Dell: Impacts of External Business Environment - Essay Example

Dell: Impacts of External Business Environment Introduction Dell is one of the leading computer and smartphone technology companies in the world and has had multiple advancements since its founder, Michael Dell, started managing the company. Dell’s approach on new computer and smartphone technology has been eccentric; typically, waiting for a technology to become standard puts the company under its competitors. Decisively, with adverse competition in computer technology, business model differentiation can work out marvelously for any corporation. This might be part of Dell’s approach to strategic management and overcoming competitors such as Apple or HP but the frequent alteration is not that effective. The company has had multiple business models aiming at attaining customer satisfaction, increasing profitability and dominating the market simultaneously (Dell 2014). Dell, unlike most of its competitors, has not made any significant accomplishments in the smartphone technology and business; moreover, most of its competitors continue to make excellent achievements in computer and smartphone technology. Resultantly, this has led to a lot of criticism for the past decade with most people questioning its proficiency even in its core field, which is computer technology. In 2009, the company launched its first ever smartphone that most of its supporters, consumers and other stakeholders had been waiting for with a lot of fanaticism, which is understandable considering its reputation in computer technology. Dell’s vision, mission and values entail listening, learning and delivering; moreover, for over two decades, Dell has dedicated it products and services to enabling everyone, despite the country and social background, to use technology as the facilitator of apprehending their dreams (Dell 2014). Through its great works in computer technology, Dell aims at being the most prosperous company internationally by conveying the best customer familiarity in the market. Assertively, the combination of the smartphones and computers creates a bigger market and range of customers to serve, particularly with the fast developing technology market. 2.0.1. PEST Analysis Political i National and local government and regulations on the development of technologies (user-friendly) Economic i Recession ii Unpredictable local environments iii Increased competition iv Vast changes in local economies Social and Demographic i Changes in customer preferences around the globe Technological i Increased developments and changes in computer and smartphone technology ii Technologies become obsolete very fast 2.0.1.1. The External Environment The external business environment often has factors that a business does not have control. Instead, businesses need to adapt to those conditions and devise strategies that can help them perform effectively in their presence (Arthur 2012). Depending on how the business responds to its external environment, it can be a source of both the threats and opportunities. i. Competitive analysis The computer industry has been one of the most competitive in the recent past, following the entry of many other new players in the industry. The company now faces increased competition from related businesses that offer similar products (Fergus 2010). The company currently competes in terms of technology, quality, reputation and price for its products with other competitors like Lenovo, Toshiba, Apple among many other companies. ii. Global changes in customer preferences Globally, customer’s preference with respect to their technologies has been changing significantly. Most consumers have tended to prefer using smartphones and tablets to laptops. In this case, Dell Company suffers from a major blow because it has major dwelt in the manufacture and selling of laptop computers to its clients. iii. The economic environment The economic environment has been changing deliberately in many countries. This environment is highly unpredictable and affects the company in most of its business operations. Economic recession has affected the company vastly though it has not led to its collapse like other companies (McKitrick 2011). The economic environment has been a major source of threat to the company, something that it hopes to manage through its research and development processes. iv. Technological environment In many businesses, the technological environment is very volatile. This is because; the technologies that people and businesses use become obsolete quite fast because of the developments in science and technology. This has however, been a great opportunity for Dell because it has always responded by creating products that are in line with changes and development in consumer technologies. v. The legal and regulatory environment factors The legal environment has been critical in the development of policies and regulations for the use of different technologies in the business environment. The company has had to abide by the regulations stipulated in many countries over the manufacture and development of technologies, which are user friendly. The company makes technologies that are environmental friendly, giving consumers the proper utility from their use and preference. 2.0.2. SWOT Analysis The table below shows a summary of the company’s SWOT analysis and its effectiveness in its business environment. The factors highlighted have been major sources of strengths and weaknesses in the company’s internal environment and opportunities and threats from its external environment alike. SWOT Table Analysis Strengths ii Brand name valued at more than $7.5 billion iii Product customization iv Environmental record v Competency in mergers and acquisitions vi Direct selling business model vii Effective leadership viii Strategic capabilities Weaknesses v Commodity (computer hardware) products vi Poor customer services vii Low investments in R&D viii Weak patents portfolio ix Too few retail locations x Low differentiation xi Processes and systems xii Organizational culture Opportunities ii Expand services and enterprise solutions businesses iii Obtain more patents through acquisitions iv Strengthen their presence in emerging markets v Tablet market growth vi Innovations vii Global trends viii Technological factors Threats iii Growing demand for smartphones and tablets iv Profit margin decline on hardware products v Slowing growth rate of the laptops market vi Intense competition vii Economic environment viii Legal and regulatory factors ix Environmental factors 2.0.2.2. The internal environment The internal business environment contains factors that the business can manipulate in the process of creating its competitive advantages in the external environment (Arthur, 2012). These factors make up the strengths and weaknesses for a business when analyzing its SWOT. Some of the important factors in Dell computer’s internal business environment include the following i. Business Strategy With regard to strategy, the company relies on various approaches in its market entry requirements. The company has managed to put up a team that conducts research and development in order realize the changing trends and customer preferences, which are essential in the manufacture of its products. Dell can exploit the practices incorporated in the overall business strategy to understand the economic market better as a tactic of overcoming threats that emanate from the growing demand for smartphones and tablets. This can be a chance to mend the company’s poor reputation in the smartphone market and make significant developments relative to the opportunities from global trends (Adeoye 2012). ii. Leadership Dell Company has grown tremendously in the recent past because of the sound management systems that practice efficiency and responsiveness to the needs of workers. Its human resource managers have had an effective comprehension of the needs of kits workers and have articulated them effectively to reduce staff turnover and enhance their competitiveness. Definitely, intense competition is a threat but Dell can make utilize the opportunity of expanding services and enterprise solutions businesses to make a mark in other markets apart from the prevalent laptop market. Dell, as a company, is among the top manufacturers of laptops around the globe but the focus on leading only such as section is a threat. The laptop market is amicably slowing down for now and the after five years it might be worse prompting Dell to strengthen their presence in emerging markets. iii. Culture Dell Company has managed to put across an organizational culture that enhances innovation and inventions using various technologies. This way, it has motivated its clients to be creative thinkers and make products that offer solutions to the diverse needs of clients who are widely spread in many parts of the world (Bayonde 2012). This has made the company produce different types of computers and other consumer technologies that respond to the needs and challenges of their consumers. However, the decline in profit margin of hardware products is a threat this initiative and the company production department should minimize it. iv. Direct selling model In its marketing services, Dell Company does not often sell its technologies through the big-box retail outlets like those of other companies. Instead, it sells them directly its consumers and other enterprises. In this approach, they always manage to keep all the thin profit margins to themselves (Paul 2013) The company management should also consider obtaining more patents through acquisitions; it is an opportunity that they should maximize in the area even if there is a lot of contention with the current practices. Recommendations Corporate social responsibility, culture and ethical principles are significant attributes that Dell should observe especially with the current external environment factors and future predictions on the same. Definitely, producing the new products in multiple technological markets (i.e. smartphone) will act as incorporation and inculcation of corporate responsibility in delivering high values and the best to the society. Most companies make one or two improvements in their new models but with this much, it is a guarantee for it to turn out well for everyone, but mostly the customers. Dell’s first smartphone had many complaints from customers, on design and features, but the new one sums it all up. Dell could use customers’ knowledge to counter their desires; the improvements in varying specifications can act as answer to many requests to facilitate customer understanding and allegiance (Dell 2014). Generally, proposed products from such initiative would act as a link between Dell and the consumers as widely expressed; furthermore, it will inspire the management to put more interest on the technological opportunities and threats in the division of smartphones. Dell, as one of the leading computer technology companies, should also consider putting a lot of effort in leading other markets especially those that competitors also focus on such as the smartphone market, competing with companies like Apple and Samsung that as of the 2013/2014 business years are dominating with a market share of around 10-15%. It is recommendable that Dell aims at stepping up its game by reaching the set limits, obtaining stability and going beyond the set boundaries through integration of new technology and customer prospects. For a long time now, very few computer and smartphone companies have been able to attain a positive market share but it is an assurance that by improving the customer services Dell could have an upper hand in even less than five years. Dell’s organization culture has not been the best, but with the new products, the company could straighten this, especially the innovation and novelty culture, by aligning the infrastructure and the necessary resources. Moreover, all the aspects will express the high expectations about the capability of inventive comportments and the worker-administrator relationship as major priorities. Most companies believe that in order to have much profit a company needs to get hold of a significant market share and compete with the leading smartphone companies that have dominated the market for a while. Nonetheless, through incorporation and integration of computer and smartphone technology, Dell could make much profit particularly if they make prices worthwhile and relative the quality of their products. Conclusion Businesses do not operate in a vacuum; they often exist in environments that have specific characteristics (Paul 2013). In the process of carrying out their functions, businesses have to be keen to ensure they make right decisions depending on their performance. Business environment scanning is a process that has to be strictly adhered to by business executives in order to determine the value of their strategies (McKitrick, 2011). While the internal business environment refers to the factors affecting the business from within, the global environment describes factors in the business external or macro environment. The business macro environment describes factors like competition, clients, industries, market, companies and even clients. Dell requires a new and unique approach to redeem the company as a whole to meet the customers’ needs and act as a foundation for corporate social responsibility and development of the company. Since 2009, the external environment has changed vastly and in reference to that, Dell has to maximize multiple opportunities and maximize threats for it to be on the safe side after another five years. Contents Dell: Impacts of External Business Environment 1 Introduction 1 2.0.1. PEST Analysis 2 2.0.2. SWOT Analysis 4 Recommendations 7 Conclusion 9 Bibliography 10 Bibliography Adeoye, A. (2012) Impacts of External Business Environment on Organizational Performance: British Journal of Arts and Social Sciences, vol. 6, no.2, pp. 194-201 Arthur, C. (2012). Dell revenues slump as tablets and smartphones eat into market. Retrieved from, Bayonde, O. (2012) Strategic Environmental Scanning and Organization Performance in a Competitive Business Environment: College of Management and Social Sciences, Osun State University, vol.64, no.1, pp.24-34 Dell (2014) Mission, Vision and Values: Support, Dell Custom Care Board, viewed on 3 March 2015, from http://en.community.dell.com/support-forums/customercare/f/4674/t/19525068 Fergus, M (2010) Understanding the External Environment: Certified Public Accountants, vol. 18, pp. 105–106 McKitrick, R. (2011). Economic Analysis of Environmental Policy, Toronto Ont: U of Toronto Paul, W (2013) Introduction to Business and Its Environments: Blackwell Bookshop, United Kingdom, viewed on 3 March 2015, from https://bookshop.blackwell.co.uk/extracts/9780199203055_wetherly.pdf Read More