MGMT1101: Introduction to Management - Dollarama Case Study

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RESEARCH & ANALYSIS PAPER
PRACHI (392154)
MGMT1101: INTRODUCTION TO MANAGEMENT
RESEARCH AND ANALYSIS OF DOLLARAMA
LAURIE SPADY
MARCH 3, 2019
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Table of Contents
SUMMARY.....................................................................................................................................3
SWOT-FORMULATING STRATEGIES.......................................................................................4
ENVIRONMENTAL CONSTRAINTS..........................................................................................5
STAKEHOLDERS..........................................................................................................................6
ORGANIZATIONAL STRUCTURE AND DESIGN....................................................................7
MOTIVATING THE EMPLOYEES..............................................................................................8
RECOMMENDATIONS.................................................................................................................9
CONTROLS AND RECOMMENDATIONS...............................................................................10
REFERENCES..............................................................................................................................11
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List of Figures
Figure 1 Porter’s Generic Strategies................................................................................................6
Figure 2 Organizational Structure of Dollarama.............................................................................9
Figure 3 Maslow’s hierarchy of needs...........................................................................................10
Figure 4 Balanced Scorecard.........................................................................................................12
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SUMMARY
S.Rossy Inc. was initially opened by Salim Rossy in the year 1910 in Montreal, Quebec which
was later transitioned to a variety store by George Rossy, Salim’s son in 1973. The stores were
later transformed to Dollarama in 1992 by Larry Rossy which was based on a simple concept
that is to offer all the items for $1 or less (Dollarama, 2019). The years 2001-2003 observed the
dramatic expansion of Dollarama in other Canadian provinces along with an increase in its
distribution and warehousing capacity in Montreal Quebec.
With the fastest growth through 350 stores across 6 Canadian provinces by 2004, Dollarama
partnered with Bain Capital private equity group to support its continuous growth (Dollarama,
2019). Since 2005, Dollarama succeeded in their expansion to become one of the leading value
retailers in Canada. The company's mission is to provide the customer with compelling value.
The vision is to meet and exceed the customers' needs by providing positive and consistent
shopping experiences thereby offering compelling value through a broad range of everyday
products.
Effective strategies will be formulated considering the strengths and weaknesses of the company
along with addressing the opportunities and threats prevailing in the business environment.
Pestle analysis is conducted to identify the constraints faced and addressed by Dollarama. It also
identifies the stakeholders and their significances along with designing the organizational
structure for Dollarama. Also, motivational theories were considered and implemented to inspire
its employees within Dollarama. At last certain recommendations were provided along with
controls to monitor the business progress.
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SWOT-FORMULATING STRATEGIES
The strengths of Dollarama are its provision of low-cost items along with a great assortment of
general merchandise, seasonal as well as consumable items. According to BCG matrix,
Dollarama has developed and sustained itself as value product providers at low prices which
strengthen its penetration in the market efficiently as compared to its competitors due to its
presence in mid-sized cities, metropolitan areas and small towns (Karakowsky & Guriel, 2015).
The company’s weaknesses are its negligible promotions on technology, lacks in tracking
inventory distribution, limited online presence until last year.
The company Dollarama does not focus on the nature of demand based on region and season
which results in high sales inconsistency, also technologies are not much utilised (Karakowsky &
Guriel, 2015). Dollarama must use technology in order to track its inventory through inventory
management techniques such as Barcode Technology, active or passive RFID technology.
Dollarama must ensure its presence on all social and media to promote and creates awareness
about the company and its products and services.
The opportunities available to Dollarama are its expansion at a global level, optimise the
inventory levels, widen the choice of products it offers and develops online marketing strategies
to promotes and sales (Hensman, 2015). Dollarama must focus on its expansion in North and
Middle East and Asian markets. Inventory management tools and online marketing tools must be
implemented and used to optimise the inventory levels and also to better promote and sales.
The threats include an increase in minimum wages, availability of substitute products, intense
competition, and increase costs. Dollarama can minimise the availability of substitute products
and intense competition by focusing on cost leadership strategies according to Porter’s Generic
strategies and also gain competitive advantages. Mobile application and social media presences
can support and develop effective customer relations and also increase brand awareness
(Henaway, 2012). Sales through digital sources such as mobile application and company website
will help the company to minimise the cost or storage and intermediaries by directly connect
with the end users. A limited number of the employees will be required to manage business
activities thereby increasing technological use. Also, train and develop the existing employees to
improve their skills for efficient technology usage.
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Figure 1 Porter’s Generic Strategies
Source: Hensman, 2015
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ENVIRONMENTAL CONSTRAINTS
The number of economic factors cannot be controlled and managed by Dollarama which could
lead to negative cash flow and profitability. For example, the disposable income of the customers
was affected by the adverse global economic crisis. The customers started spending less due to
high employment and consumer debt levels, high fuel and energy prices, and high-interest rates
(Echchakoui, 2018). This constraint cannot be controlled by Dollarama however developing
marketing strategies, managing the staff and networking helps Dollarama to cope with the
economic downturn.
The profitability of Dollarama is largely affected by the fluctuations in foreign exchanges rates,
an increase in labour costs, fuel costs and occupancy costs. In order to overcome these issues,
the company focuses on expanding in the international market considering the regions that have
low labour and low fuel costs (Echchakoui, 2018). Lack of technology usage also affects the
business operations of Dollarama as it reduces the efficiency of the entire business operations
resulting in low financial results. The e-commerce site is launched by Dollarama to deliver the
products and services across the province of Quebec. The company must focus on increasing
technology use to lower product costs and increase awareness.
Also, the operations of Dollarama are subject to government rules and regulations in relation to
import, export and sales of merchandise. The company needs to be abided by the product safety,
quality, trade policies labelling and labour practices being the seller of the product of third party
manufacturer (Echchakoui, 2018). Standards and policies are framed to ensure that the company
comply with regulatory policies and maintain the company’s reputation.
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STAKEHOLDERS
The decisions, operations and policies of the company are affected by the primary and secondary
stakeholders. The primary stakeholders of Dollarama are suppliers, employees and customers
and shareholders. Shareholders are the investors in the company influences the financial
performance and business practises as the company is committed to seeking the best interest and
value for their shareholders (Perold, 2010). Customers are another primary stakeholders on
whom the success and economic progress of Dollarama depends. Employees of Dollarama use
their knowledge, services and abilities to effectively operate its business operations. Suppliers
provide efficient products to the company at low-cost prices influencing business operations.
The secondary stakeholders of Dollarama are government, media and communities. The
government are lest interested in the company however focuses on the business operation to
ensure its compliance with their rules and regulations (Perold, 2010). Communities and media
focus on the operations of dollars so as to ensure the sustenance of the environment and
communities. The priorities of the stakeholder are customers, suppliers, employees, stakeholders,
government, communities and media respectively.
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ORGANIZATIONAL STRUCTURE AND DESIGN
Figure 2 Organizational Structure of Dollarama
Source: Author’s Work, 2019
It may be assumed that Dollarama may use the mechanistic structure as its business functions are
divided by department wise. There is a chain of commands and also each department is
specialised in their work or activity (Perold, 2010). The decision making within the
organizational structure of Dollarama is centralised. Also, it comprises formalisation as the
employees and other members of the organization maintain a formal work environment.
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CEO
Legal
Department
Finance
Center
Accounting
Cashier
Operations
Department
Inventory
Manager
Maintenance
Logistics
Purchasing
Techncial
Department
R&D
Department
Store Design
Department
Marketing
Department
Promotions
And Media
Marketing
Analysts
Trade
Marketing
Customer
Servcies
Customer
Management
Information
Department
HR
Department
Training And
Development
Recrutiment
And Selection
Companesati
on And
Benefits
Board
Chairman Directors

MOTIVATING THE EMPLOYEES
Dollarama employs about 20,000 retail employees. In order to motivate its employees, Maslow’s
hierarchy of needs theory can be considered of the employees in Dollarama. The hierarchy of
need includes physiological needs, safety needs, social need, esteem needs and self-actualisation
needs. Considering that each employee has a specific need at a particular period of time
(Hensman, 2015).
Figure 3 Maslow’s hierarchy of needs
Source: Hensman, 2015
For example, some of the employees may get motivated through incentives, bonuses, and
monetary consideration while others may be inspired by the recognition and appreciation. The
managers at Dollarama must involve the employee in their career plan and identify the factors of
motivation so as to offer them the same against their performance. For example, if the employee
is in need of monetary consideration, the manager may set the target to achieve a specified
amount of sale to get an incentive or bonus. This will fulfil the needs of both employee and
Dollarama.
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RECOMMENDATIONS
Through the SWOT analysis, it is recommended to Dollarama is focus on the expansion of stores
in areas other than Canada which will increase the sales, revenues and profits. The company
cannot depend on one particular market as it may lead to saturation or economic downturn.
Expansion in North and Middle East region and the Asian market may increase the global market
share (Henaway, 2012).
Considering the multiple prices point strategies, the products offerings can be increased as
similar to other departmental stores or super chains to attract large customer base and provide the
convenience of one-stop shopping experiences (Echchakoui, 2018). The company must
aggressively use the technology to advertise and promote its products offerings. Social media
and other digital tools such as emails, e-brochures and so on along with print media can be used
to attract and make people aware of the company and its products.
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CONTROLS AND RECOMMENDATIONS
Control and monitoring the activities and business plans of Dollarama is essential in order to
make the correction and modify in case of any changes in the external business environment. The
activities of Dollarama must be monitored using feedforward, concurrent and feedback controls.
Planning, organising and scheduling are done after the research in the market to ensure the
activities’ efficiency (Karakowsky & Guriel, 2015). Balance scorecard must be used by
Dollarama to identify the areas of improvement and improve and analyse the internal activities of
the company.
Figure 4 Balanced Scorecard
Source: Karakowsky & Guriel, 2015
In feedback control, the organization is isolated in 4 areas such as business processes, customer,
finance and learning and growth to identify the factors that hinder the business performance and
outline strategic changes for future. 360-degree performance appraisal can be used to track the
performance of the employee in concurrent controls. Insights related to their performance are
collected from all the individuals who directly connect with the employee of Dollarama
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