Family Dollar Has a Low

Family Dollar has a low level of diversification. The company operates a single store concept -- Family Dollar. Its stores have a uniform layout and the company operates solely in the United States. The company does not undertake any ancillary businesses -- it is strictly a retailer (Family Dollar.com, 2010). At this point, Family Dollar does not pursue any international strategy. The company operates in the United States only and does not appear to have any plans to expand, even to Canada.

The company's corporate level strategy is to embrace a cost leadership strategy. This does not specifically differentiate the company's stores from those of other dollar chains, nor of Wal-Mart or Target, two giant competitors that also compete as cost leaders in general retail. Success of this strategy can be measured in a couple of ways. The first is by market share and the second is by financial performance. With respect to market share, Family Dollar controls approximately 16% of the dollar store market (Sharon, 2010), which does not include Wal-Mart or Target. The company experienced a 4% increase in same store sales in 2009 (Reeves, 2009), evidence of strong growth in the face of a difficult economy.

Financially, this has translated to strong revenues and earnings. Family Dollar has seen its revenues improve consistently over the past five years, including a 6.3% increase in fiscal 2010. The company's profits have also increased steadily. In fiscal 2010, net income increased 22.9%, delivering earnings per share of $2.64, compared with $2.10 the year previous (MSN Moneycentral, 2010). This strong financial performance can in part be attributed to sector-wide strength (Lipton, 2009) but also indicates that the firm is well-positioned to take advantage of the opportunities with which it has been presented by the slumping economy.

Family Dollar has achieved most of its growth through organic means. According to the company's website, there have not been any noteworthy acquisitions in the past thirty years. The company continues to plow its profits back into expanding the firm by opening new stores. Family Dollar has chosen not to expand by acquisition.

Family Dollar's primary business partners are its vendors. Merchandise suppliers work with Family Dollar to ensure a good selection of core products are on the store's shelves. The company also partners with construction firms to build its stores as it continues to expand its network. The company also partners with transportation companies to help with the logistics component of the business. Each of these back-end partners helps the company to achieve lower prices for its goods, while ensuring that Family Dollar can offer a range of goods that will appeal to the average buyer.