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Environmental Analysis on :

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Products :

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Few more………..

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BY :AVROJIT .

DOYEL .

FAISAL.

BINCY.PRASHANT.

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Contents Introduction and summary of the company

Mission and Vision

Environmental Analysis

Micro Environment Analysis ( SWOT and TOWS)

Value Chain Analysis ( Internal Environment )

Macro Environment Analysis ( PEST )

Competitive Environment Analysis ( Porter’s Model )

Strategic Approach and Competitive Advantages

Conclusion

References

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INTRODUCTION :

Michael Dell founded the company in 1984 in Austin, Texas

Dell develops, sells and supports computers and related products and

services.

Dell, the company is one of the largest technological corporations in

the world, employing more than 103,300 people worldwide

Dell is listed at number 41 in the Fortune 500 list

They ship more than 10,000 systems every day to customers in 180

countries — that’s more than one every second.

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Using the Power of the Internet to Connect with Customers :

Dell started selling computers on dell.com in 1996 — and today they have more than 4 million visits to the site every day, resulting in an order placed online every two seconds.Today, dell.com reaches customers in 166 countries and 34 languages around the world.Dell is the second most respected brand for breadth and depth of social media activities.More than 3.5 million members belong to the Dell social Web community, which includes dell.com communities and Dell outlets on Twitter, Facebook, Orkut and other sites…

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Dell Vision And Mission Statement

Michael Dell , the founder of Dell Inc, started his business by

simple built-to-order concept selling directly to customers. Later

on he DELL started direct sales by mail and phone. Dell is the first

company to list a website. The profits dramatically increased when

Dell started to sell its products through the website.

Collective commitment to our customers, direct is Dell Effect

relationships, global citizenship, team success and winning.

Dell's aim is to create loyal customers by providing superior

experience at a great value. They are committed to direct

relationships, providing best products with standard based

technology outperforming the competition with value and a

superior customer experience.

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Vision :

Purpose: provide customers with superb value technology

Business: high quality, relevant technology, customized systems

Values: superior service and support, easy to buy, easy to use

Vision Statement:

Its the way we do business. It's the way we interact with the

community. It's the way we interpret the world around us--

our customers needs, the future of technology, and the

global business climate. Whatever changes the future may

bring our vision -- Dell Vision -- will be our guiding force.

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Mission :

Dell's mission is to be the most successful Computer Company in the world at deliveringthe best customer experience in markets we serve. In doing so, Dell will meet customerexpectations of

Environmental Analysis :

• The purpose of this report is to analyze the strategic position of Dell Inc.

It includes analyzing the

a. Internal Environment ( SWOT and TOWS )

b. External Environment ( PEST )

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SWOT Analysis of Dell

STRENGTH• Direct Sales Approach. • Market Leadership• Price for Performance• User friendly website• Latest Technology• Customization

WEAKNESSES• Reliance on Corporate and

Institutional Sales• Neglecting the College

segments• Non-availability in Retail

Segment• Changing Consumer needs• Merger of HP and Compaq

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Opportunities

• Untapped Market• Growing demand for Laptop• Increase usage of Internet• International Expansion• Business Diversification• Outsourcing

Threats• Volatile Market trends• Global Financial Crises• Slowdown in Economic

Growth• Technological innovation• Slowdown in Industry

growth rate• Emergence of China and

Indian IT giants• Price Wars

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TOWS Analysis• TOWS Analysis is a variant of the classic business tool, SWOT

Analysis. TOWS and SWOT are acronyms for different arrangements of the words Strengths, Weaknesses, Opportunities and Threats.

• By analyzing the external environment(threats and opportunities), and your internal environment (weaknesses and strengths), you can use these techniques to think about the strategy of your whole organization

It helps to answer the questions, like :i. Make the most of your strengths?ii. Circumvent your weakness?iii. Capitalize on your opportunities?iv. Manage your threats?

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TOWS Analysis

Opportunities1. Untapped Market2. Growing demand for

Laptop3. Increase usage of Internet

THREATS1. Volatile Market trends2. Global Financial Crises3. Slowdown in Economic

Growth

STRENGTH

1. Direct Sales Approach.

2. Market Leadership

3. Price for Performance

4. Customization

SO

PRODUCE HIGH QUALITY PRODUCTS

CUSTOMER ORIENTED PRODUCTS

ST

PROVIDE HIGH VALUE THAN COMPETITORS

REMAIN CUSTOMER ORIENTED

COMPETITIVE ADVANDANTAGE

WEAKNESESS

1. Reliance on Corporate and

Institutional Sales

2. Neglecting the College

segments

3. Non-availability in Retail

Segment

WO

CUSTOMER RELATIONSHIP

BETTER PROMOTION STRATEGIES

STRENGHTHENING THE BRAND

WT

SUSTAINIBILTY AND ACHIEVING COMPETITIVE ADVANTAGE

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Internal Analysis• Distinctive competencies are the core benefits that Dell enjoys

in the form of low cost and superior product performance. Moreover Dell direct sales to customer by using its website is cited as the ideal strength that the company posses that is hard to imitate. In addition to this Dell design its products according to wishes of the target market (build to customer specification) that allow the company enjoy superior customer value and brand loyalty. The company ability to coordinate its various functions to produce exciting products is still another core distinctive competence that helps Dell to stand apart from competitors.

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Dell arrive its competitive advantage from four dimensions that are:

• The value that the company creates for its customer b providing them superior technology, aesthetic designs, superior performance and technical support creates an enormous value for the offerings of the company.

• Dell charge competitive prices for its various products in the market. The company follows variety of pricing strategies depending on the market conditions. The objective of the pricing policy is to create happy and satisfied customer profitably.

• Dell has the ability to produce superior performance products at a very low cost due to its status in the market because the company enjoys various types of economies which are not at the disposal of other players in the market. The company thus has the ability to offer its products at significantly lower prices than its competitors in the market.

• Dell differentiates their laptops and PC’s many different levels including direct-to-customer model, building better-quality performance and up-to-date technological products, and direct customer interaction in diverse marketplace

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PEST ANALYSIS

• Dell’s environment consists of uncontrollable forces that directly or indirectly influence an organization’s ability to achieve a desired result.

• These influences create both opportunities and threats for a manager. We will use the PEST analysis for determining the DELL macro environment analysis.

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Political Factors:

• The political environment of the business has pivotal effects on the performance of the business in the quest of achieving its strategic goals. The political instability started after the 9/11 has affected the market conditions all over the world. Most of the computer manufacturers belong to US and the country government is taking huge efforts to facilitate the business. This offers exciting opportunities across the world to manufacturer like Dell, HP, Acer, Toshiba, and IBM etc. In order to capitalize the growing needs of the market the government of US has strengthen its ties with China in order to exploit the comparative advantage of the country in the form of low labor and technological cost.

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Economic Factors:

• The economic environment has gone through tremendous changes after

the advent of 9/11. In fact the event has completely changed the economic

conditions of the world. Companies that were considered as giant in the

market are now myths of the history. The condition stabilize relative in year

2006 and 2007 but after insolvency of Lehman Brothers and other giants of

the US the economic condition all the world suffered. The interest rates are

not stable due to huge fluctuation that arises from the instability in the

financial situations. Inflation all over the world has surged to all time high.

Due to huge expenditure on war terror fought in Iraq, Afghanistan and

other parts of the world the GDP of various countries have shown a very

low growth that have resulted in almost stagnant per capita income.

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Socio-cultural Factors:

• The values across the continents are changing with the passage of time, and now a global culture is arising meaning the presence of universal segment having the same values, likes and dislikes and other norms across the world. This offers exciting opportunities to various organizations including computer manufacturer in the form of standardized product development offers across the world with no adaptation. This translates into various economies, and low fixed costs, meaning change in attitude towards foreign brand.

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Technological Factors:

• Due to advent of the information technology the world has condensed to global village. The computing technology is leading the change from the front by offering exciting opportunities for advancement in technology. Technology has enabled the various manufacturers to enjoy low cost advantage and better quality. Manufacturer across the industry are trying their level best to offer innovative products at competitive prices. Moreover the demands for the industry offerings are increasing with the passage of time due to extensive use of Internet and World Wide Web.

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Five Forces Analysis

• The Porter's five Forces model is a simple and powerful strategy analysis tool that helps managers to know where the control lies in a company situation. It helps in understanding the strengths of the company in the market against the competitors, suppliers, and buyers.

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Rivalry Amongst Existing Competitors:

• The personal computer industry from the beginning is inclined toward consolidation, as the market type can rightly be cited as oligopoly. The industry contains players like Dell, IBM, HP, Toshiba, Gateway etc. The competition in the market is based on price and competitive advantage.

Threat of New Entrants:

• Every player tries its utmost to beat and outperform competitors by producing the latest technology and then price them competitively. This probably the reason that new firms find it very hard to enter the market and the existing competitors trying their level best to either maintain their market.

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Bargaining Power of Buyer:

• In the personal computer industry the bargaining power of the buyer is very high due to the fact that there is very less amount of brand loyalty in the market because most of the manufacturer produced identical products. In additional to absence of brand loyalty, the switching cost is very low in the industry because most of the systems are based on the Intel processor. Moreover, customer also feels comfortable with backward integration and building their own system through selecting the individual components manufactured by different producers.

Bargaining Power of Suppliers:

• Traditionally the bargaining power of suppliers is also very high in the computer market. This is due to the fact that there are very few suppliers who supply the major components of the computer. For example the major suppliers of microprocessor are Intel and AMD. They are almost having the monopoly over the market. Moreover the organization will bear significant switching if the decided to change the component part suppliers.

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Substitute products:

• Usually the availability of substitute does affect the sales and profitability of the computer and its various components to huge extent. Traditionally the threat of substitutes is very high for Dell. The computer industry has traditionally experienced similar products produced by the different manufacturer with a very little distinction between a computers produced by one manufacture with that of other. The competition between the rivals can be rightly cited as oligopoly because almost all the major producer manufactures identical products.

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Competitors Analysis:

• The competitive strategies developed by Dell help the company to realize its mission by price leadership, price signaling and non-price competition in the market by constant development and modification of new products. Dell use cut-throat competition strategy by matching even offering lesser price in some cases as compared to HP and Compaq. HP and Compaq has now realize that cutting the prices for HP and Compaq products will not translates into increase in the market share for the merged organization and will led to decrease in the margin for the company because Dell will follow the same strategy within no time. Price leadership also helps Dell to attract huge margin for the company offerings.

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Cont…• Dell’s strategy to produce constantly innovative products has

helped the company by beating the competitors on non-price factors. Dell is working on this end by developing new and improved personal computers, laptops and other technological products (Dell, 2009). These new product developments help the company to boost its market share and differentiate the company as distinctive company that offers value to customers in the form of improved product performance, innovative technology and competitive pricing.

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Strategic Approach and Competitive Advantages Direct Model:

• The company use direct sales approach that has enabled the firm to enjoy direct relationship without any intermediary with business and organizational customers. The company website have been integrated in such a way that it helps Dell to market their product on the internet, besides providing customization of the products according the needs of the market.

Price for Performance:• Dell use an integrated process management system that coordinate the

company process from procurement to distribution and technical support to ultimate customer. This integrated process allows the company to use standardized policy across the world and enjoy various economies. Thus some of cost saved by using the method is passed on to consumer by offering valued product at competitive prices.

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Customization:

• Dell also offers the customization services to individual extent. It means that a customer is free to select the component parts of the computer he wish to have (SUIT101, 2010). For example a customer may select the Hard Desk capacity, the processor, RAM etc according to his own sweet well.

Reliability, Service and Support:

• The company has differentiate its offerings from competitors by offering fast, reliable, and trustworthy customer services across the world that are available within 48 hours after lodging a complaint or problem with computer. This has helped Dell to enjoy unique value in the eyes of customer as no other company provides such type of services.

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Competiti

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"Our Policy: Rule 1 - The customer is always right! Rule 2 - If the customer is ever wrong, reread rule 1.“

“20 years and $40 billion; they seem like good round numbers”

”I saw that you'd buy a PC for about $3,000, and inside that PC was about $600 worth of parts. IBM would buy most of these parts from other companies, assemble them, and

sell the computer to a dealer for $2,000. Then the dealer, who knew very little about selling or supporting computers, would sell it for $3,000, which was even more

outrageous.”

“The interesting thing is when we design and architect a server, we don't design it for Windows or Linux, we design it for both. We don't really care, as long as we're selling the one the customer wants.”

“Our business is about technology, yes. But it's also about operations and customer relationships. ”

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Conclusion• Dell remains the world’s largest PC maker:• Not the revolutionary force it was…• Direct (DTC) will dominate• Partnerships with Microsoft and Intel:

Microsoft losing ground to Linux and Intel to AMD.

• Needs to increase R&D spending; Look for future trends.

• Cutting price. Undercutting rivals. Needs to spend more on customer service and new product development.

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References• AJULA. (2009). Comparative Analysis of PC Market Leader.

Retrieved March 27, 2010, from American Jewish University.• David, F. R. (2005). Strategic Management Eight Edition. USA:

Pearson.• Dell. (2009). Dell Computer Corporate Global Strategies.

Retrieved March 28, 2010, from Dell Computer Inc: http://www.dell.com/html/us/corporate/brochure/global.htm

• Dell. (2010). Dell Mission Statement. Retrieved March 27, 2010, from Dell.com: http://www.dellmfg.com/mission.htm

• Kotler, P., & Armstrong. (2003). Principles of Marketing. USA: Pearson.

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