Case Study 1:
Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, areavailable hereLinks to an external site.
. This material also is available under the Investor Relations link at the company’s website (www.target.comLinks to an external site.
).
Required:
- What amounts did Target report for the following items for the year ended February 1, 2020?
Total Revenues
Income from Current Operations
Net Income or Net Loss
Total Assets
Total Equity
What is Target’s fiscal year-end? Why do you think Target chose that year-end?
Regarding Target’s audit report:
- Who is Target’s auditor?
- Did Target receive a “clean” (unmodified) audit opinion?
- How many critical audit matters were discussed in Target's audit report?
The case study will be covered in class. In order to have a very substantive discussion each student is required to submit a brief of the case study prior to the actual class discussion. The summary response must have a background, comprehensive synthesis, and conclusion of the case. The summary is a 2-3 page paper submitted to instructor prior to the start of the class. The case brief must be in an APA format.
Attached is the professor sample. this is a tample of how the paper supposed to be write.
Wal-Mart Case Study Assignment By: Dr. Cesar De Castro Date: 04/22/2021 Background Wal-Mart is an American retailer that operates a chain of hypermarkets, discount stores, and grocery stores in the United States and other foreign countries. It was founded in 1962 by Sam Walton. In the first year of operation, sales at Wal-Mart stores were $975,000. Ten years later revenues had reached to $78 million. In 2005 Wal-Mart stores reported net sales had reached to $285 billion. It had presence in nine countries with 5,289 stores and 1.6 million employees worldwide. Wal-Mart was not only the largest company in the world but also the most admired company according to Fortune magazine. Wal-Mart’s success was attributed in its unique combination of culture and strategies that set it apart from its competition. Wal-Mart main strategy was providing quality goods at a low price in a friendly environment. A key strategy in Wal-Mart’s early days was opening discount stores with sizable spread of assorted merchandise in a small, one-horse towns. It avoided direct competition from a stronger players since larger companies such as K-Mart believed that populations under 50,000 would not be able to support a large store in the long run. Thus, Wal- Mart was able to grow below its competitors’ radar. The other critical strategies were relentless cost control and partnership with suppliers. It had an unrivalled Distribution and Logistics management system. The distribution network was based on the hub-and-spoke concept, with warehouses at the center of a trade area where no store was more than a day’s drive from the distribution center. Lastly, Wal-Mart’s unique culture of profit sharing helped execute these strategies to its full effectiveness. Wal-Mart was the first retailer to start profit sharing plans for rank-and-file workers, and not limited merely to executives. Crucial Corporate information such as financial numbers was shared with every employees. This not only conveyed trust, but also helped staff to understand and care for the business. Wal-Mart Quest to Go Global In the early 1990s, Wal-Mart started focusing to unchartered waters in the overseas markets. Management firmly believed that consumers were alike everywhere around the world in searching for quality products at great prices and desiring to be treated well. In exporting its business model, Wal-Mart had met with mixed reception. It had done well in Mexico, Canada and Great Britain. But it was struggling in Japan and Korea. In Germany the initiative was seriously hindered by strict union rule, high labor costs, and zoning laws and existing competition. This caused Wal-Mart to withdraw completely from Germany. China is the ultimate prize because of its tremendous population and the progressive climb of the middle class looking for higher quality goods at a reasonable price. Unexpected Challenges in Going Global China created a level of uncertainty to foreign investors that would like to do business in the country. China with 1.3 billion in population had a projected sales of $860 billion in 2006, making it the world’s seventh largest retail market. Local protectionism was a serious problem faced by many multinational firms trying to expand operations throughout China. Out of province trucks were arbitrarily stopped at city borders and subjected to tolls that local trucks were not required to pay. Local governments also had incentives to protect state-owned enterprises under their jurisdiction as they were the base of their political power, and a source of private benefits as well as fiscal revenue. China’s infrastructural deficiency created substantially higher costs and more waste especially with regard to perishable goods. Lastly, the lack of information technology network with suppliers caused purchasing and distribution very costly and difficult. Web-based system allowed suppliers hourly tracking of sales, inventory and pricing of their goods. This was not allowed in China and created significant inefficiencies in purchasing and re-stocking with 15,000 local suppliers who supplied 95% of the goods sold in its local stores. Chinese Consumers have Different Buying Habits: Chinese consumers displayed behaviors that were different to that of consumers in Wal- Mart’s home markets, which added pressure to Wal-Mart’s operational costs and directly impacts profit margins. Chinese consumers’ obsession with freshness of food and limited space at home meant people would rather pick up small amount of goods at any one time and visit frequently than purchase in bulk. The average spend per visit in hypermarket was estimated at just $6 to $10. As a result, the average cost of serving each customer greatly increased. Fresh means alive, customers’ demand for absolute freshness combined with the poor transportation network required that a large variety of foods had to be procured locally instead of through centralized procurement system. Diminished economies of scales and interrupted supply chain meant higher cost in satisfying Chinese consumers. Conclusion The highly fragmented market impaired distribution network, and unique consumer behavior in China pushed Wal-Mart’s operating costs higher and worked against a straight duplication of the US model. It was exacerbated by local competition that were supported by government policy and financial support. This put so much pressure in exhausting Wal-Mart’s formula of “Everyday Low Prices (EDLP)”. Considering all these challenges, the president and CEO of Wal-Mart Asia was confident of the ultimate win in China. This was a quote from Joe Hatfield, president and CEO of Wal-Mart China, “We have the core beliefs and operating strategy of American stores, but it is critically important to let Chinese customers understand those. We should crawl, walk and eventually run”. Reference Farhoomand, A. (n.d.). Wal-Mart Stores: “Every Day Low Prices” In China. Asia Case Research Centre. The University of Hong Kong. 06:29