Dell International Company - SWOT Analysis, Business Executive Segment, Reliability, and Weaknesses - Example

Running Head: DELL Company DELL Company Date DELL Company As the name suggests, Dell international company is a multinational corporation that deals with information technology products. The corporation has its head office in Round Rock, Texas, and USA. Named after its founder Michael Dell, the company is among the largest technological companies worldwide and has an employee base of 96000 people located in various places in the world. Since its foundation in 1984, Dell international company has grown through both organic and inorganic means. Examples of the firms it has acquired are Alien ware (2006) and Perot Systems (2009). In fact, the corporation has been listed as the fifth most popular company in its industry worldwide. The company is ranked as the fifth largest company in Texas as far as revenue is concerned and is also the 2nd biggest non-oil producing company in Texas. The company deals with computers and related products and services. The company also sells cameras, printers, MP3 players, HDTVs and many other electronics manufactured by other companies. Dell is known for its innovativeness in electronic commerce and supply chain management (Ferrell, Michael, 2008) SWOT analysis An Environmental scan of Dell international company can be effectively analyzed through its SWOT analysis. SWOT analysis describes the strengths, weaknesses, opportunities and threats that the company faces and how best to respond to them so as to gain a competitive advantage over its competitors. When carrying out the analysis, we consider the customers’ trends, profile and the kind of market segmentation adopted by the company. It is a very crucial element of a company’s strategic planning process (Hitt, 2008). This is because it helps the management understand and be able to respond to environmental factors that affect the company both internally and externally. As such, the organization is able to match its resources and capabilities to the competitive environment in which the company operates. Therefore, SWOT analysis is a very important tool in strategy formulation and selection. Internal environment The internal environment of Dell international company comprises of its strengths and weaknesses. These are analyzed as follows; Strengths a) Direct sales Dell’s success is largely attributed to its direct model whereby the company sells its products directly to its customers according to their specifications. The model its self is considered as being one of the best assets that the company has. This is because the model allows the customers to buy products that are fully customized (tailor made) according to their specifications. As the market becomes more educated, customers more than ever prefer products which target their specific needs. Customers are therefore offered more options as far as performance and portability is concerned. The method cuts out the retail seller from the distribution chain and therefore enables customers to purchase directly from Dell factory and hence offer them a chance to fully customize their products (Allan, 2009). Furthermore, the direct sales method results in faster delivery of customer orders. Through this method, customers are able to receive their customized orders within days of placing an order. It is for these reasons that the direct model method has become a very important asset in targeting both the home-user and the business executive-user segments. Just-in-time (JIT) inventory approach In a bid to minimize delays between purchases and making of deliveries, the company has a policy of manufacturing its products as close to its customers as possible. This has enabled the company to implement a just-in-time manufacturing approach which enables it to greatly minimize inventory costs. Being able to maintain low inventories is a great advantage to Dell as it operates in an industry where products depreciate very rapidly (James, 2005). Business executive segment Another of Dell’s greatest strength stems from the fact that approximately 75 percent of its sales revenue is from large businesses and governmental organizations. This means that Dell has already created relationships with big companies which provide most of their business. The companies on the other hand pass the relationship to their employees by offering them Dell products. In addition, Dell is able to customize its products to meet the requirements of these companies and employees. This in addition to the extensive business relationships places them in a very good position to target the segment with new products. Reliability Due to its direct customer model, Dell is able to provide its customers with top-notch services before and after sales. Use of latest technology The company is able to introduce the latest relevant technology unlike its competitors who use the indirect distribution channels. The company’s use of internet in other part of its business has also greatly increased. Such areas include customer support, procurement and relationship management. This enables Dell to serve its clientele better. Weaknesses Weak college students segment Dell’s greatest weakness is in attracting the college students segment of its market. This can be derived from the fact that its sales revenue from learning institutions account for only 5 percent of its total revenue. In other words, the company has focused on the business executive segment so much at the expense of the college students segment. As such, Dell has not been able to form strong relationships with learning institutions. Due to the fact that many students purchase their computers through their institutions, Dell obviously looses on such a potentially productive segment. Lack of the retail channel For the home- user segment, the direct customer model poses some problems. This is because customers are unable to go to retailers since Dell has no distribution channels. In other words, the Dell products are not as easy to come by as other brands since Dell products are tailor made to customer’s specifications and this may take a lot of days to finish. External environment The external environment of Dell Company consists of opportunities and threats. They are analyzed as follows. Opportunities There are many opportunities that Dell Company should take advantage of so as to increase its revenue. The opportunities include; The rate at which personal computers and laptops (which are the main products that Dell deals with) are being purchased and used has greatly increased. In particular, the Laptop market has been growing at a faster rate than the desktop computers market. This presents a great opportunity for Dell international company to expand its business in all the segments. Furthermore, computer users are have become more and more enlightened about personal computers since a great number of them are second-time purchasers. Users who have purchased personal computers in the past are aware of what they want and Dell can cater for their needs. Dell’s direct customer model can offer the framework for the customers to make truly tailor made personal computers in a hassle free environment. The increasing trend towards enlightened customers offers an enormous opportunity to Dell in this respect (Rosenhauer, 2008). The increasing communication and technological integration also offers many great opportunities for Dell international company. This is because buyers can now be able to personalize their computers through the internet, make an order or search for information regarding the products they want. This increases efficiency to both Dell and its customers .as a result of technological advancement, buyers are now able to access an “online store” and hence to a great extent, Dell will be able to make up for its lack of retail stores. Continued advancement in technology will obviously bring more opportunities to Dell (Martin, 2005). Threats The personal computers market is a very volatile market and hence its threats are many and immense. Owing to the ever changing nature of the personal computers industry, there is an obvious challenge for the companies to manufacture higher quality products at lower prices and at faster rates in a more efficient manner so as to be able to cope with the ever increasing competition. An obvious threat to Dell international company is the fact that price difference between various personal computer brands is getting smaller every day. The Dell’s direct customer model has a benefit of making Dell’s products cheap to the consumer. However, other companies are increasingly finding strategies of combating Dell’s low costs and hence they are now also able to pass along savings to buyers. As a result of this, price differential is no longer an issue to customers as it is considered non- existent. As a result, many of Dells close competitors are increasingly becoming closer substitutes (Akademische, 2009). Probably the most serious threat faced by Dell international company is the fact that the growth rate of the communication and information technology industry is slowing down. At the moment, Dell has a greater market share than any of its competitors worldwide. However, slowing down of the growth rate will intensify the level of competition. As such, companies will need to work harder than before so as to distinguish their brands from their substitutes. Thus if a company is unable to distinguish its brand from those of its competitors, it will be hard for it to have a noteworthy market share. Although the quick pace of advancement in technology generates a great opportunity to Dell, it also poses a great threat to the company. Owing to the fact that cost leadership strategy is gradually becoming insignificant in the industry, companies must make their brands completely different from their competitors’ brands. In this industry, the differentiation can only be based on technology as well as product design. It is only the newest, most efficient, the fastest, the most durable and user friendly products that are going to do well in the market. If a company is unable to continually invent so that their products are always the best in the market, their performance is likely to decline (John, and Richard). Conclusion The market trends in the industry are currently being driven by the ever changing consumer’s needs, demands and wants. Therefore, organizations such as Dell international company have to be in a constant state of innovation and adaptation so as to suit their customers’ needs. The company should take full advantage of its strengths, pay close attention to its weaknesses, and indentify both its threats and opportunities from the external environment. This way, the company will be able to position itself as an important shareholder in the extremely competitive market. Bibliography Ferrell, O and Michael, D 2008, Marketing strategy, Cengage learning.Pp238-245. Hitt, M. A. 2008. Strategic management: Competitiveness and globalization. Cengage learning. Pp78-81. Allan, A 2009, Strategic Innovation: New Games Strategic for Competitive Advantage, Harper row Press, pp. 234-239. James, A. 2005, Management information systems, McGraw-Hill Irwin, pp. 462-469. Martin, J. (2005, 3rd Ed.) Organizational Behavior, New York: New York Press Pp 254-256. Akademische, S 2009, Analysis of Dell’s Business strategy, GRIN Verlag, Pp 42-46. John, A and Richard, R 2009, Formulation, implementation, and control of competitive strategy, Harper and Row Press, pp. 398-400. Rosenhauer, S. 2008 ‘Profit is a wonderful world” Dell Corporation’s strategy behind the profit. GRIN Verlag, 101-104 Read More