Dollar General Industry and Competitive Analysis

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Dollar General Industry and Competitive Analysis

INDUSTRY

The first step to understanding a company is to examine its industry. There are four main areas to consider when analyzing an industry. These include:

• Competitors

There are several different types of stores within the discount retail industry, and for comparison's sake, the industry is further broken into many segments. DG is in the market segment known as the dollar store category. As a result, competitors such as Wal-Mart are in the same industry but not the same peer group. Comparisons will be made throughout this report to Wal-Mart and other big firms because they tend draw some of the same customers.

• Customers

Retail merchandise stores attract many different
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It is not sustainable due to:

• rivals' similar competitive strategies
• low barriers of entry into the market
• the absence of a differentiation strategy

When examining competitive advantage, it is also important to consider the market and take into account the existing competition against larger firms.

Small firms often find it difficult to compete with larger firms. Though there are some disadvantages DG will never be able to overcome due to its size, small firms have advantages over their larger counterparts.

Advantages

• convenience
• absence of long lines
• customer service
Disadvantages

• low purchasing power
• smaller pool of resources to allocate
• less extensive market

Improving the store internally with more resourceful employees, better lighting and displays, and more organized floor plans will start to change the image of Dollar General that the average public holds. A more respectable store will lead to an increase in customers. Dollar General will then begin developing a system of a more sustainable competitive advantage among the small and large firms of the similar industry.

DG has a current competitive advantage within its industry that is maintains through a unique cost-efficient approach. This low-cost structure is apparent through low inventories, low advertising costs, and location of stores in rural areas. Though profitable in the short-run, DG's current advantage is not

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