Dell Situational Analysis

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2.0 Situation Analysis

Dell is now entering its twenty fourth year of operation. While its products were once well received, sales have now slowed. Dell was once the leading PC seller, its stock price is now deflated. Dell’s stock prices haven’t been this low since before Michael Dell retook his position as CEO of the company, in February 2007. Dell’s sales are down and for once, Hewlett Packard shipped more PCs than Dell. Innovation and increased marketing are vital if Dell hopes to regain their, once held, top spot.

2.1 Market Analysis

As once company to beat, Dell once had what it took to be number one in its industry. Dell has infinite knowledge of the pc industry. Dell fell quickly to a problem common to those on top, the industry changed and Dell failed to change quickly enough to meet the expectations of consumers. Dell has lost its market share and title as “Most Favored Hardware” company to HP (Kratiz, 2007). With one of the most tenured CEOs in the computer industry at the reigns, Dell must use his knowledge and knowledge about the industry if it hopes to once again be one of the most admired companies.

Target Markets



2.1.2 Market Needs

Innovation. Customers are always looking for the next great thing. Proprietary and leading edge technology are needed to sustain a business.

Reliability. Customers in this industry are more demanding. Businesses with products that are constantly in need of tech support will not be tolerated.

Speed. In a world plagued by the need for instant gratification, increased processing speed is a must have. We want things done and we want them done yesterday.

Service after the Sale. In a highly competitive market with multiple substitutes, customer service is vital to a business. On average, a satisfied customer will only tell 3-4 people. However, a dissatisfied customer will tell anyone that will listen. Customer service can be used as a company’s distinguishing characteristic.

2.1.3 Market Trends

Dell previously distinguished their selves through their business model. By selling their computers directly to the consumer, Dell was better able to understand their customer needs and provide the products designed to meet those needs. However, in a changing marketplace, Dell struggled to keep up. Today’s marketplace boasts more and more price and design conscious telecommuters and students looking to purchase. Computers have become a necessity. Consumers demand products that help them to increase their production without missing a beat. Reliability, increased speed, innovative designs and technology, smaller, thinner, but with more bells and whistles are expected in today’s computers.

2.1.4 Market Growth

Due to increased competition in the computer industry, suppliers often compete based on price. Amid lower consumer confidence, Forrester Research predict that sales of technology equipment and services to grow by only a modest 4.6% in 2008. This makes it even more imperative for Dell to distinguish themselves in times were consumer spending is on the decline (Hayes Weier, 2007). In order to compete, Dell must successfully analysis the market, ascertain consumer needs and wants, and cater to the consumer. This is crucial to their survival.

2. SWOT Analysis

The following a SWOT analysis of Dell Computers. The analysis defines the key strengths and weaknesses of Dell, as well as, their threats and opportunities.

1. Strengths

▪ Inventory. Utilization of a J-I-T system. By not stock piling parts, Dell is able to greatly reduce its inventory costs. Dell, on average, has on hand four days of inventory.

▪ Responsiveness. Dell’s responsiveness is also a key factor in its success. Through Dell’s website, customers are able to build, customize, and pay for their newly designed systems. The website allows customers to create their own PCs in privacy, with little interaction from annoying salesmen. Once a...
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