Target Porter's Five Forces Analysis

Supplier Power: Although, Target operates in an oligopoly market in which the suppliers have bargaining power. When suppliers have bargaining power, they can apply pressure on a company by charging higher prices, adjusting the quality of the product or controlling availability and delivery timelines. Having said that, Target’s massive product collection is an advantage in regards to its relationship with its suppliers. It has a variety of suppliers and not one supplier delivers a substantial segment of its inputs. Target has a hedge over its suppliers because; it is an important customer for its suppliers due to its large purchases.

Buyers Power: There is no single buyer that can individually make an impact on Target. Target has a variety of buyers and each buyer only makes a small purchase compared to the overall volume of it sales. Buyers cannot easily alternate away from the industry’s products. Target provides many basic necessities. As long as consumers need food and general merchandise items Target is likely to maintain a relatively stable customer base. In the case of economic downturn in the industry, there will likely be reduction in demand for some of its product, which can lead to over supply problem and price reduction. To fix this, target will most likely reduce its supplies of products that are not in demand to avoid overstock.

Its main competitor is Wal-Mart, which leads the industry in terms of size and sales. Since K-Mart declared bankruptcy in January 2002, Target has become the second largest retailer in the U.S. Target and Wal-Mart also compete with big-box retailers like Costco as well as dollar stores. For Target, there is some similarity with the department store industry as well, but the fact that its products are discounted gives target an