Family Dollar Three-Year Strategic Plan


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Family Dollar Three-Year Strategic Plan

  1. 1. Family Dollar<br />Laura Rogers Finance<br />Spenser Hooks Marketing<br />Devin Fedorchuk General Business<br />
  2. 2. Outline<br />Mission/Vision<br />Internal Assessment<br />External Assessment<br />Strategy Formulation<br />Strategy Implementation<br />Conclusion<br />
  3. 3. Current Mission<br />For Our Customers: A compelling place to shop. . . by providing convenience and low prices<br />For Our Associates: A compelling place to work. . . by providing career opportunities and rewards for achievement<br />For Our Investors: A compelling place to invest. . . by providing strong financial returns<br />
  4. 4. Improved Mission Components<br />Customers<br />Products or services<br />Philosophy<br />Concern for survival, growth, profitability<br />Markets<br />Technology<br />Self-concept<br />Concern for employees<br />Concern for public image<br />
  5. 5. Improved Mission<br />At Family Dollar, we strive to bring the best to our customers, offering them everyday items at everyday low prices (1). We seek to meet our customers’ basic needs, providing them with common household products, including but not limited to basic food items, household supplies, health and beauty products, and basic clothing items (2). At Family Dollar, we are not just about profit; we are about providing affordable basic consumer goods to families of all income levels (3).<br />Family Dollar continues to pursue steady continued growth to meet the needs of our customers and to maximize the returns to our investors (4). We currently operate 6,600 stores in 44 states in the U.S. We are seeking to expand our services beyond the country’s borders into other parts of North America and eventually open stores on other continents as well (5). At Family Dollar, we strive to continually implement new and improved technology to our stores to better satisfy and meet the needs of our customers in this ever-changing world (6). Family Dollar will continue to use competitive technology and efficiency to maintain and expand a competitive position among discount stores (7).<br />Family Dollar seeks to serve our community by providing our employees with job security, competitive compensation, an attractive benefits package, strong leadership, and opportunities for growth, rewarding those with a high standard of excellence with good incentives for strong performance (8). As a company, we also seek to better the lives of families with low income not only by providing them with affordable products but also through contributions to non-profit organizations that meet their needs through free giving (9). <br />
  6. 6. Vision<br />Current Vision Statement<br />To be the best small-format convenience and value retailer serving the needs of families in our neighborhoods.<br />Proposed Vision Statement<br />To provide a wide array of items to our customers, giving them the best value at competitive prices.<br />
  7. 7. Internal Assessment<br />
  8. 8. Current Financial Ratios<br />
  9. 9. Current Financial Ratios (cont.)<br />
  10. 10. Current Organizational Chart<br />
  11. 11. Improved Organizational Chart<br />
  12. 12. Positioning Map<br />
  13. 13. Web Site Comparison<br />
  14. 14. Value of the Firm<br />Stockholders Equity $1,254,083,000 <br />Net Income x 5 $1,165,365,000 <br />(Share Price/EPS) x Net Income $4,435,162,378 <br />Number of Shares Outstanding x Stock Price $ 4,717,374,900 <br />Method Average $2,892,996,319.50<br />
  15. 15. Strengths<br />Family Dollar sells essential items with relatively inelastic demand. <br />Family Dollar’s gross profit margin is 2.8% higher than the industry average. <br />Family Dollar accepts Food Stamps, making it more convenient for lower class customers. <br />Family Dollar's leverage ratios average 32% less than the industry average. <br />Family Dollar raised its dividend for the thirty-third year in a row, from 8.7% to 12.5% last year. <br />Family Dollar’s total assets turnover is 24.8% greater than the industry average. <br />Family Dollar’s return on assets is 1.84% higher than the industry average. <br />Family Dollar’s return on equity is 4% higher than the industry average. <br />Approximately 90% of Family Dollar's products are priced at $10 or less. <br />Family Dollar's stock has outperformed the Retail industry for the past year. <br />
  16. 16. Weaknesses<br />Family Dollar does not do much advertising. <br />Family Dollar is currently restricting its market by not having any stores outside of the U.S. <br />Family Dollar’s market share fell from 1.85% to 1.75% in 2008. <br />Family Dollar does not have stores in every state. <br />Family Dollar’s earnings per share is only 72% of the industry average and is not growing as quickly as the industry average. <br />Selection and variety of products offered is relatively low. <br />Family Dollar’s sales have only increased by 2.18% over the past year compared to the industry’s average 5.31% sales growth. <br />Family Dollar is behind the times in technology. <br />Family Dollar’s quick ratio is significantly higher than the industry average. This could indicate a lack of long-term investments. <br />Family Dollar’s long-term debt/equity ratio is only 31.4% of the industry average. <br />
  17. 17. IFE Matrix<br />
  18. 18. IFE Matrix (cont.)<br />
  19. 19. External Assessment<br />
  20. 20. Major Competitors<br />Wal-Mart<br />Dollar General<br />Dollar Tree<br />
  21. 21. Market Share<br />
  22. 22. Market Share Excluding Wal-Mart<br />
  23. 23. Competitive Profile Matrix (CPM)<br />
  24. 24. Opportunities<br />Middle-class people are more carefully budgeting their income. <br />The average household income in the U.S. decreased nearly 10% in the last two years. <br />Demand for low-priced items is growing. <br />The value of the dollar is falling. <br />The unemployment rate is 8.5% and growing in the U.S. <br />Fourteen million U.S. households use Food Stamps. <br />The Federal Discount Rate has fallen to 0.5%. <br />Real estate prices are expected to fall 15 to 20% below their peak in mid-2007. <br />Diesel prices are expected to fall in 2009 and 2010. <br />Consumer frugality is expected to outlast the recession, with spending growing at an inflation-adjusted rate of only 2%-2.5%. <br />
  25. 25. Threats<br />Online shopping is becoming more popular. <br />Rising fuel costs may increase the cost of Family Dollar’s business. <br />The economy may improve. <br />Inflation may force prices to be raised. <br />Stigma of “Low quality, low price.” <br />Wal-Mart has a 94.81% market share among discount retailers. <br />Wal-Mart already has 318 stores in Canada and 1,203 in Mexico. <br />Customer perception that Family Dollar is for low-class people. <br />Increasing consumer expectations may make it harder for Family Dollar to satisfy customers. <br />Turmoil in the stock market may cause Family Dollar’s stock price to fall. <br />
  26. 26. EFE Matrix<br />
  27. 27. EFE Matrix (cont.)<br />
  28. 28. Strategy Formulation<br />
  29. 29. SWOT Matrix<br />
  30. 30. SWOT Matrix (cont.)<br />
  31. 31. SPACE Matrix<br />
  32. 32. SPACE Matrix (cont.)<br />
  33. 33. SPACE Matrix (cont.)<br />
  34. 34. BCG Matrix<br />
  35. 35.
  36. 36. IE Matrix<br />
  37. 37. IE Matrix (cont.)<br />
  38. 38. Grand Strategy Matrix<br />
  39. 39. QSPM<br />
  40. 40. QSPM (cont.)<br />
  41. 41. QSPM (cont.)<br />
  42. 42. QSPM (cont.)<br />
  43. 43. Recommendations<br />
  44. 44. Strategy Implementation<br />
  45. 45. EPS/EBIT Analysis<br />
  46. 46. Income Statement<br />
  47. 47. Balance Sheet<br />
  48. 48. Balance Sheet (cont.)<br />
  49. 49. Projected Financial Ratios<br />
  50. 50. Thank You for Your Time<br />