This case analysis report focuses on the declining market share faced by Dell, Inc. (“Dell”, the “Company”) and recommendations are given as to where the Company needs to alter its strategy at a business level as well as a corporate level. Broad recommendations include foraying into the retail space at a more aggressive pace, laying greater impetus in fast emerging markets such as China and India, and focusing more on R&D efforts in order to ensure that higher levels of innovation are achieved by the Company.
Dell, Inc. (“Dell”, the “Company”) is a multinational company that specializes in the development, manufacture, marketing and servicing of computers and computer related products. Dell has been one of the most successful firms in the computer industry, having achieved supernormal revenue growth and above average returns for several years spanning the mid 1990’s to the mid 2000’s. This was mainly due to their prowess in customizing products as per customer requirements, coupled with effective manufacturing and supply chain processes. The Company encourages little or no intervention from distributors and middlemen, and majority of all sales are based on a direct customer relationship business model. The firm’s resources focused on supply chain capabilities, with frequent inventory turnover and direct delivery emerging as Dell’s core competencies. At the time when Dell established these core competencies, they were valuable, rare and were not easy to imitate, therefore allowing the Company to build a sustainable competitive advantage.
More recently, industry dynamics have rapidly changed and competitive rivalry has also intensified to a very large extent. The external environment has changed significantly and demographic factors, coupled with economic indicators such as large disposable incomes that is now available to a greater number of people in emerging countries has transformed the way that Companies formulate their strategies within the computer industry. Dell’s strategy has not changed in tandem with the external environment, and as a result, the Company has been losing market share in the last few years. The computer industry is characterized by standard cycle to fast cycle markets, and constant innovation is required to ensure that firms continue to earn above average returns.
This case study analysis report will outline Dell’s existing strategy and will then explore the new strategic options that are desirable for the Company. As Dell is a global player and has operations all over the world, specific strategies will be formulated from a region wise perspective. The product categories that are proving to be winners for the Company will also be considered and analysed in depth. Specifically, this report will be presented in the following format: •Dell will be analysed in relation to its two biggest competitors i.e. Hewlett-Packard (HP) and Lenovo, and suggestions will be given as to where Dell will need to place strategic thrust in the future. •The three major geographic segments in which the Company is present viz. The Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific Japan (APJ) will be analysed in depth and relevant business strategies and diversification strategies will be expounded upon. The future course of action the Company should undertake will be presented. •The report will use the above analyses to provide recommendations to the Company in terms of product categories that are most desirable, regions that need to be focused on in the future, what new core competencies the Company should develop, and the overall direction that strategic leadership needs to take in the future. Competitor Analysis
Dell’s major competition comes from two other computer related behemoths i.e. HP and Lenovo. Dell is no longer the market leader as it had once been. HP has overtaken Dell as the largest PC manufacturer in the world. HP achieved...