The Overall Strategy of Dell - Research Paper Example

?Executive Summary The Case The case study discusses the overall strategy of Dell and how it has focused on the driven strategy to ensure its leadership in the PC market. It also discusses the rise of Dell in the PC industry as to how it’s focused strategy of selling directly to the customers and reducing the inventory cost has resulted into the improvement of profitability and market share. It is also critical to understand that the case study has focused on the history of Dell Company as well as on the rise of Michael Dell as one of the most respected personalities in the PC market. It started with the Michael Dell’s strategy to build IBM clones to sell them at significantly low prices by assembling the PCs from parts bought at cost from the suppliers. This strategy has helped the firm to actually capture that segment of the market which was looking for low priced computers in place of expensive IBM PCs- Over the period of time, Dell has expanded into other markets by forming strategic partnerships with different other players in the PC industry. Starting as a PC manufacturer, Dell has subsequently expanded into the Servers, Printers, memory and storage devices, LCD TVs, portable music players etc. Dell however, has subsequently discarded some of the products due to thin margins. Case also further discusses as to how the better assembly and manufacturing system, effective inventory management as well as direct sales approach of the firm has helped it to gain market share. The Update Since the end of 2008 there have been major changes in the information technology market as the new products and services changed the way market behaved in the past. The introduction of the Smartphones as well as the tablets in the market has made a great impact on the personal computers industry as more and more consumers preferred to use products like IPAD and Iphone to have entertainment on the go. There has been also a great change in the business computing as more focus was placed on the information technology security and safety. Recognizing this change in the market, Dell has also responded to these market changes and introduced new products and services which were potentially aimed at catering to the changing needs of the consumers. The introduction of new products such as Dell Venue Pro as well as Dell Streak outlines the shift in the strategy of the firm towards offering innovative products and services. Dell Inc has also focused on making a transition towards a services oriented firm rather than a purely hardware manufacturing firm. The use of social networking services to initiate a more personalized interaction with the customers therefore outline the necessary change in the attitude of the firm. The offering of enterprise wide services such as IT security Services, Data Storage Services etc therefore suggest that Dell is making a gigantic shift in its strategy to systematically lessen its dependence of personal computers as the major source of revenue for the firm. The Strategy Since 2008, Dell Inc has focused on the strategy of acquiring new firms in order to build its capacity to serve the different segments of the market. Dell Inc has systematically initiated the strategic acquisition process to acquire firms which can build its capacity to offer diversified range of services across different segments of the market. The acquisition strategy has proved successful for the firm as Dell Inc specially has been able to cater to the needs of its business customers. By acquiring firms like SystemWorks, Dell has been able to offer enterprise wide services to its customers. Acquisition strategy has been successfully implemented and executed by Google therefore it seems that Dell is also following into the footsteps of Google to expand its overall base of services by acquiring small and medium businesses and utilize its research and development expertise to bring in more innovation and creativity into the overall product offering. There may also be a shift in the way Dell Inc has traditionally marketed its computers directly to the consumers. (Holzner). Over the period of time, it has developed one of the best e-commerce website in the world offering custom build Personal computers however, with the introduction of Smartphones as well as the tablets in which customization may not be possible, Dell may have to look for new partners to successfully market and sell its products. Overall, Dell has focused on the shift towards becoming a services oriented organization to offer comprehensive services to both its retail as well as business customers. Company Update One of the strongest trends which have almost shifted the whole industry dynamics is the shift towards mobile computing. With the launch of IPAD by Apple Inc, the PC industry experienced a strategic shift which has resulted into the increased use of tablet devices such as Apple IPAD. The increasing use of such devices therefore is seen as a threat to the PC industry as it is largely believed that the rise in the use of such devices will ultimately kill Personal Computer. (Deloitte) The recent changes which have been taking place in the industry therefore are largely external driven with many believing that the information technology sector is going through a new bubble with the success of different new products and services. On the hardware side, there are widespread changes as consumers prefer to use small and portable mobile computing devices which can provide entertainment on the go. The launch of Smartphones has more or less fulfilled the traditional role of PCs in terms of providing utility for watching movies, listening to music as well as sharing and storing pictures while at the same time browse internet. (Arthur) In order to meet this challenge, Dell has also launched its own touch screen tablet to capture the handheld tablet PC market. Its Dell Streak- a new introduction to its product line is therefore considered as the latest innovation by Dell to capture one of the fast growing market segments in the industry. (Schofield) Initially, Dell manufactured and marketed Dell Streak- a tablet like Smartphone of smaller size in order to provide to the consumers a feel of both the things. However, continues rise of IPAD forced Dell to look for ways to introduce new and larger tablets in order to better compete in this market. As a result of shift in this strategy, Dell also abandoned this product and aimed at launching a bigger version of the same. (Richmond) Dell Inc has also focused on the launch of its own version of Smartphones and in collaboration with Microsoft by using its Windows 7 platform, rolled out Dell Venue Pro- a high end Smartphone. This entry into the Smartphone market was basically aimed at competing directly with Blackberry and Dell went on to ask its employees to exchange more than 25000 Blackberries for its new Dell Venue Pro Smartphone. (Zeman). Dell Inc by utilizing the superior expertise of Microsoft is aiming at providing a new and unique experience to the consumers to use the Smartphone. Dell Inc is also in process of launching Google Android based Smartphones in future also. In recent years, Dell also attempted to refocus its strategy and shift itself from purely a hardware based firm to a more services oriented firm. (Jackson). In order to make this transition, Dell has started to make acquisitions of small and medium enterprises to add much desired diversity in its overall product offering. Dell has acquired businesses like Force 10 Networks mainly in order to increase its penetration into storage and services business. (Gupta) Dell Inc has been famous for its customer services and direct sales model has always provided it first hand information regarding the changing preferences and trends to allow it to modify its product offerings. Over the period of time, it has relied historically on the traditional methods of customer services and sales however, it is also now contemplating on the use of social networking sites such as Google+ to directly interact with the customers in more personalized manner.1 It is believed to have reduced the cost of customer services while at the same time allowing customers to have more personal interaction with the Dell. The overall aim therefore is to bring customer services out of the traditional call center set up and establish more personal as well as cost effective way to interact with the customers. One of the strongest changes in the overall strategy of the firm is its shift towards the business of security systems. The shift towards the managed security services has allowed Dell to focus on the acquisitions of services like SecureWork to provide managed security services for its server business. SecureWork’s clientele already included many financial institutions in US thus giving Dell an opportunity to become a service based organization. Apart from offering IT Security services, Dell has also shifted its focus towards the strengthening of its Server business while at the same time increasing its market share in the data storage segments of the industry also in order to diversify itself. (Mearian) One of the most important change in the perception of the Dell as a company is based on the Michael Dell’s firm belief that the introduction of the new products has only broadened the scope of the industry. With business users not abandoning the use of PCs, market has offer a new opportunity to market smarphones as well as the tablets as the viable alternatives to PCs for home users.2 The above changes in the market dynamics has also made a general shift in the way Dell Inc now perceives itself. Traditionally, Dell has been viewed as a consumer PC company however, the consumer side of the firm is stagnant over the period of time as Dell is focusing on the expansion into different other markets. The shift towards the enterprise based services therefore is considered as one of the most important strategic change at Dell. The overall changes which have taken place uptill mid of 2011 therefore can be categorized into two broader areas. The shift towards the enterprise services3 offered by the Dell as well as the introduction of smarphones and tablets in the market has changed the way Dell traditionally perceived itself. What is also however, important to understand that Dell Inc has responded to such changes and the response has been quick and swift? It also outlines that Dell Inc has kept its hands on the pulse of the market and was instrumental in understanding and forecasting the future trends in the industry. Bibliography Arthur, Charles. Post-PC? What Apple's iPad sales and PC trends tell us about computing's future. 21 July 2011. 14 August 2011 . Deloitte. Deloitte Analysis of Top Technology Trends for 2011. 20 January 2011. 14 August 2011 . Gupta, Poornima. Dell to keep up acquisitions, sustain margin growth. 29 June 2011. 15 August 2011 . Holzner, Steven. How Dell does it. New York: McGraw-Hill Professional, 2006. Jackson, Joab. Dell Launches Dedicated Services Organization. 17 December 2009. 14 August 2011 . Mearian, Lucas. Dell reveals its storage roadmap, acquisition integration plans. 17 March 2011. 14 August 2011 . Richmond, Shane. Dell scraps the Streak 5 - but not in Britain. 15 August 2011. 15 August 2011 . Schofield, Jack. Dell's Streak tablet is a supersized Android phone. 26 May 2010. 13 August 2011 . Zeman, Eric. Dell Dumps BlackBerries For Microsoft's Smartphones. 10 November 2010. 14 August 2011 . Read More