Dell Inc., 2009Mr. ReederMr. MackeyMs. BlockerMs. Richey

Overview

Analyze case/ Success and Downfall Competitive Advantage SWOT Internal/External Threats Dell Competitiors Response to Threats

Dell Inc., 2009

The success of DellHow Dell Added Value to its CompanyDell, the Largest supplierThe fall of Dell and the Rise of others

BTODells Competitive Advantage

SWOT Analysis of DellStrengths:

World’s largest PC maker.One of the best known brands in the world.First PC maker to offer next-day, on-site product service.Direct to customer business model. Uses latest technology.Dell has low operating cost Direct relationships with customers such as corporate and institutional customers.Direct customer service before and after the sale.Each Dell system is built to order to meet each customer’s specifications. Dell is able to introduce the latest relevant technology.Dell is not a manufacturer; Components are made by the suppliers and Dell assembles the computers using relatively cheap labor. Dell has total command of the supply chain.Dell is enhancing and broadening the fundamental competitive advantages of the direct model by increasingly applying the efficiencies of the Internet to its entire business.

SWOT Contined

Opportunities:

Diversification strategy by introducing many new products to its range.Personal computers are becoming a necessity now more than ever. The internet also provides Dell with greater opportunities since all they have to do now is to visit Dell’s website to place their order or to get information.Since Dell does not have retail stores, the online stores would surely make up for its absence.

SWOT ContinuedWeakness:

A huge range of products and components from many suppliers from various  countries.Computer maker and not the computer manufacturer, making DELL unable to switch supply.Dell lacked solid dealer / retailer relationships.No propriety technologyNot attracting the college student segment of the market. Dell’s focus on the corporate and government institutional customers somehow affected its ability to form relationships with educational institutions.For home users, Dell’s direct method and customization approach posed problems. Customers just can’t buy Dell as simply as other brands the custom-built according to their specifications and this might take days to finish.

SWOT Continued

Threats

CompetitorsNew entrants to the market pose potential threats.The threat to become outmoded is a pulsating reality in a computer business.Price differencesDell’s Direct Model attracts customers because it saves cost.With almost identical prices, price difference is no longer an issue for a customer. The growth rate of the computer industry is also slowing down. Dell has the biggest share of the market.

Internal threats● Slack- lost focus and allowed cost

structure to become non-competitive

● Strategic missteps- waited too long to improve technology and reduce cost

● Lost shares due to growth of units sold through retail and competitive pressure from HP and Apple

External threats

●Imitation- lost market share caused by competitors imitating their supply chain and lowering their prices

●Substitution- lost share to HP, Apple and other vendors.

●Hold up- poor financial performance and negative news coverage caused by Kevin Rollins

Dells Competitors Hewlett Packard- Focused on getting their products to retail outlets

first. Acer inc- Selling lower costing PCs that were Linux and Windows

friendly, bought Texas instrument notebook division,and Gateway inc and Packard Bell, also ridded itself of conflicting manufacturing partner Winstron Corp.

Apple- targeted premium customers, were known for their aesthetic designs and distinctive advertising campaigns, designed its own OS, hardware, and services

Lenovo Group Limited- Largest Pc manufacturer in China, bought IBM, sold to large businesses, and took advantage of low cost advertising in Banglore and India. Would contract manufacturing on a temporary basis.

Dells Response to threats

We have to gain a retail presence, most of the customers we are missing go to those places to see the product. If we don’t have a product their the consumer will not desire our product. We have to have a presence in the mobile space.