Dell Strategic Management Assignment
Dell Strategic Management Assignment
Dell Strategic Management Assignment
Dell Strategic Management Assignment/Case Study. It reviews the organizational structure, vision, mission, SWOT, PESTEL Analysis, Strategic Group Map Competition and Product Positioning Map of Dell. This is a sample paper. If you like to order your own paper, please Click Here
INTRODUCTION
This report undergoes a strategic management overview of Dell, one of the leading PC vendors of the world with a unique operations model focusing on built to order and direct to consumer frameworks. The report begins with a comprehensive overview of the companys operations, its hierarchy, location and principle of logistics. An understanding of the vision, mission and objectives allows for the strategic analysis to be put into context and perspective. Our first strategic analysis tool is the SWOT analysis followed by an internal and external factor analysis. This is accompanied by a TWOS matrix allowing the report to pin point specific strategies which may help the organization cash on its strength and opportunities to offset threats. An overview of the life cycle of the industry is followed by a PEST analysis. Understanding the political factors is critical and along with the location principles explained in the first section allows us to pin point some strategic direction for the company. Similarly the economic, social and technological factors are discussed for the industry and the implications for Dell on a strategic level. A competitive analysis with other names in the industry is done through a product positioning map on the factors of price and customization.
also used for installation, repairs on the site and integration of the overall systems. Resellers are used for recommendation of the product to consumers.
LOCATIONS
The location factor of Dell is critical to the effectiveness of its built to order model. The basic decisive factor in choosing a location is to understand how costs can be minimized, built to order models can be extended and direct sales can be maximized around the world with minimum time and maximum customer satisfaction. Specific locations and their selection depend upon labor rates in an area, the transportation infrastructure, political barriers and the closeness to high demand areas. The headquarters originally was in Austin Texas, where the company was formed. Manufacturing units exist in Tennesse as well. Currently the manufacturing units in America are limited to these two areas. Brazil has a manufacturing unit of Dell in Eldorado do Sul. This location point was decided on the basis of the need to supply the South American market. There were also political factors such as the avoiding of tarrifs because of the choice of location. The European, Middle Eastern and African market are combined as one sector; the headquarters of which is based in the UK. Ireland is used for a production unit because of the tax incentives available over there (Loughran, 2000). Logistic hubs and technical support units are also deployed around the continent. Manufacturing units are placed strategically in the Asia-Pacific region as well. Malaysia because of its appropriate labor rates, political incentives and closeness to suppliers were chosen as the central location. Production units are placed around the continent including one in China with close suppliers in Taiwan.
HIERARCHY
The organizational hierarchy can be seen as follows:-
MISSION STATEMENT
Dells 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: Highest quality Leading technology Competitive pricing
Individual and company accountability Best-in-class service and support Flexible customization capability Superior corporate citizenship Financial stability
BUSINESS OBJECTIVES
Dells business objectives include quality, leading technology, competitive pricing and flexible customization support. Through a strong quality assurance team and in house capabilities to build most of its product it has been able to develop a strong QA engineering function. Through a participative culture of employees and a drive to meet future market needs it is able to incorporate all development of technologies in its expansion. Its business model has always been successful to stay on top of technology. Utilizing a build to order model it has been able to incorporate leading technology as well as provide flexibility of products to consumers. Through the removal of middle men in sales as well as developing in house capacities and optimized inventory management; Dell has also been able to achieve cost leadership in many market segments of the computer industry.
SWOT ANALYSIS
STRENGTHS
The business model of dell which focuses on a built to order framework where the middleman is removed and PCs are sold directly to the end buyer
Strong strength of sales strategy through a variety of mediums ranging from conventional to e-commerce Elimination of the mark ups added by the reselling party through the direct sales to end buyer resulting in lower costs to consumer without cutting down margins for Dell Reliability that comes out of a built to order model reduction of over-heads related to large inventories and finished goods. One of the industry leads in the Personal Computer market Considerable number of manufacturing units across the world Strong brand value and power in B2B as well as B2C Significant margins over costs of production because of the direct sales to the end buyer A highly relationship intensive strategy starting from the consumer sector and extending to the corporate and government sectors Holds a large share in the market of personal computers Through the built to order model of production, Dell is able to achieve a quick turnover as well as decrease the stock required in the inventory High level of quality assurance through extensive testing in the production process A wide array of customers including specific market segments such as hospitals and universities Top ranked Server on Intel technology by the publication Technology Business Strong understanding of individual customer segment needs Wide array of methods of advertising and marketing There are not a lot of production units and regional offices in the west including the United States For some consumers it is an inconvenience that Dell PCs cannot be purchased through retail outlets It has not been able to penetrate into several international segments as a leading supplier even though the number of locations in the international market are great In the printer market it does not produce its own products rather purchases it from Lexmark There is a strong dependency on outside suppliers from foreign lands which leads to a strong dependency on fuel supply and their prices leading to fluctuation The size of the company comes in the way of faster growth There is a continuing demand for personal computers There is a strong and evolving market for notebooks and tablets There are strong opportunities of partnership in the market including one potentially with Microsoft There is a strong margin of expansion in consumer electronics Consumer spending on technology is relatively untouched compared to other products Strong growth in the market of color printers There are more mergers and acquisitions happening in the industry a threat of strong consolidation trend in the PC industry
The influence and dependency on outside suppliers means increasing oil prices are crippling the spending of the consumers on PCs The demand of commercial usage of PCs are not increasing at the same pace Strong competition continues to act as a threat The growth of the market has slowed down Strong fluctuation in price Computing power fees has reduced The market has widened The fluctuating value and devaluation of currency continues to happen in the international market
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not increasing at the same pace Strong competition continues to act as a threat The growth of the market has slowed down Strong fluctuation in price Computing power fees has reduced The market has widened The fluctuating value and devaluation of currency continues to happen in the international market
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extending to the corporate and government sectors Holds a large share in the market of personal computers Through the built to order model of production, Dell is able to achieve a quick turnover as well as decrease the stock required in the inventory High level of quality assurance through extensive testing in the production process A wide array of customers including specific market segments such as hospitals and universities Top ranked Server on Intel technology by the publication Technology Business Strong understanding of individual customer segment needs Wide array of methods of advertising and marketing
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Weaknesses
There are not a lot of production units and regional offices in the west including the United States For some consumers it is an inconvenience that Dell PCs cannot be purchased through retail outlets It has not been able to penetrate into several international segments as a leading supplier even though the number of locations in the international market are great In the printer market it does not produce its own products rather purchases it from Lexmark There is a strong dependency on outside suppliers from foreign lands which leads to a strong dependency on fuel supply and their prices leading to fluctuation The size of the company comes in the way of faster growth .025 2 .05
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TWOS MATRIX
Strengths Weaknesses The business model of dell There are not a lot of which focuses on a built to production units and order framework where the regional offices in the west middleman is removed and including the United States PCs are sold directly to the For some consumers it is an end buyer inconvenience that Dell PCs Strong strength of sales cannot be purchased through strategy through a variety of retail outlets mediums ranging from It has not been able to conventional to e-commerce penetrate into several Elimination of the mark ups international segments as a added by the reselling party leading supplier even though through the direct sales to the number of locations in end buyer resulting in lower the international market are costs to consumer without great cutting down margins for In the printer market it does Dell not produce its own products Reliability that comes out of rather purchases it from a built to order model Lexmark reduction of over-heads There is a strong related to large inventories dependency on outside and finished goods. suppliers from foreign lands One of the industry leads in which leads to a strong the Personal Computer dependency on fuel supply and their prices leading to market fluctuation Considerable number of manufacturing units across The size of the company comes in the way of faster the world growth Strong brand value and power in B2B as well as B2C Significant margins over costs of production because of the direct sales to the end buyer A highly relationship intensive strategy starting from the consumer sector and extending to the corporate and government sectors Holds a large share in the market of personal
computers Through the built to order model of production, Dell is able to achieve a quick turnover as well as decrease the stock required in the inventory High level of quality assurance through extensive testing in the production process A wide array of customers including specific market segments such as hospitals and universities Top ranked Server on Intel technology by the publication Technology Business Strong understanding of individual customer segment needs Wide array of methods of advertising and marketing W-O Strategies The development of further production units as well as retail units in the United States [A combination of Weakness 1, Weakness 3 and Opportunity 5] Diversification strategy towards the printer market into the color printers including development of internal capabilities [Weakness 4 and Opportunity 6]
Opportunities
S-O Strategies
There is a continuing demand for personal computers There is a strong and evolving market for notebooks and tablets There are strong opportunities of partnership in the market including one potentially with Microsoft There is a strong margin of expansion in consumer electronics Consumer spending on technology is relatively untouched compared to
Expansion intensive strategy into the personal computer as well as laptop Market [Combination of Strength 1, Strength 5, Opportunity 1] Strategize such that all future developments are in line with the evolving technology and focus on a corporate social responsibility agenda (Strength number 14 and Opportunity number 1)
Threats
S-T Strategies
W-T Strategies Counter competition and increasing market share by penetrating into the Asian and European market for leading supplier position in maximum locations [A combination of weakness 3 and threat 1]
There are more mergers and acquisitions happening in the industry a threat of strong consolidation trend in the PC industry The influence and dependency on outside suppliers means increasing oil prices are crippling the spending of the consumers on PCs The demand of commercial usage of PCs are not increasing at the same pace Strong competition continues to act as a threat The growth of the market has slowed down Strong fluctuation in price Computing power fees has reduced The market has widened The fluctuating value and devaluation of currency continues to happen in the international market
Provide attractive pricing and discounting packages on specific products to the B2C market [A combination of strength 9 and Threat 4]
This stage is not to be mixed with the actual product introduction stage. The purpose is to bring the media and big guns to an event and announce what will be coming through in the near future. The product does not always reach its final shape at the time of announcement of the product.
STAGE 4: MAINTENANCE
It is during this stage of the life cycle that the price starts decreasing and the supply increases getting even with the actual demand in the market. The products will be send to all major sales point of Dell around the world at a lower cost than before. It is at this stage of the new product that the future product is announced.
STAGE 5: RETIREMENT
Since Dell operates in a highly technological environment, changes and advancement are frequent which results in a relatively quicker retirmenet of products. This is now replaced by the introduction of the product which incorporates new technology.
ECONOMIC
The economic situation around the world, in specific regions have a direct impact on two things. A) The changing economic situation and landscape has a direct impact on the pricing strategy and profit margin of Dell and B) Economic turmoils such as the one faced right now by the world decreases consumer power to buy the Dell products. Currency fluctuation and Changes in Oil prices are another factor which causes strong disruption in pricing models of Dell. Strong dependency on foreign supply means these two factors become all the more critical.
SOCIAL
Demand for computers has a strong dependency on several social factors. One of the most critical of these social factors is the level of education that prevails within a country. Higher education standards lead to strong demand for the PCs around the globe.
TECHNOLOGICAL
Technological changes in environment include the advancement of components, more efficient parts, internet access, newer ways to market the product and the pace at which products keep getting smaller and faster. This change in speed and size is central to the changes that are required on a regular basis by Dell in order to keep up with the business environment. Source: (Kharif, 2005)
Customizable
HP
Generic
RECOMMENDATIONS
An involvement in CSR activities including a Green Campaign for collection of old PCs/electronic equipment for recycling/disposition in an environmental friendly way. This will lead to better image in the society as well as sustainable development and cost efficiency in the long term
A series of internal marketing efforts to maintain a highly innovative culture within the organization for a re enforcement of its employer values for high performance management and employee participation. Venture into R&D partnership with an established company sharing intellectual resources and the hardware infrastructure of Del for development of technology savvy products for future. Building more manufacturing plants around the world and specifically in the US. Global expansion should be met with region specific capacity building as well as to reduce supply chain costs/complications and dependency on external factor
Internal capacity building for the development of printer products in order to cut down its costs, increase quality and increase market share in competition to HP.
CONCLUSION
The industry of personal computers, laptops and related hardware is one which evolves continuously. The result of globalization, political incentives and technological advances can be seen on a regular basis. This means that a reassessment of strategy for all the players in the industry is important in order to keep the respective competitive advantage going. Dells structure allows for efficiency, cost optimization, customer relationship intensive strategies and optimum supply chain. This report assessed the strategic direction that Dell has been taking on the basis of its external environment and internal capabilities/limitations. Through TWOS, PEST, positioning maps and internal/external key factor evaluation, the report came up with a five point recommendation focusing on research and development, production plants, internal capability development, high performance management and corporate social responsibility.
Dell is very famous for custom-built PC and other computer related products and selling them online. Dell is very efficient in terms of dealing with its suppliers and keeping the inventory near to zero level which helps the company to adapt JIT method which lowers the prices to the final user.
Moreover, they have post sales online supports which are online and in some cases the company engineers can even visit the customer sites. As long as the company has been serving giant companies such as governments, and huge companies such as Cox communications, EDS and etc, they tend to be permanent customers as it costs massive money for the customers to switch from Dell to another company. Moreover, as the company has been diversifying its product ranges from simply computers to other products such printers, storage services; this indicates that the company will be serving all type of customers, not only corporate clients. Therefore, Dell has to focus on improving its customer service to small business and individual customers as well to gain their lifetime loyalty.
REFERENCES
Dell, M. (1999). Direct From Dell: Chairman and Chief Executive Officer, Dell Computer Corporation. Collins Kharif, O. (2005). Dell, Time for a New Model? BusinessWeek Schmid, N. and Kelber, A. (2005). The Dell Company A Strategic Analysis. Management Seminar. www.dell.com www.hp.com www.ibm.com
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