Abdul Majeed MBA-CS# 3

Dollar General Bids for Family Dollar

SUKKUR INSTITUTE OF BUSINESS ADMINISTRATION

FACULTY OF BUSINESS ADMINISTRATION

Corporate Strategy
MBA III & MBA VIII
Spring 2019

Dollar General Bids for Family Dollar

Case Questions

1. Pastel Analysis and any identify key factors. (EACH COMPANY)

Pastel define Identify Reasons Counter
(Strategies)
Politico/Legal Policies, regulations, Federal Trade Because the Dollar General
taxes and other tariffs. Commission anti-trust acts need to stablish
(TFC), will have a well ground
Family Dollar greater impacts. information
Stores, Inc. about such
rejected Dollar situations
General's $9.7
billion buyout
bid, offered on
citing
"significant
antitrust issues.
Economical Employment rate, Changing Improving Shareholders
inflation, Income purchase economy would inquire
patterns duo to throughout the the incomplete
the economy rural areas of bid.
the states.
Social Family Dollar It may be a Growth of
Population aims to attract great ethical economy would
growth. Age the same low- concern so that need to be
Demographics. income General Dollar considered
 Lifestyle shopper, but would face in
Fashion. nearly half its near future
Attitude stores are in
towards health urban
(e.g. nutrition). locations.
These impacts
on the
consumer’s Family Dollar
needs and the sited its stores
potential in densely
market size for populated
an enterprise’s areas.
goods and
services.
Environmental Pollution Targets.
Ethical and
sustainable business.
Technological Automation. Accelerate Improved General Dollar
imitative and product would have to
Investment incentives plans to qualities. accept the latest
upgrade its Emerging new changes in the
POS systems payment setups environment
Rate of technological across all of its
change. stores in order
to support an
expanded
selection of
payment
options.

2. Analyze the changing industry structure in which EACH Company is operating by using
Porter’s Five Forces Model. How did Company counter the changes and challenges of the
industry competitive forces in which Company is operating by using Porter’s Five Forces
Model?
Five Forces Who Level of Reasons Counter (Strategies)
They Threat/Bargaining
Are Power
Buyers Moderate to Low Unavailability of Why not to build a
Power substitutes platform for
customers so that can
integrate them as
well.
Supplier Moderate to High Variety of clients such as Go for Backward
Power Dollar Tree and Family integrations. Increase
Dollar the numbers of
 suppliers from cheap
countries like China,
India, Kenya etc
Threat of Moderate to Low As Dollar General offers Go online like
Substitute in the shape of smaller Walmart.
quantities in sales so
there is least chances that
Walmart and Kmart
would offer the same
Threat of Low to Moderate Because of higher fixed Bring continuous
New costs and strong innovations in the
Entrance regulations as well products portfolio
Threat of Moderate to High Of course, the Dollar Offer differentiated
Existing Tree and Family Dollar products and sale
competitio can offer the same services as well
n services as well

3. You are also advised to conduct a strength, weaknesses, opportunities and threats (SWOT)
analysis for EACH Company and provide strategic suggestions based on analysis. (EACH
COMPANY)

Identify Counter (Strategies)

Strength: Dollar general strength is
their presence in many
locations as the company is
present more than 10000
locations.

Popular brand visibility.

Price convenience.

Better and cleaner products

are there.
Performs better job of
keeping goods in stock and
displays full. Price is strength
because they are offering the
everyday low prices around
the nationwide.
Threats: The competitors are the big
threat for the dollar general
like the increased
competition from the bigger
chains (target and Walmart).
 For the dollar general the big
threat is from merger of the
dollar tree and the family
dollar.
The threat for the company is
that dollar general
competitors are opening the
more stores and this is the big
threat for the company.
Opportunities: The income for the middle Dollar General need to offer a
class is diminishing, causing variety of services and in
them to be more cautious such a scenario the would
with their expenditures. need to do mass marketing.

The average household

income is dropping due to
weak economy.

The demand for low-priced

items is growing

Weakness: Operating cost is increasing. Dollar General need to

Inconsistent sales/store. manage the supply channels.

4. How is the using its resources and capabilities to get competitive advantage and why is it so
successful in it?
Companies have utilized the recessionary period in their own advantage by opening large
number of stores offering affordable prices for low income consumers. Increment in
expansion of stores from16753 to 25340 between 2005 and 2015 has helped the three
companies to grow even during recessionary time.
Electronic benefit transfer cards have made the stores more attractive to consumers under
poverty line. They have the location advantage as thirty-six percent of dollar stores are
located in south east where average per capita income is found to be lowest. They have a
transportation advantage as low income group people have an easy access to reach them at
affordable prices. Packaging of products also favor lower income consumers.
Management of Dollar General are trying to retain the customers by improving the store
aesthetics, improving customer service and adding nationally advertised brands alongside
private label brands and they have been successful in it as customers are found to be cautious
in terms of spending even though economy has slowly recovered. Under the leadership of
Dreiling Dollar general has increased operating efficiencies and at the same time increased
the store count by 41% (11789 stores) and revenues by 81% (to nearly $19 million) between
 fiscal years 2008 and 2014. From case sources. Dollar general has upgraded its site selection
technology in 2013 to improve and better understand their growth strategy as a result of that
dollar general has been found to be successful in improving their product quality.

5. Describe Company Business strategy?

Nationally branded, wide variety, low cost leadership and convenient places.

6. Who are Company’s competitors?

Dollar Tree
Walmart (prospect)
Family Dollar

7. What are the core competencies of each competencies?

Core competencies of Family dollar:
Offers their product in reasonable price /cheaper price.
Store are located at suburban place.
Offering includes high consumables goods additionally, apparels as well.
Efficient distribution system has helped to make bulk deliveries to its stores and has
benefited them a lot.
Capability to open large number of stores without facing the difficulty of stock shortages.
Core Competencies of Dollar General
Dollar General saves money of shoppers.
Dollar General provides national brand name and large market size.
Display full merchandise assortment in their stores.
Strong focus on high frequency of sold goods Maintain their offering of everyday low prices.