Dell Case Study

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UNIVERSITI MALAYSIA SABAH SCHOOL OF BUSINESS AND ECONOMICS MASTERS OF BUSINESS ADMINISTRATION

BM7033 CORPORATE STRATEGY

PROF SYED AZIZI WAFA SYED KHALID WAFA EN. JULIAN PAUL SIDIN

“CASE STUDY 9 - DELL, INC.”

DONE BY: No. 1 2 3 4 NAME GOY PENG LIAK NORZAINI BINTI SAUPI NUR THARA ATIKAH BINTI ZAINAL WONG SIAO FUI MATRIC NO PE20117048C ME1212045T ME1212016T ME1212058T

BM7033 – Corporate Strategy

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INTRODUCTION

This case study is about Dell Inc. and the issues that it faces in the business that its venturing into mainly PC business and services business. Therefore, this paper would suggest the strategies that Dell Inc. could take in order to gain competitive advantages and increase its market share. This paper is divided into eight chapters which includes case summary, SWOT analysis, problem statement, alternative strategies, evaluation of alternative strategies, the best strategy and justification, implementation and lastly conclusion of the paper.

BM7033 – Corporate Strategy

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CASE SUMMARY

Dell is a well known brand with many establishments received from Inc., Pc Magazine, Financial World and Fortune 500. This brand has been competing in the computer industry since it was founded at the United States in 1984, by Michael Dell. To manage their tremendous growth, in 1995 they used the business model of handling direct distribution to their customer. Apart from the changed supply chain strategy, Dell invest small on their R&D as compared to the other competitors and spend more on improving its manufacturing process. This explains on the reason Dell Inc. only produces products that are standardized with the market with lower costs. It made Dell more cost-focus. However because of increasing and intense competitions, Dell had to change their direct marketing business plan and integrate intermediaries in their distribution network. After 15 years of business, Dell has diversified its product line which includes personal computer, mobility, software and peripherals, servers and networking, services and storage. Among all, personal computer business profit margin is getting slimmer and services product gross margin is increasing. Based on personal computer business, the competition is intense with Hewlett-Packard (HP) and Acer as its top rivals. The PCs has become commoditized in the industry in which made Apple iPad easily dominates the PC sales with its differentiation. In Dell’s service product line, IBM, HP and Oracle are the top competitors that focus on servers, software and consulting. Dell also restructured their geographic structure into four global business units based on customers, in which Large Enterprise and Public segments bring in the largest revenue percentage for Dell as of 2010. Mostly, the biggest market for Dell is from the United States and commercial market. Dell continues to improve its strength of customer service and initiates three-pronged strategy which focus on improving its core business; shifting to a higher margin portfolio; and balance liquidity, profitability and growth.

BM7033 – Corporate Strategy

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SWOT ANALYSIS 3.1 SWOT Matrix

Table 2.1 Strengths 1. Experienced top management team 2. High establishment 3. Low risk business model – red ocean strategy 1. 2. 3. 4. 5. 6. 7. 1. 2. 3. 4. Opportunities Outsourcing Internet usage Large commercial market Global market 1. 2. 3. 4. Weaknesses Less innovated & expertise – R&D Weak direct distribution Product line too broad Competitive pricing that cause low perceived quality Customer service Acquired weak firms – Perot Systems Cost leadership Threats Intense competition Market trend change Economic recession Saturated market

3.1.1 Strengths With Michael Dell building up the company since 1984 and resumed his CEO role, he plays the main role for Dell’s success. Along with recruited experienced executives from global companies such as Motorola and Nike, it has changed the business model...
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