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Target CEO Case Study Analysis
MGT/521 Version 15
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University of Phoenix Material
Target CEO Case Study Analysis
Target CEO Works to Retain Consumer Trust after the Company Was Hacked
Minneapolis—Executives settled around a square table inside a Target Corp. conference room here
earlier this month and munched on store-brand snacks as they chewed over something far less
appetizing.
Opinion surveys commissioned by the company found that the massive cybertheft that waylaid
Target late [in 2013] had knocked confidence and trust in the 51-year-old retailer to an all-time
low.
Target was having trouble shaking the fallout from a key decision by Chief Executive Gregg
Steinhafel that made the crisis appear even worse than it already was.
The initial evidence had indicated that credit and debit card numbers of about 40 million Target
customers had been stolen. But the retailer had learned later that the hackers gained access to
partial names and physical or e-mail addresses for as many as 70 million people—a breach that
some top executives counseled against disclosing because it was unclear what kind of fraud danger
it posed.
Nevertheless, Mr. Steinhafel insisted on making the bigger number public, sparking news
reports that as many as 110 million Target customers had been affected.
At the meeting, Chief Marketing Officer Jeffrey Jones groused about the huge number. The
public “keeps hearing that equals one-third of all Americans,” he said. “That’s hammering us.”
Mr. Steinhafel says he has no regrets about the aggressive disclosure and other costly decisions
in the wake of the crisis. “Target won’t be defined by the breach, but how we handle the breach,”
he says.
The executives acknowledge the crisis has damaged the retailer’s bull’s-eye brand, while
analysts estimate it may cost Target billions of dollars. During the holiday-shopping season,
Target’s sales and store traffic plummeted. Call-center volume overwhelmed employees.
Executives testified before congressional panels, and the company is facing federal and state
investigations into how the cybercrime occurred from its store registers and computer network.
Over the two months since the crisis erupted, Mr. Steinhafel, 59 years old, has lurched from
one difficult decision to another.
At one point, he proposed in a meeting that Target would provide free credit monitoring and
identity-theft insurance for one year to all its customers. Scott Kennedy, a senior executive, asked:
“You’re saying we will give this to any customer who’s ever been in a store, but we aren’t
checking?”
Mr. Steinhafel nodded.
“Then we’re offering this to all Americans,” Mr. Kennedy replied.
Target went ahead with that plan.
The breach could wind up costing Target, which notched $73 billion in sales in 2012, a few
billion dollars, people familiar with the matter say.
New chip technology to replace magnetic strips on credit cards could cost about $100 million,
one executive told Congress. Card-monitoring services for customers could cost tens of millions,
Copyright © 2018 by McGraw-Hill. All rights reserved.
Target CEO Case Study Analysis
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according to one executive. Hundreds of millions of marketing dollars could be diverted to
repairing the brand. In addition, costs are mounting for reissuing cards, staffing call centers,
forensic and data-security units, and lawyers for public inquiries and private lawsuits. . . .
The CEO, who likes to say “retail is detail,” is known internally for paying surprise visits to
Target stores—there are about 1,800 in the U.S. that drew about 32 million customers a week
before the crisis. Store managers say they warn each other to be alert for a man snooping around
the aisles, frequently snacking from a box of animal crackers.
Recently, Mr. Steinhafel says, he stopped a manager who was reading e-mail on her cellphone
as she passed through Target’s downtown Minneapolis headquarters. “Please be in the present,”
he recalls telling her.
From November 27, the day before Thanksgiving, through December 18, Target executives
say, shoppers’ payment-card data was captured through “malware” installed in Target’s computer
network. The hackers had entered the network through a vendor.
The breach got wide publicity. Shoppers clogged Target phone lines and stores. Some sent
tweets and emails that they would never again shop at Target. On the last weekend before
Christmas, the big crowds at Target stores had dwindled.
On December 20, Mr. Jones, the chief marketing officer, urged Mr. Steinhafel to appear in a
video on Target’s website. The CEO was reluctant. He didn’t have a script and was exhausted.
With a camera rolling, Target’s public-relations chief, Dustee Jenkins, asked him questions.
Mr. Steinhafel, clad in Target’s trademark red shirt and khakis store attire, thanked customers for
their trust, provided tips to monitor their accounts, and promised zero liability to shoppers for any
fraudulent charges.
Mr. Steinhafel began holding twice-daily “status meetings” in a 32nd floor conference room.
Early this month, prompted by the Target data breach, Congress held hearings on cyberattacks.
As Mr. Mulligan, the CFO, made his appearances, Mr. Steinhafel and his executive team watched
from the company’s “situation room.”
A Secret Service official testified that the data breach was “highly technical and sophisticated,”
prompting Mr. Steinhafel to remark: “That shows it’s not just our operation. It would be hard for
any retailer to withstand this.”
At a daily status meeting early this month, Mr. Steinhafel pushed to accelerate to early next
year the timeline for Target to replace magnetic strips on its payment cards with a new chip
technology widely used in Europe and Canada that is less vulnerable to fraud.
Source: Langley, M.(2014). Target CEO Works to Regain Consumer Trust after the Company was
Hacked. In Kinicki, A., Williams, B.K. (Eds.), Management: A Practical Introduction (pp. 37-38). New York,
NY: McGraw-Hill.
Copyright © 2018 by McGraw-Hill. All rights reserved.
Target CEO Case Study Analysis
MGT/521 Version 15
Case Analysis Questions
Answer the following in 175 words each:
1. Describe the managerial functions that were demonstrated in the case description. Provide
examples of how each function you discuss was evident in the case study.
2. Assess the success with which the Target management team handled the management
challenges identified in Chapter 1.
Copyright © 2018 by McGraw-Hill. All rights reserved.
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Target CEO Case Study Analysis
MGT/521 Version 15
3. Describe the primary management viewpoint demonstrated in the case study. Evaluate your
concept of its success in this case. Do you think another management viewpoint would have
been more appropriate?
4. Assess your ideas regarding Target’s need and ability to operate as a Learning Organization in
the future.
Copyright © 2018 by McGraw-Hill. All rights reserved.
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