family dollar three-year strategic plan

Family DollarLaura Rogers FinanceSpenser Hooks MarketingDevin Fedorchuk General Business

OUTLINE Mission/Vision Internal Assessment External Assessment Strategy Formulation Strategy Implementation Conclusion

CURRENT MISSIONFor Our Customers: A compelling place to

shop. . . by providing convenience and low prices

For Our Associates: A compelling place to work. . . by providing career opportunities and rewards for achievement

For Our Investors: A compelling place to invest. . . by providing strong financial returns

IMPROVED MISSION COMPONENTS1. Customers2. Products or services3. Philosophy4. Concern for survival, growth, profitability5. Markets6. Technology7. Self-concept8. Concern for employees9. Concern for public image

IMPROVED MISSIONAt 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).

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).

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).

VISIONCurrent Vision Statement

To be the best small-format convenience and value retailer serving the needs of families in our neighborhoods.

Proposed Vision Statement

To provide a wide array of items to our customers, giving them the best value at competitive prices.

INTERNAL ASSESSMENT

CURRENT FINANCIAL RATIOS

CURRENT FINANCIAL RATIOS (CONT.)

CURRENT ORGANIZATIONAL CHART

IMPROVED ORGANIZATIONAL CHART

POSITIONING MAP

WEB SITE COMPARISON

VALUE OF THE FIRMStockholders Equity $1,254,083,000

Net Income x 5 $1,165,365,000

(Share Price/EPS) x Net Income $4,435,162,378

Number of Shares Outstanding x Stock Price $ 4,717,374,900

Method Average $2,892,996,319.50

STRENGTHS1. Family Dollar sells essential items with relatively inelastic demand. 2. Family Dollar’s gross profit margin is 2.8% higher than the industry

average. 3. Family Dollar accepts Food Stamps, making it more convenient for

lower class customers. 4. Family Dollar's leverage ratios average 32% less than the industry

average. 5. Family Dollar raised its dividend for the thirty-third year in a row, from

8.7% to 12.5% last year. 6. Family Dollar’s total assets turnover is 24.8% greater than the

industry average. 7. Family Dollar’s return on assets is 1.84% higher than the industry

average. 8. Family Dollar’s return on equity is 4% higher than the industry

average. 9. Approximately 90% of Family Dollar's products are priced at $10 or

less. 10. Family Dollar's stock has outperformed the Retail industry for the past

year.

WEAKNESSES1. Family Dollar does not do much advertising. 2. Family Dollar is currently restricting its market by not having any

stores outside of the U.S. 3. Family Dollar’s market share fell from 1.85% to 1.75% in 2008. 4. Family Dollar does not have stores in every state. 5. Family Dollar’s earnings per share is only 72% of the industry

average and is not growing as quickly as the industry average. 6. Selection and variety of products offered is relatively low. 7. Family Dollar’s sales have only increased by 2.18% over the past

year compared to the industry’s average 5.31% sales growth. 8. Family Dollar is behind the times in technology. 9. Family Dollar’s quick ratio is significantly higher than the industry

average. This could indicate a lack of long-term investments. 10. Family Dollar’s long-term debt/equity ratio is only 31.4% of the

industry average.

IFE MATRIX

IFE MATRIX (CONT.)

EXTERNAL ASSESSMENT

MAJOR COMPETITORS Wal-Mart

Dollar General

Dollar Tree

MARKET SHARE

MARKET SHARE EXCLUDING WAL-MART

COMPETITIVE PROFILE MATRIX (CPM)

OPPORTUNITIES1. Middle-class people are more carefully budgeting their income. 2. The average household income in the U.S. decreased nearly

10% in the last two years. 3. Demand for low-priced items is growing. 4. The value of the dollar is falling. 5. The unemployment rate is 8.5% and growing in the U.S. 6. Fourteen million U.S. households use Food Stamps. 7. The Federal Discount Rate has fallen to 0.5%. 8. Real estate prices are expected to fall 15 to 20% below their

peak in mid-2007. 9. Diesel prices are expected to fall in 2009 and 2010. 10. Consumer frugality is expected to outlast the recession, with

spending growing at an inflation-adjusted rate of only 2%-2.5%.

THREATS1. Online shopping is becoming more popular. 2. Rising fuel costs may increase the cost of Family Dollar’s

business. 3. The economy may improve. 4. Inflation may force prices to be raised. 5. Stigma of “Low quality, low price.” 6. Wal-Mart has a 94.81% market share among discount retailers. 7. Wal-Mart already has 318 stores in Canada and 1,203 in

Mexico. 8. Customer perception that Family Dollar is for low-class people. 9. Increasing consumer expectations may make it harder for

Family Dollar to satisfy customers. 10. Turmoil in the stock market may cause Family Dollar’s stock

price to fall.

EFE MATRIX

EFE MATRIX (CONT.)

STRATEGY FORMULATION

SWOT MATRIX

SWOT MATRIX (CONT.)

SPACE MATRIX

SPACE MATRIX (CONT.)

SPACE MATRIX (CONT.)

BCG MATRIX

IE MATRIX

IE MATRIX (CONT.)

GRAND STRATEGY MATRIX

QSPM

QSPM (CONT.)

QSPM (CONT.)

QSPM (CONT.)

RECOMMENDATIONS

STRATEGY IMPLEMENTATION

EPS/EBIT ANALYSIS

INCOME STATEMENT

BALANCE SHEET

BALANCE SHEET (CONT.)

PROJECTED FINANCIAL RATIOS

THANK YOU FOR YOUR TIME