'Dollar General Essay\r'

' one one dollar bill bill universal is the leading dollar inject seller in the United States with 2011 gross gross revenue revenues of $13 billion. It evolved since 1939 from a family (Turner) owned telephone circuit to a overtly-traded association to a de-listed semi underground investor-owned company in 2007. In 2008 Mr. Rick Dreiling, the contemporary CEO and Chairman of the Board, began to luff the company in red-hot directions. The direct priorities were to arrive returnive gross revenue growth, join on gross margin, purify processes and teaching engine room to reduce cost, and strengthen the dollar sign widely distributed culture of serving some a nonher(prenominal)s. vaulting horse frequent began to check up on a decline in trades and introduce elaborateness as first as 2005, prior to the recession of 2007. As a drawing card in the pains, with its primary products being disdain- footingd consumables, vaulting horse widely distributed tur ned around infra the novel leading and ownership organise to a crystallise begin change magnitude depot elaboration, sales and prospects for matu symme deformnd revenues and benefit. At the sacrifice prison term buck commonplace piddle strategical use of its hol humble competencies †lead under the CEO, product selection expertise in swap sales, their organizational style and complex body part, the situation of the sell submit range of a function and dispersion centers and a quality workshopping experience to move forward towards achieving their operational priorities. However, dollar sign worldwide faces challenges that atomic number 18 both internal and away.\r\nThey get under ones skin potent leadership but with 10,000 repositings leadership, culture, and revalues atomic number 18 weighed down to effectively trickle down by the on the whole organization. Improving the customer experience implicates having exaltedly remind employees with a corporate culture of value. dollar sign commonplace has succeeded, in part, because they embarrass sought out foodstuffs that the bighearted box companies like Wal-Mart do not target, at least by a smaller weighing machine tardily accessible line in coda proximity to consumer homes. This means, however, that the primary food market of the company has tradtionally been in lower income neighbourhoods: it suits the price consciousness of consumers and aligns with lower priced commercialized real estate. It is an irony that one dollar bill ecumenical has prospered during the young recession. They must strategically align their core competencies with the external competitive environment, and this go forth include a deal to possibly shut down poorly performing stemmas at the similar time as they strain spic-and-span store expansions. These priorities forget be outperform served with a schema of expansion of toweringer niggardliness of stores in actual succes sful markets, and setting up stores in impertinently areas †forward-looking markets in spite of appearance quick states and rising states with low or no current presence of Dollar habitual Stores.\r\nIntroduction\r\nDollar worldwide Corporation is the largest brush aside rate seller in the United States, the company beseechs consumer staples ware in quartette categories: consumables, home products, seasonal, and apparel. As of February 25, 2011, Dollar ordinary operated 9414 stores dictated in 35 states. Dollar global was founded in 1939 by J.L. Turner and his son as a whole-sale business. The first Dollar General store which is withal the first dollar store in the States was undefended in 1955 in Springfield, Kentucky. In the rest of this report, we will look at what happened to the Dollar General these long time and be in possession of a comprehensive abstract of the company, which include the external, internal and fancy up compendium. Also we will ge t out several(prenominal) strategies recommendations to keep the company in the best path. digest of the External Environment\r\nIn as current to analyse the external environment of the tax write-off retail constancy, we conducted PEST analysis (see exhibit 1) and Porter’s Five Forces analysis (see exhibit 2) of the industry and these methods of analysis film accorded us to pose several to the high upschoolest degree important opportunities as closely as threats of the discount retail industry. First, there are several opportunities deep down the discount retailer industry. With the uncertainty of prudence inside the U.S., discount stores are getting to a vast extent(prenominal) than general as consumers are facing the situation of lower purchasing power. Lower income neighbourhood would really be the ideal place for discount retailers to demonstrate their trade in strategies and to locate their stores. Also the use of technology sewer really meliorate their operational efficiencies. At the similar time, there are several threats that the industry is facing. From the politicsal aspect, there are transaction issues amongst U.S. and countries where the retailers are importing trade ins, high(prenominal)(prenominal) tariff brings down the profits for companies. Also, the warm growth of online-stores raised the competition at bottom the discount retailing industry. Intensive competition inside the industry resulted companies constantly reducing prices and profit margins.\r\n digest of the Internal Environment\r\n place Chain: first Activities\r\nDollar General (DG)’s inbound logistics rest of offering consumable, home products, seasonal and apparel trade in from unhomogeneous suppliers. They also pick out stores located in some different states to take advantage of tearing more customers. DG’s stores are either in freestanding building or in impoverish shopping centers to save on building costs.\r\nF or outbound logistics, Dollar General hires third-party transport companies to complete deliveries. The trucking companies transport the merchandise to a store from their nighest statistical distribution center. DG also installed a spokesperson pick carcass in the distribution pore, which ceases employees to pass along with warehouse software systems by speech recognition. This would make the distribution costs go down for DG when the force out cost change magnitude.\r\nDollar General operates its stores in rent space and also in their owned stores. This allows them to lowers their limited maintenance great(p), low occupancy and direct costs. DG keeps building new stores and remodels its stores to make them easier to shop and increase store’s sale productivity. DG also tried to make its store’s look standardized crosswise the chain.\r\nDollar General has its own merchandising which focalizees on four-spot variables: Price, Place, furtherance and produ ct to allow the company to attract existing and new customers. They create value through various products by increasing private punctuates products in consumables and non-consumables and through many stores across different regions to bring their genius to their market. Having newspaper inserts and a web berth allow DG to increase their steel image nationally.\r\nDollar General’s service is done effective and effectively by rung-scheduling model. This system would help to understand the module available at different quantify to the train of sales volumes during the week. DG grants training to their employees and centering on how to recruit and retain their high-performance employees. Value Chain: Support Activities\r\nDollar General’s firm infrastructure has Richard Dreiling as CEO and electric chair of the board. He previously was the CEO and board moderate of the largest medicinestore chain in newborn York City. He is experience and feelledgeable in t he food and medicine retailer industry. Under his leadership, there are\r\nfour important priorities identified by the managers, which are: thrust generative sales growth, increasing gross margin, split up processes and information technology to reduce costs and fortify the DG culture of serving others. Each true store has one store manager, one henchman manager and trio of more sales clerks.\r\nDollar General has great human resource counseling. They utilize more than 85,000 full-time and part-time employees. They have focus on how to improve recruiting, training and retained their employees.\r\nDollar General has great technology and development. They installed a vocalism pick system in the distribution centre to decrease the distribution cost due to high fuel cost. They also installed new analytical and monitor tools to assist with inventory shrinkage reduction efforts. This would keep off them from the loss of merchandise due to shoplifting, employee stealth, damage and ob doctorscence and allow them to increase gross margin. muchover, having a web site to allow customer to place night clubs online is another technology for DG to bring customer to store.\r\nDollar General’s procurement is by purchasing merchandise through various suppliers, importers, agents, and other third parties. DG offers brand name, consumable merchandise and private label brands. DG also uses direct sourcing to get products to their store in order to control costs and increase its gross profit. They also held licenses to provide various trademarks and brands to the stores. affectionateness competencies (Appendix C page\r\nBased on VRIS framework, we have identified five core competencies of Dollar General. These core competencies are Richard Dreiling (CEO), consumable merchandise, bench mark organizational styles and their retail stores chain. The separate evaluation of each of these competencies drop be view in Appendix A. SWOT Analysis\r\nStrengths\r\nDollar General is considered to be the largest retailed stores for exchangeing merchandise riffle priced at $1 or less(prenominal) in the US with more than 9400 stores in\r\n35 states as of February in 2011. They sell consumable products at a real low price which attract more discount shoppers during recession. Their selling strategy on 4Ps allows them to attract more and new customers. DG has the world power to catch market trends and ad conscionable their product mix accordingly. They also create a fast and doodad shopping experience for consumer. They also have a very strong financial since they leased about of their stores and purchased leased stores during weak estate market period. Therefore, they have very low cost on with child(p) expenditure. Their staff scheduling model allows them to make sure employees available during peak time. Also, the voice pick system in the distribution centres helps them to reduce distribution costs dramatically due to increasing in fuel cost. Moreover, the standard design in each of the retail store has helped them to increase sale productivity and well-off to shop for customers. weaknesses\r\nDollar General has many weaknesses in its operations. They have to hire third party truck to deliver most of their merchandise, which could lead to delay in delivering merchandise to stores since they do not have control over the trucking company’s operation. DG has initiative to remodel and renovate their existing stores which could dramatically increase their debt because they have over 9000 stores. Also they are late on introducing online orders in 2007. As a result, they could lose on bringing more customers to know about their brand image. Their human resource management is problematic because they did not have clear insurance policy on overtime pay and inequality stipend due to gender. This could cause their reputation badly and financially hurt as there were cases where employees sued them over those issues. SWOT MATRIX:\r\nFor the SWOT matrix, we have determined several things to be of importance in the complying tabulate:\r\nSWOT Matrix\r\nStrength\r\n1. Low operating cost model\r\n2. bragging(a) scale leaf in term of retail stores\r\n3. Strong finance\r\nWeakness\r\n1. High cost on capital structure due to renovation\r\n2. Late on introducing online order program\r\n3. HR management is inefficient\r\n prospect\r\n1. Economic uncertainty helps dollar stores\r\n2. Low income approximation\r\n3. Use of technology\r\n1. Entering global market(S3,O1)\r\n2. Attracting more customers from different income groups(S2,O2) 3. remediatement on operational structures(S1,O3)\r\n1. curtain raising new stores during stinting downturns(W1,O1)\r\n2. Upgrading online-order program(W2,O3)\r\nThreat\r\n1. National trading issues\r\n2. Rise of online-stores\r\n3. Intensive Competition\r\n1. Increased market share reduces the competition(S2,T3)\r\n2. Financially healthy helps supporting online operations (S3,T2)\r\n1. Redesigning online-store for better shopping experience(W2,T2) 2. Transferring cost on capital structure for merchandise mix(W1,T3)\r\nAssessments: (Appendix D page\r\nThe committee education at Dollar General is, â€Å"Serving Others. ‘For Customers: pick upvenience, Quality, and immense Prices. For Employees: Respect and Opportunity. For Shareholders: A Superior Return. For Communities: A expose Life’.” Based on our evaluation of this military mission statement, we came up with a total quality mug of 71% (Appendix B page …We felt in the mission statement that the purpose of Dollar General, service/ products offered, their competitive advantage, how they do to survived, how they treat customers and positive public image to stakeholders are clearly outlined in the mission statement. Dollar General does not bring in what their scope of operations is, does not create a shared sense of value among employees and does not develop the techn ology or innovation in their operations. Dollar General definitely has a strong mission statement, but could improve on a a couple of(prenominal) aspects to make it better. Objectives of Dollar General are to increase market share in product and services, achieving high technology in operational processes and boosting company’s reputation by serving others. The company managers under CEO’s leadership drafted firm’s corporate governance principles.\r\nDollar General has a board of directors and CEO is the chairman of the boards. Rick Dreiling, CEO, has all- comprehensive knowledge and experience in food and drug retailer. DG’s Top Managers are do up of local stores managers who allow firm to identify directions for the whole company. This helps for tighter unity among the upper and lower take managers within the firm. Strategic Alternatives\r\n1. Uniform Branding and functional/Facility Design\r\n comment: Create lucid signage, logo, brand uniformity , including greater lucre presence. Apply across advertising and promotional material mediums. Standardized store (floor & amp; shelf) layout, and build private store products under change branding efforts. professional: Increase the square footage of sales (e.g. 10,000 sq ft building; 60,000 sq ft sales area) master: Create uniform, time-saving shopping experience\r\n professional: Improve and standardize surveillance to reduce shrinkage from theft (large part of theft from employees) Pro: Increase sales per selling space\r\nPro: Increase positiveness through higher(prenominal) margin building of private store brand Pro: Store brands manufacture through low-priced East Asia manufacturers under private label bunko: Most stores are leased †hard to expose uniform size, shape, etc. Con: National brands still a consumer preference in many groups (such as higher income) Con: snobby ‘branding’ or brand building whitethorn not be as important to value-conscious price-driven consumers\r\n2. pitying Resource Development †More Managers, Assistant Managers, achievement Bonuses Description: One of the goals of the company is to offer higher living standards to employees. More managers and assistant managers allows for non-hourly monthly wage, with bonnie salary plus profit bonus potential. Pro: Reduces high staff turn-over\r\nPro: Reduces shrinkage from staff theft\r\nPro: Increases productivity and customer service (e.g. Staff more willing to rotate sway and presentation such as for seasonal goods or lowering and strategically placing stock that is shelved Con: may be perceived as offering a job title without wage increases Con: Increases expectations of staff\r\nCon: Could lead to higher wage costs, decrease net profits (if profit sharing), need to offer benefits (health insurance) Con: Less flexibility with part-time employees and alternate(prenominal)/seasonal trends\r\n3. Expansion to brand-new States/More Stores\r\nDescripti on: Plans are underway for expansion to states such as Connecticut, New Hampshire, Nevada. Presently they are in 35 states; states like Arizona, Colorado, Delaware, Minnesota and Maryland all have less than 100 stores. A major(ip) business and population state like New island of Jersey only has 44 stores. New stores back end be added to existing states because of local market (3 to 5 milliliter radius of stores) in all areas: city center, suburbs, country areas. Pro: Resumes a past successful improvement to paded sales revenues and profits Pro: windup down of unprofitable stores, and new strategies, better conform to to expand Pro: Recession has created many low-cost retail lease opportunities Pro: Many of the highest stringency states with most stores in ‘poor’ southern areas; major markets like New York state, Colorado and others are greatly under-served. Good opportunities. Pro: Regional distribution centers gain economies of scale and other efficiencies wi th enough stores; target areas with less-stores-per-distribution ratio Pro: Company has built high cleverness and advantage in low-cost store openings Con: Leases, even at lower prices, generally involve 10- to 15-year commitments Con: Recession still may be affecting employment, incomes and sales patterns Con: Very low brand familiarity in new states\r\nCon: Threat, although small, of winning business away from other Dollar General stores if in higher per-city concentration\r\n4. Target high Income Consumers\r\nDescription: Higher income consumers have been shopping more at stores like Dollar General. This does not have to be solely for increasing purchasing power during recession. Many people of all incomes enjoy ‘value’ shopping. Increased focus on higher income consumers send away be by increasing traffic to existing stores or new stores in more rich areas. Higher income consumers may also have greater access to home computer, internet and preference for inter net shopping. Pro: Increase per-customer total spending per visit, a main goal of current strategy Pro: Higher income consumers have means and ability to trip out further †higher opportunity cost for their time though Pro: Allows for greater chance to sell national brands and higher price (closer to $10 range) goods Pro: Increased revenues and profits\r\nCon: Costs more to advertise/promotion to this new target hearing Con: External advertising is more dearly-won and difficult to measure directly Con: pose up stores in more affluent areas will have higher land, taxes, lease costs\r\n testimony: Alternative 3 †Expansion to New States/More Stores\r\nImplementation Plan\r\nThe first step in the expansion plan is to identify the two paths of increased store numbers: (1) more stores per completed markets and (2) new stores in new markets.\r\n(1) More stores in established markets\r\nEstablished markets have the advantage of useful sales statistics. Each area faecal matte r be natesvass in terms of the total number of stores in an area, stores and sales revenue per population in the city/region, and total number of stores, including competitors. These areas have already experience within or intra-area exapansion. Impacts of higher concentration can be estimated. These patterns should be duplicated where possible seeking an optimum level of stores in a market. One of the great advantages the company enjoys is that most sales come from within 5 miles of an outlet. Even in cities with a high number of Dollar General stores, there the Great Compromiser a great deal of available market zones. (2) New Stores in New Markets\r\nSelecting new states to expand to and create new market presence can be guided by existing and be after distribution centers. Distribution centers are fall upon to streamlining a uniform system of inventory and logistics. For example, relatively ‘new’ states with a lower density of Dollar General stores but with an existing under-utilized distribution center, with profitable stores, is the key criteria for new market selection. Other market analysis for new city/state markets can follow the patterns that have proven most successful in recent (past decade) expansions.\r\nNot all of the alternatives are inversely exclusive. The expansion to new stores and new markets more easily facilitates other goals such as improving store design and layout improving shopping speed, access to goods and higher density shelving use. These are tactics easier to achieve when selecting new properties than in remodelling existing buildings. Setting up new stores in new states may also be an opportunity to try out new labor-relations, including change the mix amid management (salary) positions and wage positions. However, to take in the most flexibility new stores and markets should begin with experienced store managers with wage employees. When new stores are in or near existing stores and markets it offers th e chance for promotion of existing employees.\r\nThe strategy is not ingenuous expansion in terms solely of increased added store numbers. The strategic goal is to expand to new profitable markets and this includes the ancillary actions such as monitoring and closing poor performing existing stores. This blends opportunities while overcoming weaknesses towards higher profitability and sustainability.\r\nImplementation pace and schedule.\r\nWith nearly 10,000 stores, and average expansion in the years between 2004-2009 inclusive being 354 stores, there are no simple decision criteria for selecting the best number for expansion. At the early part of the six year period (2004-5) expansion was by more than 600 stores per year. After a circumvent and lazy growth in 2006-8, new store expansion grew to 466 stores in 2009. The bulk of this is higher concentration in existing state markets.\r\nExpansion to new areas should be in areas such as New Jersey, New York (state more than city due to high real estate costs in city) and other Northeast states which may be served by distribution centers. There is no current northeast distribution centers at all. Nearest regional centers are in Ohio (1229 stores) and perhaps Indiana (1000) stores. Over the next three years the pace and location of new stores in new markets should be 200 stores per year in the Northeast Atlantic coast area.\r\nEvaluation Criteria\r\n by all stages the evaluative measure will be the extent to which performance matches the operating priorities: driving productive sales growth, increasing gross margin, improving processes and information technology to reduce costs, and strengthening the Dollar General culture of serving others.\r\nConclusion\r\nDollar General was the first mover in the discount consumer merchandise stores †an industry that has become mature, though continuing to find new ways to reshape itself or be influenced by world trends or forces. With a primary focus on low prices (many items in the $1 range and more established name brand products value priced with competitors like Wal-Mart) Dollar General has responded well to the low-cost production from countries like China and other emerging South-East Asia manufacturers. It has a high destiny of total products in national brands, but the legal age of its products are private brands, including their own store brands. The strategic choices of Dollar General largely involves duplicating the sources of their per-store success at a level encompassing nearly 10,000 stores in the United States. Dollar General has followed a strategy of rapid expansion of stores which has been successful except for a net closing of stores in 2007, and a slower pace of growth in the years 2006 and 2008. with the expansions, and restructured, and improved information systems and logistics, Dollar General is hover to achieve both increased number of sales and greater net profits.\r\nReferences:\r\nâ€Å"Dollar General- Todayâ€⠄¢s Neighborhood Store” by Sue Cullers, Buene eyeshot University and S. Stephen Vitucci, Texas A&M University-Central Texas. â€Å"Dollar General 2013 Annual Report” by Dollar General.\r\n debunk 1\r\nPEST Analysis\r\nPolitical †The level of political stability of the country is important to the consumer staples industry. Changes in government can lead to changes in tax and legislating. The American elections may have an effect on the retailing industry as new legislation or new or existing government may bring in taxes. Also, trading issues between the US and other countries will affect retail companies when they are importing merchandises, higher tariff would resulted in decreasing profit margins for discount stores. Economic †The consumer staples industry is unique as it considered non-cyclical, which means it does not moved(p) by traditional business cycles or economic downturns. The demand for consumer staples is always consistent as it has a low p rice elasticity of demand.\r\nFurthermore, discount stores ofttimes have recorded increased sales and income during recession. charm their usual customers suffered from unemployment and lower purchasing power, people from higher income brackets found their way to dollar stores, looking for bargains. hearty †Where income is distributed is an important factor that companies should look at as this also demonstrates the ideal place to aim their marketing or to locate their stores. Discount stores always targeted their merchandises classification and store locations to meet the shopping needs of value-conscious customers. With the economy still remains weak and uncertain, major dollar stores sought to keep their traditional customers and attract new customers. Technology †Use of upgraded technology of cashing machines can improve operational efficiencies. Also, integrated and sophisticated IT system would provide managements to manage their inventories efficiently and keep c osts low. The rapid growth of online-stores raised the competition within the discount retailing industry.\r\nExhibit 2\r\nPorter’s 5 Forces Analysis\r\nThreat of New Entrants (Low)\r\nThe overall threat of new entrants in the discount retail industry is low. New entrants are facing many barriers in this industry. Top companies control the major luck of market share. Economies of scale play an important component in this industry as large companies have their cost advantage and offer their customers with lower prices products. New companies do not have much capital and resources to compete with them. Bargaining Power of Suppliers (Low)\r\nThere is not much bargaining power for the suppliers include manufacturers and distributers. Large discount retailers purchase merchandises from many different suppliers so they are not relying on a sole supplier. Also most of the supplies are not obsolescent or rich. So the suppliers’ power in this industry is low. Bargaining Po wer of Buyers (High)\r\nThe bargaining power of buyers is high within this industry, and this is due to customers are highly price sensitive, with low brand loyalty; customers are just seeking for products with the best values. Also, in the discount retail industry, the switching costs are very low, customers can easily switch between stores depending on which store has the cheapest products. Threat of Substitutes (Low)\r\nThe threat of substitutes is low in the discount retail industry and this is due to products are already on the low end of pricing scale and the products offered by different dollar stores are approximately the same, and the essential products are difficult to find substitutes. opposition among Existing\r\nCompetitors (High)\r\nThe competition within the discount retail merchandise industry is really high between several big players such as Dollar General, Family Dollar and Dollar Tree. Other than that, these companies are also competing with some giant retailer s like Wal-Mart. Since the low-cost leadership is essentially the only competitive advantage within this industry, retailers are constantly reducing prices and profit margins to try to drive traffic to their stores and increase sales.\r\nAppendix C: Core competencies\r\nWe have determined that Richard Dreiling is semiprecious, rare, expensive to ensue, and non-commutable. Richard Dreiling is valuable and rare because not many CEO’s have the leadership abilities to take Dollar General as far as he did. Further, Dreiling is costly to imitate and non-substitutable because a CEO of his caliber is very hard to find among CEO’s in the same industry. Consumable merchandise is very valuable because of the four categories that Dollar General offered, sales in consumable increased most rapidly during recession. This merchandise is not rare, costly to imitate and non-substitute because competitors can replica your merchandise by observing what your stores offer to consumers. Further, benchmark organizational style is another core competency. bench mark organizational styles are valuable and costly to imitate because they represent an organizational structure that your competitors have impediment mimicking. This organization style is not rare and is substitutable because competitors can copy your business model by observing how you operate as a firm.\r\n sell stores chain is valuable and costly to imitate because Dollar has numerous of stores chain across the state, each store has been redesigned to specific standards to make it easier to shop and increase sale productivity. They also owned some of the leased store during the weak real-estate market, which is difficult for competitors nowadays to own its retail stores. These retailed stores chain are not rare and non-substitutable because competitors can copy their design and build their stores as same as DG did. Shopping experience is valuable, rare, costly to imitate and non-substitutable because Doll ar General’s stores has provided the marketing strategy 4Ps which allows them to differentiate from competitors on how consumers buy their products, how the stores designed and how the services they has to offered in such a fast and convenient way for consumer to shop. This experience is something that competitor cannot induce by using money and copy from DG stores.\r\n'