Dell Incorporation’s SWOT Analysis for 2014

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Table of Contents

Information about the Company
SWOT Analysis
References

Information about the Company

Dell Incorporation (Dell, Inc.) was established in 1984 as PC’s Limited by Michael Dell. By 1989, the company was able to “commence their business dealings across country boundaries” and soon afterwards “go outside of the United States to Europe, and the company was able to achieve $50 million of sales turnover” (Dissanayake, 2012, p. 27). In 2014, Dell, Inc. “shipped over 10.8 million units growing 8.5% on the year”, mainly in the U.S. and Asia-Pacific excluding Japan region taking the third position on a worldwide basis after Lenovo Group Limited and Hewlett-Packard Company accordingly and leaving Acer, Inc. and Apple, Inc. behind (PC leaders continue growth and share gains as market remains slow, according to IDC, 2015, para. 11).

Nowadays, scope of Dell, Inc. products and services includes business and consumer hardware (PCs and servers), networking and storage-related services, enterprise solutions and software technologies

SWOT Analysis

Strengths

Customer-focused marketing strategy
Product diversification

Since its foundation, Dell, Inc. announced “a consumer concentrated approach” avoiding intermediates so that “the company was able to pass the benefit to the consumer while reducing the cost of the product” (Dissanayake, 2012, p. 27). This unique customer-focused marketing strategy distinguishes Dell from its competitors by providing additional competitive advantages. Hence, Dell, Inc. has used direct sales channels (phone, The internet, and mail) to sell customized products and services at low prices.

After Michael Dell, the founder, and private equity firm Silver Lake Partners bought back Dell from public shareholder, new Dell’s strategy called Project North Star was announced: “to accelerate our solutions strategy and to focus on the innovations and long-term investments with the most customer value” (Dell, 2015). Hence, Dell’s shift to IT solutions and services will enlarge products range and attract new customers.

Weaknesses

Product recalls
Single supply chain

Dell, Inc. needs to improve its production quality control because when in 2006 the company experienced a battery problem with one of its product, “its poor reputation routinely contributed to the virality of angry blog posts and memes” (Dilworth, 2013, p. 27). Since it was impossible “to ignore the online howls of customer discontent”, marketing team had “to go out and participate in these forums that were just incredibly unpleasant” (Dilworth, 2013, p. 27).

Nowadays market trend has changed due to “demand for commoditized products, changes in customer channel preferences, emerging market growth, component cost declines, a more capable supply base and globalization” (Davis, 2010, p. 3). Since customers need cost reduced products and services fast, Dell, Inc. should “move from a single supply chain to a client segmentation supply chain approach” and develop “long-term demand sensing to continually refine its portfolio” (Davis, 2010, pp. 1, 4). Hence, Dell’s competitors have an edge in supply chains, so it should be improved.

Opportunities

New target market
Online customer service

An analysis of enterprises’ unmet needs and expectations revealed a new target market for Dell, Inc. The growing impact of “Big Data and public/private cloud services… on virtually every vertical industry” was detected (Hughess, 2013, p. 1). The new target market is connected with Dell’s core philosophy of developing strong customer relationships to help customers to cope with constant data volume increase. Therefore, Dell can now use “its services capabilities to help companies manage the complexity inherent in cloud migration, security/risk/compliance, and other transformational processes” (Hughess, 2013, p. 3). According Abraham (2012), “creating a new product for an existing market, which is also a product-development strategy” is an excellent opportunity for a company (p. 139). Although the new target market for storage services demands large investments, it will pay off by customers’ loyalty.

Geographically, Dell’s global presence in IT market is presented by the following figures: “9M Dell’s global PC shipments in Q2 2013 (Gartner)”, “11.8% Dell’s global market share in Q2 2013 (Gartner)”, and “$735.1B Value of global connected device shipments by end of 2015 (IDC)” (Dilworth, 2013, p. 28). Hence, new global B2B target market requires customer service to be always at hand. Nonetheless, new technology gives an opportunity for Dell, Inc. to be always online. Hence, Dell can change its customer service strategy by connecting “employees through social media training seminars… to engage with customers on their social pages, based on their role” (Dilworth, 2013, p. 28). This new 24/7 online customer service trend should be developed because it ensures customer’s satisfaction.

Threats

Economic recession
Foreign competition

Continued world economic recession affects all the industries including PC market with “a year-on-year decline of -2.4%” (PC leaders continue growth and share gains as market remains slow, according to IDC, 2015, para. 1). Although total shipments in 2014 “were slightly above expectations of -4.8% growth… the final quarter nonetheless marked the end of yet another difficult year – the third consecutive year with overall volumes declining” (PC leaders continue growth and share gains as market remains slow, according to IDC, 2015, para. 1).

However, Dell’s foreign low-cost competitor Lenovo Group Limited “continued to push hard in EMEA”, “outpaced the market in the U.S.”, and its shipments “reached a record 16 million units in 4Q14 with year-on-year growth of 4.9%, and annual shipments up over 10% from last year” securing the first place for Lenovo Group Limited in PC market five top vendors (PC leaders continue growth and share gains as market remains slow, according to IDC, 2015, para. 9).

References

Abraham, S. (2012). Strategic management for organizations. San Diego, CA: Bridgepoint Education, Inc.

Davis, M. (2010). Case study for supply chain leaders: Dell’s transformative journey through supply chain segmentation. Gartner Research, ID Number G208603, 1-11. Web.

Dell.(2015). Web.

Dilworth, D. (2013). Dell-ving into the future. DM News, 35(12), 26-29.

Dissanayake, D. (2012). Integrated communication, integrated marketing communications and corporate reputation: Evidences from Dell Computer Corporations. International Refereed Research Journal, 3(3), 26-33.

Hughess, P. (2013). Storage and data management services: Vendor profile. IDC, 1(243115), 1-7. Web.

PC leaders continue growth and share gains as market remains slow, according to IDC [Press release]. (2015). Web.

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