Key Components of the Business Environment of Dell

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14 March 2008

Dell Corporation


Dell Corporation is one of the leading computer companies in the world operating on the global scale since 1990s. Dell relies on innovative technologies and new solutions which help the company to reach global consumers and market high quality products in different categories. International expansion helps Dell to obtain strong market position and sustain strong growth. A current strategy of Dell includes the determination of the basic long-term goals concerns the conceptualization of coherent and attainable strategic objectives.

Key Components of the Business Environment of Dell

High-technology market is marked by increasing capital markets activity over the past 5 years. It is estimated that average annual returns are anticipated to exceed 13 percent over the next 10 years, with investment alternatives performing at single digit growth rates (approximately 7 percent to 9 percent). This approach is based on Dell superior understanding of the problem solved by the product, the benefits it offers and issues it addresses. Dell is a leader in IT industry with S$ 57.095 billion revenue a year. Customers and technology are the primary driving factors in this arena (Dell Corporation Home Page 2008). Customers want products that satisfy their needs or improve their productivity. In

2 order to respond to external environment, Dell looks for ways to deliver these benefits at a lower cost, smaller size, and higher speed. Operating within an industry with this kind of rapid change presents several challenges for personal computer and notebooks, namely production costs, intellectual property owners, and monopolies. For Dell innovations are the key of success. The main factor which influences the industry is competition. Dell’s main competitors are Apple and IBM. In Europe and Asia, there are a wide number of smaller competitors who has an impact on strategy and market position of Dell. In contrast to its competitors, Dell proposes unique and high quality services and exceptional products (Dell Corporation Home Page 2008).

In general, Dell bases its strategy on traditional marketing theory and internet marketing. The main advantage of the company is that it can achieve lower cost and differentiation simultaneously (Dell Corporation Home Page 2008). Company’s managers admit, however, that many different kinds of potentially profitable competitive strategies are possible. Although only a company can successfully pursue the cost leadership strategy (because it is so dependent on achieving dominant market share), others can pursue an almost unlimited number of differentiation and focus strategies (depending on the range of possible desirable features and the number of identifiable market niches. In Europe, competition is fierce influenced by a number of internal and external factors. Michael Porter contends that a corporation is most concerned with the intensity of competition within its industry (Porter 34). "The collective strength of these forces," he contends, "determines the ultimate profit potential in the industry, where profit potential is measured in terms of long-run return on invested capital" (Porter, 1985, p. 58). For Dell, the ability of a firm to use its resources and capabilities to develop a competitive advantage through distinctive competencies does not mean it will be able to sustain it. Two basic characteristics determine the sustainability of a firm's distinctive competencies: durability and imitability. Market changes and fierce

3 competition suggest that Dell should take into account increased competition and innovations planning its goals and strategies.

The Process of Strategic Planning

Strategic Planning

In general, strategy is identifies as the framework which guides those choices that determine the nature and direction of an organization. Strategy development is the heart of strategic...
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