Capital Budget Requests

In: Business and Management

Submitted By jorach1813
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I recommend that the 5 CPR’s be given precedence in the following order: Gopher Place, Whalen Court, Stadium Remodel, Goldie’s Square, The Barn. Given the importance and history of capital budgeting decisions among the CEC (Capital Expenditure Committee), I will give sufficient information to defend the said recommendation.
Background: A little over 50 years ago, in 1962, Target first opened its doors branching off from the more upscale Dayton Company. (p.3) It took less than 40 years for this popular concept to morph into SuperTarget stores and Target.com; thus officially giving birth to the Target Corporation. Although direct competitors were difficult to identify in the market, Wal-Mart and Costco emerged as important competitors. (p. 1) While Target’s revenue was very similar to Costco’s at approximately 52 billion (Exhibit 2), its philosophy on customer experience varied greatly. Target appealed to the more affluent shopper with its slogan, “Expect more. Pay less.” Great precision was given to store ambiance giving the customer a well-rounded shopping experience that differed greatly from Wal-Mart and Costco. Target committed large resources (2% of sales compared to Wal-Mart’s allocation of 0.5% of sales) to advertising campaigns. This resulted in the Target Bull’s-eye logo being ranked among the most recognized corporate logos in the country. (p. 4) A notable distinction was Target’s commitment to Market Capitalization. Among its strongest competitors it allocated more resources, in comparison to its own revenue, towards its Capital Budget. This is important for its sales growth in a retail market where new stores and growth in existing stores account for most of its increase in sales. In 2005 Target had 1,397 stores in 47 states and saw a 12.1% over the past 5 years. This lead to its announcement of continued growth of approximately 100 stores per…...

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