Dollar General Business Proposal
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 …show more content…
The main barriers to entry are startup capital and the ability to supply low cost products.
Threat of Substitute Products
In an industry whose top 3 selling products are household cleaners, seasonal decorations, and wrapping paper. Consumers have limitless options to where else they can purchase goods. Most consumers that shop at Dollar General live below the poverty line so quality and brand name is not the reason they are shopping there. This leads to a very serious threat of substitute products at a lower price.
Dollar General, operating in the dollar store industry, executes a strategy of offering superior prices and convenience. Dollar General’s intention was to act as a complementary retailer, but still competitive, alongside Wal-Mart. Dollar General’s core customer purchases her staple items at Dollar General, and embellishes her household needs with items from Wal-Mart. Dollar General, as a competitive leader in the industry, has several strengths. Dollar General is able to reach smaller, more rural areas than big-box competitors by focusing on a specific layout meant to ensure convenience at all costs. Wal-Mart’s stores are usually a minimum of 100,000 sq. ft., whereas Dollar General stores average around 6,900 sq. ft. This severe difference in size allows Dollar General to be successful in