown Structure. The schedules were set up in 2011 for
the 2013. President and other leads were announced. Credit card partners were disclosed. Company
started contributed in local charities to get local attention. Target partnered with 6 Canadian
charities to fulfill its pledge to donate $1 Million in a move to cohabit with Canadian society as a
‘caring-local retail store’. (Freeman, 2013) Target was highly concerned with the right ERP
system for its Canadian venture. To get best fix, it outsourced technology consultancy aspect to
Accenture which tested in favour of German based SAP software as the right software for store
use and supply chain management. (TGO Consulting, 2016)In the hiring stage, the Canadian
leadership opted to chose fresh pass outs and youth following the same tradition inherited from
US.
The WBS looked perfectly well till the store opened and flaws emerged in the SAP’s selection
under ERP system. It was disclosed that the well-established technology that Target integrated
in its US stores couldn’t have been implemented in Canadian stores mainly because it opted an
different Product line in stores from all new vendors and secondly the US system didn’t test well
for ‘French’; Canada’s second national language. This concern forced Target to go for an
entirely new and unfamiliar technology. Apparently, SAP itself didn’t had issues on its own but
poor training and ambiguity of use of SAP amongst stores and Distribution Centres resulted in
wrong product information, accuracy rate of only 30%, and errored shipping to and from the
Distribution Centres. (Castaldo, 2016). HR team responsible for hiring and training also came
under question as new graduates and teenagers had no experience in either sales, SAP of point
of sale software. Since even Target US wasn’t familiar with SAP, they couldn’t have arranged
extensive training for the Canadian staff. Also, the lack of experienced-matured workers hit the
company bad as teenagers even after trying their best couldn’t handle the changing dynamics
going on behind the scenes before the launch. (Castaldo, 2016)

Another critical technical flaw that contributed in Target Canada’s demise was scheduling of the project
from 2011 to 2013. After leasing the Zellers, it again subleased it to Zeller to incur lease money till
Target pursues its Canadian venture. This gave them relatively lesser time to prepare the stores for
opening, which looked like under developed and substandard stores in appeal. Scheduling also failed in
terms of inventory management and supply chain management. Since Target Canada suffered constant
challenges from everything including technology, hiring and resource management, Fisher knew that
they needed more time for the launch. Still he went on with the same schedule trying to push the
workers and managers to achieve the dates. This caused more embarrassment for Target as
unpreparedness was very clearly visible from stores and the empty shelves. (Castaldo, 2016)

Last but not the least, in it fell face first in terms of resource allocation and planning. It started with
leasing lesser known Zeller stores which normally existed in smaller and less visited locations. Besides
this they were smaller in size and by no ways they could have justice to the dimensions required to open
a full sized American style Target. (Castaldo, 2016) Target also failed in getting all its vendors and other
resources right, consequently it showed in high priced merchandise as compared to other stores like
Walmart and Winners Canada.

Besides Technical issues, Target Canada was also obstructed by significant Socio -cultural challenges
which they failed to overcome in given time. From failed leadership to misjudged customer expectation
to in-effective problem solving, Targets venture touched all these bases to ensure its demise in Canada.

In terms of Leadership, Tony Fisher a popular image in Target Corporation was given the big task, but
somehow his decisions lead the company’s future in jeopardy. He stated in the press release that he has
analysed the market and demographics of Canada really extensively (Target Corporation, 2011), but
from the operations it was clear that his research was insufficient to understand Canadian customers as
well as his choice of first 3 test stores was a mistake. Target chose Guelph, Ont., Fergus, Ont., and
Milton, Ont. for the launch and testing which was viewed as a bad strategy as these locations
were relatively remote and couldn’t be related to the posh locations like Toronto and Vancouver.
Besides from the first look and appeal the Canadian stores were definitely not in par with their
American siblings. They appeared substandard with much lesser variety and spiked up prices.
(Hughlett, 2015)
In terms of problem solving; even the vastly experienced Target failed badly, mainly because they
were under so much pressure to open the stores as scheduled that they knowingly ignored errors
in inventory, database management, product pricing and in billings to vendors. It was admitted
by ex-employees that they knew the problem was there, but they still carried on with the limited
information and skill they had. Even simpler things went wrong, like product dimension and
how many pieces can fit in a container. The stores showed the same picture where stocking was
poor, shelving didn’t match with product size. (Castaldo, 2016)
Market pundits clearly deciphered a lack of teamwork amongst distribution centres, stores and even
management. Empty shelves, unorganised stores, wrong price tags were enough indicators to explain
that information was partially or incorrectly shared amongst DCs and stores. Issues with wrong pick for
technology widened the gap. From meeting every day before the launch to lesser and fewer meeting
after the launch clearly indicated that management had lost hope in the success and they were failing in
keeping the staff motivated. As described by a former employee Fisher was a common face in stores and
in distribution centres but with time he was lesser seen and spent more time in board room listening to
problems and struggling to find answers. (Castaldo, 2016)

Another aspect of failed Socio-cultural analysis of was seen in term with determining basic customer
expectations. Target and Fisher went way off the track in understanding Canadian customers. They
confidently went with the assumption that Americans and Canadians have so much in common from
history, conditions and even heritage that the customers choices and spending power will be similar to
their US counterparts. This was a big blunder and after math of the launch solidified the fact.

One key factor that made sure that Target would never grow as planned was the intense competition
from other retail competitors in Canada. For example, Walmart critically analysed the pricing strategy of
Target and reacted with better pricing, making Target look overpriced and ordinary. Others one-stop-
retailers like Shoppers Drug Mart Corp. and Loblaw Cos. Ltd., multiplied its range in groceries and
clothing. (Mcmahon, 2015)

These issues constantly accumulated and intensified the discussions concerning Target’s future in
Canada. In its first annual report after Canadian launch in February 2014, Target reported a mammoth
loss off US$ 941-million that shook the entire world. Big moves took place, Fisher was sacked and Mark
Schindele was named the new lead. CEO Gregg Steinhafel stepped down and was soon replaced by
experienced Brian Cornell. Soon after the company looked more active and with a better direction.
Under new leadership, the inventory problem was actively resolved and at some stage company even
proposed plan to rent more storage spaces to act as replenishment centers for the stores. Assoociates
were given more training on Sap systems. Major flaw in Supply chain management was fixed that
initially caused delays of shipment to reach DCs. Schindele focussed on intensifying stores with daily use
merchandise and groceries, a step that proved fruitful for Target in US expansion. The bold step
considered to revive the situation went sour one more time as Schindele didn’t actually analysed how
competitive this segment was. In June 2014, Target released an apology video on Youtube to all
Canadians with a promise to be better in coming time. (Castaldo, 2016)
By November, even after all the enactments in policies, revisiting store appearances, categorising stores
and their needs, intensive training, somehow Target Canada realised they were not able to woo the
Canadian customers who still were reluctant to buy at Target. Multiple stores were closed and people
were layed off. This clearly indicated the future of Target Canada. Soon, it was made official that in
January 2015, Target Canada filed bankruptcy protection. In this short period of the 2 years company
had to close all its 133 stores, the company lost around $7 bilion and 17600 jobs were lost creating a big
hole in the Canadian economy. This officially marked the closing for the Target’s Canadian project.
(Castaldo, 2016)

A comparison in the picture below clearly shows how Target suffered to even generate sales in Canada
between 2013-2014. In the same period, it performed tremendously well in US markets. (Shaw, 2015)

In a thorough analysis of the unfortunate case study of Target Canada, it can be analysed that the
venture which was anticipated to be ‘easy’ and ‘successful’ appeared dreadful in the end. Target made
tonnes of mistakes from the beginning of the project and carried on with blunders throughout its
planning and execution phases. But it is even far more important to understand what Target should
have done to avoid the ill-fate. As mentioned earlier, there are many companies that have successfully
ventured onto foreign land and achieved significant success following strategies which can be deemed
to be very ‘simple’ and ‘analytical’.

A fine example is of J.Crew which entered Canada in 2011. It selected Toronto for its first test store.
Unlike Target which rushed to open hundred stores in matter of months, J.Crew gradually added stores
around Canada. It even faced the similar complaints to Target about higher price tags as compared to
prices found in US stores, but in a reactive approach it offered lower duties on online store with the
added bonus of reduced shipping costs. The move was positive and was warmly welcomed by the
customers. These simple strategies has enabled J.Crew to turn into a brand name in Canada with
consistent growth in Store numbers around Canada. (Dahlhoff, 2015)
The new associates lacked training in new technology and store experience, which costed the company
in terms of associates which struggled to help customers, process merchandise and even to bill the right
product manually {since after failure to precisely work with new software, stores were at a point
instructed to find and enter products manually for the customer. (Castaldo, 2016)} The company
wouldn’t have struggled with the issues related to SAP only if they would have hired staff with SAP
experience or employed trainers with SAP certification to extensively train associates.

Target closed all the Zellers store in short period to facilitate renovations for the new Target stores. This
costed Target rental income plus stopped all customer flow in the plazas where Zellers were the main
anchor stores. This moved the Zellers customers to other brands like Canadian Tire or Home depot. On
other hand when Walmart and took over Woolco stores in 1994. Woolco was allowed to carry on sale
while Renovations ran after store hours. This helped customers to get accustomed to new Walmart
stores gradually. This little moved made them a local store even before official launch. (Pittis, 2015)

Target ended up as golden lesson in business world as a finest example of things companies should
avoid doing in any market. It was a project well funded and with a clear objective in mind and with set
time frames. The only reason one can quote is the scope of the project that Target couldn’t plan and
execute. Considering Target’s example, it is clear that it is essential for any company to carefully study
and analyse understand the market, market demographics, customer expectations and customer mix
both quantitively and qualitatively in order to devise strategies and to select best project processes
groups aimed to be a success. It is also important that any projects success depends right mix of
knowledge recourse and physical resource. Target should had employed right people with a right
approach and provided required information and training, there is no denying that Target had a better
chance of being a huge success. Another aspect of project management that Target failed to apply was
monitoring and control process (PMI, 2013). If Target would have monitored every step, every issue
right from the root and responded to issues at each stage with a corrective action their fate could have
been different.
References
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