Dollar_General_Case_Study

Dollar General Case Notes 1. Describe Dollar Generals business model. Are they following a cost-leadership, focus or product differentiation strategy' They are using both the focus and cost leadership strategies in their business. They are using the Focus strategy by targeting under-serviced rural areas that were in need of a local discount store to make everyday purchases. This is a niche market for Dollar General that other retailers are currently ignoring. They are also utilizing the cost leadership strategy by offering low prices through managing and implementing a companywide low cost strategy. They keep inventory low, hire the minimum number of staff members and lease low-cost real estate, allowing them to keep overhead low. 2. What are Dollar Generals competitive advantages, if any' They have got a competitive advantage with the low cost structure of their business. While this is currently an advantage that they have, it could easily be threatened in the future. The market is highly fragmented and the barriers to entry are very low. This means that other competitors could enter without a lot of start-up costs and threaten their business and sustainability. 3. How would you evaluate DG’s options for growth' There is a huge growth potential for Dollar General, although several changes will need to happen in my opinion. I believe they are currently too regionalized. They should expand their presence in areas other than the southeast, southwest and Midwest regions. There are many areas within the United States that could benefit and would be potential customers for their products. They may want to consider acquiring some of the smaller competitors that represent areas where dollar general is currently not represented. This would allow them to utilize some of what already exists and minimize the fragmentation of the market. For the areas that they currently reside in, they should focus more on their current stores and not worry as much about opening up a bunch of new stores. I think they also should pursue some of the additional services that would fit in nicely with their target market of lower to middle income families. Knowing that many of them do not have a bank account, offering them check cashing or money order services not only helps them out, but also fits in with their convenience strategy. As for International growth, it is not a bad idea, but my fear is that they are going to get put in to the same category as the big players (Aldi, Walmart etc…). If they expand to International areas, I think they should do a test market and open up a few stores to see how they do and if the response is similar to that of what they have received in the US. Initially, I would focus on expansion in the US, and then would explore more International options.