Dollar General
Date: April 30th 2013
Dollar General Business Proposal
Executive Summary
Our group performed an analysis of Dollar General’s external and internal environment, which included a Porters Five Forces breakdown. Those findings as well as analysis on the company’s financial statements formed the basis for our recommendations. We considered several alternative growth strategies for Dollar General to implement. Those strategies are, international expansion, continued domestic expansion, internal improvements, extending services, and taking the company private. We concluded that the most beneficial direction for the company is to go private thereby relieving pressure to meet short-term objectives. We also believe that Dollar General can benefit from increasing domestic expansion and improving its value chain efficiency by upgrading merchandising products. This strategy will allow Dollar General to achieve sustainable long-term growth.
Introduction
Dollar General has reached an inflection point in the company’s history. Recent growth has been explosive, sending revenues to a high of over $9 billion in 2007. However that data may be misleading, though revenues have been increasing each year the rate of revenue growth has been declining steadily since 2000. This phenomenon of diminishing margin of returns, as well as recent issues forcing the close of 200 stores in 2006, has put Dollar General in an uncomfortable financial position with its Wall Street investors. The question we will be addressing in our paper is the strategy Dollar General should use to grow its business efficiently and create sustainable long-term advantages.
External Environment By performing an external analysis we were able to determine many potential opportunities for Dollar General. First, consider the changing demographics in the United States. In 2005, 37 million Americans had household incomes below the poverty line as defined by the U.S. Census Bureau. The shift in
Dollar General Business Proposal
Executive Summary
Our group performed an analysis of Dollar General’s external and internal environment, which included a Porters Five Forces breakdown. Those findings as well as analysis on the company’s financial statements formed the basis for our recommendations. We considered several alternative growth strategies for Dollar General to implement. Those strategies are, international expansion, continued domestic expansion, internal improvements, extending services, and taking the company private. We concluded that the most beneficial direction for the company is to go private thereby relieving pressure to meet short-term objectives. We also believe that Dollar General can benefit from increasing domestic expansion and improving its value chain efficiency by upgrading merchandising products. This strategy will allow Dollar General to achieve sustainable long-term growth.
Introduction
Dollar General has reached an inflection point in the company’s history. Recent growth has been explosive, sending revenues to a high of over $9 billion in 2007. However that data may be misleading, though revenues have been increasing each year the rate of revenue growth has been declining steadily since 2000. This phenomenon of diminishing margin of returns, as well as recent issues forcing the close of 200 stores in 2006, has put Dollar General in an uncomfortable financial position with its Wall Street investors. The question we will be addressing in our paper is the strategy Dollar General should use to grow its business efficiently and create sustainable long-term advantages.
External Environment By performing an external analysis we were able to determine many potential opportunities for Dollar General. First, consider the changing demographics in the United States. In 2005, 37 million Americans had household incomes below the poverty line as defined by the U.S. Census Bureau. The shift in
Bibliography: Chinni, Dante. "Poverty 's Changing Profile in the U.S." PBS. PBS, 07 Nov. 2011. Web. 29 Apr. 2013 Company reports, MVI research, 2006.