5. Contents
Introduction and summary of the company
Mission and Vision
Environmental Analysis
Micro Environment Analysis ( SWOT and TOWS)
Value Chain Analysis ( Internal Environment )
Macro Environment Analysis ( PEST )
Competitive Environment Analysis ( Porter’s Model )
Strategic Approach and Competitive Advantages
Conclusion
References 5
6. INTRODUCTION :
Michael Dell founded the company in 1984 in Austin, Texas
Dell develops, sells and supports computers and related products and
services.
Dell, the company is one of the largest technological corporations in
the world, employing more than 103,300 people worldwide
Dell is listed at number 41 in the Fortune 500 list
They ship more than 10,000 systems every day to customers in 180
countries — that’s more than one every second.
6
7. Using the Power of the Internet to
Connect with Customers :
Dell started selling computers on dell.com in 1996 — and
today they have more than 4 million visits to the site every
day, resulting in an order placed online every two seconds.
Today, dell.com reaches customers in 166 countries and 34
languages around the world.
Dell is the second most respected brand for breadth and
depth of social media activities.
More than 3.5 million members belong to the Dell social
Web community, which includes dell.com communities and
Dell outlets on Twitter, Facebook, Orkut and other sites…
7
8. Dell Vision And Mission Statement
Michael Dell , the founder of Dell Inc, started his business by
simple built-to-order concept selling directly to customers. Later
on he DELL started direct sales by mail and phone. Dell is the first
company to list a website. The profits dramatically increased when
Dell started to sell its products through the website.
Collective commitment to our customers, direct is Dell Effect
relationships, global citizenship, team success and winning.
Dell's aim is to create loyal customers by providing superior
experience at a great value. They are committed to direct
relationships, providing best products with standard based
technology outperforming the competition with value and a
superior customer experience.
8
9. Vision :
Purpose: provide customers with superb value technology
Business: high quality, relevant technology, customized systems
Values: superior service and support, easy to buy, easy to use
Vision Statement:
Its the way we do business. It's the way we interact with the
community. It's the way we interpret the world around us--
our customers needs, the future of technology, and the
global business climate. Whatever changes the future may
bring our vision -- Dell Vision -- will be our guiding force.
9
10. Mission :
Dell's mission is to be the most successful
Computer Company in the world at delivering
the best customer experience in markets we
serve. In doing so, Dell will meet customer
expectations of
10
11. Environmental Analysis :
• The purpose of this report is to analyze the
strategic position of Dell Inc.
It includes analyzing the
a. Internal Environment ( SWOT and TOWS )
b. External Environment ( PEST )
11
12. SWOT Analysis of Dell
STRENGTH
• Direct Sales Approach.
• Market Leadership
• Price for Performance
• User friendly website
• Latest Technology
• Customization
WEAKNESSES
• Reliance on Corporate and
Institutional Sales
• Neglecting the College
segments
• Non-availability in Retail
Segment
• Changing Consumer needs
• Merger of HP and Compaq
12
13. Opportunities
• Untapped Market
• Growing demand for Laptop
• Increase usage of Internet
• International Expansion
• Business Diversification
• Outsourcing
Threats
• Volatile Market trends
• Global Financial Crises
• Slowdown in Economic
Growth
• Technological innovation
• Slowdown in Industry
growth rate
• Emergence of China and
Indian IT giants
• Price Wars
13
14. TOWS Analysis
• TOWS Analysis is a variant of the classic business tool, SWOT
Analysis. TOWS and SWOT are acronyms for different
arrangements of the words Strengths, Weaknesses, Opportunities
and Threats.
• By analyzing the external environment(threats and opportunities),
and your internal environment (weaknesses and strengths), you can
use these techniques to think about the strategy of your whole
organization
It helps to answer the questions, like :
i. Make the most of your strengths?
ii. Circumvent your weakness?
iii. Capitalize on your opportunities?
iv. Manage your threats? 14
15. TOWS Analysis
Opportunities
1. Untapped Market
2. Growing demand for
Laptop
3. Increase usage of Internet
THREATS
1. Volatile Market trends
2. Global Financial Crises
3. Slowdown in Economic
Growth
STRENGTH
1. Direct Sales Approach.
2. Market Leadership
3. Price for Performance
4. Customization
SO
PRODUCE HIGH QUALITY
PRODUCTS
CUSTOMER ORIENTED
PRODUCTS
ST
PROVIDE HIGH VALUE THAN
COMPETITORS
REMAIN CUSTOMER ORIENTED
COMPETITIVE ADVANDANTAGE
WEAKNESESS
1. Reliance on Corporate and
Institutional Sales
2. Neglecting the College
segments
3. Non-availability in Retail
Segment
WO
CUSTOMER RELATIONSHIP
BETTER PROMOTION
STRATEGIES
STRENGHTHENING THE BRAND
WT
SUSTAINIBILTY AND ACHIEVING
COMPETITIVE ADVANTAGE
15
16. Internal Analysis
• Distinctive competencies are the core benefits that Dell enjoys
in the form of low cost and superior product performance.
Moreover Dell direct sales to customer by using its website is
cited as the ideal strength that the company posses that is hard
to imitate. In addition to this Dell design its products according
to wishes of the target market (build to customer specification)
that allow the company enjoy superior customer value and
brand loyalty. The company ability to coordinate its various
functions to produce exciting products is still another core
distinctive competence that helps Dell to stand apart from
competitors.
16
17. Dell arrive its competitive advantage
from four dimensions that are:
• The value that the company creates for its customer b providing them superior
technology, aesthetic designs, superior performance and technical support creates
an enormous value for the offerings of the company.
• Dell charge competitive prices for its various products in the market. The company
follows variety of pricing strategies depending on the market conditions. The
objective of the pricing policy is to create happy and satisfied customer profitably.
• Dell has the ability to produce superior performance products at a very low cost due
to its status in the market because the company enjoys various types of economies
which are not at the disposal of other players in the market. The company thus has
the ability to offer its products at significantly lower prices than its competitors in
the market.
• Dell differentiates their laptops and PC’s many different levels including direct-to-
customer model, building better-quality performance and up-to-date technological
products, and direct customer interaction in diverse marketplace
17
18. PEST ANALYSIS
• Dell’s environment consists of uncontrollable
forces that directly or indirectly influence an
organization’s ability to achieve a desired result.
• These influences create both opportunities and
threats for a manager. We will use the PEST
analysis for determining the DELL macro
environment analysis.
18
19. Political Factors:
• The political environment of the business has pivotal effects on
the performance of the business in the quest of achieving its
strategic goals. The political instability started after the 9/11 has
affected the market conditions all over the world. Most of the
computer manufacturers belong to US and the country
government is taking huge efforts to facilitate the business. This
offers exciting opportunities across the world to manufacturer
like Dell, HP, Acer, Toshiba, and IBM etc. In order to capitalize
the growing needs of the market the government of US has
strengthen its ties with China in order to exploit the
comparative advantage of the country in the form of low labor
and technological cost.
19
20. Economic Factors:
• The economic environment has gone through tremendous changes after
the advent of 9/11. In fact the event has completely changed the economic
conditions of the world. Companies that were considered as giant in the
market are now myths of the history. The condition stabilize relative in year
2006 and 2007 but after insolvency of Lehman Brothers and other giants of
the US the economic condition all the world suffered. The interest rates are
not stable due to huge fluctuation that arises from the instability in the
financial situations. Inflation all over the world has surged to all time high.
Due to huge expenditure on war terror fought in Iraq, Afghanistan and other
parts of the world the GDP of various countries have shown a very low
growth that have resulted in almost stagnant per capita income. 20
21. Socio-cultural Factors:
• The values across the continents are changing with the
passage of time, and now a global culture is arising
meaning the presence of universal segment having the
same values, likes and dislikes and other norms across
the world. This offers exciting opportunities to various
organizations including computer manufacturer in the
form of standardized product development offers
across the world with no adaptation. This translates
into various economies, and low fixed costs, meaning
change in attitude towards foreign brand.
21
22. Technological Factors:
• Due to advent of the information technology the world
has condensed to global village. The computing
technology is leading the change from the front by
offering exciting opportunities for advancement in
technology. Technology has enabled the various
manufacturers to enjoy low cost advantage and better
quality. Manufacturer across the industry are trying
their level best to offer innovative products at
competitive prices. Moreover the demands for the
industry offerings are increasing with the passage of
time due to extensive use of Internet and World Wide
Web. 22
23. Five Forces Analysis
• The Porter's five Forces
model is a simple and
powerful strategy analysis
tool that helps managers to
know where the control lies
in a company situation. It
helps in understanding the
strengths of the company in
the market against the
competitors, suppliers, and
buyers.
23
24. Rivalry Amongst Existing Competitors:
• The personal computer
industry from the beginning
is inclined toward
consolidation, as the market
type can rightly be cited as
oligopoly. The industry
contains players like Dell,
IBM, HP, Toshiba, Gateway
etc. The competition in the
market is based on price
and competitive advantage.
Threat of New Entrants:
• Every player tries its utmost
to beat and outperform
competitors by producing
the latest technology and
then price them
competitively. This probably
the reason that new firms
find it very hard to enter the
market and the existing
competitors trying their
level best to either maintain
their market. 24
25. Bargaining Power of Buyer:
• In the personal computer industry
the bargaining power of the buyer is
very high due to the fact that there is
very less amount of brand loyalty in
the market because most of the
manufacturer produced identical
products. In additional to absence of
brand loyalty, the switching cost is
very low in the industry because
most of the systems are based on the
Intel processor. Moreover, customer
also feels comfortable with backward
integration and building their own
system through selecting the
individual components manufactured
by different producers.
Bargaining Power of Suppliers:
• Traditionally the bargaining power of
suppliers is also very high in the
computer market. This is due to the
fact that there are very few suppliers
who supply the major components of
the computer. For example the major
suppliers of microprocessor are Intel
and AMD. They are almost having the
monopoly over the market. Moreover
the organization will bear significant
switching if the decided to change
the component part suppliers.
25
26. Substitute products:
• Usually the availability of substitute does affect the
sales and profitability of the computer and its various
components to huge extent. Traditionally the threat
of substitutes is very high for Dell. The computer
industry has traditionally experienced similar
products produced by the different manufacturer
with a very little distinction between a computers
produced by one manufacture with that of other. The
competition between the rivals can be rightly cited as
oligopoly because almost all the major producer
manufactures identical products.
26
27. Competitors Analysis:
• The competitive strategies developed by Dell help the company
to realize its mission by price leadership, price signaling and
non-price competition in the market by constant development
and modification of new products. Dell use cut-throat
competition strategy by matching even offering lesser price in
some cases as compared to HP and Compaq. HP and Compaq
has now realize that cutting the prices for HP and Compaq
products will not translates into increase in the market share
for the merged organization and will led to decrease in the
margin for the company because Dell will follow the same
strategy within no time. Price leadership also helps Dell to
attract huge margin for the company offerings.
27
28. Cont…
• Dell’s strategy to produce constantly innovative products has
helped the company by beating the competitors on non-price
factors. Dell is working on this end by developing new and
improved personal computers, laptops and other technological
products (Dell, 2009). These new product developments help
the company to boost its market share and differentiate the
company as distinctive company that offers value to customers
in the form of improved product performance, innovative
technology and competitive pricing.
28
29. Strategic Approach and Competitive Advantages
Direct Model:
• The company use direct sales approach that has enabled the
firm to enjoy direct relationship without any intermediary with
business and organizational customers. The company website
have been integrated in such a way that it helps Dell to market
their product on the internet, besides providing customization
of the products according the needs of the market.
Price for Performance:
• Dell use an integrated process management system that coordinate the
company process from procurement to distribution and technical support to
ultimate customer. This integrated process allows the company to use
standardized policy across the world and enjoy various economies. Thus
some of cost saved by using the method is passed on to consumer by
offering valued product at competitive prices.
29
30. Customization:
• Dell also offers the customization services to individual extent. It
means that a customer is free to select the component parts of
the computer he wish to have (SUIT101, 2010). For example a
customer may select the Hard Desk capacity, the processor, RAM
etc according to his own sweet well.
Reliability, Service and Support:
• The company has differentiate its offerings from competitors by
offering fast, reliable, and trustworthy customer services across
the world that are available within 48 hours after lodging a
complaint or problem with computer. This has helped Dell to
enjoy unique value in the eyes of customer as no other company
provides such type of services.
30
33. "Our Policy: Rule 1 - The customer is always right! Rule 2 - If the customer is ever
wrong, reread rule 1.“
“20 years and $40 billion; they seem like good
round numbers”
”I saw that you'd buy a PC for about $3,000, and inside that PC was about $600 worth
of parts. IBM would buy most of these parts from other companies, assemble them, and
sell the computer to a dealer for $2,000. Then the dealer, who knew very little about
selling or supporting computers, would sell it for $3,000, which was even more
outrageous.”
“The interesting thing is
when we design and architect
a server, we don't design it
for Windows or Linux, we
design it for both. We don't
really care, as long as we're
selling the one the customer
wants.”
“Our business is about technology, yes. But it's
also about operations and customer
relationships. ”
33
34. Conclusion
• Dell remains the world’s largest PC maker:
• Not the revolutionary force it was…
• Direct (DTC) will dominate
• Partnerships with Microsoft and Intel:
Microsoft losing ground to Linux and Intel to
AMD.
• Needs to increase R&D spending; Look for
future trends.
• Cutting price. Undercutting rivals. Needs to
spend more on customer service and new
product development.
34
35. References
• AJULA. (2009). Comparative Analysis of PC Market Leader.
Retrieved March 27, 2010, from American Jewish University.
• David, F. R. (2005). Strategic Management Eight Edition. USA:
Pearson.
• Dell. (2009). Dell Computer Corporate Global Strategies.
Retrieved March 28, 2010, from Dell Computer Inc:
http://www.dell.com/html/us/corporate/brochure/global.htm
• Dell. (2010). Dell Mission Statement. Retrieved March 27, 2010,
from Dell.com: http://www.dellmfg.com/mission.htm
• Kotler, P., & Armstrong. (2003). Principles of Marketing. USA:
Pearson.
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