Dell Inc SWOT Analysis - Essay Example

College: Dell Inc SWOT Analysis Michael Dell founded Dell Inc in 1984. It is one of the world’s leading suppliers of personal computers and other electronic accessories. The company designs, manufactures, markets, distributes, and services, personal computers, printers, servers, storage systems, and peripherals. The company’s head quarters are in Round Rock, and it employs more than 60,000 people across the globe. The company distributes its products direct to consumers and focuses on ensuring that it manufactures products that meet consumer needs. The company’s vision is to be one of the most successful global computer companies. SWOT analysis is a management tool that allows managers to view the company’s at a wider picture thus enabling them to designing both short-term and long-term plan that may improve business performance. The following SWOT analysis identifies the company’s strengths, weaknesses, opportunities, and threats. In other words, the analysis tries to identify the company’s problems and recommends the best strategic moves for the company to remain competitive. Strengths One of the company’s greatest strength is its business model. The company sells its products directly to consumers. In other words, there are no intermediaries i.e. retailers and wholesalers. This has assisted the company in bringing down distribution cost significantly. Because of this, the company is able to charge lower prices than its competitors thus acquiring a competitive advantage. The time lag between the customers’ orders and delivery is less compared to competitors’ time. This is because of lack of wholesalers or retailers in the distribution channel. This has contributed a lot in strengthening the company’s relationship with its customers, as well as, enhancing the customer satisfaction. Additionally, the business model supports customization of the company’s products and services especially the personal computers. The direct contact between the company and the customers enables the company to tailor-make its products to meet the customers’ needs. The company is also able conduct the market research effectively thus focusing on enhancing the customer satisfaction. The company’s high stock turnover is, as well, its strength. Because of this, Dell Inc has a good relationship with its suppliers since it has a healthy liquidity that enables it to pay the suppliers as early as possible. Because of this, the company is able to obtain supplies at lower prices compared to if it would pay later, thus reducing the cost of manufacturing. The company’s other strength is that it does not only sell to individual consumers, but also to businesses and government organizations. Consequently, Dell is able to supply a large number of personal computes and other related products thus increasing the profitability. Another Dell’s strength s product differentiation that enables customers to simply identify the company’s products. Weaknesses One of the company’s strength, customization, is also its weakness. A customer would have to wait for more time before receiving his or her computer from a delivery than when he or she goes direct to a retailer store, buys a computer, and acquires it as soon as he or she pays. Additionally the customers are not given an opportunity to physically touch the products and test them before they purchase them. The customers should have an opportunity to go to the retail shop and compare different products before deciding the ones to purchase. For the case of Dell, the company expects consumers to order their products direct from the company without comparing them with competitors’ products, in the market. Another weakness is that the company focuses more on businesses and government organizations as customers in expense of individual consumers. Jenster states, “every market segment is equally important for every business meaning that he focus should be on all customers (52)”. To eliminate the weaknesses the company should segment its market and produce products that meets every segment’s needs. Opportunities The demand for personal computers is growing rapidly in today’s world. A computer has become a necessity for every individual. Laptops demand has outdone the demand for desktops, which is an opportunity for the company to invest more on design and development of laptops than desktops. All the company’s market segments including individual buyers, businesses and government organizations are now demanding more personal computers than before. To benefit from this, Dell Inc should make use of its successful business model to tailor-make its products to meet the ever-changing consumers’ needs. The company should as well conduct market research using its business model to determine the consumers’ needs thus customizing the products in a way that would enhance their satisfaction. Another great opportunity for dell is the increased integration of communication and technology. Consumers can now access companies’ online store at a click of a key and make orders. Dell should take advantage of online business. Online business cuts down distribution costs nearly to zero enabling businesses to reduce their products’ prices significantly. If Dell Inc would invest a lot in online business, it would gain a competitive advantage thus growing its market share. Another opportunity is the internet. The internet has made the world a global village. In other words, the whole world is now more interconnected than before, and a business could easily sell its products to a consumer at any corner of the world. Since dell is a global company, it should make use of the internet to reach its target customers, in real time, across the world. Additionally, the internet has facilitated social sites communication and the company should use them to market its products globally. Almost all computer consumers, access social sites and, therefore, the company should use social media like Twitter to communicate any message; for example, the available products in the market, their features and how to use them. By using the social media to advertise, the company would reach a wider coverage of the target markets. Another opportunity is the fact that consumers are becoming more educated. They have now learned how to use computers to solve their everyday life problems and to carry out various activities. In other words, their understanding on how to use a computer is becoming higher everyday. In the next one decade, the demand for computers may more than double and, therefore, the company should reposition itself to increase its profitability as the demand grows. Another opportunity is taking advantage of the emerging markets. The growth of middle class in emerging markets like China, Brazil and India, is an opportunity for the company. The demand for computers in those countries is increasing every day and; therefore, the company should take advantage of these markets to increase its profitability. It should expand its business in these regions, market its products, and customize them based on the different markets’ needs. The ever-changing technology is also an opportunity for the company. It should invest a lot in technology to enhance efficiency in designing, manufacturing, distribution, and marketing. By doing this, Dell Inc would be able to acquire a competitive advantage by lowering the cost of production thus charging lower prices than the competitors do. For a business to survive in today’s competitive world, it must acquire a competitive advantage. Threats Dell is able to charge lower prices than its competitors because of its successful business model. Other company’s are also looking for ways to lowering their cost of production thus lowering their products’ prices, especially through investing in today’s rapidly changing technology to bring down the cost of production. Because of this, the price difference is reducing, and this is a threat to the company. The best strategy is for the company to stop relying only on its model, direct sales to consumers, to lower distribution cost, but also invest in technology to lower cost of production further. Another threat is that, in a technological industry, things change rapidly. In other words, technology becomes obsolete extremely fast. New computer features are being introduced on a daily basis thus making the older one obsolete. Therefore, the company should always invest in an innovative research to ensure that it introduces new product in the market at a higher pace than before. Failure to do this, the company’s market share would reduce if not being pulled out of the market. Lastly, the global financial crises also threaten the company. All industries are negatively affected during hard economic times and therefore the company should always be at a lookout. The best strategy is to ensure that it always has a broader product line to spread the risk. Another strategy is to ensure that the business spread in many regions across the world also as a way of spreading risk during financial crises. Alternative Solutions Since the company is currently at a decline stage, it should reinvent its products and services. It should also invest in an innovative research to bring new products into the market regularly. For the company to survive in the high tech industry it must take advantage of technology advancement to ensure that its products meet customers’ needs. Dell should also broaden its product line for diversification. This is a risk management move that global companies must implement. A broader product line would mean new sources of revenue for the company and increased profitability. Additionally the move would minimize the company’s risk. The company may also consider merging with other computer making companies to increase the market share and to acquire control of the market. The company should expand its business to all the emerging markets to take advantage of the growing demand in the regions. They include Brazil, China, and India among others. This move would increase the company’s market share, as well as, profitability. Shifting operations to low labor cost countries like China would help the company reduce the cost of production thus gaining a competitive advantage. Computer industry is highly competitive and competition becomes stiffer as technology advances. Therefore, Dell should always be at the lookout to ensure it is not driven out of the market. Conclusion and recommendations Dell Inc is among the leading computer companies in the globe, but remaining in its position is a key challenge. This is because, in a high technology industry, innovation is crucial for survival. The company should invest a lot in research to ensure that it frequently brings into the market innovative products. Its low cost strategy is not enough for survival in today’s world. In addition to low cost strategy, the company should invest a lot in technology to ensure that its products are innovative and differentiated from the competitors’ products. This long-term strategy would enable the company to acquire a competitive advantage. Works Cited Jenster, Per. Company analysis : determining strategic capability. Chichester ; New York : Wiley, 2001. Read More