Chapter on "on Dell Inc"

Chapter 13 pages (3557 words) Sources: 1+

[EXCERPT] . . . .

The organization has reduced its manufacturing and inventory costs in an effective manner. Furthermore, the process of direct selling also enables the organization to surpass the distribution costs and have a direct link with the customers, which also enhances its relationship with the customers. All these factors have enabled the organization to reduce its costs and provide the best prices to the customers. (Wheelen & Hunger, 2012, pp. 9 -- 3)

4. How well do the different pieces of Dell's strategy fit together?

The organization has the basic focus of lowering the costs; providing best prices and services to consumers; and enhancing the financial standing and competitive position of the company. The different elements of the organizational strategy, including: just in time approach; build to order manufacturing; direct selling, expansion; advertisement; and high quality customer service fit together to attain the overall objectives. All of these elements complement each other and work collectively for the attainment of the above mentioned goals. (Wheelen & Hunger, 2012, pp. 9 -- 3; 9 -- 5)

5. Does Dell's expansion into other IT products and services make good strategic sense? Why or why not?

Yes, as the expansion of Dell in the market of other IT products and services makes a good strategic sense. This is because the expansion in these markets would enable the organization to complement its sales of personal computers and servers. The organization has had a previous experience of attaining high market share in the personal computer market and by sticking to its core strategy it can attain high market share in the new markets as well.(Wheelen & Hunger, 2012, pp. 9 -- 3; 9 -- 5)

With the changes in the consumer preferences and use of technology, the institutional customers of Dell were observed to make heavy investments on storage and customer solution services. Dell has identified a potential growth market in that area. Dell, because of its ability to cut costs throughout its value chain and transfer the costs savings to the customers, has an evident potential to attract a heavy customer base and establish a strong competitive position in the market.(Wheelen & Hunger, 2012, pp. 9 -- 3; 9 -- 5)

A number of factors have triggered the organization to enter these markets, including the increase in the global spending on information and technology services; rapid explosion of the digital information and content; expansion in the rate of search engine activity, use of emails, social networking websites, and text messages. As well as the rapid growth in the demand of information technology products and services throughout the globe. All of these aspects of the information and technology market triggered Dell to expand in this market and exploit the maximum potential benefits associated with it.(Wheelen & Hunger, 2012, pp. 9 -- 3; 9 -- 5)

6. What does a SWOT analysis reveal about the attractiveness of Dell's situation?

Strengths:

Dell is one of the largest and most popular PC maker in the world. It has retained its position as the market leader for the past few years and has shown positive signs in terms of share growth. In addition to that, Dell is efficient at minimizing inventory cost by turning it over in about every six days. Apart from that, Dell is able to increase its net income due to its Direct Selling Business Model. This allows the organization to supply products directly to the customer instead of providing the product via retailers. (Wheelen & Hunger, 2012, pp. 9 -- 2)

Weaknesses:

Dell has a plethora of suppliers from all around the globe, increasing its supply-chain management costs. Also, due to strong competition from rivals Hewlett-Packard, the growth of market share is slow. Dell does not attract the sector of market consisting of educational institutions, and a very minute portion of the sales is attributable to this sector. Apart from that, Dell does not employ distribution channels, disabling the costumers from approaching the retailers and restricting the sales to be carried out over the internet. (Wheelen & Hunger, 2012, pp. 9 -- 2)

Opportunities:

Dell can employ the strategy of diversification-which includes launching a versatile range of products. In addition to that, with the ever growing demand of personal computers and laptops; the knowledge of people regarding such devices has increased resulting in ease while operating Dell's custom made computers, and, in turn, an increase in their demand. (Wheelen & Hunger, 2012, pp. 9 -- 2)

Threats:

The increasing competition in the personal computer poses a threat to Dell. Also, the price difference between different brands is minimal. Apart from that, the rate of growth of the market is quite slow. Furthermore, new advancements and innovations are always on the go, threatening the organization's products to become outdated; hence, Dell has to come up with new ideas constantly. (Wheelen & Hunger, 2012, pp. 9 -- 2)

The following table summarizes the strengths, weaknesses, opportunities, and threats of Dell:

Strengths.

Weaknesses.

Largest Personal Computer maker over the globe.

Leader in the world Personal Computer market.

Employs Direct Selling Business Model.

Competes for merging and acquisitions.

Minimal inventory cost.

Competitive prices.

Reliable products.

Product adaptability

Growth in market share is slow because of intense competition.

Lack of retailers causes problems for customers in some regions.

Investments in research and development are low.

Relies heavily on large suppliers.

Does not target educational institutions.

Opportunities.

Threats.

Employing the strategy of diversification.

Growth of tablet market.

Increasing acquisitions in order to increase patents.

Tapping the printer market.

Making its presence in new markets stronger.

Outsourcing

Ever increasing competition.

Growth rate of Personal Computers market is low.

Increase in demand of smartphones and tablets.

Quick improvements and innovations in technology.

Competitive pricing wars.

(Wheelen & Hunger, 2012, pp. 9 -- 2)

7. Has Dell's strategy given it a sustainable competitive advantage?

The initial strategy of Dell became somewhat ineffective in the face of intense competition and changing market place. This, as a result, made Dell lose its market share to the competitors like Gateway, Hewlett-Packard (HP), and Apple. (Wheelen & Hunger, 2012, pp. 191) Thus, the strategy did not provide Dell with a sustainable competitive advantage. In order to gain sustainable competitive advantage over the rivals, it is necessary for the organization to make innovations in its product line or diversify into new markets. The current strategy of expansion into the information technology solutions market has the potential to aid the organization in gaining sustainable and effective competitive edge over the rivals. (Wheelen & Hunger, 2012, pp. 9 -- 3; 9 -- 5)

8. Is Dell's strategy potent enough to beat out existing competitors?

The current strategy of Dell focuses on the three key elements that are critical for the success of any organization, namely: customer satisfaction and cost reduction; effective product portfolio; and liquidity and profitability (Wheelen & Hunger, 2012, pp. 9-1 -- 9-5). On the basis of the current strategy; Dell has evident chances of beating the existing competitors as the strategy addresses almost all the forces that shape the industry competition. (Wheelen & Hunger, 2012, pp. 110) The organization, however, is required to attract and maintain a pool of skilled and talented workforce. This is because the human resource of an organization plays an important role in providing it with sustainable competitive advantage. If the organization fails to gain commitment from its human resource then even the best of the strategies fail and the organization has to struggle for its survival. It is, therefore, necessary for Dell to hire and retain a skilled and talented workforce so as to beat its competitors and maintain a high share in the market. (Wheelen & Hunger, 2012, pp. 158-159)

9. What are Dell's changes for becoming the dominant leader in the global PC market?

The global personal computer market is characterized by intense competition. Due to the rapid developments in technology, the organizations such as Apple and HP are introducing new products at a rapid rate. The high rate of obsoleting makes the life cycles of technological products very short. The prospects of Dell for becoming the dominant leader in the global PC market are not very high as the company cannot be ranked high on innovation and creativity. The consumers of technological product prefer products that can be differentiated from others in the industry and this can only be done on the basis of innovation. The organization, therefore, is required to work on its innovatory skills so as to make its future prospects more bright and successful.

10. How good are Dell's prospects for continued growth in revenues and earnings?

The use of related diversification strategy, or expansion into the market of other information and technology products and services, has enhanced the prospects of Dell for continued growth… READ MORE

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