Group 7

By Andrew Hoffert, Vanessa Gross, Tanner Green Kenneth Griffith, Elman Ilyayev

MGT-4190

Target to Expand Internationally to Mexico

Table of Contents

Executive Summary....................................................................................................2

Target History.............................................................................................................3Product Description............................................................................................................4Services...............................................................................................................................5Operations Size & Scope of Organization..........................................................................5

Expansion Market.......................................................................................................6Why Mexico?......................................................................................................................6

Demand for Product...............................................................................................................6Market Growth Rate...............................................................................................................7Raw Material Access.............................................................................................................7Labor Costs............................................................................................................................7Availability of Skilled Workforce..........................................................................................8Technology Availability.........................................................................................................8

Country of Mexico Environment................................................................................8Economic............................................................................................................................8Political...............................................................................................................................9Legal/Regulatory................................................................................................................9Technological......................................................................................................................9

Culture......................................................................................................................10Power Distance.................................................................................................................10Uncertainty Avoidance.....................................................................................................10Individualism-Collectivism...............................................................................................11Masculinity.......................................................................................................................11

Materialism..........................................................................................................................11Values...............................................................................................................................11

Assertiveness.......................................................................................................................11Future Orientation................................................................................................................12Performance Orientation......................................................................................................12Humane Orientation.............................................................................................................12

Entry Mode/Strategy Description.............................................................................13

Goals and Concerns..................................................................................................14

Conclusion.................................................................................................................15

References.................................................................................................................15

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Executive Summary

As we have all come to learn, making the decision as to whether or not to expand an organizations operating capabilities internationally is a major undertaking involving a wide ranging span of variables, factors and considerations that upper management must take into account. Taking the big leap to open up your organizations doors in a foreign land can almost be a scary thought if your organization has not adequately planned out a detailed international expansion strategy that involves a thorough environmental assessment of the country or region that you are planning on expanding into. There are also numerous stories out there of major U.S. retailers that have tried to expand aggressively on the global forefront and are have experienced difficulty identifying what customers in different regions of the world really want and have ended up closing stores in some regions, and shelving plans to expand into others.

The American discount retailer Target has a history of growth, expansion and success within U.S. borders and has managed to develop a reputation that is synonymous with a higher quality product offering and retail environment than that of their competition. Target has taken a steady growth approach in regards to expansion within the U.S. and by no means have they saturated this market with their retail stores. Target stores are typically located in the metropolitan areas of larger cities and are currently operating 1,778 stores in 48 states.

Current global economic trends indicate that a Target expansion into the Mexican retail market may have beneficial outcomes for all parties involved. Throughout our analysis of the potential feasibility of a Target international expansion into Mexico we will first give you a brief history of how Target got to where they are today and the different products and services that they currently offer. We will then give a breakdown of the Mexican market explaining why this market is feasible including the potential demand for Target products in this region as well as a political assessment of the region. Other factors that we have included in our considerations for expansion into this international market are the Mexican culture and values, our strategy for entering this market, and Target’s goals and concerns for entering this market.

Target History

Target as organization has a long storied history that dates back to the very beginning of the twentieth century. In 1902 it all started with George D. Dayton becoming a partner in the fourth largest department store in Minneapolis, MN, Goodfellow’s Dry Goods Company. The following year George takes over as sole owner of the company and renames it Dayton Dry Goods Company. As President, George Dayton stayed active in the management of the company for nearly forty years until his death in 1938, when operations were then taken over by his son and grandsons who had plans to make the store a nationwide retailer. By 1911 the company is growing rapidly and is know simply as Dayton’s department store. Over the years the company grows to

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open multiple stores in the suburbs of Minneapolis as well as expanding their product offerings.

In the early 1960’s Dayton’s had plan to continue their growth and expansion by creating a new discount chain retailer and on May 1, 1962, the brand icon that we all know so well today was created, Target. The explanation behind the decision in choosing this name was, “As a marksman’s goal is to hit the center bulls-eye, the store would do much the same in terms of retail goods, services, commitment to the community, price, value and overall experience” (Target, 2014). In 1966 Target opens their first store outside the state of Minnesota in Denver, CO. and expands to three other major cities shortly thereafter. Target also opens their first distribution center in 1969 in Fridley, MN that would be responsible for supplying product to all of their store locations. We then fast forward to 1979 where Target reaches the major milestone of achieving $1 billion in annual sales revenue. By 1989 Target has retail stores open thirty-two states and they continued to grow steadily to where they are today, on the cusp of international expansion.

Product Description

As a discount retailer, Target offers a very wide range of products that can be found in all of their store locations. These locations range in size and are anywhere from 95,000 to 135,000 square feet. They have also gained a reputation in the retail industry of having higher quality product offerings in their stores than that of their main competitor Walmart. Target offers thousands of different items and these products are broken down into different departments. The major product departments provided by Target include:

Clothing – men’s / women’s / kids’ / baby Home – bath / bedding / home appliances / home décor / home improvement /

kitchen & dining / storage & organization Patio – lawn & garden / outdoor décor / outdoor lighting / patio accessories /

patio furniture / fire pits & patio heaters / grills & outdoor cooking Furniture – bathroom furniture / bookcases / custom furniture / entryway

furniture / home office / kids’ furniture / kitchen & dining / living room / lounge seating / patio

Electronics – TV’s & home theatre / cell phones / iPad & tablets / iPod & audio / computers & office / cameras & camcorders / video games / movie, music & books / GPS & navigation

Entertainment - books / movies / music / TV shows / video games Toys – action figures & playsets / arts & crafts / dolls / dress up & Pretend play /

games & puzzles / kids’ electronics / learning toys / outdoor toys / riding toys / stuffed animals & plush toys / vehicles & radio control

Sports – bikes / camping / exercise & fitness / game room / helmets & pads / lawn games / pools & water slides / scooters, skateboards & skates / sports equipment

Health – diet & nutrition / vitamins & Supplements / first aid / home medical equipment / healthcare uniforms / medicine cabinet / oral care / personal care / sexual health / shaving and grooming / pharmacy / optical / clinic

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Beauty – bath & body / fragrances / spa & message / hair care / oral care / makeup /shaving & grooming / skin care / personal care

Other – Grocery & essentials / luggage / musical instruments & karaoke / party supplies & holiday / pets / school & office supplies / gift cards

Services

The typical services that are provided by Target are of an in-store nature and vary depending on the location. These services include Target Optical, which offers eye exams and prescription glasses and contacts. Target Clinic, which is a minor healthcare clinic that provides the service areas of minor illness, skin treatments, minor injuries, vaccinations, cosmetic prescriptions consultations, and wellness. Many locations also have a Target Photo, which have the ability to provide a vast array of services in regards to customers photo needs. Special delivery services are also offered for any large products purchased in-store and all products purchased online. Another service this is offered online is that of registry programs such as Club Wedd, Target Baby and Target Lists. Target offers various warranty packages for many of their electronic product offerings.

Operations Size & Scope of Organization

Target is headquartered in Minneapolis, MN and has regional offices in Dallas, TX, Los Angeles, CA, and Philadelphia, PA. This organization also has approximately

twenty-seven distribution centers spread throughout the United States with locations in twenty-three different states. Target also has four-food distribution centers strategically located in different areas of the country. The company also operates three-import warehouses and three Target.com fulfillment centers.

Employing more than 360,000 employees, Target currently operates 1,683 stores in 48 states, including 239 SuperTarget stores, 1,519 pharmacies, 325 optical centers, 186 portrait studios, 916 Starbucks, 1,165 one-hour photo processing labs and 28 health clinics. Target’s total store square footage is 222,420,000 square feet (Target, 2014). Of these locations, there are two types of layout formats for the retail stores that include General Merchandise stores that are typically one-level stores within major community or regional shopping districts. This type of layout is Target’s most prevalent store format, which is approximately 126,000 square feet in size. SuperTarget stores broaden the Target brand beyond clothing and home décor by providing customers with a pleasing and convenient grocery shopping experience in addition to the traditional Target store experience. SuperTarget offers a full grocery line, including a bakery and deli, meat and

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produce selections. With an average size of 174,000 square feet per store, SuperTarget’s mix of grocery and merchandise offers the convenience of one-stop shopping.

Expansion Market

Why Mexico?

Mexico has maintained its economic growth and has kept inflation rates under control. The retail sales in the region have grown at a robust pace and the market growth exceeded the GDP growth last year (Euromonitor, 2014).

Financing and consumer credits have emerged as important retailing tools in Mexico. Several retailers are evolving into financing bodies by providing the options of deferred payments at a cash price (Euromonitor, 2014). “Meses sin intereses,” or monthly payments with no interest, has become a common practice in the market. Additionally, retailers are looking to expand throughout the country while specifically targeting the

regions with heavy footfall (Euromonitor, 2014). This has reinforced the popularity of smaller format and quick-stop stores, and Target can easily adapt to this trend with its CityTarget format. Along with store expansion, department stores and other grocery retailers are expanding their product portfolios as well (Euromonitor, 2014). This will be to meet the customer demand and outperform local retailers who offer

limited products. Since Target already offers a wide range of products, it is likely to benefit from this trend.

Although the retail sales have grown strongly in the region in the last few years, they declined unexpectedly during the initial period of 2013 (Cattan, 2013). Weak consumer confidence due to the slowest economic growth since 2009 appears to be the reason. Nevertheless, policy makers are likely to cut the interest rates in order to stabilize the economic growth (Cattan, 2013).  The region’s inflation rate could also come down to 2%-4% during the second half of the year, from 4.65% in April 2013 (Cattan, 2013).  This should help the consumer confidence to a certain extent and support the growth in retail sales.

The U.S. retail giant Wal-Mart has performed exceptionally well in Mexico with its everyday low price strategy. Therefore, Target will have to rely on its price match strategy to appeal to the region’s value-conscious buyers.

Demand for Product

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Mexico has a high demand for American-made products, and there is undeniably a market niche that Wal-Mart has been consuming. Target can also provide and fill the demand for American-made products to Mexico. Mexico became the second largest purchaser of United States goods in 2011 and purchased billions in electronics, transportation equipment, and machinery – and a good amount of jewelry, beer, and cheese (Miroff and Booth, 2013). Mexico is undoubtedly presenting a high demand for United States goods and is proving to become the largest purchaser and trader of U.S. goods worldwide.

Market Growth Rate

The Gross Domestic Product growth in Mexico has been following the Latin American trend-line, but has since surpassed and is ahead of the rest of Latin America. Mexico has proved to keep the GDP annual growth percentage in the positive figures since the year 2010 (GDP Growth, n.d.). In 2011, Mexico purchased $198 billion in United States goods, which is a substantial increase from the $41 billion in 1993 (Miroff and Booth, 2013). This leaves a lot of room for Target to jump into the market, and capitalize on the considerable market growth that has occurred in Mexico in the last couple of decades. Mexico is currently the second largest economy in Latin America, and has steady growth rates from 1996 to 2012 on a quarter to quarter basis of .76%, but Mexico’s GDP slowed in the last quarter of 2013 (Taborda, 2013).

Raw Material Access

The North American Free Trade Agreement, known as NAFTA, allows import and export between North American countries without tariffs being applied. This makes things a lot easier for Target, and was something that Wal-Mart did not have the pleasure of having when they first entered the Mexican market. Wal-Mart has actually shifted gears more recently to retail more American made products including socks, light bulbs, candles, and other goods (Hagerty, 2013). This proves that raw material access is efficient, and that Target could potentially have similar access to American made retail products for resell in Mexico.

Labor Costs

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Labor costs in Mexico are essentially low. Recently Mexico surpassed China in having hourly wages that were even lower there’s. Average wages in Mexico for a manufacturing job are anywhere from $2.50-$4.50 an hour, wage stagnation, unemployment, and inflation have assisted in diminishing the income level of 31 million Mexicans (Yuk, 2013). This diminished income level provides cheap labor, at least until the market can improve to better conditions again.

Availability of Skilled Workforce

Mexico’s labor force in 2012 made up 42.7% of the residents, about 47 million skilled workers that has gradually been rising by nearly a million each year (Mexico Labor Elections, 2012). There are sufficient amounts of workforces to fill the stores with at tremendously low-income rates. If one plans to hire Mexican workers, it is essential they be prepared for labor unions because about thirty percent of the workforce is already unionized (Mexico's labor market and laws, 2006).

Technology Availability

When a person thinks about technology and retail stores, they tend to think of online shopping. The technology has to be there in order for online shopping to work resourcefully. Mexico’s online market is predicted to grow to $5.5 billion from $2.2 billion, a frequency growth of 150% (Andre, 2013). Mexico presently has the fastest growing number of Internet users out of any country in Latin America, growing faster than Argentina, Colombia, Chile, and even Brazil (Benítez, 2011).

Country of Mexico Environment

Economic

Making the move for Target into the Mexican economy would prove to be a beneficial one in the long run. “Data showed factory output, a component of industrial production, rose by 2.34 percent in January compared with the prior month, its best showing since September 2012” (Mexico Industry). This highlights the potential available in the Mexican economy that is reviving itself from past economic hardships. The ability for

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improvement in an economy on the uptake is extremely likely in this circumstance. To introduce a large retailer such as Target would boost the economy to become even more efficient and self-reliant. Another benefit of the economy in Mexico is that “Mexico exports mostly manufactured goods and nearly 80 percent of its exports to the United States” (Mexico Industry). This strategic advantage will automatically align the Target brand with the Mexican economic system through experience gained from trading with Mexican manufacturers.

Political

The political situation is somewhat similar to that of the United States, in that they elect a president for a term. “The executive wing of power is in the hands of the President of Mexico who is elected for a fixed six-year term with no provision for reelection. (Mexico). Although there is no ability of reelections like the United States, the term is slightly longer and “the president also enjoys the power to issue decrees that have the effect of law” (Mexico). This is something to be considered as a benefit to help stray from corruption. Allowing the president the power to issue a new law helps to protect businesses that may otherwise become the victims of corruption in the local government. Although corruption has been a large problem in the past, there is still hope for the international businesses under an honorable, business advocate as president. Along with protection by the executive branch, the income taxes are much lower in Mexico than in the United States for corporate entities. “The top individual income and corporate tax rates are 30 percent. The corporate income tax is set to decline to 29 percent in 2014 and 28 percent in 2015” (Index).

Legal/Regulatory

“Mexican trade policy is among the most open in the world. Mexico has signed twelve trade agreements, with forty-three nations, putting ninety percent of its trade under free trade regulations” (Deresky, International Management:Managing Across Borders and Cultures). Allowing exports and imports free of trade regulation would be a great benefit to have as a multinational retailer. This would render the ability to ship and receive resources and products easily without the burden of high costs. Target is a company that makes some products in house; however the majority of the products that are sold are purchased first through the manufacturer. Without free trade regulations, this would normally be seen as somewhat of a burden because some manufacturers may be located in several different countries. “The overall start-up process has been simplified, and no minimum capital is required. Launching a business takes six procedures and six days on average” (Index). Having a simplified start-up process means more money saved for Target. Most countries offer a much longer, labor-intensive process, which eventually costs the entity more money in start-up costs. The strategy would be to have a quick entrance that would allow time to adjust to the market and prepare for more competition from other international companies.

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Technological

“Of all developments propelling global business today, the one that is transforming the international manager’s agenda more than any is the rapid advance in information technology” (Deresky). For any international business that wants to succeed, there must be a significant amount of technology involved in the entire process. Although the technological advancements in Mexico are not considered to be extremely ahead of the competition, there remains the strategic advantage of its potential availability. “While

Mexico lags behind many more technologically developed countries in terms of educational programs and research, it is a definite leader in Latin American due to its development of science and technology programs in the 20th Century” (Alvin Heng). The potential of a country with technology ahead of its closest neighbors can allow for further advancement into the same area as more developed countries. The

fact that a country can become much more advanced than the countries that surround it shows that there is easier access to information technology than the other countries. This advantage will also decrease the amount of competition due to the lack of surrounding countries to begin business in.

Culture

Power Distance

The first value dimension is the level of acceptance by a society of the unequal distribution of power in institutions (Deresky, 2011). Inequalities in the workplace are normal, however the extent to which a subordinate accepts the unequal power is societal determined. According to Hofstede’s power distance index, which measures the extent to which the less powerful members of organizations and institutions accept and expect power to be distributed unequally, Mexico scored an 81. This means that Mexico displays a high power distance. It is a hierarchical society in which employees acknowledge their boss’s authority, respect their position and seldom bypass the chain of command. In a hierarchical society, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat

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Uncertainty Avoidance

Uncertainty avoidance is the second value dimension; it refers to the extent to which people in society feel threatened by ambiguous situations (Deresky, 2011). When countries have a high level of uncertainty avoidance they tend to assure strict laws and procedures are in place to make certain their people adhere closely and overcome a strong sense of nationalism. Countries that have lower uncertainty avoidance nationalism is not as pronounced and protests and other such activities are more acceptable. In those countries that portray lower uncertainty avoidance company activities are less structured and less formal. Managers are known to take more risk and high job mobility it much more common. According to Hofstede’s scale Mexico scored an 82 and thus the Mexican culture prefers to highly avoid uncertainty. The Mexican culture has a high emotional need for rules, even if they appear to not work. They believe that time is money and therefore have an urge to be busy and work hard, precision and punctuality are the norm.

Individualism-Collectivism

Individualism is the third of Hofstede’s value of dimensions; it is the tendency of people to look after themselves and their immediate families only and to neglect the needs of society as a whole (Deresky, 2011). According to Hofstede’s scale, Mexico scores a 30 and is considered a collectivistic society. Loyalty is paramount, and for the most part it over-rides societal rules and regulations. The society fosters strong relationships where everyone takes responsibility for fellow members of their group. In this type of society hiring and promotions practices are based on paternalism rather than achievement or personal capabilities, which in an individualistic society would be favored.

Masculinity

Masculinity, the fourth dimension, is the degree of traditionally “masculine” values assertiveness, materialism, and a lack of concern for other that prevails in society. In this dimension Mexico scores a 69 and thus is considered a masculine society. People that are living in masculine countries tend to “live in order to work” (Deresky, 2011). Managers are expected to be decisive and assertive, the emphasis is on equity, competition and performance, and conflicts are resolved by fighting them out. Women in Mexico are generally expected to stay at home and raise a family.

Materialism

Materialism has been identified as highly relevant for consumer behavior and therefore has been investigated extensively. Although the Mexican culture consists of hard workers, they believe leisure is more important than work. Work is only a means to support themselves and family. They possess a positive attitude and have a tendency towards optimism. Most of the time they act as they please and spend money as they wish. The Mexican culture is very impulsive and materialistic.

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Values

Cultural values are a society’s ideas about what is good or bad, right or wrong, such as the widespread belief that lying or stealing is immoral and unfair. Values determine how individuals will probably respond to any given circumstance (Deresky, 2011). When considering different cultural value dimensions, it is important to understand that most of the variations between cultures are a result from underlying value systems in which people behave differently under similar circumstances. According to the GLOBE cultural dimensions study Mexico is included in the sub-group Latin America along side nine other countries including Brazil, El Salvador and Venezuela.

Assertiveness

This dimension refers to how much people in a society are expected to be tough, confrontational and competitive versus modes and tender (Deresky, 2011). In assertiveness, Mexico scored in the higher end of the assertiveness range in societal practices of this value and was ranked second highest among the countries in its Latin American sub-group. It can thus be determined that Mexican cultural has a middle of the road can-do attitude and often times have a moderate amount of sympathy for the weak. In comparison to the United States, Mexico was in the same grouping of higher scores in this cultural dimension.

Future Orientation

Future orientation is the dimension that refers to the level of importance a society attaches to future-oriented behaviors such as planning an investing in the future (Deresky, 2011). In looking at this Mexican societal value, they tend to score moderately high in future orientation and this implements that there is a greater importance placed on long term planning and less emphasis placed on short term gratification. Mexico ranks the highest among Latin American countries in the category and is ranked only slightly behind the U.S. in this category.

Performance Orientation

The performance orientation dimension measures the importance of performance improvement and excellence in society and refers to whether or not people are encouraged to strive for continued improvement (Deresky, 2011). When assessing where Mexican society falls when considering this vale, it can be determined that Mexicans practice a moderate amount of performance orientation in their country. Their societal practice score for this value ranks them third out of the other Latin American countries,

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but noticeably lower than that of the U.S. This suggests that Mexican culture often times holds other priorities such as tradition and family ahead of performance.

Humane Orientation

This dimension measures the extent to which a society encourages a rewards people for being fair, altruistic, generous, caring, and kind (Deresky, 2011). Mexican society practice a moderately low amount of humane orientation suggesting they focus less on sympathy for the weak and are moderately friendly, tolerant, and place a little less value on harmony. This also states that in Mexican society, there is slightly more importance placed on power and material possessions as well as self-enhancement. Mexico scored fifth in humane orientation out of the ten Latin American countries and had a very similar score to that of the U.S.

Entry Mode/Strategy Description

Target Corporation is one of the ten largest retailers in the United States by sales. As of January 2013, it had generated revenues of over $70 billion and had approximately 1,778 stores in operation (Crane, et al., 2014). Due to its sheer size, it is clear that the Target Corporation would need to further its reach outside of the U.S. or risk cannibalization of sales due to overexpansion (Crane, et al., 2014). In March of 2013, Target did just that by acquiring the locations of 220 Zellers Stores – a similar yet ailing Canadian discounter. It was predicted that the new locations would be a success, as the Target brand is considered very popular among Canadians. However, due in part to supply-chain issues, currency fluctuations, and contractual stipulations with American suppliers, Target is expected to suffer a $800 million to $900 million loss (Austen, 2014). Because of this experience I believe that Target will learn how to better deal with its foreign operations and approach new foreign investment opportunities with a much more careful entry.

Because of the ease of bi-lateral trade created by the enactment of NAFTA in 1994, it makes strategic sense to further global operations by establishing a presence in Mexico (The United States Commercial Service, 2013). However, due to the cultural and economic differences between Mexico and the U.S., Target must implement a wholly different strategic approach to entry than attempted in Canada. In this case, I personally believe that Target should enter the market via joint venture, which “reduces the risks of expropriation and harassment by the host country” (Deresky, 2011). This is exactly what Wal-Mart, who was incredibly successful with its internationalization operations in Mexico, did when they entered the Mexican market via a joint venture with Grupo Cifra.

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Wal-Mart started its global operations in 1991. After a successful launch into Canada, it planned on making the move into the Mexican market but felt that it lacked the vital competencies and resources required of a start-up operation (Gupta & Govindarajan , 2002). Thus, they formed a 50-50 joint venture with the largest retailer in Mexico – Grupo Cifra. Wal-Mart would develop and support the infrastructure while Cifra utilized its own suppliers and oversaw the day-to-day operations. To date, Wal-Mart México y Centroamérica, otherwise known, as “Wal-Mex” has become the biggest player in the industry, outsizing the next three biggest competitors combined and outpacing sales growth in the U.S. market (Bussey, 2006).

If Target is to be successful in its Mexican expansion operations, it needs to use Wal-Mart as the benchmark, and then, through internal and external assessments, tailor its strategy their own. According to Kenneth Fox, in his article: Learn to Expect the Unexpected in Global Retail Expansion, “Retailers that seek future international growth need to avoid repeating prior mistakes from others who came before them. Even the most successful and largest global retailers have encountered unanticipated problems in global markets that could have been identified and prevented prior to their launch” (Fox, 2011). It has been shown that in the market of which both Target and Wal-Mart share, a joint venture would seem to be the best entry candidate.

The advantages of the joint venture, according to (Deresky, 2011) would include insider access to markets, shared cost and risk, and synergies between the two firms by leveraging each other’s skill bases, technologies, and local contacts – an overall agreeable situation.

Goals and Concerns

In the case of internationalization, increased profits and market share due to the expansion into underserved markets tends to be a common goal, as well as creating economies of scale by increasing distribution across more sites. In the case of Target’s expansion into Mexico, it would not only strengthen Target's market position, but also dilute its business risk arising out of limited geographic presence (Market Line, 2014). The expansion would also help to alleviate the cannibalization of sales it is currently experiencing in the U.S. due to market saturation and domestic overexpansion factors (Crane, et al., 2014). Other goals of Target’s expansion include gaining valuable experience into expanding into a global marketplace, which will undoubtedly be of value when further ventures are sought.

Before Target can accomplish any of the aforementioned goals, it must determine with whom to enter into an IJV. Controladora Comercial Mexicana would be a stellar choice as they are the second largest retailer in Mexico and one of Wal-Mex’s top competitors. They operate more than 200 stores located throughout the country with their aim to serve all consumer groups through seven different store formats via: Mega, Bodega Comercial Mexicana, Sumesa, City Market, Fresko and Alprecio brands (Controladora Comercial Mexicana, 2012). This venture would allow Target to maintain

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its comparative advantage as a higher quality, hypermarket alternative to the competition, as well as better compete in the grocery and market category. It would give CCM access to Target’s infrastructure capabilities, and Target access to CCM’s local supply chain with each benefiting the other.

Major concerns would arise with Target’s entry into Mexico if a mutually beneficial joint venture could not be attained. The Mexican retail market is already fairly developed and considered saturated by U.S.

standards (Mun & Yazdanifard , 2012). It would greatly increase the chances of Target’s operational failure if they entered via turnkey operations or greenfield operations especially as this would expose them to the full range of risk (Deresky, 2011).

Conclusion

It has been determined through a careful examination of not only the potential market demand for target retail products in Mexico, but also both the political and economic environment of the country, that it would be an appropriate action to proceed with Target’s international expansion plans for this region of North America. In analyzing the culture and values of the Mexican people, we found that while certain traits and habits are more distinguished and prevalent in Latin America, for the most part, they are not a far stretch form what we as an American society has a good understanding of. All of these factors considered, we feel that a Target expansion into the country of Mexico would be a mutually beneficial venture for all parties involved.

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Mexico. (n.d.). Retrieved from 2014 Index of Economic Freedom: http://www.heritage.org/index/country/mexico

Mexico Business Etiquette, Culture, & Manners. (n.d.). Mexico. Retrieved April 16, 2014, from http://www.cyborlink.com/besite/mexico.ht

Mexico:Government and Politics. (n.d.). Retrieved from Mexico Map XL: http://www.mexicomapxl.com/government-and-politics/

Mexico Industry Output Rises at Fastest Pace In Nearly A Year. (2014, March 13). Retrieved from Reuters.com: http://www.reuters.com/article/2014/03/13/mexico-economy

Mexico: Labor, Elections. (2012, April 1). Migration News. Retrieved April 20, 2014, from http://migration.ucdavis.edu/mn/comments.php?id=3748_0_2_0

Mexico's labor market and laws. (2006, January 1). Mexico's labor market and laws. Retrieved April 20, 2014, from http://www.mexconnect.com/articles/196-mexico-s-labor-market-and-laws

Miroff, N., & Booth, W. (2013, February 13). Middle-class Mexicans snap up more products ‘Made in USA’. Washington Post. Retrieved April 10, 2014, from http://www.washingtonpost.com/world/the_americas/middle-class-mexicans-snap-up-more-products-made-in-usa/2012/09/09/27c9d1b4-f212-11e1-892d-bc92fee603a7_story.html

Target-Mexico | 17

Mun, L. Y., & Yazdanifard , R. (2012, January). Walmart Success In Mexico, Canada and China: Global Expansion, Strategies, Entry Modes, Threats and Opportunities. Retrieved April 13, 2014, from Research Gate: http://www.researchgate.net/publication/234167019_WALMART_SUCCESS_IN_MEXICO_CANADA_AND_CHINA_GLOBAL_EXPANSION_STRATEGIES_ENTRY_MODES_THREATS_AND_OPPORTUNITIES

Taborda, J. (2013, February 21). Mexico GDP Growth Rate. Mexican Economy Slows in Q4 . Retrieved April 20, 2014, from http://www.tradingeconomics.com/mexico/gdp-growth

The United States Commercial Service. (2013, September 13). Doing Business in Mexico. Retrieved April 05, 2014, from Export.gov: Helping U.S. Companies Export: http://export.gov/MEXICO/doingbusinessinmexico/index.asp

Yuk, P. K. (2013, April 5). . Mexican labour: cheaper than China. Retrieved April 10, 2014, from http://blogs.ft.com/beyond-brics/2013/04/05/made-in-mexico-now-cheaper-than-china/

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