close
test_template

Industry Setting & Competition

About this sample

About this sample

close

Words: 1774 |

Pages: 4|

9 min read

Published: Jan 8, 2020

Words: 1774|Pages: 4|9 min read

Published: Jan 8, 2020

In any industry, competition depends on five key forces (Porter, 1979): the bargaining power of suppliers, the threat of substitute products or services, the bargaining power of customers, the threat of new entrants and the industry jockeying for position among existing rivals. Kennedy Consultants has applied Porter’s 5 Forces to Dell to understand the industry and its dynamics. The bargaining power of suppliers is significant in the IT industry, and specifically in the computer hardware segment. Dell depends on its suppliers for its manufacturing processes, since the company only assembles the parts into the final product. Despite the large number of suppliers of computer parts, the proximity to Dell’s assembling line is a critical factor. To protect against the risk of high demand variability and combat long lead times, the company has developed a system by which suppliers keep inventory readily available in supplier logistics centers (SLCs) close to Dell plants, based on quantity demand forecasts provided by Dell. Moreover, as a dominant purchaser, the company also holds power over its suppliers by imposing technological imperatives and shaping the geography of its supply base (Fields, 2006).

'Why Violent Video Games Shouldn't Be Banned'?

With computer sales lowering considerably and customer preferences shifting to smartphones and tablets instead (Marketline, 2018; Passport, 2018), one of the company's core businesses, the computer segment, is seriously threatened by these emergent substitutes. Competition is increasing fast in the smartphone and tablet niches, forcing companies to either reduce prices or improve performance. Furthermore, there is an abundance of choices for consumers regarding IT products, in areas such as personal computers, networking and storage services, or data protection technologies. Customers thus possess substantial bargaining power against market players, requiring Dell and its competitors to engage in a continuous battle for market share. By further focusing on the segments of the industry where it can achieve product differentiation, Dell can mitigate some of their customers' power. An example would be cloud computing, which provides an exciting opportunity to the company to consolidate its position and further grow its customer base (Marketline, 2018).

The company experiences intense rivalry from numerous competitors across all of its business areas. In the enterprise PC and server markets, its main competitors are Acer, HP, Lenovo, IBM and Toshiba. In the consumer electronic industry, it faces competition from HP, Acer, Apple, Sony, Lenovo, as well as Asustek, in European markets (Marketline, 2018). We can argue that the exit barriers expected due to large capital investments are contributing to the state of the competition. In the IT industry and in computer hardware specifically the threat of new entrants is not very significant due to a number of barriers to entry, including sunk costs, groundbreaking technology innovation required to enter the market and the economies of scale achieved by big market players. These barriers can be overcome when competitors are able to introduce disruptive innovations. Key Sustainability Issues and Dynamics The IT sector is prone to high-energy consumption, carbon emission and e-waste, accounting for more than 2 percent of human greenhouse gasses according to Global Action Plan (2018). The industry is energy-intensive due to manufacturing processes and usage, but also on account of materials transportation. In 2018, Gartner Inc. reported that the combined annual shipment of devices reached 2.2 billion units, illustrating the global dependence on technology products. Particularly, the consumer electronics industry recognizes the urgent need to make increasing commitments to environmentally friendly business practices.

Research undertaken by Greenpeace (2017) examining 20 of the largest consumer electronic companies by market share showed that most companies try to establish environmental sustainability by reducing waste, conserving resources and shrinking product sizes. Another report published by the Consumer Electronics Association (CEA, 2008) noted that the Consumer Technology Industry focuses on green packaging and recycling initiatives. There is currently no international label for sustainable IT products. However, companies proactively develop their own 'green' labels. Assessing the quality of these labels is a challenging task. In the consumer electronics sector, Greenpeace (2017) developed a ranking framework that provides some starting guidance. The 2017 leader was Fairphone, a company that positions itself as the developer of 'the world's first ethical, modular smartphone' (Fairphone, 2018). Their competitive advantages include a reduction of resource consumption and transparency across the supply chain. Apple is well regarded in terms of sustainability due to its efforts to using renewable energy in its manufacturing, as well as being the first company in the sector to make commitments toward closing the loop in production processes. Dell is ranked the third 'greenest' company and stands out through reduced resource consumption, more sustainable product design, and a closed-loop usage of plastic.

The company’s sustainability strategy originated in an accumulation of stories, where Dell focused on narrow areas of sustainability with which it frequently interacted. This eventually formed the ‘Legacy of Good’ campaign (Dell EMC, 2017). Dell identified five areas which they could significantly impact by using their technology capabilities: net positive impact, supply chain, environment, communities, and people. Dell is reducing negative ecological impact and fighting climate action through several initiatives such as open-source supply chain innovation of ‘Ocean Bound’ plastics, investing in renewable energy and cleaning up shore lines with the goal of becoming more eco-efficient, i.e. reducing the overall ecological impact per unit of production (Dyllick and Hockerts, 2002). Moreover, Dell is setting ambitious targets to measure its progress such as regenerating resources by giving 10 times back to the global systems. At the societal level, Dell has taken various actions to improve the social issues our planet is facing, with a focus on communities and people.

The company has tackled several sustainable development areas, improving quality education through the 'Youth STEM Learning initiative, as well as by contributing to societal well-being through precision medicine technology in early disease treatment. Dell has also helped develop the appropriate infrastructure for industry innovation, clean water, sanitation, and affordable clean energy in India, where Dell has its second biggest Research Hub (The Economic Times, 2018). Furthermore, Dell reports progress on these initiatives in their annual 'Legacy of Good' CSR report in what appears to be a very transparent and detailed manner. In assessing the impact of Dell's sustainability strategy, we use certain key academic frameworks to establish the value of sustainability, assess Dell’s policy effectiveness through academic typology, and position Dell within the planetary systems. Creating Value through Sustainability By modeling the different actions and policies Dell has implemented over the years as a response to the issue of sustainability, Dell’s value capture and creation model can be visualized. The Sustainable Value framework, developed by Hart and Milstein (2003), positions sustainability initiatives according to space-time parameters in order to understand how these tools create fundamental shareholder value. Figure 1 maps Dell’s current initiatives along that framework. The bottom right quadrant categorizes initiatives into internal space and having short term effects. These kinds of initiatives typically relate to waste, pollution, and consumption reduction.

Dell’s initiatives that fall into this category include the Gold Recycling program, focused on increasing the energy efficiency of their products to reduce the carbon footprint of both manufacturing and product use, and the Ocean Plastics initiative and partnerships. The latter is one of the larger and more impactful initiatives and creates value for Dell by reducing packaging and material costs, as well as developing networks with other industries and firms to scale up the infrastructure for recycling both the plastics and the new packaging (Dell, 2018). The program was started through a partnership with other technology firms and an NGO that brought awareness of the issue to Dell. The Gold Recycling program, through a partnership with Goodwill, is another industry leading initiative, making Dell the first OEM to recycle gold for their products (Werner et al., 2017). Additionally, Dell’s innovative use of mushroom caps as packaging represents overlaps the future impact and short-term impact parameters (Dell, 2018). This innovation has greatly reduced the company’s costs of packaging and presents an opportunity to set a standard for new eco-positive business decisions. The bottom-right quadrant contains initiatives with short term impact and focus on firm externalities. These activities typically involve transparency in supply chains, as well as honest and forthright reporting to legitimize the firm (Hart & Milstein, 2003).

Dell falls into this quadrant with efforts to require suppliers to comply with international regulations on the mining of conflict minerals, namely Tin, Tantalum, Tungsten, and Gold, otherwise known as 3TG (Dell, 2018). This compliance has so far enabled Dell to operate in more stringent markets where sourcing of these conflict minerals is monitored, as well as to improve company reputation. Additionally, Dell sets aside a portion of capital to assist with natural disasters (Dell, 2018). Market research shows that firms with disaster relief assistance and exposure during disaster relief increases public opinion implying has benefitted from this exposure (Thomas and Fritz, 2006). When analysing initiatives situated in the top-left quadrant of Figure 1, shareholder value is generated by actions taken to enhance the development of future capabilities within the company. For example, Dell’s efforts to improve the energy efficiency of products has resulted in lower energy consumption in both producing and using Dell’s technologies. Dell’s commitment to transitioning to renewable energy sources has begun repositioning Dell as a sustainability leader. Similarly, when analysing initiatives situated in the top-right quadrant, initiatives typically generate shareholder value by identifying the business needs of a sustainable future and better aligning the industry environment to meet those needs.

Get a custom paper now from our expert writers.

These efforts should involve partnerships for laying out a roadmap for the future and give Dell a strategic advantage when predicting long term changes. For example, Dell’s partnership with Arizona State University (ASU) to deliver online education, as well as its Youth Learning program, grow expertise in the field of digital education, providing opportunities to develop new markets in growing economies. While Dell has implemented a robust and impactful sustainability strategy, many material issues are not actually being addressed. Dell has acknowledged the detriment of the current ocean plastics crisis, and while the Ocean Plastics initiative to improve packaging practices has helped, it merely prevents more plastics from being added but does not directly address the more pressing matter of the ‘plastic soup’ as we will discuss later on. Additionally, the Recycled Gold program, while innovative and industry-leading, only accounts for less than 1% of Dell’s demand for gold (Werner et al., 2017). The effort for more transparency in supply chain management has brought Dell into a much more sustainable state, however the current standard is handing off responsibility to suppliers to check for transparency with their suppliers and so on down the chain.

Image of Prof. Linda Burke
This essay was reviewed by
Prof. Linda Burke

Cite this Essay

Industry Setting & Competition. (2020, January 03). GradesFixer. Retrieved April 19, 2024, from https://gradesfixer.com/free-essay-examples/industry-setting-competition/
“Industry Setting & Competition.” GradesFixer, 03 Jan. 2020, gradesfixer.com/free-essay-examples/industry-setting-competition/
Industry Setting & Competition. [online]. Available at: <https://gradesfixer.com/free-essay-examples/industry-setting-competition/> [Accessed 19 Apr. 2024].
Industry Setting & Competition [Internet]. GradesFixer. 2020 Jan 03 [cited 2024 Apr 19]. Available from: https://gradesfixer.com/free-essay-examples/industry-setting-competition/
copy
Keep in mind: This sample was shared by another student.
  • 450+ experts on 30 subjects ready to help
  • Custom essay delivered in as few as 3 hours
Write my essay

Still can’t find what you need?

Browse our vast selection of original essay samples, each expertly formatted and styled

close

Where do you want us to send this sample?

    By clicking “Continue”, you agree to our terms of service and privacy policy.

    close

    Be careful. This essay is not unique

    This essay was donated by a student and is likely to have been used and submitted before

    Download this Sample

    Free samples may contain mistakes and not unique parts

    close

    Sorry, we could not paraphrase this essay. Our professional writers can rewrite it and get you a unique paper.

    close

    Thanks!

    Please check your inbox.

    We can write you a custom essay that will follow your exact instructions and meet the deadlines. Let's fix your grades together!

    clock-banner-side

    Get Your
    Personalized Essay in 3 Hours or Less!

    exit-popup-close
    We can help you get a better grade and deliver your task on time!
    • Instructions Followed To The Letter
    • Deadlines Met At Every Stage
    • Unique And Plagiarism Free
    Order your paper now