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Dollar General Case Study

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Dollar General Case Study

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Table of Content

EXECUTIVE SUMMARY 2

1. Background 3

2. Dollar General diagnosis 4

a. Financial analysis 4

b. Strengths and weaknesses analysis 5

3. External Analysis 7

a. Competitors 7

b. Opportunities and threats analysis 8

4. Problem identification 10

REFERENCES 11

EXECUTIVE SUMMARY

Dollar General is a retailing company, especially extreme value oriented.

Since its establishment in 1955, Dollar General has drastically grown. In 10 years, from 1955 to 1965, the Company grew to 255 stores with annual sales of $25.8 million. Today, Dollar General owns 6,300 stores in 27 states, with 2002 annual sales of $6.1 billion and more than 54,000 employees. This growth was extremely fast in the 1990's. The number of stores grew so from 1,461 in 1991 up to 6,113 in 2002.

Since the beginning, Dollar General takes advantage of a niche by setting up profitable small stores delivering convenience and value. All the Dollar General's Strategy is based on a customer-driven distribution of consumable basics.

Financial situation of the Company remains really satisfying in spite of shareholders lawsuits due to restatement of its earnings few years ago. Revenue growth was equal to 12.6% in 2003 for a total amount of $7.24 billion. Its net income was the largest of the sector with $319.9 million. In the same time, and over the last three years, the Company has reduced its long-term debt by $448 million.

Such a success can be explained by a really good positioning of the Company through its external environment and among its direct competitors. Dollar general knows very well how to manage the exploited niche and its opportunities. The main strength of Dollar General remains its ability to constantly open new stores, knowing that the key success holds in the proximity of small stores delivering convenience and value. It is in fact a kind of necessary comparative advantage on this market.

The new CEO, David Perdue has got no experience of...