The Dell Company - A Strategic Analysis - Assignment Example

Dell Computer Corporation EXECUTIVE SUMMARY Dell Computer company was established in 1984 by Michael Dell. Since then it has grown from a small company to the largest computer manufacturing and Supplies Company. Its financial endowment has grown tremendously from 1984 to employ over one hundred people worldwide. It assembles and designs a wide range of computer products. The SWOT analysis shows details of the company’s successes and failures in the computing industries. Introduction Dell, Inc. Company is a holding company that does its business activities in the whole world through its contributory networks. It is responsible for designing, developing and manufacturing processes of a wide range of products. It also markets, distributes and sells various products that are tailored to fit individual customer necessities that include desktop computers, mobility products, software, servers and storage, services and networking. The company has four large segments that support its operations. These segments include Large Enterprise segment, Public segment, Business and Consumer and Small and Medium segments (Aruvians Rsearch , 2008, p. 14). The Large Enterprise segment is responsible for the innovation of products and services by using cloud computing solutions and data center. The Public segment is responsible for services that include simplification of IT, provision of faster provision of Information Technology applications, the expansion of enterprise and services operations and increase of customer relations. The Small and Medium Business segment is specifically deals with small and medium enterprises through offering open and capable solutions including innovative products and customizable services and solutions. The last segment deals with customer care. This paper will analyzes the Dell, inc. Company in terms of its history, its activities, key financial activities, SWOT analysis, PEST analysis and competitor activities among other details. Investigation methodology In the study and analysis of the Dell, Inc. Company, the information was provided by conducting a research in relevant websites, company profiles, and its financial details that include sales turnover, profit and growth details. Research was also undertaken on books and journal materials that provided information about Dell, Inc. and comparisons made with its competitors. Company outline Dell was established in 1984 in Texas, by Michael Dell who is the owner. The company was named after him. The company was initially known as PCs limited. It employs over 100,000 people around the world in 180 countries around the world. He founded the company on the basis of a simple concept that through the sale of computer systems to customers, the company could provide for the needs of the customers by ensuring that it provided effective computing solutions to meet the specific needs of customers (Pinegar, March, 13, 2002).1988 was also a significant year for Dell, Inc because it went public giving 3.5 million shares of its company’s stock to the public. Currently, Dell Inc. is the leading retailer of computer systems in the whole world. It controls a global market share of more than 15 percent. Dell deals in several products and services that include for designing, developing and manufacturing processes of a wide range of products. It also markets, distributes and sells various products that are tailored to fit individual customer necessities that include desktop computers, mobility products, software, servers and storage, services and networking (Pinegar, March, 13, 2002). Dell, Inc. has experienced growth in terms of its sales turnover, profit and development. Starting an estimated cost of $1000 dollars, Dell, Inc. has grown with a fiscal of 11 per cent increase from $13.43bn year-over-year. In 2010, through the sale of the cheap PCs, the company increased its percentage of sales. In the quarter that ended in the end of January 2010, Dell had increased its earnings to $334. In 2011, Dell had enterprise revenue of 4.2 million dollars. This was an eight percent growth. Laptop revenue reached 4.5 billion dollars during the fourth quarter, in comparison to 2010’s $4 billion during the same quarter. Desktop revenue dropped to 3.45 billion dollars during the fourth quarter from $3.54 billion in 2009. PC shipments were amazingly strong. However, the margins were unsatisfactory because of lower average selling prices and strain from component pricing (Haselton, 2011). SWOT analysis OPPORTUNITIES THREATS STRENGTHS WEAKNESSES Introduction of new products to the customers. Competitive rivalry in the PC market internationally. Largest PC maker worldwide. Build computers instead of developing them. Its low cost and low priced computers that are sold anonymously to the entire world to open other avenues of branding. New entrants to the market create potential threats. Deals directly with the customers. (Direct model) Huge variety of products and apparatus from many suppliers from several countries. Marketing through the internet to gain access to larger market bases. Price differentiation among brands reducing. Assembly is done at a moderately inexpensive cost. For home users, the direct method and customization strategy posed problems. Expansion into government and education markets. Tariff trade barriers affect its position in multiple countries. Top PC provider for intermediate and undersized businesses across the US for 10 concurrent years. Weak business relationships with many computer retailers. PEST ANALYSIS Political The political environment where businesses operate has direct effects on their business performance and the fulfillment of strategic goals that they set. The political instability that began after the 9/11 has negatively affected the market conditions throughout the world. Most of the large computer manufacturing companies are by business people from the US. This means that the country has a significant role to play to ensure that businesses are not affected by political instability (Schmid, Kelber, Behrend, & Krasel, 2006, p. 34). Economic The economic environment has changed incredibly from the September 11 attack in America. This event changed the economic conditions of the world in a major way because businesses became concerned of their safety. The largest companies that were existent were destroyed in line with the economic recession. Social Because of modernization, societies have been forced to change their values and cultural systems that have been replaced with a global culture characterized by the presence of universal arena that provides similar values and other norms in the whole world. This provides various organizations with opportunities to maximize their businesses that include computer manufacturing companies in the form of standardized product development practices throughout the world without adaptation. This contributes to economic growth, low fixed costs, changes in consumer attitudes towards foreign companies and the products they produce. Technological Because of the development of information technology, the world has been reduced into a village. Most importantly, the computing technology has become an essential factor that offers many opportunities that can lead to technological advancement. Technology has ensured that various manufacturers get low cost advantage and produce goods with better quality. Manufacturers in the computing industry have tried to provide innovative products that offer customers a competitive price. In addition, customers demand for better qualities has increased through an extensive use of Internet and Web that is global. There are reasons for choosing the OPPORTUNITIES and THREATS with reference to my PEST analysis and competitor activities. As one of the major computer manufacturing companies throughout the world, it is essential to mention that Dell, Inc. has grown tremendously since its establishment. It is also significant to look at its OPPORTUNITIES and THREATS in light of the ever changing business environment where competitors have come up with strategies and unique products that challenge the success Dell Computer Corporation. The growth and development of competitors is an area of concern where Dell, Inc. can work for success by using the OPPORTUNITIES that it has despite the THREATS posed by its competitors and their activities (Pinegar, March, 13, 2002). Therefore, for Dell to achieve success, it has to pay attention to the OPPORTUNITIES that give it advantages over its competitors. This means that it has to maximize on those OPPORTUNITIES, as mentioned in the table. Dell must also look at the THREATS posed by competitors and their activities to make sure that it closes the gap provided by the THREATS, to ensure it continues growing and maintaining the market base that it already has. It is also essential for Dell to understand the operations of the other companies to make sure that it responds to the market trends (Schmid, Kelber, Behrend, & Krasel, 2006, p. 18). There are reasons for selecting the STRENGTHS and WEAKNESSES with reference to internal resources and capabilities. For Dell to ensure that it maximizes the opportunities in the market, it must have some strengths in relation to its internal resources and capabilities. To maintain the top position in the industry, Dell’s STRENGHTS lie in its resources and capabilities. This is the reason why the STRENGTHS must be studied in relation to the resources available to the company and its capabilities in terms of using these resources for the satisfaction of its customer base (Ignatiuk, 2009, p. 14). Dell would not be successful if were ill resourced and lacked capabilities of using its resources. Its top position, in computer manufacturing, in the world has been because of the use of its internal resources and its capabilities. Its WEAKNESSES can be understood with reference to its internal resources and capabilities. For instance, its weaknesses lie on the manner in which the company produces and deals with its customers through the direct model. These WEAKNESSES are internally placed. They stem from the inside part of the company. Therefore, it would be tricky to tell the precise weaknesses of Dell without looking at their internal structure, operations and the use of its capabilities (Pinegar, March, 13, 2002). Strengths can be used to take advantage of opportunities and counter threats. For a company to be successful, it has to understand its STRENGTHS as an entity to be able to take advantage of its OPPORTUNITIES and address the THREATS that it faces in the business environment. It is clear that many of the STRENGTHS of Dell rest on its model. First, Dell can use the direct model to ensure that introduces new products to its customers. This allows the company to fully customize laptops and other products for its customers. The company gets an opportunity to take advantage of the fact that customers have become knowledgeable and demand products that fit to their specific needs. This means that it becomes an opportunity for the company to respond to the needs of its customers on a direct base (Aruvians Rsearch , 2008). Because of the fact that its products are assembled on a lost cost, it translates this cost to customers. This means that the customers are able to purchase the products they want with a relatively cheap price. The fact that Dell deals with business companies makes it advantageous. This is because these companies pass Dell’s products on their employees making sure that Dell improves its sales (Ignatiuk, 2009). The company can also use its STRENGTHS to address its THREATS. The main THREATS that Dell encounters deal with its competitors. Therefore, it can use its STRENGTHS to ensure that the new entrants and other competitors in the market do not take its market share. Dealing directly with its customers, assembling its products as a low cost and dealing with small, medium and large companies ensures that the company stays close to the customers thus identifying dissatisfaction and customer complaints in due time. This helps the company to correct mistakes and respond to the customers’ needs in real time. This ensures that the company does not lose its customer base to competitors (Schmid, Kelber, Behrend, & Krasel, 2006, p. 45). In conclusion, this report has covered important information about Dell, Inc. Company. It has looked at its history since inception, its financial details including profits and growth. The SWOT analysis and PEST analysis have also been essential in the report in understanding Dell Computer Corporation and its activities. It has also helped in looking at the position of Dell Computer Company in terms of its market share and competition with other computer firms. In this respect, internal resources, capabilities and competitor activities have been essential in carrying out the analysis. References Aruvians Rsearch ., 2008, August 1. Analysis of Dell Inc. Retrieved March 26, 2012, from Market Research: http://www.marketresearch.com/Aruvian-s-R-search-v3456/Dell-1906627/ Haselton, T., 2011, November 15th. Dell reports stagnant Q3 revenue, CFO says prices may increase. Retrieved March 26, 2012, from BRG: http://www.bgr.com/2011/11/15/dell-reports-stagnant-q3-revenue-cfo-says-prices-may-increase/ Ignatiuk, A., 2009. Analysis of Dell’s Business Strategy. New York: GRIN Verlag. Pinegar, P., March, 13, 2002. Dell Computer Corporation. Market Trends and SWOT analyses . Round Rock, Texas., 2011, February 15. Dell Delivers Record Results in Fiscal-Year 2011 Fourth Quarter and Full Year. Retrieved March 26, 2012, from DELL.COM: http://content.dell.com/us/en/corp/d/secure/2011q4_fy_ir_release Schmid, N., Kelber, S., Behrend, S., & Krasel, M., 2006. 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