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14th Oct, 2013 Mr. Michael Dell CEO, DELL Inc. A Coursera Student Strategy Analysis of DELL Inc.
Introduction
The purpose of this report is to analyze the strategic position of Dell Inc. Headquarter in Round Rock, Texas; Dell computer was founded in 1984 by Michael Dell who was then an undergraduate student at the University of Texas. From very inception the company company is providing superior value to its target market by providing latest technology at competitive prices around the world. Dell is cited as the largest player of the personal computer market. The company follows unique selling policy that is known as Dell Modelselling computers and other equipments directly to customer and build-to-order build order strategy thereby eliminating the intermediary margins and inventory costs. The company follows unique selling policy that is known as Dell Modelselling computers and other equipments directly to customer and build-to-order build strategy thereby eliminating the intermediary margins and inventory costs.
External Analysis
In terms of external analysis, it is critical to assess whether the contextual economic, social, technological, ecological, media, political aspects are conducive to a specific direction. For instance, is the local government receptive to the concept of private sector participation? How are the relationships between the local government with the communities and the private sector? These are important aspects of the macro environment which will have a general impact on industries and companies.
Global Trade Issues Government of US has strengthened its ties with China in order to exploit the comparative advantage of the country in the form of low labour and technological cost. Global manufacturing is aiding firms to become more & more cost efficient.
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The reduction in the supply chain by integrating and collaborating with outside vendors and suppliers supplie have acted as a success factor in reducing product and production cost.
Asus 7%
Acer 10%
**The annual worldwide market share of personal computer (PC) vendors includes desktop computers, laptop computers and net books, but not tablet computer. (Source: Wikipedia)
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Rivalry(High)
Large number of competitors Significant quality differences Little power in marketplace Product differentiation Pricing determination
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Weaknesses
1. Comodity (computer hardware) product. 2. Low investments in R&D 3. Weak paptents portfolio 4. Too few retail locations 5. Low differentiation 6. High dependency on component suppliers
SWOT
ANALYSIS OF DELL INC.
Opportunities
1. Expand Services & enterprize solution buisness 2. Obtain more paptents through acquisitions 3. Strengthen their presence in emerging markets 4. Tablet market growth 5. Taping the Ultrabook market
Threats
1. Growing demand for smartphones & tablets 2. Profit margin decline on hardware products 3. Slowing growth rate of laptop markets 4. Intense competition 5. Merger of HP and Compaq 6. Price Wars 7|Page
Internal Analysis
Distinctive competencies are the core benefits that Dell enjoys in the form of low cost and superior product performance. Moreover Dell direct sales to customer by using its website is cited as the ideal strength that the company posses that is hard to imitate. In addition to this Dell design its products according to wishes of the target market (build to customer specification) that allow the company enjoy superior customer value and brand loyalty. The company ability to coordinate its various functions to produce exciting products is still another core distinctive competence that helps Dell to stand apart from competitors. Dell arrive its competitive advantage from three dimensions that are: 1. The value that the company creates for its customer b providing them superior technology, aesthetic designs, superior performance and technical support creates an enormous value for the offerings of the company. 2. Dell charge competitive prices for its various products in the market. The company follows variety of pricing strategies depending on the market conditions. The objective of the pricing policy is to create happy and satisfied customer profitably. 3. Dell has the ability to produce superior performance products at a very low cost due to its status in the market because the company enjoys various types of economies which are not at the disposal of other players in the market. The company thus has the ability to offer its products at significantly lower prices than its competitors in the market. Dell differentiates their laptops and PCs many different levels including direct-to-customer model, building better-quality performance and up-to-date technological products, and direct customer interaction in diverse marketplace.
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Action Plan
Increase standard As the competitors have better standards in the same product line which makes it a weakness in the competitive market. By inspecting the quality of the parts before entering into production will reduce the defects and compete or come in par with the competitors standard. Idea Storm The senior management takes the decision of the design and the features depending on the feasibility of the production. The feedback site called Idea Storm by Dell has various suggestion and opinion which should be considered majorly and using the innovation expected by the people should be identified for the feasibility for production. By fulfilling maximum expectation of the customers with the integration of the companys low cost goal, market share can be increased drastically. Trade Off There are not many Dell products available in the retailers as they sell its products through direct selling (website) and customized which are the companys core values. This customization needs time and bought through dell site, thus makes the home users disappointed who are interested in buying directly at shop by examining the product and buy some other brand instead. So keeping in mind of the home buyer and electronic buyers, dell products should be sold at retail stores and in the website. Student focus Only 5% of the Dells total sales come from education institutions like schools and colleges as the company did not focus in that market unlike other competitors. This is one of shortcomings of dell. Through effective marketing by providing discounts to students, sales can be increased. To focus on innovation Providing more emphasis on Research & Development will help the company to stay ahead of the industry through the development of new products. Increase of spending in R & D from 10% when compared to its competitors. R&D should be done without changing its focus from mass customization. To expand their support and services This strategy encourages Dell into the business consulting. Dells expertise in the field of Support and services would definitely provide differentiation in the market. Customer service is one of the key success factors for the company which should be enhanced. To strengthen the customization of Dells product, the firm must increase its suppliers those who can integrate well with the Dells supply chain. To modify its retail sales in markets by launching retail showrooms where customers doesnt have access to internet or credit cards.
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Exhibit 10 : References
Wikipedia http://www.nngroup.com/reports/life_cycle_of_tech.html. http://www.dell.com http://google.com Forbes website Dells Annual Reports Various university links for details on any strategy Bloomsberg, Reuters etc.
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