DOLLAR GENERAL
DOLLAR GENERAL
MGMT 790.UB1
Individual Case Analysis
Fall, 2016
Professor William Carter
Tierra Bennett
DOLLAR GENERAL
Executive Summary
Dollar General is an American based variety of chain store with over 12,483 stores in the
United States. The company deals in a wide variety of general and specific brand merchandise
ranging from apparel, grocery, home décor, seasonal items among other consumables. The
company lies in the dollar variety stores industry where other firms are in competition such as
Fred’s Corporation, Dollar Tree, 99 cents only, Family Dollars and Big Lots.
The company stands as the leading low-cost firm in the market and thus is able to provide
affordable prices for all products by giving discounts. This has greatly helped the company in
capturing a wider market and maintaining a sharp competitive edge against its competitors. The
company has enjoyed greater financial performance over the years as the sales have been
increasing consistently over the years with the latest increase from the previous year standing at
7.7%. The net income for the same period also increased by 13%. In addition, for the same
period, the cash flows increased by $1.4 billion.
There are several environmental factors that are affecting the operations of the company.
They comprise of the legal, economic, environmental, political, social and technological factors.
As a result, the company should try to position itself in a way that the resources of the firm can
be aligned to the overall strategy in order to match the diverse changes of the environment.
Technology has been one of the key drivers of change in the organization which have seen a
growth in sales and growth in the number of stores set up across US since it increases the
operational efficiencies of the company.
Key success factors that can increase the company in the near future and in its long term
plans comprise of maintaining of high customer relations, increasing the operational efficiencies,
focusing on effective management of human resources, improving the strategic focus for growth
opportunities and management of the physical resources in the order of priority as listed.
Corporate Social Responsibility and Technological Innovation have been key pillars of
the great performance of the country. The company has been consistently engaged in community
involvement by the establishment of the Dollar General Literacy Foundation to maintain its
relevance and legitimacy of the company in the society. The company has also embraced high
level technology by development of a mobile app for customer use for greater experience. The
company also developed data links for all district managers to coordinate well with the store
managers. This has greatly helped the company in maintaining a very high competitive edge in
the market.
The major strategic plan embraced by the company is the expansion strategy where the
company aims to open over 1,000 stores in the country by 2017. The company is endowed well
with resources to achieve the strategic plan. The major challenges faced by the company are
economic fluctuations, high competitive pressures, interruption of the company’s information
system and the inability of the company to maintain the skilled personnel. Since, the economic
conditions are non-controllable; these factors need to be addressed with urgency and adequacy
for sustainability of the firm.
DOLLAR GENERAL
The sales forecast developed for the next five years as per the data supplied by Nasqad,
the company earnings are expected to increase by an average rate of 11.904% per annum over
the next five years. This shows that the financial performance of the company is strong and it is a
perfect indicator that the company’s strategic plan will be implemented due to the strong
resource endowment and availability.
DOLLAR GENERAL
1.0 Overview of the firm
Dollar General is an American based chain store with variety of stores of about 12,483
stores in different parts of the United States. The headquarters of the firm are based in 100
Mission Ridge, Goodlettsville, and Tennessee. The company was formed in 1939 by J.L. Turner
and Cal Turner Sr. It sells a wide variety of name brand and general merchandise ranging from
clothing, cleaning supplies, health and beauty aids, grocery, home décor, seasonal items, toys and
pet supplies. In the year 2015, the company reported an operating income of $1.940 billion
(Dollar General official website).
Dollar and Variety Stores industry deals in general merchandise such us automotive parts,
apparel, hardware, groceries, dry goods, and home furnishings. Most of the industry operators
retail these goods at a relatively discounted price. The major players in this company include
Fred’s Incorporation, Family Dollar, Big Lots, Dollar Tree Incorporation and 99 Cents Only
Stores Incorporation. This industry focuses majorly on middle-class consumers who are more
focused on value over quality as a result of falling disposal incomes that were occasioned by a
recession. (Hoovers, 2016; IBIS, 2016).
2.0 Analysis of the Firm
2.1 Business-Level Strategy
The firm has adopted several business level strategies. Firstly, the company is focused on
enhancing its position in the industry as a low-cost operator firm. The company has undertaken
to develop a zero-based budgeting so as to generate higher flexibility, reinvest savings and boost
the growth of the firm. Further, in efforts to reduce costs, the company is focused in eliminating
work so as to make the business remain as simple as possible. All these measures put in place,
Dollar General has reduced costs significantly which implies that the products sold to the final
customer has remained as affordable as possible leading to a higher customer base. The low cost
has also led to expansion of business with over 12,483 stores opened in major states in the
United States and another 900 stores targeted to be opened in 2016. Secondly, the company is
focused on driving a profitable sales growth by delivering the brand promise to customers every
day at low prices and improving on-shelf availability of products for better customer experience.
Several gross margin expansion strategies have been put in place such as improvements in
inventory shrink reduction, brands penetration, distribution and transportation efficiencies, global
sourcing and non-consumable sales (Dollar General 10K report, 2015).
2.2 Firm’s Resources, Capabilities and Distinctive Competencies
The company enjoys a wide base of resources that helps the firm in its day to day
operations, its expansion plans and also in maintaining its competitive edge in the industry. As of
January 29, 2016, the company reported a growth of total assets of $11.258 billion in 2015 from
$11.209 billion in the previous year. The net income also improved from $1.065 billion in 2014
to $1.165 billion in 2016. The increase in the amount of net income can be attributed to an
increase in sales revenue over the two year period. The net cash provided by operating activities
also improved with an increase from $1.315 billion in 2014 to $1.378 billion in 2015 (Dollar
DOLLAR GENERAL
General 10K report, 2015). This means that the company improved its cash flows from the
operating activities of the firm by a significant margin so as to enable the daily operations of the
firm run smoothly. A lot of human investment has also been made with the company targeting
skilled sales personnel who help the company in maintaining the high customer satisfaction and
experience.
The major competitive advantage that has helped the firm maintain its position in the
market is that of offering relatively affordable products than what its competitors are selling at.
This has been achieved through lowering of costs by proper utilization of the zero based
budgeting to maintain high level flexibility, reinvest savings and drive growth. The lower costs
have triggered the adoption of a discounted price on all products to facilitate customer attraction,
retention and improving on customer experience. In addition, the company has been keen in
capturing any growth opportunities. As of 2015, the company had developed a 2016 short term
plan of opening over 900 stores in various states in US thus drawing the company closer to the
customers for easy customer accessibility. The opening of the new stores will be coupled with a
new store format for all newly opened stores. Relocation and remodeling of some stores will also
be done. All these measures have been put in place to ensure that the company reputation is
enhanced through physical peculiarity of all stores to create a unique picture for stronger
customer brand positioning. The new format will also allow for expansion in products which
customers want thus providing a more customer friendly layout to allow faster customer
checkout. In addition, the firm has remained strong in the marketing due to its attention on talent
selection and development through onboarding, training and open communication. Through
References
Anderson G. (2016). Dollar General invests in major expansion. Retrieved from
http://www.retailwire.com/discussion/dollar-general-invests-in-major-expansion/
Dollar General 10K Report (2015). Retrieved from
http://investor.shareholder.com/dollar/financials.cfm
Dollar General Literacy Foundation official website. Retrieved from
http://www2.dollargeneral.com/dgliteracy/Pages/about_us.aspx
Dollar General Moves into New Markets on Heroku (2016). Retrieved from
https://www.heroku.com/customers/dollargeneral
Dollar General official website. Retrieved from
http://www2.dollargeneral.com/About-Us/Pages/index.aspx
Dollar General provides Outline of Strategic Plans to Deliver on Its Growth Model; Company
Announces Plans to Accelerate New Store Openings to 1,000 in 2017 (March 23, 2016).
Retrieved from
http://newscenter.dollargeneral.com/news/dollar-general-provides-outline-of-strategic-pla
ns-to-deliver-on-its-growth-model-company-announces-plans-to-accelerate-new-store-op
enings-to-1000-in-2017.htm
Hoovers Official Website. Retrieved from http://www.hoovers.com/about-us/our-data.html
IBISWorld. Dollar & Variety Stores in the US: Market Research Report. Retrieved from
http://www.ibisworld.com/industry/default.aspx?indid=1093
Nasqad. Retrieved from http://www.nasdaq.com/symbol/dg/earnings-growth
Pidun U., Stelter D. & Dyken K. (2010). Why companies should prepare for inflation.
