In this report, I will review the internal and external environment of Dell Computer which enabled them to compete with other PC competitor. A case study from the instructor about Dell was provided to help with the internal and external analysis of the company in relation with the non price attributes with their PC product. This report will also look on how Dell should implement their strategy to retain their market share and to out position other competitor in the future.
As one of the pioneers in selling computers, Dell has been widely recognized as a company which can deliver their sales to costumer effectively and efficiently by eliminating intermediaries’ channels. By selling their Personal Computer (PC) directly to consumer, Dell belief that they can understand customers’ need and provide the most effective computing solution to meet those needs. Dell has been on a steady momentum of growth market wise and financially since 1997 when the sales reached $1 million. In 1999, Dell overtook Compaq to become the largest seller of PC in US with $25 billion in revenue reported in January 2000. With the intense competition from other major competitor like IBM (Lenovo), Compaq and Hewlett-Packard (HP), Dell must be able to answer some questions to be able to compete in the market place. How Dell was positioned their product to other competitors? How Dell does well positioned with respect to its competitors? How customers perceive Dell product attributes based on flexibility and performance?
INTERNAL AND EXTERNAL ANALYSIS
Competitive advantage and Competitor Analysis
PC computer: well-accepted product ,quick customized PC order , worldwide appeal, unconstrained PC component supply The Company
A unique business model which is direct sale and build to order PC production have proven successful in minimizing inventory and bringing new products to market quickly, enabling it to increase market share and achieve high returns on investment.
Country of origin
Comparison to Dell and its product (from the Performance and Flexibility attributes) Major competitors
Hewlett- Packard (HP)
No.1 leading market PC producer in the world (Gartner, 2008)
Global provider of PC, imaging and printing product. HP has a strong market position in most of its product segments. Made a strong gains in premium PC market HP also has a good brand equity
Lack in house management consulting division, weak internal control as well as flat R&D spending which will affect the company product pipeline.
Dell has proved that they had a strong brand image even though in terms of performance product attribute they may fall behind IBM/Lenovo from the customer survey. Dell profits are mainly resulted from their indirect sales such as online sales and leading retail chains stores. Dell’s Executive product was lagged behind HP in terms of the flexibility attributes according to the customer survey. This was due to the Dell past strategy to put more focus on providing single operation system in their PC and not exploring the consumer’s choice of having an open source operation like Linux and U-Buntu in their products (Dell, 1999). HP has a wide product to cater every needs of their consumers like for multimedia (HP Pavilion) or the combination of business & multimedia (HP Presario) IBM (Lenovo)
The top 5 PC manufacturer in the world
Leading provider of IT services, the world leader in middleware and second largest software company overall. IBM also has a strong research and development capabilities in order to maintain its technology leadership across several product offerings. The PC products are also cheaper and faster than their competitors.
Weak enterprise mobility product portfolio so IBM only focus on enterprise mobility market in which it lacks in terms of service capabilities and service levels.
References: Heidrick and Struggles, 1997. Michael S. Dell on the importance of sticking to a strategy that works. The Art of Taking Charge 2(1): 1-12.
Kenneth L Kraemer, et al, (2000), “ Refining and Extending the Business Model with Information Technology : Dell Computer Corporation” , The Information Society Journal, Taylor & Francis, 16: 5-21,2000
Gartner report (2008), www.gartner.com
Euromonitor, Dell, Inc, SWOT Analysis (2008), www.datamonitor.com
Euromonitor, HP, SWOT Analysis (2008), www.datamonitor.com
Euromonitor, IBM, SWOT Analysis (2008), www.datamonitor.com
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