Dell has grown by both organic and inorganic means since its inception—notable mergers and acquisitions including Alienware (2006) and Perot Systems (2009). As of 2009, the company sold personal computers, servers, data storage devices, network switches, software, and computer peripherals. Dell also sells HDTVs, cameras, printers, MP3 players and other electronics built by other manufacturers. The company is well known for its innovations in supply chain management and electronic commerce.
On May 3, 2010, Fortune Magazine listed Dell as the 38th largest company in the United States and the 5th largest company in Texas by total revenue. It is the 2nd largest non-oil company in Texas (behind AT&T) and the largest company in the Austin area. Current situation
Dell is weathering a downturn in consumer demand by emphasizing its business and enterprise customers. The pickup in its enterprise business has helped Dell outshine rival Hewlett-Packard Co. for the second straight quarter. The trend is a reversal for Dell, which has lost its consumer edge to HP, but consumer sales now only represent 20 percentage of Dell’s revenue. Strategic Posture
The key competencies of Dell are customer focus, manufacturing processes, supply chain management, customer selection, acquisition and retention, customer service and human capital management. Dell’s strategy has been to match its core competencies with key industry success factors. The strategy for Dell is to reinvigorate its differentiation advantage. Ultimately, the company must get back to basics. This requires the firm to realign its core competencies with the needs of a global marketplace.
The PC industry is facing increasingly strong worldwide competition – leading to reduced differentiation among competitors and increased price sensitivity among consumers. Although Dell has seen considerable growth, the company is beginning to lose its competitive edge in critical business segments. Specifically, Dell needs to improve in the following areas: customer service, customization options, increased marketing presence and retail solutions tailored to the global environment. Dell’s ability to adapt in these business segments will ultimately determine its ability to maintain its predominant position.
Dell is facing multiple external environment issues which may impede on the company’s top position in the computer hardware market.
First, Dell faces slow growth for its primary product: the personal computer (PC) in a saturated U.S. market. The majority of U.S. corporate and education PCs will be replacement units affected by a technological upgrade cycle within the next two years. Therefore, as Dell attempts to maintain its dominant position, the company should focus on product customization and superior relationships with suppliers. This strategy enables Dell’s past success but had become diluted over the last five years. The company should continue to improve itself in these areas in order to remain the top computer hardware differentiator. Second, the erosion of Dell’s brand value continues due to the perception of declining customer service. Although the company prides itself on superior customer service, recent surveys suggest that Dell’s results recently declined in this business segment. Dell’s executives...