Dollar Tree, Inc.
Executive summary
The Dollar tree Inc company is a leading global operator of discount variety stores which offers a merchandise at a fixed price of a dollar in both United States and Canada. Therefore it can be comprehensively described as a customer-oriented, value-driven store which operates at a one dollar price point. Dollar Tree company was established in Dalton in 1986, and subsequently joined the Discount industry (Chauhan, Cadwell & Adcock, 2007). Currently, their headquarters is located in Chesapeake.
The company has indeed indicated a massive growth in the recent years and as a result it actually opened some branches in various parts in United States and Canada as well. In connection with this as of 2007, there were 3,219 Dollar Stores in 48 states of America. Due to its unique specialization which is the below dollar products, the company has been able to survive in a competitive environment and as a result the number of stores operating in United States has increased tremendously to approximately 2,914 in addition the existing ones.
This has been brought about by the increased market in which the advancement in information technology has indeed played a very significant role. This is mainly through the online marketing, which is believed to have increased the company’s regional reputation as well as offered a convenient opportunity for its customers to shop online.
Dollar Tree direct competitors are Family Dollar, Dollar General and 99 Cent Only Store. One of the main characteristics of the industry in which these companies operate is that the firms compete on utmost cost rather than quality. As a result, Dollar Tree has emerged to be in frontline as far as the affordability cost of its merchandise is concerned. More importantly, the recent statistics indicates that the discount variety industry is currently growing at a rate of 2.38% and out of this growth, the Dollar Tree has a 19% of the market share in terms of the total revenue (Wampler, 2013). This is a clear indication that the company is substantially increasing its market share not only in America but also in Canada.
Introduction
Dollar Tree is the leading operator of discount variety stores in which it offers merchandise at the fixed price of $1.00. While it is a company in the Discount variety industry, it is believed that the variety and value of products it sells for $1.00 indeed makes it appear different from the competitors. Most of Dollar Tree stores operate under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Tree Canada, Dollar Giant and Dollar Bills. In approximately 4,778 of the company stores, the firm sells all items for price of $1.00 or less in the United States and $1.25 or less in Canada. In almost all of the remaining stores, operating as Deal$, the company sells items for $1.00 or less but also sell items for more than $1.00 (Wampler, 2013).
As far is the discount variety industry is concerned, it is evident that, due to increased number of companies in the industry, there has been a growing rivalry among both the existing and the emerging companies. This is mainly due of the threat of substitute products which are very high in this particular industry. However, a part from the increased competition, some of the firms in the industry have indeed developed customer loyalty like the Dollar Tree Company. Although the industry trades with undifferentiated products, similar products have been indeed yielding switching costs which to some extend increases the threat of substitutes of products. Dollar Tree company offers a selection of everyday basic products and also supplements these basic, everyday items with seasonal, closeout and promotional merchandise.
Brief History
The roots of Dollar Tree Company go more than sixty years back. The company has been marked by changing names and ownership until 1993 when the company changed its name from “Only $ 1.00” to Dollar Tree stores so as to counteract with what could be actually a multi-price point tactic in future. Part of equity interests was also sold to SKM Partners which is a private equity firm. In 1995 the firm went public on the NASDA exchange which took place in the month of March at an offer of $15 a share.
In the year 1997 Dollar Tree did its initial center of distribution as well as new store Support center. Since then, the company has been marked by a massive growth in its market share as well as internal development. In 2012, Dollar Tree steady growth persisted as the company opened approximately 345 new stores and as a result it exceeded $ 7 billion in its sales. Furthermore, in 2014 the company celebrated the opening of its 5000ths store in the United States. It is now evident that, the company has a successful history, which is not only marked by a massive development by also a substantial extension of its market to other countries (Plunkett, 2008).
Major CEOs
The success of any business majorly depends on the kind of management as well as leadership style. In this regard, Dollar Tree have been managed by great Chief Executives who have indeed committed them in fostering transformative change in the company. Their invaluable effort have been of great benefit to the company, especially during the hard economic times like the depression time. Currently, Dollar Tree company is managed by Matacunas Michael as the Chief Administrative Officer.
He has good management skills and invaluable expertise in the field of management. In addition, Michael was also a CEO of the Parker Avery Group from the year 2007 to 2013. Previously he served as the Vice President of the Manhattan Associates, Inc. from 2005 to 2006. As a matter of fact, he has indeed served in a number of senior level positions where he has gained a substantial expertise in merchandising, supply chain, organization development and technology (Reuters.com, 2015).
More importantly we cannot forget the leadership of the current Chief Executive Officer, Bob Sasser. His contemporary mission is to work hand in hand with the customers so as to enhance customer loyalty. In terms of expertise and academic prowess, it is a factual matter that Dollar Tree has one of the best CEO as far as Retail variety industry is concerned.
Vision/Mission
The Dollar Tree, Inc. is a customer oriented, furthermore it is a value-driven store which operates at a one dollar price. According to the mission statement, the store operates profitably, and empowers its associates so that they can share in its opportunities and the utmost successes. The store also believes in dealing with others in an honest and considerate way. The company mission is formulated in such a manner that it is consistent with the measured and profitable growth.
Corporate Values
Dollar Tree also has a number of corporate values which act as its guiding philosophy in its daily activities. These values are adhered by the all the staff and any party which derives its identity from the company. The first corporate value is Attitude. Dollar Tree stores believes that attitude is everything and whether the store is its mission of serving customers or working with fellow associates , the store believes in being courteous, acting responsibly and carrying put its business with utmost integrity.
The second, critical value is Judgement. In this regard, the store believes in doing the right thing for the right reason. In connection with this, Dollar Tree believes what is best for their customers and associates and will be critical in making their decision. The final and last corporate value is commitment, which basically deals with Honor and respect for self and the company. In connection with this, from customer to coworker, the store associates actually treats each and every one with dignity and great respect that they deserve.
Opportunities
Although Dollar Tree is operating in a competitive environment, there are some great opportunities which the company can indeed exploit. The first opportunity is as a result of the fact that Dollar Tree is the benchmark of value for its customer basic variety store need and wants. In this case, there is expending base for its customers both in United States and Canada. This is due to the fact the Dollar Tree sells its products at an affordable prices usually below a dollar.
Furthermore its products are differentiated so they are unique as compared to the substitutes sold by their competitors. Dollar Tree company has a great growth opportunities which is represented by a substantial number of associates. Another great opportunity which the company is indeed exploring is the advancement in the technology especially in computing, a situation which enabled the company to advertise its products online and also customers can place their order using the online platforms provided by the company. In this case, if the company utilizes all these opportunities presented by the online mean of conducting business, then it cuts the cost of conducting business as well as increasing the customer base.
General Environment
We cannot talk about a company without mentioning the environment in which it operates. Dollar Tree as a company operating in the Discount variety industry operates in not only competitive environment by also a social, cultural, demographic and political environment. All these make up both the external and internal environment. The culture of the of the customers and buying behavior of the commodities worthy less than one dollar, indeed affects the market of the company.
Secondly, the federal policies and laws governing the Discount variety industry have greatly affected the expansion of the store. For instance, there has been a challenge in establishing stores in some states in US because of lack of compliance with certain procedures provided by the industrial act of the constitution.
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Industry Analysis
The retail industry in which the Dollar Tree operates is large hence it can be broken into subs industries. These includes: Discount variety stores, specialty retail stores, and the upscale retail stores. In this case, Dollar Tree competes in the discount variety stores. This sub industry majorly concentrates on providing retail bases on cost rather than quality. The discount variety store industry includes the Dollar Tree and other potential competitors like Dollar General Corp, 99 Cent Only Stores, and Family Dollar Stores Inc.
The main focus of this subindustry is to compete on cost. It is worth nothing that, Wal-Mart and Target, although are categorized as discount variety competitors, they are indirect competitors of Dollar Tree simply because their main focus is on quality and are more flexible in price range which they operate as compared to Dollar Tree (Jia, 2008). In terms of growth, the industry reaches a pick in growth in mid-2003 in which an average growth of approximately 19.25% was witnessed. On the other side, in mod 2006 the industry also had one of its negative growth in which there was an inverse growth of about -37.5% (Dollar Tree, 2015).
The rivalry in discount variety store industry tell indeed indicates that the for a firm to be successful, it must compete on cost. Existing tend to be have a preexisting relationship with both the buyers and sellers. In order to overcome all these relationship, a firms must be willing and able to have the lowest prices since there is little product differentiation. The industry experiences a moderate level of concentration and indeed a very high level of rivalry exist amongst the existing firms. In this case, the rivalry among all the firms is aggressive because there is a low amount of consumer loyalty. This is brought about by the situation in which firms compete on price rather than cost.
The internal organization
One of the strengths of the Company is that it has a wide variety of tangible resources. For instance, the company has a location and site which are both important to the company. The company has attractive locations which attract the customers. This acts as an advantage to it since the competitors cannot imitate its location. The company is able to access tangible materials such as the goods and equipment. The equipment is not rare to find and is quite valuable. The best strength of the company is the partnership of the company, the customer loyalty and its brand awareness. The three make up the strength of the company since they are rare and cannot be substituted.
The company policy of selling products at $1or less has also made the company popular among the customers. The customers love the company because of the affordable prices. The other strength of the company is its intense research and other developmental research. The company spends much of its money in doing research and trying to improve its brand. This has enabled it to produce products of high quality. Additionally, the company has ensured that it maintains good relationship with the customers.
Through the good relationship, the company is able to maintain its customers. Compared to its competitors, the company has the customer loyalty and great brand awareness which is an added advantage. Besides that, the good relationship between the company and the customers has been of great use to the company since it has enabled it to know their taste and preference. The good relationship with the customers and the loyalty of the customers are some of the elements of the value chain analysis. As noted earlier, the two have been the strengths of the company.
Current Strategy
Dollar Tree has faced a major setback in the organic farming. In the past recent years, the company has not been very successful in achieving the organic growth. A good example is the past year when the company did not manage to achieve 1%. This is a great disappointment since the company’s target is 4%. Dollar Tree has also tried to use a strategy known as multiproduct diversification. Consequently, the company sells for different products including the goods which are consumable. Earlier on, the company had tried to use the unrelated diversification strategy but it failed miserably. This was due to the change of management of the crew that managed the products of the company.
Using the Boston Consulting Group Matrix, the company has a cash cow. The Dollar Tree Company was able to acquire some companies when it started. The company has a good international strategy. Dollar Tree not only sells its products in the United States but also in other foreign countries (Davidson, Bates ; Bass, 2002). Currently, Dollar Tree has 3 countries in which it directly operates and sells its products. In addition to that, the products of the company are sold in more than 100 countries.
