7/22/2014 Copyright 2012, Tony Gauvin, UMFK 1

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FAMILY DOLLAR, 2009
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OVERVIEW
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COMPANY OVERVIEW
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History
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The Founder
Leon Levine
In 1959, Leon opened first Family Dollar store
in Charlotte, NC
In 1998, Handover the business to his son
Howard Levine.

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Growth
1970 had gone to Public
Single distribution center in Charlotte delivering to
Carolinas and neighboring states
1977 there were 300 stores with an annual sale of
$100 Million
1989, opened its 1500
th
store
1996, opened its 2500
th
store
2003, introduced New Distribution centers and POS
systems.
2003, 5000
th
store with an annual sale of $5
Billion .
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2009
50
th
Anniversary
6600 stores in 44 states
14% market share among Dollar Stores
44,000 employees.
Full time (25,000)
Part-time (19,000)
Target Customer
Company Caters to the low-to-low middle
income group ($30000 or $35000 of annual
income)

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Organizational Chart
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11 person
Board
CEO &
CHAIRMAN
OF THE
BOARD
EVP
SUPPLY
CHAIN
DC
MANGERS
DC
MANGERS
EVP STORE
OPERATIONS
REGIONAL
MANAGERS
STORE
MANGERS
STORE
MANGERS
SVP GLOBAL
SOURCING
SVP
INVENTORY
OPTIMIZATION
SVP REAL
ESTATE
AND
FACILITIES
SVP
CUSTOMER
MARKETING
SVP FOOD
SVP
FINANCE
CFO
PRESIDENT
AND CEO
VICE
CHAIRMAN
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4,141
4,616
5,027
5,466
5,898
6,394
6,834 6,983
6,984
Store Count
Revenue
7/22/2014 Copyright 2012, Tony Gauvin, UMFK 12
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COMPANY PRODUCTS
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Existing vision
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Existing Mission
Family Dollars mission states the three most
important relationships to making our business
successful; our customers, our associates, and our
investors.
For our customers, we offer a compelling place to
work by providing convenience and low prices.
For our associates, we offer a compelling place to
work by providing exceptional opportunities and
rewards for achievement.
For our investors, we offer a compelling place to
invest by providing outstanding returns.

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Vision (proposed)
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Mission (Proposed)
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At Family Dollar, we strive to bring the best to our customers, offering everyday
items at everyday low prices (1). We seek to meet our customers basic needs,
providing them with common household products (2) at affordable prices
while maintaining our growth and profitability to our loyal stockholders (5)
utilizing the latest technology and through dedicated employees (4, 9). Our
purpose has been to open stores where we strongly believe we can be
competitive while meeting the demands of our customers (3). We continue to
be responsible by contributing back to communities, society and charitable
events (6, 7, 8).
1. Customer
2. Products or services
3. Markets
4. Technology
5. Concern for survival,
profitability, growth
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees
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Strategy-Formulation Analytical Framework
Stage 2:
The Matching
Stage
Stage 1:
The Input
Stage
Stage 3:
The Decision
Stage
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External Factor Evaluation
Matrix (EFE)
Internal Factor Evaluation
Matrix (IFE)
Competitive Profile Matrix
(CPM)
Stage 1:
The Input Stage
Strategy-Formulation Analytical Framework
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External Factor Evaluation Matrix
Key External Factors Weight Rating Weighted
Score
Opportunities

1. The income for the middle class is diminishing, causing them to
be more cautious with their expenditures
0.1 4 0.4
2. The average household income is dropping due to weak
economy
0.1 3 0.3
3. The demand for low-priced items is growing
0.07 3 0.21
4. The unemployment rate is increasing
0.09 4 0.36
5. Smaller retailers are closing their stores and some have filed
for bankruptcy
0.08 3 0.24
Threats

1. High competition among large discount retailers
0.1 3 0.3
2. Dollar General has higher market share compare to Family
Dollar
0.09 2 0.18
3. Per square foot, Dollar General is creating more sales
0.07 2 0.14
4. The industry is sensitive to economic conditions
0.08 3 0.24
5. Change in demographics due to purchasing habits
0.05 3 0.15
6. Increase in tariffs and trade barriers
0.07 1 0.07
7. Lack of quality control in products due to being imported from
other countries
0.1 1 0.1
TOTAL
1.00 2.69
INTERNAL AUDIT
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Internal Factor Evaluation Matrix
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Key Internal Factors
Weight Rating
Weighted
Score
Strengths

1. Sells essential items with relatively inelastic demand 0.05 3 0.15
2. Healthy gross profit margin 0.05 3 0.15
3. Accepts food stamps 0.08 4 0.32
4. Lower than industry average leverage ratio 0.05 3 0.15
5. Being able to raise its dividends 0.03 3 0.09
6. Better than industry average total asset turnover 0.03 3 0.09
7. Its return on assets of 1.84% is higher than the industry average 0.02 3 0.06
8. Its return on equity is 4%, higher than the industry average 0.03 3 0.09
9. Approximately 90% of the companys products are priced below $10 0.07 3 0.21
10.
In the past year, the companys stock has outperformed the average
retail industry . 0.03 3 0.09
Weaknesses
1. Does not do much advertising 0.07 2 0.14
2. Limited market share! 0.08 2 0.16
3.
In the year 2008, the company's market share dropped from 1.85% to
1.75% 0.08 2 0.16
4.
The company's EPS is only 72% of the industry average and is not
growing as quickly as the industry average 0.05 1 0.05
5. Limited in variety of products being offered 0.08 2 0.16
6.
For the year 2008, the company's overall sales only grew by 2.18%
whereas the average industry sales grew by 5.31% 0.07 2 0.14
7.
Does not generate enough sales from its web site due to limited
technology 0.08 2 0.16
8.
Higher than industry average quick ratio, indicating lack of long term
re-investment 0.03 2 0.06
9.
The company's long-term debt to equity ratio is only 31.4% of the
industry average 0.02 1 0.02
TOTAL 1.00 2.45
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Competitive Position
Family Dollar Dollar General Dollar Tree
Year Started 1959 1939 1953
2009 Annual Sale $6,984 m $9,454 m $4,645 m
2009 Net Income $233 m $13 m $230 m
No. of Stores 6,600 8,400 3,600
No. of States 44 35 48
No. of Employees 44,000 71,500 46,000
Fortune 500 Rank 359 357 499
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Competitive Profile Matrix

Family Dollar Dollar Tree Dollar General
Critical Success Factors Weight Rating
Weighted
Score
Rating
Weighted
Score
Rating
Weighted
Score
Store Locations 0.12 3 0.36 2 0.24 4 0.48
Merchandise Variety 0.12 2 0.24 1 0.12 3 0.36
Advertising 0.08 2 0.16 1 0.08 3 0.24
Customer Loyalty 0.09 2 0.18 1 0.09 3 0.27
Market Share 0.11 2 0.22 1 0.11 3 0.33
Customer Service 0.09 2 0.18 3 0.27 1 0.09
Product Quality 0.15 2 0.30 1 0.15 3 0.45
Price Competitiveness 0.15 2 0.30 1 0.15 3 0.45
Technology 0.09 1 0.09 2 0.18 3 0.27
Total 1.00 2.03 1.39 2.94
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SWOT Matrix
SPACE Matrix
IE Matrix
Grand Strategy Matrix
Stage 2:
The Matching Stage
Strategy-Formulation Analytical Framework
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Strengths Weaknesses
1. Sells essential items with relatively
inelastic demand
2. Healthy gross profit margin
3. Accepts food stamps
4. Lower than industry average leverage
ratio
5. Being able to raise its dividends
6. Better than industry average total asset
turnover
7. Its return on assets of 1.84% is higher
than the industry average
8. Its return on equity is 4%, higher than the
industry average
9. Approximately 90% of the company's
products are priced below $10
10. In the past year, the company's stock has
outperformed the average retail industry
1. Does not do much advertising
2. Limited market share
3. In the year 2008, the company's market
share dropped from 1.85% to 1.75%
4. The company's EPS is only 72% of the
industry average and is not growing as
quickly as the industry average
5. Limited in variety of products being
offered
6. For the year 2008, the company's overall
sales only grew by 2.18% whereas the
average industry sales grew by 5.31%
7. Does not generate enough sales from its
web site due to limited technology
8. Higher than industry average quick ratio,
indicating lack of long term re-investment
9. The company's long-term debt to equity
ratio is only 31.4% of the industry
average
Opportunities S-O Strategies W-O Strategies
1. The income for the middle class is diminishing,
causing them to be more cautious with their
expenditures
2. The average household income is dropping due to
weak economy
3. The demand for low-priced items is growing
4. The unemployment rate is increasing
5. Smaller retailers are closing their stores and some
have filed for bankruptcy
1. Implement some price cuts to
improve sales (S2, O1, S9, O3)
2. Advertise to improve product
variety and offerings (S1, S2,
S3, O4, O5)
1. Increase number of stores in low
income areas (O2, O1, W3, W2)
2. Expand product offerings such
fruits and other perishable
products (W3, W5, O3, O4, O5)
Threats
S-T Strategies
W-T Strategies
1. High competition among large discount retailers
2. Dollar General has higher market share compare
to Family Dollar
3. Per square foot, Dollar General is creating more
sales
4. The industry is sensitive to economic conditions
5. Change in demographics due to purchasing habits
6. Increase in tariffs and trade barriers
7. Lack of quality control in products due to being
imported from and other countries
1. Due to better return on
assets ratio, the company
can invest in technology,
promoting online selling
(S6, T1, T5)
1. Increase advertising by
offering discounts, coupons,
and other special offerings
(W1, W2, W3, T1, T2, T3,
T4)
SWOT
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SWOT Matrix
SPACE Matrix
IE Matrix
Grand Strategy Matrix
Stage 2:
The Matching Stage
Strategy-Formulation Analytical Framework
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Internal Dimensions External Dimensions
Financial Strength (FS)
Competitive Advantage (CA)

Environmental Stability (ES)
Industry Strength (IS)

Space Matrix
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Financial Stability (FS) Environmental Stability (ES)
Return on Investment
3 Unemployment -1
Leverage
2 Technological Changes -2
Liquidity
3 Price Elasticity of Demand -3
Working Capital
2 Competitive Pressure -1
Cash Flow
3 Barriers to Entry -2
Financial Stability (FS) Average 2.6 Environmental Stability (ES)
Average
-1.8
Space Matrix
FS = 13/5
FS = 2.6
ES = -9/5
ES = -1.8
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Space Matrix
Competitive Advantage (CA) Industry Stability (IS)
Market Share -4 Growth Potential 4
Product Quality -5 Financial Stability 2
Customer Loyalty -4 Ease of Market Entry 5
Competitions Capacity
Utilization
-3 Resource Utilization 3
Technological Know-How -6 Profit Potential 3
Competitive Stability (CS) -22 Industry Stability (IS) 3.4
CA = -22/5
CA = -4.4
IS = 17/5
IS = 3.4
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Space Matrix
X-axis = CA+IS
= -4.4 + 3.4
= -1

Y-axis = FS+ES
= 2.6 - 1.8
= 0.8
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Space Matrix
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SWOT Matrix
SPACE Matrix
IE Matrix
Grand Strategy Matrix
Stage 2:
The Matching Stage
Strategy-Formulation Analytical Framework
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Quadrant (I, II, IV)
Company should be the in position to Grow and
build

Quadrant (III, V, VII)
Company should be in a position to hold and
maintain

Quadrant (VI, VIII,IX)
Company should be in a position to Harvest or
Divest
Internal-External Matrix
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Strong
3.0 to 4.0
Average
2.0 to 2.99
Weak
1.0 to 1.99
High
3.0 to 3.99
I II III


Medium
2.0 to 2.99
IV IV VI
Low
1.0 to 1.99
VII VIII IX
IFE Total Weighted Score

E
F
E

T
o
t
a
l

W
e
i
g
h
t
e
d

S
c
o
r
e


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SWOT Matrix
SPACE Matrix
IE Matrix
Grand Strategy Matrix
Stage 2:
The Matching Stage
Strategy-Formulation Analytical Framework
Rapid Market Growth
Quadrant II

Quadrant I



Quadrant III Quadrant IV


Slow Market Growth
Weak
Competitive
Position
Strong
Competitive
Position
Market Development
Product Development
Market Penetration

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Strategy-Formulation Analytical Framework
Quantitative Strategic
Planning Matrix
(QSPM)
Stage 3:
The Decision Stage
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Increase
number of
stores in low
income areas


Increase
advertising by
offering
discounts,
coupons, and
other special
offerings
Key Factors Weight AS TAS AS TAS
Opportunities
1. The income for the middle class is diminishing, causing them
to be more cautious with their expenditures
0.1 3 0.3 2 0.2
2. The average household income is dropping due to weak
economy
0.1 4 0.4 3 0.3
3. The demand for low-priced items is growing 0.07 3 0.21 2 0.14
4. The unemployment rate is increasing 0.09 2 0.18 3 0.27
5. Smaller retailers are closing their stores due to lower sales 0.08 3 0.24 2 0.16
Threats
1. High competition among large discount retailers 0.1 1 0.10 2 0.20
2. Dollar General has higher market share compare to Family
Dollar
0.09 --- --- --- ---
3. Per square foot, Dollar General is creating more sales 0.07 2 0.14 1 0.07
4. The industry is sensitive to economic conditions 0.08 3 0.24 1 0.08
5. Change in demographics due to purchasing habits 0.05 3 0.15 2 0.1
6. Increase in tariffs and trade barriers 0.07 --- --- --- ---
7. Lack of quality control in products due to being imported from
and other countries
0.1 --- --- --- ---
TOTAL 1.00 1.96 1.52
Quantitative Strategic Planning Matrix
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Strengths
1. Sells essential items with relatively inelastic demand 0.05 1 0.05 2 0.1
2. Healthy gross profit margin 0.05 2 0.1 4 0.2
3. Accepts food stamps 0.08 4 0.32 3 0.24
4. Lower than industry average leverage ratio 0.05 2 0.1 1 0.05
5. Being able to raise its dividends 0.03 --- --- --- ---
6. Better than industry average total asset turnover 0.03 3 0.09 1 0.03
7. Its return on assets of 1.84% is higher than the industry
average
0.02 --- --- --- ---
8. Its return on equity is 4%, higher than the industry average 0.03 --- --- --- ---
9. Approximately 90% of the company's products are priced
below $10
0.07 4 0.28 3 0.21
10. In the past year, the company's stock has outperformed the
average retail industry
0.03 3 0.09 2 0.06
Weaknesses
1. Does not do much advertising 0.07 1 0.07 3 0.21
2. Limited market, solely in the only 0.08 3 0.24 2 0.16
3. In the year 2008, the company's market share dropped from
1.85% to 1.75%
0.08 4 0.32 2 0.16
4. The company's EPS is only 72% of the industry average and
is not growing as quickly as the industry average
0.05 --- --- --- ---
5. Limited in variety of products being offered 0.08 2 0.16 1 0.08
6. For the year 2008, the company's overall sales only grew by
2.18% whereas the average industry sales grew by 5.31%
0.07 2 0.14 3 0.21
7. Does not generate enough sales from its web site due to
limited technology
0.08 1 0.08 2 0.16
8. Higher than industry average quick ratio, indicating lack of
long term re-investment
0.03 --- --- --- ---
9. The company's long-term debt to equity ratio is only 31.4% of
the industry average
0.02 1 0.02 2 0.04
SUBTOTAL 1.00 2.06 1.91
SUM TOTAL ATTRACTIVENESS SCORE 4.02 3.43
Recommendations
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(Market Development)
Build additional stores in the U.S. Currently, many stores are
closing and the price of real estate has dropped, in some
areas, as high as 60%. Opening stores in lower priced areas.

Build/acquire 200 stores/year for next 3 years
Grow to 7000+ stores till 2013

.

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