Dollar General Analysis
Valuation and Analysis of Dollar General
Table of Contents
Executive Summary……………………………………………………1 Overview of Dollar General…………………………………………6 Five Forces Model..............................................………..9
Rivalry among Existing Firms................................9
Industry Growth………………………………………….10 Concentration………………………………………….….10 Differentiation and Switching costs……………………13 Scale Economies and Fixed/Variable Costs…………..13 Excess Capacity and Exit Barriers………………………14
Threat of New Entrants……………………………………..15
Economies of Scale……………………………………….15 Channels of Distribution and Relationships…………..16 Legal Barriers………………………………………………17
Threat of Substitute products…………………………….17
Buyer’s willingness to switch…………………………………17
Bargaining Power……………………………………………..18
Bargaining Power of the Customer...............................18
Switching Cost…………………………………………….18 Product Cost and Quality………………………………..19 Number of Buyers………………………………………..19 Volume per Buyer………………………………………..19
Bargaining Power of the Suppliers……………………...20
Switching Cost...............................................20 Product Cost and Quality………………………………..20
2
Number of Suppliers…………………………………....20
Value Chain Analysis………………………………………………...21
Efficient Production………………………………………22 Simpler Product Design……………………………….…22 Lower Input Costs……………………………………....22 Low-cost Distribution…………………………………...22 Minimal Brand Image Cost……………………………..23 Tight Cost Control………………………………………..23
Firm Competitive Advantage Analysis…………………….…...23
Efficient Production………………………………….….24 Simpler Product Design………………………………….24 Lower Input Costs…………………………………..…..24 Low-cost Distribution……………………………………25 Minimal Brand Image Cost…………….……………….25 Tight Cost Control………………………………………..25 Conclusion………………………………………………...26
Accounting Analysis…………………………………………….......27
Key Accounting Policies…………………………………….…28 Degrees of accounting flexibility…………………………..30 Accounting Strategy……………………………………….…..32
Table of Contents
Executive Summary……………………………………………………1 Overview of Dollar General…………………………………………6 Five Forces Model..............................................………..9
Rivalry among Existing Firms................................9
Industry Growth………………………………………….10 Concentration………………………………………….….10 Differentiation and Switching costs……………………13 Scale Economies and Fixed/Variable Costs…………..13 Excess Capacity and Exit Barriers………………………14
Threat of New Entrants……………………………………..15
Economies of Scale……………………………………….15 Channels of Distribution and Relationships…………..16 Legal Barriers………………………………………………17
Threat of Substitute products…………………………….17
Buyer’s willingness to switch…………………………………17
Bargaining Power……………………………………………..18
Bargaining Power of the Customer...............................18
Switching Cost…………………………………………….18 Product Cost and Quality………………………………..19 Number of Buyers………………………………………..19 Volume per Buyer………………………………………..19
Bargaining Power of the Suppliers……………………...20
Switching Cost...............................................20 Product Cost and Quality………………………………..20
2
Number of Suppliers…………………………………....20
Value Chain Analysis………………………………………………...21
Efficient Production………………………………………22 Simpler Product Design……………………………….…22 Lower Input Costs……………………………………....22 Low-cost Distribution…………………………………...22 Minimal Brand Image Cost……………………………..23 Tight Cost Control………………………………………..23
Firm Competitive Advantage Analysis…………………….…...23
Efficient Production………………………………….….24 Simpler Product Design………………………………….24 Lower Input Costs…………………………………..…..24 Low-cost Distribution……………………………………25 Minimal Brand Image Cost…………….……………….25 Tight Cost Control………………………………………..25 Conclusion………………………………………………...26
Accounting Analysis…………………………………………….......27
Key Accounting Policies…………………………………….…28 Degrees of accounting flexibility…………………………..30 Accounting Strategy……………………………………….…..32
References: 1. www.dollargeneral.com Dollar General 10-K 2. www.familydollar.com Family Dollar 10-K 3. www.dollartree.com Dollar Tree 10-K 4. www.edgarscan.com 5. www.finance.yahoo.com 6. www.nyse.com 7. http://moneycentral.msn.com 8. www.research.stlouisfed.org/fred2/ 9. Bernard, Victor, Paul Healy, and Krishna Palepu. Business Analysis & Valuation Third Edition. 2004 112