Firms Internal Environment
Background
Dell is a multinational Information Communication and Technology company based in Texas, United States. Founded in 1984 by Michael Dell, the company offers a broad range of computer products and services to its customers (Kapuscinski, Zhang, Carbonneau, Moore, & Reeves, 2004). Today the company boasts of a staff community that is well above the 100,000th mark in all stores worldwide. The Dell holding company performs all its operation through subsidiaries located all over the world. The four broad sections in which the business is anchored upon are the large enterprise, small to medium businesses, the public, and the consumer.
Products and Services
Strategy
At the business level, Dell satisfies customer expectation by exemplary use of cost leadership bundled with stellar a differentiation strategy (Anonymous, 2005). With this package, Dell penetrates the market by offering low-cost products and services that are unique.
Industry Environment
Competitors
The computer hardware industry is crowded with many manufacturers trying to get a hold of the market share. Some of the major competitors to the firm include Hewlett-Packard, Acer, Sony Toshiba, Samsung, Apple, and Asus (Datamonitor, 2012). The market is healthy and is expected to do well going forward. With a Total Annual Revenue of $75.5bn in 2014, the Industry Analysis forecasts predict that the market is set to accelerate further giving Dell the more reason to design strategic competitive advantages.
Market Data
The computer hardware market experienced a 5.8% growth in 2014 and amassed the $75b valuation after stagnating from 2010. In figures, the percentage growth in 2010-2014 was 0.1, (0.8), (4.7) and 5.8 respectively ("MarketLine Industry Profile," 2015, p. 8).
External Environment
Dells nature of work is affected by numerous environmental factors that have a direct or indirect impact on the company’s future objectives. The paper will use the PEST analysis technique to elaborate on these factors.
Politics has always had a profound effect on business. This is no difference today as the event of 9/11 shook the market stability of computer hardware in the United States (Meckling, 2011). Dell like other manufacturers has reduced the risk by stretching out to other countries worldwide. In addition, the ever-growing market need has forced the US government to make strategic ties with Asian countries to exploit the resulting comparative advantage regarding low labor costs. Dell has to take into consideration the forthcoming US presidential elections in 2017 and forecast how the consumer spending will be affected by the occurrence.
Economic factors are the driving force of business and telling global crises such as the 9/11 and the 2007 financial crisis always have an impact on any business. Companies like the Lehman Brothers have been affected adversely by these events. Looking forward, Dell financials have to evolve strategically while keeping an eye on the inflation levels, interest rates and the per capita income of various countries.
Perhaps the most important element that has a direct effect on Dell nature of business is the technological factors. The Advent of IT has widened the scope and made the competition even stiffer with more entrants into the market. In light of this Dell has to lead in innovation and other value additional components that will beat the competition. Going forward the company has to conduct extensive R&D to come up with pioneering life changing technologies will aid day-to-day activities.
Choice of Decision-Situation
Dell Company faces many decision-making situations, and they have to rely on a stable decision-making strategy to see the best ideas translate into sales (Kenneth L. Kraemer, Jason Dedrick, 2000). The decision-making scenarios vary from marketing, strategic to product design decisions.
In this instance, Dell has the decision to make over certain product material casing designs that are available for the high-performance gaming laptop- The Alienware 17. Since its inception, Dell has always been focused on producing customer –centric models among its transactional and relationship customer segments. The Alienware is obviously built for the relationship segment and optimized for the ultimate gamer that wants unparalleled experienced while gaming. The high degree of rivalry and equally high number of substitutes in the market necessitates the decision making process in order to tilt competition in Dell’s favor ("MarketLine Industry Profile," 2015, p. 12).
The options for the development of the Alienware design has to critically factor in the environmental impact, consumer preferences, costs involved and durability.
The decision- making team is composed of some of the design team members have to search for information regarding the best elements that can be used in developing the product casing material while working within boundaries of critical factors. The options are carbon fiber, metal or plastic casing.
The next step would involve weighing the risks associated with selecting either of the choice building materials for the design. For instance, metal carbon fiber casing would be appealing and environmentally friendly but would drive the costs exorbitantly high. The plastic casing would still be attractive, less expensive but environment unfriendly.
The decision-making team will then have to sit down and carefully assess the pros and cons of the materials and the effect of their use on the Company.
The final step would be to pick one out of the three available materials based on the prior analysis. The decision-making team would finally decide on a specially treated plastic casing that is recyclable. The flexibility of plastic can make it appealing, cost friendly and environment-friendly.
References
Anonymous. (2005). There’s something about Dell. Strategic Direction. http://doi.org/10.1108/02580540510616638
Datamonitor. (2012). Dell Inc. SWOT Analysis. Dell, Inc. SWOT Analysis, 1–9.
Dell Official Site - The Power To Do More | Dell. (n.d.). Retrieved from http://www.dell.com/#
Henderson, A. D. (2004). Territories of Profit: Communications, Capitalist Development, and the Innovative Enterprises of G. F. Swift and Dell Computer. Administrative Science Quarterly, 49(3), 479–481. http://doi.org/10.1353/tech.2006.0009
Kapuscinski, R., Zhang, R. Q., Carbonneau, P., Moore, R., & Reeves, B. (2004). Inventory Decisions in Dell ’s Supply Chain. Interfaces, 34(3), 191–205. http://doi.org/10.2307/25062900
Kenneth L. Kraemer, Jason Dedrick,. (2000). Refining and Extending the Business Model With Information Technology: Dell Computer Corporation. The Information Society, 16(1), 5–21. http://doi.org/10.1080/019722400128293
MarketLine Industry Profile. (2015). Computer Hardware in the United States, 0072(0049), 1-45.
Meckling, J. (2011). The Globalization of Carbon Trading: Transnational Business Coalitions in Climate Politics. Global Environmental Politics, 11(2), 26–50. http://doi.org/10.1162/GLEP_a_00052
