Target has a history of success within United States and has managed to establish a reputation of having higher quality product offerings and retail environment than its competition. Target has seen steady growth with regard to expansion within the United States, it has not saturated the market. Target has historically launched stores in the metropolitan areas of larger cities and currently operates stores in 48 states. Recent global economic trends demonstrate that a Target expansion into Mexico will generate positives results for those involved. Mexico has seen continued economic growth and has inflation has been kept under control. Retail sales in Mexico have grown at a steady pace and market growth exceeded growth in GDP in 2015 (Euromonitor, 2016).
Financing and consumer credits have developed as crucial Mexican retail tools. Many Mexican retailers are have become financing bodies through providing deferred payments at a cash price (Euromonitor, 2015). Zero-interest monthly payments have become the norm in the region. In addition, many retailers are seeking to expand throughout Mexico. They are targeting areas with high foot traffic (Euromonitor, 2015). Target has the ability to fit into the trend with CityTarget. With expansion, department stores and grocers have expanded their product portfolios also (Euromonitor, 2015). This is required to meet customer demand and keep pace with local retailers that offer limited products. Target can benefit from this because of the wide range of product already offered by the company. Policy makers in Mexico are anticipated to slash interest rates to promote economic growth over the next 10 years (Cattan, 2016). Mexico’s inflation rate is also predicted to drop 2%-4% during the second half of 2016 (Cattan, 2016). This drop will help with consumer confidence and support growth for retail sales in the country. A recent expansion for Wal-Mart into Mexico has yielded tremendous results, focusing on its everyday low-price strategy. An expansion for Target will rely on its price matching strategy so as to appeal to the country’s price-conscious consumers. The resulting ease of bi-lateral trade created by the passing of NAFTA in 1994 makes strategic sense for establishing a foothold in the Mexican market (The United States Commercial Service, 2014). …show more content…
Although, as a result of cultural and economic differences between Mexico and the United States, Target will be required to implement a completely different strategic approach for expansion into Mexico than it did into Canada. For Mexico, Target must enter the market via joint venture. Joint venture will “reduce the risks of expropriation and harassment by the host country” (Deresky, 2012). Wal-Mart entered the market in this manner and it has been incredibly successful with its operations in Mexico. Wal-Mart’s global operations began in 1991. Following a successful expansion into Canada, Wal-Mart sough to make a move into the Mexican market, but its executives believed vital competencies and resources were missing (Gupta & Govindarajan , 2002). Because of this, Wal-Mart entered into a 50/50 joint venture with Mexico’s largest retailer – Grupo Cifra. Wal-Mart’s plan was to develop and support the infrastructure while having Cifra utilize its own suppliers to oversee the day-to-day operations in the region. Wal-Mart México y Centroamérica, also known as “Wal-Mex” is now the largest player in the market. It has become larger
Financing and consumer credits have developed as crucial Mexican retail tools. Many Mexican retailers are have become financing bodies through providing deferred payments at a cash price (Euromonitor, 2015). Zero-interest monthly payments have become the norm in the region. In addition, many retailers are seeking to expand throughout Mexico. They are targeting areas with high foot traffic (Euromonitor, 2015). Target has the ability to fit into the trend with CityTarget. With expansion, department stores and grocers have expanded their product portfolios also (Euromonitor, 2015). This is required to meet customer demand and keep pace with local retailers that offer limited products. Target can benefit from this because of the wide range of product already offered by the company. Policy makers in Mexico are anticipated to slash interest rates to promote economic growth over the next 10 years (Cattan, 2016). Mexico’s inflation rate is also predicted to drop 2%-4% during the second half of 2016 (Cattan, 2016). This drop will help with consumer confidence and support growth for retail sales in the country. A recent expansion for Wal-Mart into Mexico has yielded tremendous results, focusing on its everyday low-price strategy. An expansion for Target will rely on its price matching strategy so as to appeal to the country’s price-conscious consumers. The resulting ease of bi-lateral trade created by the passing of NAFTA in 1994 makes strategic sense for establishing a foothold in the Mexican market (The United States Commercial Service, 2014). …show more content…
Although, as a result of cultural and economic differences between Mexico and the United States, Target will be required to implement a completely different strategic approach for expansion into Mexico than it did into Canada. For Mexico, Target must enter the market via joint venture. Joint venture will “reduce the risks of expropriation and harassment by the host country” (Deresky, 2012). Wal-Mart entered the market in this manner and it has been incredibly successful with its operations in Mexico. Wal-Mart’s global operations began in 1991. Following a successful expansion into Canada, Wal-Mart sough to make a move into the Mexican market, but its executives believed vital competencies and resources were missing (Gupta & Govindarajan , 2002). Because of this, Wal-Mart entered into a 50/50 joint venture with Mexico’s largest retailer – Grupo Cifra. Wal-Mart’s plan was to develop and support the infrastructure while having Cifra utilize its own suppliers to oversee the day-to-day operations in the region. Wal-Mart México y Centroamérica, also known as “Wal-Mex” is now the largest player in the market. It has become larger