Background information
Dell is one of the leading IT companies that specializes in production and distribution of Dell model of computers, software, smartphones, printers and other electronic spare parts all over the world. The company was founded in 1984 by Michael Dell while he was still a student and the founder is still currently the chairman and the Chief Executive officer of the company whose headquarters are currently based in Austin, Texas. The company has a wide number of competitors in the IT such as Microsoft, IBM, Apple and HP which are currently the leading IT products and services providers in the global market.
Dell Company external environment
The main external factors that have affected the success rate of Dell Company can be categorized into political and legal bodies, economic, social-cultural, technology and the global demographics that have a direct or indirect association with the company’s business transactions in the market.
Industry and competitive factor
This revolves around the analysis of Porter’s five forces analysis.
- Threat of New Entrants – LOW
- There is existence of strong entry barriers in the computer industry.
- The business requires a high starting capital to venture into the business
- Technology is highly changing and hence the business requires advanced technologies and frequent research and development strategies.
- The business requires strong distribution network mostly with already established market.
- Power of Suppliers – HIGH
- The current supply is dominated by few IT companies such as Apple, Microsoft and Intel.
- The goods involved in Computer industry are critical due to their fragile nature and hence few people are willing to risk.
- The cost of switching to production and supplying business is high.
- Power of Buyers – HIGH
- The company has big number of loyal customers hence the purchasing power is high.
- Buyers are becoming price sensitive especially as a result of emerging diversified brands.
- Customers are more informed on the PC products.
- Availability of Substitute Products – HIGH
- Emergence of smartphones, tablets and tabloids are threatening the use of existing company PCs.
- Lagging behind on technological advancements as compared to other companies.
- Some alternative products have limited features as compared to the company’s products.
- Intensity of Rivalry – HIGH
- The industry is growing at a high rate with strong rivalry of competitive companies.
- The current competitors are almost equally balanced.
- The innovations are constantly changing in the industry.
External Factors Analysis chart
Impact
Maximizing on the market opportunities such as the rising demand will enable the company increase customer base in new markets. At the same time, the company must come up with new strategies of creating computers which are using current advancements so as to retain competitive advantage in the global market.
Internal environment Analysis
Internal Factors Analysis chart
Impact
The analysis shows that if the company will utilize its strengths, then it is possible to capture a wide market opportunity as they have already succeeded in bringing their products closer to the buyers. On the other hand, as a result of lack of any unique innovation by the company makes it to constantly keep up with new innovations made by other companies, a situation which is a threat to the company’s development.
Discussion
External
- What ways can Dell use to come up with new technologies to counter the competition in the industry?
- How can the company deal with the current economic recession affecting sales in the global market?
Internal
- How can Dell improve the current Research and Development department to counter the high changing technology?
- How can the company maximize sales in the local market to increase domestic profitability?
References
Hills, C. & Jones, G. (2012). Strategic Management Theory: An Integrated Approach. New York: Routledge.
Mueller, S. (2002) Upgrading and Repairing PCs, 13ed, Indianapolis: Que Publications.
Scheck, J: (September, 2008). Dell Plans to Sell Factories in Effort to Cut Costs. The Wall Street Journal.
www.dell.com/corporatesocialresponsibility.
