TARGET

Together effect

Monday 6 June 2016

2 inspired

A. The main facts about the activities of the company.

WHY DID WE CHOOSE THIS COMPANY?

We were looking for a big company that could impress us for their ethical values. We were looking for a company that was compromised with the issues that we worry the most; these can be summarized in 3 main dimensions: Environment & Sustainability; Impact on Society; Employees. We found many companies that had a good CSR space in their webpages, but a lot of them were so similar, standardized and simple that were not appealing to us. Finally, we found TARGET, this company had all the requirements that we were looking for and, in addition, it surprised us because of the magnitude and the historical compromise that the company has had with society.

THE MAIN FACTS OF THE ACTIVITIES OF THE COMPANY

Target is an American big-box retailer. It was founded in 1962 by Dayton Company who changed the family-run department store business model into the USA largest discount-store chain. Target was built up as "a store you can be proud to shop in, a store you can have confidence in, a store that is fun to shop and exciting to visit”.

Today, their business model is still very close to the initial project. They base their success in delivering outstanding quality and creating such a good buying experience always maintaining their promise of “Expect more, pay less” corporate compromise.

Target is one of the 10 biggest retailers of the world and competes directly with Wal-Mart Stores, Costco Wholesale Corporation, The Kroger Co, The Home Depot, Inc in the USA. Their success lead Target to have a total revenue of 73,785$ Billion Dollars and 447,000 people were employed in 2015.

In 2015 Target invested 5% of their profits to communities, this added up to more than 4 million $ each week. In addition, Target works under the culture of the “Together effect” that is based in the co-contribution to communities of Target as business, their employees, customers, suppliers and stockholders.

B. The Ethical challenges this company is addressing.

As stated before, Target addresses a lot of ethical challenges. This challenges can be divided in three different groups.

1. Environment.

It is one of the most critical points of retailers as they work with products that generate a lot of waste and with different origins. Guarantee the quality of the products and manage all the waste are key factors to improve the retail sector. In order to achieve that, Target is working toward a goal to make more of their owned-brand packaging designs more sustainable by the end of 2016, by using fewer materials, incorporating more recycled or renewable content, and reducing product waste. For example:
- Each time a client buys something at their store, they offer a 5-cent discount for each reusable bag they use. So far, their clients have used more than 190 million reusable bags instead of plastic bags.

2. Society.

Aside from the environment, Target also takes the society in consideration while operating their daily business. A couple of examples regarding helping the (local) society are:

- Engaging in local communities: They partner with a lot of local non-profit organisations to ensure the needs of the (diverse) local community.

- They look for ways to make the neighborhoods where they do business safer for guests and team members. They also award grants to public safety agencies and programs to prevent crime, train and educate law enforcement and support youth programs.

- Education. One out of three Hispanic and African american students do not graduate on time. Target tries to address this dropout problem by supporting these particular students with classroom resources, education grants and scholarships. In August 2015, Target reached the tremendous amount of one billion dollar, which have been given away by Target to address and tackle the dropout problem in US schools.

3. Employees.

Target does not only donate their time and money to support the needs of the environment and the society, they also try to teach their ethical values to their employees by encouraging them to participate in volunteer work with the goal to support strong, healthy and safe communities. For example:

- In 2013, employees from Target worldwide invested more than one million hours in volunteer work. They helped renovating school and libraries and even participated in a disaster responding team.

- Target uses strict guidelines regarding the assurance of diversity and equality among their employees.

- They have very detailed and specific business conduct guide for their employees. This guide consists of guidelines and tips how to be ethically right and still perform during daily business. A good example is the Integrity Hotline. A hotline, available for all the employees from Target to report (potential) unethical behaviour from stakeholders (managers, employees, suppliers, buyers). To encourage the use of this hotline, the board of Target decided that an objective third party will be managing the hotline and decide about potential punishments. There is even a possibility to call the hotline anonymously!

C. What makes you believe this company is really ethical and why you trust it?

We believe that this company is really ethical because it frames a huge range of social sectors and they do it in such a deeper way that gives them all the trust. It reinforces our beliefs the transparency with which they reflect all the activities they do. They also admit the profit they take by being ethical and what already needs to be done in order to make this company 100% ethical. Then we deeply explain the main reasons of what, in our opinion, makes this company really ethical.

- Transparency:

When you look at their social corporate responsibility website, you are explained since the first moment the reason why they invest such amount of money in caring for the community that they work with: “We fulfill the needs and fuel the potential of our guests. That means making Target your preferred shopping destination in all channels by delivering outstanding value, continuous innovation and exceptional experiences”.

In our opinion the more transparent a company is the more believable and trustworthy. They also clearly explain very detailed all the actions they do for the community and as explained before there are a big amount of movement that make us trust on their explanations and believe that this company really cares for the community.

- Huge amount of money invested:

As explained before they invest 5% of their earnings to the community which means an amount of 4 million $ every week. It is not only the investment of this huge amount of money, but also where and why they invest it. The combination of the bet to being socially compromised with the financial power of Target, makes this company able to promote a change where it establish their business.

- Very proved ethical partners:

Target works with very proved ethical partners. The company sources target-brand products from more than 3,200 registered manufacturing facilities in around 50 countries. All of which are required to follow Target’s standards for how to treat workers and care for the environment. In addition, Target partnered with the Natural Resources Defense Council (NRDC) on the Clean by Design project, which aims to reduce the environmental impacts of manufacturing. They also are a founding member of the Sustainable Apparel Coalition (SAC), a group with many apparel retailers, non-profit organizations and NGOs that work together in order to reduce the social and environmental impacts of apparel and footwear products in the world.

- Awards & recognition:

In 1995, Target built its first green store, which used skylight that cut the original energy consumption by 24%. For this initiative, they received the Green Lights Partner/Ally Of The Year Award.

The above fact is just a prove of the compromise of Target with the most important ethical concerns in our society. The aim is not to be the most awarded company, but it recognize the well done work. Here, we present you other awards and recognitions that Target got this year:

Their rewards achieved on 2016: The Human Rights Campaign give Target a score of 100 on its 2016 Corporate Equality Index, as one of the best places to work. Other rankings of best places to work like Top 50 companies for Diversity, World’s most admired companies and Most Innovative companies for retail.

Other 2016 recognitions like: Energy Star partner of the year, one of the “World’s most ethical companies” and part of the 100 best corporate businesses.

- Despite of it...

As for most other large scale companies, it is difficult to believe that Target is mostly driven by corporate social values. It is still a profit organization that ultimately wants to maximize its profits and satisfy its shareholders. Along the way, it will naturally try to reduce costs in different levels of its supply chain, as in production and sourcing. Since Target has a very large supply chain that crosses many borders, it is important to pay attention to what extent it monitors its suppliers. They do require providers to fulfill certain standards, but we still do not know if this is regularly controlled or what their legal requirements are.
Furthermore, because Target is such a big company, even reducing a part of the harms it causes on the environment and on the society, the company might still be emitting relevant externalities. As such, Target is not doing any favor to society. Instead, it is fulfilling its corporate citizen’s role to, at least, level down these harming factors.
It is arguable whether they fulfill this “role” for the sake of the business or for its own values, but it could as well be for both. With no doubts, these activities need to be done in order to stay in business, because their reputation would likely be affected had they not developed CSR strategies. At the same time, the citizen role and helping the environment and society is also embedded in their philosophy and corporate culture, and that is the reason why we chose Target as our company.

D.The possible challenges facing the company in the future and how you think this company may improve.

Companies like Target are continuously exposed to challenges, especially those that imply ethical issues. Because of the huge dimension of the company it gets more difficult to control and ensure that the whole business is running in the most ethical way. We have discovered that Target does many things to help their communities to have a better life. It has been amazing to discover it, but as always. Their performance can be improved.

Here we suggest some issues that we think that will have importance in the short future:

- Manage their own growth and the possibility to start making business in other countries. This would imply further challenges to the company and more effort in terms of control and ensuring their ethical values.

- Keep working on the supplier control. We think this is a critical issue as Target works with a lot of different products and suppliers. Ensure the quality and guarantee the origin of these products should be a priority.

- More effort in waste reduction is needed. As we have seen Target is already working on it and has the goal of reducing their actual waste a 15% in 2 years, but, they accept that more work is needed. So we would want to encourage them to keep working on it.

Bibliography

https://corporate.target.com/_media/TargetCorp/csr/pdf/2014-corporate-responsibility-report.pdf
https://corporate.target.com/_media/TargetCorp/csr/pdf/2014-corporate-responsibility-report.pdf

https://corporate.target.com/annual-reports/2015/download

Location: Minneapolis, Minnesota (USA)

Sector: Wholesale and retail trade

Official website: www.target.com

Key figures:

Annual Sales 2015: 73,785 Million $

Annual profit 2015: 3,321 Million $

Number of employees: 477 thousand

Countries of operation: USA

Nbr. visits: 604

Nbr. inspires: 2