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Q4. Among the given options, what do you suggest as the future expansion for
Dollar General?
ANS. Dollar General is as of now looking at growth through development of stores
or search inside its business to identify the deviations that have made a few
stores unprofitable and get erect a working framework that can deal with the
changing and expanded requirements of the clients and the business. The
organization's execution has seen a descending incline in the recent years. Their
Gross Margins have been high whereas their Selling and Administrations costs
have additionally been high. Since 2000 organization has being seeing a gradual
decline in deals and same store deals. Dollar General has additionally not
possessed the capacity to meet its objective of opening 800 stores in 2007.Several
such certainties prompt the conclusion that Dollar General, in dislike of high
development, has not possessed the capacity to accomplish its targeted
development because of its operational and management inefficiencies, deficient
innovative progression, limited expansion in new classes, and restricted product
mix advertised.
Growth Options available to Dollar General
Each available option will be ranked as high, low, and moderate. High implies
highly favorable to Dollar General, low will be least favorable, and moderate
implies an option that may not have adverse effects on the outcomes.
Demographic
Pursue Urban Consumer:
This option, in my view, is a low key option as Dollar General’s entire business
concept revolves around offering basic consumer goods with convenient shopping
at low price to low-income earners who reside in suburban areas. Pursuing urban
consumers would require DG to re-establish its policies, operations, management,
and understanding of consumer market.
Pursue More Affluent Consumer:
This option is a low key option for Dollar General at this point since the Extreme
value retail is fragmented and there is still unsaturated, hence there is possible
room for expansion for DG within its category. DG should focus on its current
niche but should give them more options with the same convenience and low
price.
Geographic Growth
Expand into Western U.S:
This option would be highlyfavorable to Dollar General, since there may
be possiblemarkets in the western U.S that would highly suit DG’s cultureand its
operating structure. Also DG may be able to make loyalcustomers in the western
part as well and making it a bigger player in the retail segment.
International Expansion:
this a moderate option for DG to adopt at this juncture since the European
market would bedominated by players like Aldi and unless DG
can back themselves with the operational and managerial expertise tosurvive
competition from local companies, it would be lethalto enter into international
markets. DG, can however, eyecertain markets that are conducive to their kind of
businessstructure and can sustain the needs of the market.
In-fill existing U.S presence:
This would be a high-key optionfor DG since they U.S market can sustain upto
40,000 suchretail stores, DG would be better of expanding its presence inthe U.S
market to achieve maximum growth before its reachesthe saturation point.
Industry roll-up:
This option is also a high-key option for DGsince the industry is fragmented and
region based. One of the best options for growth would be to consolidate and buy
outsome of the stores in the retail industry. This would give themthe ideal
location and also enable them to serve the customers better.