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Dell Analysis
- 1. Firm Overview Name Dell Inc. Industries Computer hardware, Computer software, IT consulting, IT services Geographic areas served Worldwide Headquarters U.S. Current CEO Michael Dell Revenue $ 63.07 billion (2012) Profit $ 3.49 billion (2012) Employees 110,000 Main Competitors Apple Inc., Samsung Electronics Co., Ltd., Lenovo Group Limited, Hewlett-Packard Company, Sony Corporation, Fujitsu Limited and many others. Arghya Sarkar
- 2. 1. Brand Value & loyal Customer base 2. Excellent Customer Service 3. Direct Selling Business Model 4. Product Customization 1. No Proprietary Technology to offer 2. Low R&D Investments & Weak Patent Portfolio 3. Lack of Retail outlets 4. Low Product Differentiation 1. Expand services and enterprise solutions businesses 2. Obtain more patents through acquisitions 3. Strengthen presence in emerging markets 4. Tablet market growth 1. Growing demand for smartphones and tablets 2. Profit margin decline on hardware products 3. Slowing growth rate of the laptops market 4. Intense competition SWOT Analysis Competitive Factors NegativePositive ExternalInternal IndustryExposure
- 3. Competitor Analysis Market Share (%) Growth (in %) ROA (%) Q3-’13 Strength Weakness Lenovo 18.1 14.6 4.3 Mass Production Relatively poor known brand HP 16.4 -0.6 -2.9 Global Brand, Global market Weak Customer Support Dell 11.8 13.5 3.4 No Inventory build-up High dependence on Suppliers Acer 7.8 -10.3 Cost Efficiency & Aggressive Pricing Limited Product Portfolio Asus 6.5 -13.3 In-house Manufacturing & Innovation Small customer base Apple 4.8 29.5 Quality Design & Innovation High Price Others 34.5 -4.4
- 4. Environmental Analysis Demographic Trends Socio-Cultural Influences 1. Average age of people in the world is increasing. (+) 1. Going green. (-) 2. Education levels on an average rising. (+) 2. New generation by default being more tech-savvy & inclined to mobile devices. (-) 3. Time-constraints meaning most of interaction is done online. (+) Macroeconomic Impacts Political-Legal Pressures 1. High tariffs on IT products implying high entry barrier for companies. (-) 1. Issues of environmental policies. (-) 2. Purchasing power of working class increasing over last few decades. (+) 2. E-waste regulations & recycling of old obsolete products. (-) 3. Labour issues – minimum wage, pension plans (-) Technological Developments Global Trade Issues 1. Innovation rate grew significantly. (-) 1. Ever-expanding market ripe for exploitation. (+) 2. Everything going online. (+) 2. National Governments supporting domestic companies. (-)
- 5. 1. High Entry Barriers (+) 2. High barrier to scale nationally or globally (+) 1. Numerous options for buyers (-) 2. Hig price sensitivity (-) 3. High product Differentiation (-) 1. Over dependance on WinTel monopoly (-) 2. Other resource wise in good position (+) 1. Other global heavyweights like HP, Apple, Lenovo (-) 2. Tablet and mobile devices in general threatening PC segment (-) Porter’s Five Forces Analysis Entry Suppliers Buyers Substitutes 1. Intense Rivalry (-) 2. Range of products & competitors (-) 3. One of the market leaders, although lagging recently (+)
- 6. Capabilities Analysis Core Capabilities 1. Direct Business Model 2. Excellent Customer Service People • Comfortable Shopping/Maintenance Experience. • Well-paid and knowledgable employees and suppliers. Process • High brand equity, brand valued at $7.5 billion. • 30 years of operating experience. • Continual Improvement policy. System • Direct interaction with customers excluding middle party. • Newly adopted commitment to sustainable approaches. • Model to maximize customer satisfaction. Alignment & Sustainability • Strong relationship with supplier and buyer. • Loyal customer base. • Green approach to business for sustainable growth.
- 7. Emerging Phase Growth Phase Mature Phase Competitive Business Cycle Analysis (Dell-owned or Prospective Business) Phase Timing Severity Disruption Continued roughly for 30-40 years, in the decline now. Gradual growth with shocks at times. Shakeout With the latest technological needs, probably never ending. Out for everyone to fight over. One can expect an oligopoly down the line. Annealing The “IT” thing now, although sustainability can be questioned, subject to technological advancements. Multiple styling and customization design based on standard tech model. Disruption PCs & Laptops Enterprise Solutions Smartphones & tablets
- 8. HP, Dell, Lenovo,Acer (GLobal competitive PC market) Apple is trying to expand here / Dell have also invested in a new R&D division Asus (Innovative and low cost laptops targeted at working class of today) Apple (niche market/PCs for the sofisticated & the rich) Strategy Maps (Over-all Market View) Source of Competitive Advantage UniquenessCost NarrowBroad CompetitiveScope withinIndustry Up for Grabs! Product Differentiation
- 9. Smartphones & Tablets (Focus since immense opportunity of growth) Services & Enterprise Solutions (Strategic partnerships with high-end companies) Not really, Dell retains a sterling reputation and tech-savvy market is constantly expanding Personal Computers & Laptops (Trend for mobile devices and slowing market growth rate) Diversification Matrices (From Dell’s Perspective) Business Unit Competitive Advantage HighLow LowHigh IndustryAttractiveness Should invest heavily here! Try to monopolize the market! Maintain position, market should bounce back!