Description
General Instructions – PLEASE READ THEM CAREFULLY
●This assignment is a group assignment. Each group will consist of 4-5 Students only.
●The Assignment must be submitted only in WORD format via allocated folder.
●Assignments submitted through email will not be accepted.
●Students are advised to make their work clear and well presented, marks may be reduced for poor presentation.
●Students must mention question number clearly in their answer.
●Late submission will NOT be accepted.
●Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
●All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Learning Outcomes:
Describe decision making process for complex issues pertaining to business environment both internally and externally. (C.L.O :1.1)
Demonstrate decision tools and employ appropriate analytical business models to break down complex issues. (C.L.O :2.2)
Demonstrate effective leadership skills and teamwork capacity for efficient decision making with the problem owners and other stakeholders as either a team member or a team leader. (C.L.O :3.1)
Assignment Instructions for Part-I:
●Log in to Saudi Digital Library (SDL) via University’s website
●On first page of SDL, choose “English Databases”
●From the list find and click on EBSCO database.
● In the search bar of EBSCO find the following article:
Title: “Case Study: Should a Dollar Store Raise Prices to Keep Up with Inflation?”
Author: by Jill Avery and Marco Bertini
Date of Publication: March 1, 2023
Published: Harvard Business Review
Assignment Question(s):(Marks 10)
Read the case study titled as “Case Study: Should a Dollar Store Raise Prices to Keep Up with Inflation?” by Jill Avery and Marco Bertini published in Harvard Business Review, and answer the following Questions:
1.Identify the main problem and subproblems of the case? [Mark 1]
2.Write all the information present in the case that would be helpful for decision. What other information should you gather, that would be helpful to know before making decision? [Mark 1]
3.Brainstorm with your team and generate all the ideas that your team suggests. The team cull the ideas and selected some relevant alternative choices for decision. [Mark 2]
4.Weighing the alternatives [Marks 2]
When weighing the various alternatives, how well each alternative fulfils the variables to consider can be expressed as scores. A different rating scale will be used to assess each alternative:
+2 very suitable
+1 quite suitable
0 neither suitable nor unsuitable
-1 not quite suitable
-2 not suitable at all
Note: Positive numbers (+2 or +1) indicate that the alternative is able to fulfil the variables, whereas negative numbers (-2 or -1) denote the opposite.
5.Draw a decision tree based for decision making, [2 Marks]
6.As CEO of the Dollar store, what will be your decision to keep up with inflation and why? [Mark 1]
7.Write the conclusion and overall assessment. [Marks 1]
Answers
Answer-
Answer-
Answer-
Answer-
Answer-
Answer-
Answer-
Unformatted Attachment Preview
Case Study
Should a Dollar
Store Raise
Prices to Keep Up
with Inflation?
by Jill Avery and Marco Bertini
HBR’s fictionalized case studies present problems faced
by leaders in real companies and offer solutions from
experts. This one is based on the HBS Case Study “Dollar
Tree: Breaking the Buck” (case no. 522091-PDF-ENG), by
Jill Avery and Marco Bertini, which is available at HBR.org.
140
Harvard Business Review
March–April 2023
WI LLI AM FI SHE R J R . opened
the door to his office and pointed
to the metal folding table in the
corner. It was the one his father
had bought in 1957, the year he
founded Dollar Bill’s, and staffers
now jokingly—but lovingly—
referred to it as “the executive
conference table.” Today it was
covered with packs of candy,
stationery items, bottles of water,
tiny action figures, and countless
other knickknacks.
“What’s all this, William?”
whispered Dollar Bill’s chief marketing officer, Robin Mitchell. She
had an earbud in her left ear and
was listening in on a conference
call with a limited partner from
China.
“Looks like a yard sale,” said
Bobby Cabrera, the company’s
chief product officer.
“It’s more of a sorting exercise,” William said. “I’d like you
to guess how much each of these
items cost me and make two
piles: one for things I bought
for a dollar, and the other for
things I bought for more than
five dollars.”
Robin and Bobby gamely
began to divide the items. In five
minutes there were 10 in the dollar
pile and roughly 30 in the five-
dollar pile.
Illustrations by ANUJ SHRESTHA
offering for one. That goes against
everything Dollar Bill’s has ever
stood for.”
THE PRICING DEBATE
“This is the problem,” William
said. “I bought them all for a
dollar!”
“That’s good, isn’t it?” asked
Robin. “That means we can do
what the board wants and charge
more for everything in the second
pile, and customers won’t think
twice about it.”
“No,” William said. “Our
customers expect us to give
them good deals. If we want to
sell things at higher prices, the
quality or quantity needs to be
higher too. I’m not going to start
selling merchandise for five
bucks, or even two, if it’s not any
better than what we’re already
Throughout its 66-year history,
Dollar Bill’s, a discount retailer
of general merchandise including books, gifts, toys, house
hold staples, consumables, and
clothing, had priced everything
in its inventory at one dollar. One
of several “dollar store” 1 chains
that emerged in the U.S. retail
landscape starting in the 1950s,
it was the only one that still stuck
to the promise rooted in its name.
In 2010, after seeing his company
through the Great Recession,
William changed the tagline to
“One Dollar: Yesterday, Today,
and Always.”
By 2023 Dollar Bill’s had more
than 15,000 stores in the United
States and Canada and was gen
erating $25.5 billion in net sales.
Although customer traffic was
down 13% year over year, the
average customer expenditure
had increased by 18%, to approximately $10 a visit. But Dollar
Bill’s was still underperforming
against competitors: Margins
were shrinking, and shareholders
had begun pushing for changes
in strategy. William fought them
at almost every meeting.
“For nearly 70 years, Dollar
Bill’s has succeeded at something the retail industry thought
impossible—selling goods of
surprising quality for a dollar and
still earning a decent profit in
the process,” he typically argued.
“The magic of our business model
is leaving customers with no
doubt that they are getting a bargain. When everything is a dollar,
nothing seems overpriced, even
if we’re keeping healthy—not
Experience
obscene, but healthy—gross
margins.” 2
Unfortunately, inflationary
pressures had caused those margins to drop from 35% to 25% over
the past two years, mainly owing
to cost increases and delays on
products imported from China.
The board had asked William
to research price increases,
arguing that they would allow
the company to mitigate further
inflation risk and return to its
historical gross margin rate. He
said he would investigate, but
he never did.
After a rough fourth quarter
the board’s chair, Elizabeth
McGee, asked William to come
to her office. “We’ve got to start
appealing to new consumer segments,” she said. “A quarter of our
customers are from households
earning less than $25,000, and
close to 60% are from households
earning less than $50,000. They
shop at Dollar Bill’s to stretch
their budgets. One dollar isn’t an
impulse-buy price point to them;
it’s a get-through-the-month
price point. We need a new group
of shoppers.”
“Well, I’d argue that a recession is just going to expand the
segment you’re talking about,”
William countered. “And even
wealthier households 3 are going
to be more price-conscious. Why
would we move away from our
dollar promise 4 at a time when
everyone is trimming budgets
and looking for bargains? Isn’t
it better to be the one store that
Case Study
Classroom
Notes
1. In 2021 more
than 34,000
dollar stores
were operating
in the United
States—more
than all Walmart,
Starbucks, and
McDonald’s
locations
combined.
2. What should
be considered a
“healthy” margin
in the discount
retail sector?
3. Twenty-one
percent of
shoppers at
dollar stores
have household
incomes of
$100,000
or more.
4. How impor
tant is the dollar
price point as
a differentiator
in 2023?
Harvard Business Review
March–April 2023
141
5. What other
ways might
Dollar Bill’s
regain some of
the margins lost
to inflation?
6. How would
you communicate a price
increase to
customers?
142
fights for customers, the one that
wants to beat inflation rather
than the one indiscriminately
jacking up prices?
“I know margins have
thinned,” he continued. “But
Bobby has suggested another
solution: repackaging the
merchandise so that we’re taking
a bit more margin while giving
customers almost as much as
they had before.5 I’m not completely sold on the idea, because
I still worry that our customers
will notice the change and view it
as a betrayal. But it’s something
to consider.”
William explained the
strategy: If chewing gum comes
five packs to a bag, Dollar Bill’s
could sell four packs for a dollar
instead. Ditto party favors, thankyou cards, paper towels, and a
host of other products. They
could maintain the magical dollar
price point while also recouping
some of their profits.
Harvard Business Review
March–April 2023
Elizabeth crossed her arms.
“But why not just sell the fivepacks for two dollars instead?”
“Because we’re Dollar Bill’s,”
William said.
“I understand where you’re
coming from,” Elizabeth said.
“But our brand promise is that
customers will get great value for
what they spend, whether it’s one
dollar for an item or 10. We need
to start capturing more value
than pennies.”
She paused and then spoke
with finality. “The board has
asked me to relay a message
to you. It’s time to raise prices.
Please have a proposal on our
desks as soon as possible.”
THE PLANNING MEETING
The next day Mark Alvarez, William’s best friend and a longtime
consultant, walked the aisles of
the local Dollar Bill’s store. Bobby
and Robin were trailing him.
“I don’t like the idea of reducing quantity—or even quality
for that matter—to maintain the
‘Dollar’ brand name,” Mark said.
“Your customers will know that
the four-pack of soda they bought
for a buck today was a six-pack
yesterday.”
“That’s my concern,” William
said. “We need them to trust us,
and shrinking our packages feels
like a bait and switch. What do
you think, Robin?”
“What if we were transparent
about the process?” Robin asked.
“We could run a campaign, send
out a press release, put signage up
in the stores.” 6
“We’ll do all that no matter
what we decide,” William said,
“but the single dad who works
two jobs isn’t reading our press
releases. He’s shopping at our
stores with his toddlers in tow, in
a rush, and he’s praying that his
debit card doesn’t get declined.
Having one price just makes
things easier. He doesn’t have
to worry about how much he’s
spending—he can tell exactly
how much by counting the items
in his basket.”
“There are a couple ways to
approach it,” Mark said. “You
can raise the price of everything,
or you can raise the price of some
things. In either case you run
the risk of alienating customers
who are lured to your stores by
the dollar price point, or custom
ers who simply can’t afford to
pay more.
“That said,” he continued,
“new inventory attracts new cus
tomers and intrigues returning
ones. Higher-priced goods will
improve shopping cart totals.7
And let’s be honest: A dollar 40 or
so years ago is certainly not worth
one dollar today. Counting infla
tion, it’s probably closer to $2.50.
So, if you keep everything under
$2.50, you’re essentially keeping
your dad’s original promise.”
“I trust you more than any
one,” William said. “But I’ve
spoken to several other analysts,
and they see bigger risks in that
strategy.”
He asked Robin to brief Mark,
and she read from her notes:
“One predicted significant con
sumer pushback. He estimated
that about a third of Dollar Bill’s
customers would shop at the
chain less often if prices crept
above one dollar, and that 5%
would stop altogether.”
Mark picked up a rubber bas
ketball from a shelf and tossed it
in the air. “Start slowly,” he said
to William. “You’ve got big stores.
Maybe dedicate a small area to
higher-priced items—the ‘luxury
section’ of the store. Then see
what happens.”
WEIGHING THE OPTIONS
The following week, Mark sent
a proposal to William for Dollar
Bill’s Max, a special section of
goods with three tiers of prices:
two dollars, five dollars, and
10 dollars. The new section,
which would occupy the front
10% of each store, would be ded
icated to nonessential seasonal
products that Dollar Bill’s had
always sold, such as graduation
gifts and Fourth of July decora
tions. Those items would cost
more than they had in the past
but, as Mark wrote, “If you have to
raise prices, raise them on things
that people don’t absolutely
need.” 8 The more expensive items
would include toys and household
consumables such as candles.
William forwarded Mark’s
proposal to Bobby and Robin for
their views.
Bobby replied immediately:
“Sticking to one price point no
matter what’s going on in the
economy has always been our
hallmark. In my view, if we’re
offering goods at a range of prices,
7. According to
a 2019 Fortune
article, the average consumer
spend per visit
at dollar stores
was $13, compared with $40
at Walmart and
other national
big-box retailers.
8. Do you
agree with this
assertion? Or
are people more
likely to turn to
affordable treats,
as Leonard
Lauder claimed
when Estee
Lauder saw
lipstick sales
rise despite a
tough economy
in 2001?
Harvard Business Review
March–April 2023
143
Experience
then we’re no different from any
other discount store.”
Robin chimed in soon after:
“Bobby’s suggestion to cut
package sizes but maintain the
dollar price point will be tricky
to communicate, but the more
I think about it, the more I worry
it will be even harder to explain
that Dollar Bill’s is no longer
a true dollar store. I know other
companies have done it, but I
don’t think they’ve done it well.
If we’re suddenly charging double
or more for some of our existing
merchandise, I think shoppers are
going to be puzzled. And I know
Dollar Mania has had some success with higher prices on newly
introduced products, but frankly,
I don’t think our customer base
is going to be interested in five-
dollar coloring books and 10-dollar
candles in a recession.”
William moved from the chair
behind his desk to the one at the
folding table and stared at the two
proposals he’d printed out. He
still didn’t know whether to go
with Bobby’s initial plan or to
raise prices on some nonessential
items, as Mark had suggested.
JILL AVERY is a senior lecturer
of business administration
at Harvard Business School and an
expert on customer relationship
management. MARCO BERTINI is a
professor of marketing at Esade—
Universitat Ramon Llull, in Barcelona,
and a senior adviser to the marketing,
sales, and pricing practice at Boston
Consulting Group.
144
Harvard Business Review
March–April 2023
Should William proceed
with Bobby’s or Mark’s plan?
The experts respond.
GREG BESNER is a
cofounder and the
CEO of Sunflow and
an adjunct assistant
professor at NYU Stern
School of Business.
The only certainties
in life are death, taxes,
and inflation.
One 1957 dollar is the equivalent of
$10.61 today. (That’s 960% cumulative
inflation compounding.) William will
eventually trigger a crisis at Dollar Bill’s
if he sticks to his dollar prices forever.
So he needs to make a change.
He should start by evaluating every
product—or SKU in industry parlance—
that Dollar Bill’s retails to see which
can still be sold for one dollar while
achieving a sustainable margin. He can
keep those items on the shelves.
Products that don’t meet that standard must be repackaged or alternatively sourced in a way that allows the
company to deliver value for a dollar.
Of course, any reduction in quantity or
quality must be made in a way that will
feel acceptable to the consumer. For
example: A 12-ounce bottle of juice can
be sold at 11 ounces without upsetting
people if it’s a brand they trust and
enjoy. And they won’t think twice about
a shirt made of the same cotton but
acquired from a less-expensive factory.
However, this strategy is a short-term
solution, because you can’t keep cutting
back on quantity or quality forever. One
ounce of juice won’t quench anyone’s
thirst, and no one wants a scratchy,
misshapen shirt.
Eventually the cost of goods will well
exceed the purchasing power of a dollar,
leaving Dollar Bill’s without a sustainable business model. This is a question
not of if but when. So William must act
now to test higher-priced merchandise.
He might find that certain customers
shop less often in revolt, but others will
no doubt treat themselves to some of
these products, and he might attract
the new wave of bargain hunters that
Elizabeth and the board anticipate.
I understand William’s attachment
to the name Dollar Bill’s. But if that
needs to change to reflect the new brand
proposition, it can. After all, if you drop
the possessive apostrophe, you have
Dollar Bills, plural.
BARRIE CARMEL is
the vice president of
pricing at Michaels
Stores and a former
senior vice president
of commercial strategy
for Bed Bath & Beyond.
Dollar stores have found
ubiquity and success
in the United States by
catering to the huge portion
of the population that is
low-income.
This customer segment is meaningful
and underserved. And Dollar Bill’s has
a very clear value proposition for these
consumers. Changing it is too much of
a gamble.
Dollar Bill’s needs to evolve, sure, but
an abrupt revolution could be incredibly dangerous: Loyal customers might
feel abandoned when they need the
company the most.
Elizabeth suggests that the board
wants to raise prices and sell higherpriced inventory to attract new,
higher-income customers. But pulling
those people into dollar stores might be
impossible. Even if they’re willing to try
discount retail in a recession, they’re
highly unlikely to continue shopping
there when times improve. Most think,
“It’s all junk.” They’re just not going.
If William is backed into a corner,
however, which he seems to be, I sug
gest putting a small “special buys” section of higher-priced items in selected
stores where the demographics are the
most favorable. That will demonstrate
whether customers are willing to tolerate more-expensive purchases. If Dollar
Bill’s continues to deliver incredible
value at reasonable price points ($2, $5,
and $7), its customers may expand their
share of wallet. I wouldn’t touch the
price of items that are weekly purchases
or necessities, but impulse-buy items or
those bought less frequently might fit.
“Shrinkflation,” or package downsizing, can work, and some retailers do
it. But customers aren’t stupid. I think
William is right to think that, when a
six-pack of razors is suddenly a fourpack for the same price, they will notice
and resent it.
William should challenge Elizabeth
to consider whether the current board
actually cares about Dollar Bill’s longterm health. As he fights passionately
for his company’s values and core customers, the board is saying, “We don’t
care. Make more money.” That’s a really
good way to destroy a business.
No matter what, William must main
tain his focus on providing value to
lower-income customers. They are the
shoppers he will always need to appeal
to. He just needs them to spend a little
more money.
HBR Reprint R2302M
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المملكة العربية السعودية
وزارة التعليم
ر
اإللكتونية
الجامعة السعودية
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 3
Decision Making and Problem Solving (MGT 312)
Due Date: End of week 13, 02/12/2023 @ 23:59
Course Name: Decision Making and Problem
Solving
Course Code: MGT312
Student’s Name:
Semester: 1st
CRN: 13878
Student’s ID Number:
Academic Year:2023-24; FIRST SEMESTER
For Instructor’s Use only
Instructor’s Name: Amer Alenazy
Students’ Grade:
/ 10
Level of Marks: High/Middle/Low
General Instructions – PLEASE READ THEM CAREFULLY
●
This assignment is a group assignment. Each group will consist of 4-5 Students only.
●
The Assignment must be submitted only in WORD format via allocated folder.
●
Assignments submitted through email will not be accepted.
●
Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation.
●
Students must mention question number clearly in their answer.
●
Late submission will NOT be accepted.
●
Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
●
All answered must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Learning Outcomes:
1. Describe decision making process for complex issues pertaining to business
environment both internally and externally. (C.L.O :1.1)
2. Demonstrate decision tools and employ appropriate analytical business models to
break down complex issues. (C.L.O :2.2)
3. Demonstrate effective leadership skills and teamwork capacity for efficient
decision making with the problem owners and other stakeholders as either a team
member or a team leader. (C.L.O :3.1)
Assignment Instructions for Part-I:
● Log in to Saudi Digital Library (SDL) via University’s website
● On first page of SDL, choose “English Databases”
● From the list find and click on EBSCO database.
● In the search bar of EBSCO find the following article:
Title:
“Case Study: Should a Dollar Store Raise Prices to Keep Up with
Inflation?”
Author:
by Jill Avery and Marco Bertini
Date of Publication:
March 1, 2023
Published:
Harvard Business Review
Assignment Question(s):
(Marks 10)
Read the case study titled as “Case Study: Should a Dollar Store Raise Prices to Keep
Up with Inflation?” by Jill Avery and Marco Bertini published in Harvard Business
Review, and answer the following Questions:
1. Identify the main problem and subproblems of the case?
[Mark 1]
2. Write all the information present in the case that would be helpful for decision. What
other information should you gather, that would be helpful to know before making
decision?
[Mark 1]
3. Brainstorm with your team and generate all the ideas that your team suggests. The
team cull the ideas and selected some relevant alternative choices for decision. [Mark
2]
4. Weighing the alternatives
[Marks 2]
When weighing the various alternatives, how well each alternative fulfils the
variables to consider can be expressed as scores. A different rating scale will be used
to assess each alternative:
+2 very suitable
+1 quite suitable
0 neither suitable nor unsuitable
-1 not quite suitable
-2 not suitable at all
Note: Positive numbers (+2 or +1) indicate that the alternative is able to fulfil the
variables, whereas negative numbers (-2 or -1) denote the opposite.
5. Draw a decision tree based for decision making,
[2 Marks]
6. As CEO of the Dollar store, what will be your decision to keep up with inflation and
why?
[Mark 1]
7. Write the conclusion and overall assessment.
[Marks 1]
Answers
1. Answer2. Answer3. Answer4. Answer5. Answer6. Answer7. Answer-
College of Administrative and Financial Sciences
Decision Making and Problem Solving MGT312
Assignment- 3
Critical Thinking Case studies
Criteria/Achiev
ement Level
Exemplary
The students identified Main
Identify the
main problem Problem, and written at least
5 sub-problems
and
subproblems of
( 1 Marks)
the case?
Proficient
Needs Improvement
Value
The students identified
Main Problem, and
written at least 3 subproblems
The students
identified Main
Problem, and written
at least 1 subproblem
(0.5 Marks)
1
( 0.75 Marks)
Gather
information:
The students gathered at
least 6 information
(1 Mark)
The students gathered
at least 4 information
(0.75 Marks)
The students
gathered at least 2
information
(0.5 Marks)
1
Brainstorm for
Decision
making
Student conducted
barnstorming session and
generated list alternative
idea. Student written at
least 6 alternatives.
Student written at
least 4 alternatives.
1Mark
Student written at
least 2 alternatives.
0.5 Mark
2
Students weighed the
alternative and
calculated
Students weighed
the alternative
2
1Mark
Students drawn a
decision tree and
included some the
information.
0.5 Mark
Students drawn a
decision tree.
Weighing the
alternative
Decision tree
Decision
Making and
Justification
Conclusion and
overall
assessment
2 Marks
Students weighed the
alternative successfully
and calculated properly
2 Marks
Students perfectly drawn
a decision tree and
included all the
information perfectly with
sequence.
2 Marks
Student successfully
presented the decision he
will take with proper
justification
1.5 Marks
Student presented the
decision he will take
with some
justification
1 Marks
0.75 Marks
Student concluded the
decision perfectly and
overall assessment is
based on calculation.
Student concluded
the decision and
overall assessed the
decision
1 Mark
Student presented
the decision
0.75 Marks
1
0.5 Marks
Students
Concluded.
0.5 Marks
1 Marks
2
1
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