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DELL Inc. Prepared by Zhanna Tulekova MGT 490. Organizational Background.
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DELL Inc. Prepared by Zhanna Tulekova MGT 490
Organizational Background Dell Corporation is the direct selling computer company, with 96,000 employees. Dell was originated in 1984 by Michael Dell. Beginning with small capital Michael Dell, who is current Chairman and CEO, made the company profitable after first two years. The income report for the last three years is presented in the table below
Organizational Background Dell focuses on the design, improvement, produce, advertising, sale, and support of a variety of computer systems and services worldwide. The key market segments are Governments and big businesses. The company’s strategy is “Direct Business”- to understand consumers’ needs and efficiently provide its products by eliminating retailers.
Dell Strategy- Direct Business Model Dell Strategy- Direct Business Model • Sell directly to customers • Build products to customer order • Reduce retail mark-ups and costs • Reduce risk associated large inventories of finished goods • Leverage relationship with suppliers and consumers • Make better relationship with customers • Use information to improve the Value Chain
PEST Analysis (cont.) X- Ranks of PEST Analysis Y- Rank Y X (4- most important, 3- important, 2- less important, 1- the least important)
Dell Inc. Major Competitors
PC Industry Sales Y X X-Year Y- Total Industry Sales The whole computer industry demonstrates increase in sales over a 4 years (2005 - 2008) and decline in 2009 which was a result of the economic down turn. All sales figures are in Million Dollars.
Porter’s 5 forces (4- the highest threat, 3- high threat, 2- moderate threat, 1- the lowest threat)
Porter’s 5 forces Intensityof Rivalry (Very High) • Large number of rivals • Relatively low difference in price between competitors • Low differentiation • High exit barriers • However, Dell differentiates from other competitors by its successful business strategy. Dell should keep with low prices.
Porter’s 5 forces Bargaining Power of Buyer (Very High) • Customer service is important factor • Highly price sensitive (If the prices are raised high, customers will buy from competitors) • Dell should pay big attention to consumers and entry emerging markets for obtaining new customers.
Porter’s 5 forces Bargaining Power of Suppliers (High) • Large amount of suppliers for different parts: hardware, keyboards, and etc. • High switching costs Supplier power is high in PC’s industry, but Dell is a big corporation, and suppliers would like to work with Dell
Porter’s 5 forces Threat of Substitutes (Low) • Wide usage of PCs throughout the society (one computer for every three people in the U.S.) • It is difficult to find alternative to computers, especially for businesses and governments.
Porter’s 5 forces Threat of new entrants (Moderate) • Required low capital investment • No legal or government barriers • Difficult to compete • Difficult to acquire customer’s loyalty and trust • In the PC’s industry it is easy to entry, but new companies will not create a tense competition for Dell. Because quality reputation is important, and new companies will need much time to prove its excellence.
Conclusion on overview Dell’s strategy and industry analysis In conclusion, the external environment is wholesome to the company because the Political, Economical, Social and Technological factors are opportune to the business. The company has come up unique strategy, which have helped to gain competitive advantage in the industry in which it operates.
Competitors Major Competitors Recently, the computer industry progressed a lot. New products are coming out all the time, the competition is brutal, and customers are changeable. The major competitor of Dell Inc. are presented below.
Competitors #1
Competitors * Web influence describes a company's ability to build brand-name recognition on the Web. Web influence data can be determined by the number of hyperlinks to the company’s Web site from external domains.
Competitors High DELL HP, IBM APPLE QUALITY CISCO XEROX Low Low High COST
Competitors • Founded in 1939 • HP’s mission: “To invent technologies and services that drive business value, create social benefit and improve the lives of customers—with a focus on affecting the greatest number of people possible.” • The founders developed a unique management style that came to be known as The HP Way. • 1. We have trust and respect for individuals. • 2. We focus on a high level of achievement and contribution. • 3. We conduct our business with uncompromising integrity. • 4. We achieve our common objectives through teamwork. • 5. We encourage flexibility and innovation. • HP is listed in Greenpeace’s Guide to Greener Electronics
Competitors • Founded in 1911 • IBM mission “We translate advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide.” • International Business Machines is a technology and consulting firm. It manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas ranging from mainframe computers to nanotechnology. • IBM has nine research laboratories worldwide • IBM’s goal is a reduction of the company's impact on the environment • Tokyo Ohka Kogyo Co. and IBM are collaborating to establish new, low-cost methods for bringing the next generation of solar energy products to market.
Competitors • Founded 1976 • Apple’s mission: “Apple will be a leader in providing simple, powerful, high-quality information products and services for people who learn, communicate, and create.” • Apple is listed in Greenpeace’s Guide to Greener Electronics • Stylish product innovation
PC Vendor Unit Shipment • In Asia/Pacific, PC shipments reached 29.7 million units in the third quarter of 2010, a 10.5 percent increase from the third quarter of 2009. • PC shipments in China in the third quarter of 2010 held steady at 62% of all PCs shipped in Asia/Pacific, growing 11.3% over the same quarter last year. • Latin American PC shipments totaled 8.2 million units in the third quarter of 2010, a 9.9% increase from the third quarter of 2009. • PC shipments in Japan surpassed 3.6 million units in the third quarter of 2010, a 14.1% increase from the same period last year.
Market Analysis 23.3% 8.4% 10.3%
Market Analysis (Average Selling Price) PCs Servers Mainframe Servers Average Price Decline -4.4% -6.2% -3.6% Key Reasons causing prices to decline Increased price decline due to commoditization Industry’s tend to decrease manufacturing costs
Market Analysis • Technologies are improving every year, consequently making the industry fiercer. • “Ten years from now there will be a small number of computers in home. As an alternative, people will be wearing computers implanted, for example, in eyeglasses, with the retina as the screen” according to IT Specialist, Raymond Kurzweil.
Market Analysis An important question to ask is how profitable is the industry. And the answer is very profitable. The industry is always redefining itself as well as every other business on the world due to its deep routes within every industry. As for what company ranks the highest in profit at the moment is Apple, but the numbers are skewed due to other hardware Apple provides. The industry is extremely competitive and profitable.
Market Analysis • In the US computers are found in most homes with access to the Internet. Population is taught to use computers in school at a young age. The target market for PC industry is the whole world (families, children, businesses, governments, and etc.) • However, there are some countries where people do not hot to use computers. The PC industry has plans to expand into emerging markets.
Social Media Dell uses social media to listen, learn and engage with the customers. • Dell Community - Support Forums -Owners Club - Dell Groups • Facebook - Dell Home/Consumer -Dell Large Enterprise - Dell Small & Medium size Business • Likedln • Twitter - Dell News - Dell Corporate Accounts - Dell Support Accounts
Conclusion on competitor analysis • PC industry is very profitable with constant innovations. Almost all companies work globally, they compete with each other by choosing different strategies. The leader in sales for 2010 is HP.
Dell’s Business Model • Earn customers' respect and loyalty by providing high quality, value, and low prices by direct business • To seize opportunities to growth by offering products in retail stores. • Comply with laws and rules • Attain profit for finance growth, value for shareholders investment and corporate objectives • To demonstrate the commitment to employees by promoting and rewarding based on performance and by creating a good work environment. • To lead in the marketplace by developing and delivering useful and innovative products and services
Changes in distribution of sales by product/region • Expanded relationships with retail partners around the world • Created Streak, a 5-inch device designed to provide on-the-go entertainment, social connection and navigation experience • Dell saw its sales in China jump 81% since 2010. Now China generates about $4 billion in annual sales, about 7-8% of Dell's total • In India sales jumped 52%, generating sales around$1 billion annually
BCG Matrix Dell in China Dell in USA Dell in EMEA Dell in Japan
