External Factor Analysis (Case Study Sample)

Family Dollar Stores External Factor Analysis Name: Institution: EXTERNAL FACTOR ANALYSIS SUMMARY (EFAS) on Family Dollar Stores (FDO) External Factors Comments Opportunities O1: Diminishing spending rates among the Middle Class. The Middle Class is continually cutting its budget as a result of the worsening economic conditions. The people in this category are now planning their budgets and exercising cautious spending patterns. The budget cuts creates a conducive environment for Family Dollar Stores as they offer items at a reduced price. As it appears, more people will visiting these stores in the near future. Increment in the customer visits implies a rise in profits and revenue accrued to the firm. O2: The demand for low-priced items is rising every day. With the worsening economy, Americans are now looking for items that can increase value for their money. In other words, the people are looking for opportunities that enable them to have more products for less money. This factor follows the anticipated decrease in the average household income. In 2009 and 2010, experts expect that the mean household income will drop with 10 percent. Such a condition avails Family Dollar Stores a chance to make unprecedented sales to the people who are seeking for cheaper products. This opportunity is magnified by the fact that the value of the dollar has been dropping greatly in the recent months. O3: Collapse of small retail firms The recession has impacted negatively on the survival rates of small retail firms. According to David (2011), a lot of small retail firms are expected to close operations while others will file for bankruptcy as a result of poor financial performance. Such a condition opens sales doors for Family Dollar Stores which has demonstrated impressive financial performance recently. This opportunity is further amplified by the fact that it targets the same population that was being served by the collapsing retail firms. Given that most of Family Dollar Stores’ merchandise sells for less than $ 10, it is bound to become the next favorite store for low-to-middle class. Threats T1: Stiff competition from higher and better established retail stores. Family Dollars Stores face stiff competition from retail chains such as Wal-Mart. Wal-Mart, for example, recorded an improvement from $348 billion in 2007 to $378 billion in 2008 (David, 2011). This is despite the recession that hit the American economy at the time. The company also faces considerable threats from Dollar General, a similar retail company that enjoys a higher market share. Given that some big retail companies offer discount on many items, they could attract a...