Marketing - Dollarama - Pestel Analysis Assignment Help

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Marketing  Pestel Analysis Assignment Help

Assignment Task: MISSION AND VISION ANALYSIS Mission statement: We have applied some modifications to Dollarama’s mission statement; we expected to deliver a message that allows people to remember what Dollarama is and does. Our mission is to exceed customer expectations through the quality and variety of consumer products we offer at select, low fixed price points. With this mission, the message is quite clear to explain who we are and what we do; can be measured through client’s satisfaction surveys; it is achievable because it is possible to provide quality, low prices, and variety of products; and is coherent because it is aligned with our commercial activity criteria. Vision statement: Currently, Dollarama does not have a vision statement; the group has decided to create one: Become a top mind brand in the discount retail industry globally. According to Dess (2016) a vision statement is an “organizational goal that evokes powerful and compelling mental images.”. We designed a vision statement where we dream about becoming a reminded brand across the world. PESTEL ANALYSIS   Political

• The transition from the NAFTA trade agreement to the USMCA agreement, and the strained relationships between USA and Canada have generate a negative impact in many industries affecting the consumer market.
• Trade agreement between China and Canada, and the fees imposed between both countries affect importation costs.
• Change in the taxation and legislation by the government can affect the costs of the companies and the purchasing power of consumers.
• 43rd Canadian federal election is to be done on October 2019, this fact generates uncertainty among the industries and population, therefore, cautious and austere behaviours.
• Increasing relations with China can also bring drastic changes in the retail market.
• The political pressure for paying higher wages.

Economical

• Fluctuation in the exchange rates directly affect the cost of imports of the products.
• Disposable Personal Income (DPI) in Canada decreased to 1,230,932 CAD Million in the third quarter of 2018, this fact affects negatively the purchasing power of consumers.
• The Bank of Canada forecasted inflation averaging 2.4% in 2018 and 2.2% in 2019; a steady inflation rate allows Dollarama to forecast financial scenarios with low fluctuations risk.
• Unemployment rate in Canada came in at 5.6 percent in December of 2018, remains the lowest rate over the latest 40 years, when this happens bargaining power and salaries might increase.
• Economical condition of buyer affects the sales on a huge scale. (Sales usually drops in the last two months of the year because most of the consumers spend less and save more for Christmas).
• Efficiency in financial market to increase the capital in the market.

Socio cultural

• The change in the standards of health and education aware people, therefore a change in demand which affects the company sales.
• Generation Y is the next workforce for companies, however, this generation has a different attitude towards work; it can become difficult to manage employees.
• Different religions with different lifestyle can also affect the demand of the Dollarama’s products.
• Canada's population increased over half a million in one year (July 2017- 2018), especially influenced by the immigrant population; this fact increases potential retail sales considering newcomers have a limited budget and are looking for low-cost products to start their lives in Canada.
• The new generations have increased online shopping trend.
• The increasing trend of social media is at its peak. The company can use this trend to advertising and increase its popularity as well as sales.

Technological

• The development of machinery to manufacture better quality low-cost products increases the inventory turnover of the industry.
• The increase of online-banking apps uses decreases cash payments.
• E-commerce has been a trend during the latest years.  
• The technology used by manufacturers to produce with lower costs decreases retail industry costs as well.
• The development of devices such as GPS, satellite antennas, and live location facilitates tracking the transport and distribution processes.
• It can be expensive for the industry to upgrade to the latest technology. On the other hand, it is necessary to maintain in the market.

Environmental

• Change in the climate affect the demand of seasonal products which affect the sales of company.
• Bad weather conditions have impact on the transportation which may also affect the distribution and cost of the inventory.
• Increasing trend of using green and economical products may also affect the company’s sales.
• Use of plastic products (bags, water bottles) is being criticized globally.
• Environmental groups campaigns against corporations, affect companies’ image.
• The minimum use of energy and other resources is needed to save it for future generations.

Legal

• Labour laws and tax laws can increase industry costs.
• Discrimination/Harassment cases risk is high due the diversity of the industry  employees.
• Regulations and agreements needed to establish franchises can affect the development of new business models.
• The supply products and net income of the industry can highly be affected by consumer protection law.
• Copy right laws, patents and intellectual property laws need to be maintained.
• Customer privacy is important to be maintained. Data protection laws need to be taken seriously.

PORTER’S FIVE FORCES Industry rivalry  

• Dollarama, Inc. operates in a very competitive Discount Stores industry, at present, there are 23 famous business units in the discount stores industry in Canada, which proves the high intensity of Canadian discount stores industry
• The Canadian division of large discount retailers such as Walmart and Target dominate most of Canada's markets
• The Canadian dollar store chains include competitor brands such as Dollar Tree Canada, Dollar Store With More, Great Canadian Dollar Store; overall dollar store industry (including competitors) have 1,640 stores, however, Dollarama owns and operates 71% of them.
• Competitors offer almost the same product or service at economies of scale costs.
• The rivalry among the existing participants in discount stores industry is intense, it will drive down prices and decrease the overall profitability of the industry.

Substitutes products

• Discount stores face competitive pressure from substitutes such as hypermarkets, supermarkets, convenience stores, department stores, specialty stores, and E-commerce.
• Hypermarkets offer a wide range of products such as appliances, clothing and groceries, offering products that are similar to discount stores. As a substitute for discount stores, it is very competitive.
• Supermarkets are the most frequent places in people's daily lives. Buyers often buy groceries directly in supermarkets for convenience, instead of going to discount stores.
• Convenience stores are convenient and time-saving and are a very competitive substitute to discount stores.
• Department stores also offers a wide range of choices for customers and attracts customers with a better shopping environment and better-quality products.
• Specialty stores cater to specific retail markets and are specialized in a product store. It will offer more choices in the same product to meet customer needs.
• E-commerce is a potential substitute alternative because of its convenience in distribution and low geographical limitations.

New entrants

• The discount store industry, as an industry directly in contact with consumers, has a high level of profit
• Existing companies in the discount store industry do not have strong and lasting barriers to entry
• The products of existing companies in the discount store industry are not unique
• Customers have low loyalty to discount stores, and customers choose stores that offer cheaper products
• Existing competitors in the discount store industry will not take drastic retaliatory measures against new entrants
• By copying or counterfeiting, the new store has enough capacity to enter the discount store industry

Bargaining power of suppliers

• The discount store industry has a variety of suppliers, such as food, groceries and seasonal products.
• Almost all companies in the discount store industry buy raw materials from numerous suppliers.
• There are a large number of suppliers to choose from, and the company will only purchase the raw materials of the supplier if it meets the company's terms.
• The supplier’s products or services are not unique.
• Discount stores have a high bargaining power and can demand better products at lower prices.
• Low cost of switchin from one supplier to another.

Bargaining power of buyers

• Because the industry rivalry and threat of substitutes are high, so the bargaining power of buyers is high.
• For the discount store industry, the buyer’s price sensitivity is very high
• There are a large number of buyers in the discount store industry, and each individual buyer is very important to the company
• However, the cost of converting a buyer from one company to another is low
• The discount store industry has seen a situation of oversupply.
• Buyers have a high choice of rights and are free to choose companies in the discount store industry, they have high bargaining power

INTERNAL ANALYSIS Operations

• Imports: Dollarama imports its products from over 25 countries, however, China is its principal supplier.
• Transportation: Dollarama does not own transportation fleet; in order to move products as efficiently as possible, they contract carriers and freight forwarders.
• Warehousing: Owned by the company used to stored goods imported; warehouses about 63% of their goods.
• Distribution: Dollarama’s distribution centre is located in Town of Mount Royal, Quebec; the centre was recently expanded to increase the distribution capacity of the company.
• Retail sales:  Dollarama sale its products through over 1,000 stores across Canada supplying an assortment of products such as cleaning, clothing, food, decoration, kitchen, party, pets, and others; sales at a low and fixed price (no more than $4 dollars); recently launched online sales.

Financial

• High inventory loss as a consequence of mislabelling, damage by customers or employees, and theft.
• Sales are seasonal seriously affecting the first semester of the year.
• Long inventory turnover, due weak replenishment analysis.  
• High inventory turnover (397 days).
• Stocks decreasing in the stocks market -38%.
• Stable net income over the las two years 13.43%.

Marketing Dollarama does not make important use of marketing and promotions resources, mostly because of the strong brand name and the selective store locations process. Advertising: It is only used to advertise new stores. Human resources

• Stores: Over 19,100 employees ( 40% full-time . 60% part-time or occasional)
• Head office: 500 head office and field management employees.
• Warehouses and distributions: 170 employees (most needs are outsourced)
• Collective bargaining: Employees are not party to a collective bargaining agreement or represented by any labour union.
• Acknowledges: Never recognized as a Great place to work
• Wages: mostly minimum wages (high turnover).

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