Dell Corporation
Dell computers
Company Background
Michael Dell is a global icon, especially on his college-based business of building personal computers using available parts, which he used to create a global business. The Dell Computer Company officially became a global corporation in 1984 (Dell, 2009). The priority of Dell Corporation was the build to order strategy, whereby clients ordered computers; their orders routed via credit check, and then the manufacturing followed (Qurechi and Muffech, n.d). Afterwards, the company built the order, tested, and shipped to the client who later received the computer within 5-7 days from the date of placing the order. This approach resulted to beneficial outcomes. First, the company eliminated the use of intermediaries.
In so doing, Dell passed customer’s savings in the form of affordable prices, understood the customer’s needs and embraced market changes in a quick manner than competitors (Dell, 2009). Another significant benefit is that the company built computers for clients and not for inventory. Therefore, the company did not waste resources in building computers that may not reach a client, employ staff to transport inventory all over the globe, or use lots of time tracking inventory (Qurechi and Muffech, n.d). The company is best recognized for its prioritization of direct marketing for selling and distributing computers. During the ordering process, the customer has a chance to select the features one wanted for their computer. Therefore, the company manufactured systems only after the customer ordered.
The company has a very user-friendly website, whereby most of the sales, technical support and orders take place online. The supply chain and data integration in collaboration with their suppliers has contributed in making Dell one of the most successful computer producers. In addition, the unending advancements in technology and creative approach to manufacturing and assembly have assisted in maintaining the Dell Company the affordable leader in the Computer sector (Qurechi and Muffech, n.d). Additionally, the company has the highest Return on Assets, highest inventory turnover, and highest Return on Invested capital in the Personal Computer industry.
Company History
Michael Dell’s vision and business approach guided the upcoming computer company to change with times and cater directly to the exceptional, wants and desires of the customers. One of the creative approaches undertaken by the entrepreneur in the company history was the establishment of a national computer support center that provided technical support, trouble shooting, maintenance and restoration for most of the Dell products. During the time, there was no other computer company, which offered such responsive, customized and (Dell, 2009). The company, which was originally named PC’s Limited, changed its brand name in 1988 to Dell Computer Corporation. In the same year, the company went public and sold stock shares for $8.50 each.
In the year 1992, the company made to Fortune Magazine’s ranking of the top 500 companies. In the same year, Michael Dell was 27 years of age. Presently, the company has a net worth of around 14 billion dollars and gained a status of among the wealthiest corporations in the globe (Dell, 1999). In the year 2007, some of the products from the Dell Computer Corporation’s history were celebrated as national treasures, when the company gave out a collection of original computers to the Smithsonian National Museum. Currently, the company provides a variety of products including notebook PCs, printers, network servers, televisions and many other electronic devices. In addition, the company offers employment to over 77, 000 people in the globe.
Dell Computers: SWOT Analysis
Dell inc., directs its business activities through four worldwide sections, that is, large enterprise, public small and medium business, and consumer. The large enterprise section focuses on providing solutions and services using data centers, cloud-computing solutions to national customers (Kreamer, Dedrick and Yamashiro, 2000). The public section focuses on the wide range of information technology. The small and medium business sections aim at assisting small and medium sized companies work for their technology by providing products, services and solutions (Pinegar, 2002).
Strengths
Weaknesses
Dell is the largest PC manufacturer and brand in the globe
Dell Inc. is a computer assembler, not a computer manufacture; they purchase the parts from manufacturing suppliers globally
The company uses the current technologies and direct marketing to customers
Due to the many suppliers, the company may end up assembling low quality products
The company meets retailers, suppliers directly to the customers
The products assembled are not attractive for college students because it gets a revenue of 5% in the total revenue
The company has a total command over its supply chain. In addition, the company specifies and adds features and items according to the customer’s preferences
Another potential weakness is that customers do not get to touch or see the products physically
The company’s strategy of direct access allows the company to meet the corporation’s to provide direct relationship. Additionally, this allows the company to keep in touch with customers after the sale too.
The customers cannot purchase dell products like other brands because a customer needs to specify a product
The company brags an efficient acquisition, manufacturing and distribution channels
The company poses a challenge to new users owing to its direct method and customization because, for a single system, customers cannot go to purchase products from retailers
The company offers consumers powerful machines at affordable prices
The company assembles PCs using cheap labor whereas the suppliers manufacture the computers. Then the company drops the products to the customers using courier. Dell has total command over its supply chain
Opportunities
Threats
Michael became CEO of Dell and remained as the leader for a long time. The company can allow the new generation to lead the company into new modern changes with their talent and smartness
The competition in the PC industry is the only potential threat for the company. All profit making companies, new entrants, and other competitors pose as threats
Dell is using various strategies by introducing new products. this includes printers, toners and included LCDS and other non-computing products
Dell being a computer assembler is a significant threat because it cannot make computers
The company is still .
There is a threat of becoming outmoded, which is a reality in the PC business
There is increased demand for laptops compared to PCs. The growth in demand for laptops is another opportunity for Dell to develop in other segments
The direct model used by the company is only used because it is attractive. Owing to the possibility of other at an affordable cost is a potential threat
Personal computers are gradually becoming a necessity because customers have knowledge about the computers. Additionally, this is an opportunity for the company to grow in various segments
The price difference is not an issue for the customer because they might choose other PC brands instead of waiting for Dell’s computers
The company has a new experience owing to the internet, and customers only have to visit the company’s website to get information and place orders online. The trend towards proficient buyers is an opportunity
The growth rate in the PC sector is declining. Dell has the largest market share and in case of demands slowing down, competition will grow, and this means that the company will have to work extra harder in order to maintain its large market share
The increase in communication and technological merging are also an important opportunity for the company
Personal computers represent a volatile market where there are many threats. For instance, there are changes in software, hardware daily, and it is significant for the company to always check for the new things in the market or develop new systems
There is a threat of other companies producing high quality computers at a low price
Technology suggests that the current products are the most popular; therefore, the company will need to keep up with technological advancements
Five Forces Analysis
The Porter’s Five Forces approach is a powerful evaluation tool that helps managers to recognize the focal point of control in an organization. In addition, it plays an important role in understanding the strengths of the organization in the sector against competitors, suppliers and consumer’s. This part will examine the five aspects that comprise the Porter’s Five Forces independently and evaluate their impact on Dell Corporation and the personal computer sector as a whole (David, 2005).
Rivalry amongst Existing Competitors
The computer industry, specifically the personal computer from the start it is directed towards consolidation as the market type is one that fits oligopoly. Additionally, the personal computer industry constitutes of competitors such as IBM, Compaq, Hp, Gateway, Toshiba and many others. Therefore, owing to such powerful companies as competitors, Dell Corporation will require to develop strategies to maintain an affordable price while producing high quality products to acquire a competitive advantage against these competitors.
Threat of New Entrants
Some of the factors that lead to emerging companies in the same sector are the advanced technology. Therefore, every company will try its best to outperform competitors by producing the latest technology and at the same time produce affordable systems. Probably, this is the reason why new firms find it hard to cope in the market. Dell has an already established market, and its affordable products gives the company a competitive advantage, which may discourage new entrants. In addition, as an existing competitor, Dell Corporation will competitively perform better compared to new entrants.
Bargaining Power of buyer
Due to the less amount of brand loyalty in the computer industry, the bargaining power is high. Additionally, this arises because many companies tend to produce similar products. In the case of Dell Corporation, the customers have a chance to specify their preference and order systems they can afford. Therefore, this will give the corporation a better chance because the customers choose what they can afford.
Bargaining Power of Suppliers
In the computer market, the bargaining power of suppliers is large because there are few suppliers who deal in computer components. Therefore, the suppliers in the case of Dell Corporation, most of them practice monopoly over the market. However, if the company decides to switch suppliers, it will bear significantly on costs.
Substitute Products
The availability of substitute products has significant influence on sales and profitability of the computer industries. The threat of substitutes is high for Dell Corporation due to the similarity of products produced by different companies with very little distinction (Kreamer, Dedrick and Yamashiro, 2000). In addition, the competition created by developing similar products leads to the creation of a market known as oligopoly.
Recommendations
Liquidity, profitability and growth are some of the aspects used to measure the trends in achieving organizational success. This means that a company must have the liquidity to endure challenges that arise in the business cycle. It should make exceptional profits to uphold their investors, and growth in the market and lead in innovations as per the technology advances. In additional, capacity to succeed in these aspects will give the company a competitive advantage over competitors in the same industry. Owing to the changing consumer needs for computer industry, the company should take advantage of its strengths, identify opportunities and threats, and pay attention to their weakness in order to position itself as substantial shareholders in this competitive market.
References
David, F.R. (2005). Strategic Management Eight Edition. USA: Pearson
Dell. (2009). Dell Computer Corporate Global Strategies. Retrieved September 26, 2013, from Dell Computer Inc.: http://www.dell.com/html/us/corporate/brochure/global.htm
Dell, M. 1999, Direct from Dell — Strategies that revolutionized an Industry, HarperCollins Inc.,
New York.
Kraemer, K.L., Dedrick, J., Yamashiro, S. (2000). Refining and Extending the Business Model
with Information Technology: DELL Computer Corporation. The Information Society, 16 (1), 5-21.
Pinegar. (2002). Dell Computer Corporation: Market Trends and SWOT Analysis. Retrieved from http://www.pinegars.com/PDF_Files/Paper%202a.pdf
Qureshi, I., & Muffich, J. Case Analysis: Dell Corporation. Retrieved from http://ijazconsulting.com/uploads/Dell-Strategic_CaseAnalysis_by_Ijaz_and_Muffich.pdf
