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The Reasons That Govern Dell’s Business Practices

  • Category: Business
  • Subcategory: Corporation
  • Topic: Dell
  • Pages: 6
  • Words: 2711
  • Published: 26 April 2019
  • Downloads: 33
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According to Schilling (2014), the general environment refers to all factors existing within a society that is capable of influencing the operation of a firm or even the overall outcome and performance of an industry. In the case of Dell Company, two primary segments of the environment that would greatly influence its operations in the tech industry include technological factors and the demographics of the niche it serves.

From the management report of 2017, Dell Company is currently on the verge of introducing some of the world most amazing computing solutions to the market (Form 10-K, 2016). Such efforts have been manifested by the Company’s relentless effort to introduce robust technological gadgets that are increasingly gaining brand recognition in the market. Dell Company continues to research and innovate with aim of introducing more efficient and friendly computing devices (Form 10-K, 2016). Besides, the Company continues to engage in price efficient mechanisms to promote its brand in the market. Therefore, the management at Dell is privy to knowledge that technology is a primary driver of competition in the industry. Hence, it is vital for the firm to continue innovating and come up with new processes and products that meet and exceeds consumers computing needs (Schilling, 2014).

Another environmental segment that would rank highest in Dell Company is the demographics/ population of its market. Some of the important attributes that Dell Company will focus on to better serve its market population will include the geographical distribution of its most loyal brand customers (Schilling, 2014). Also, the enterprise will consider other attributes such as the age, the gender, the ethnic and racial makeup of its likely customers, their income level, as well as, their educational background (Cox, 2015). Hence, it is essential that the management at Dell develop a comprehensive geographical profile of its different category of customers to help it derive as much information needed to serve those segments better.

Question 2

The Porter’s five force model is widely used as a strategic analysis tool by many firms to evaluate their performance relative to the industry and the environment they operate. This five force model as proposed by Michael Porter includes the supplier power, the buyer power, rivalry among existing firms’, threat of substitute, and the threat of potential entrants (Johnson, 2014). Nonetheless, in comparison with the tech market, it is crowded with different tech players promoting their main portfolio, while diversifying their brand to other markets. However, for Dell Company it mainly deals with the manufacturing of computers (Dell Inc., 2018). Therefore, the two most significant forces of competition that Dell Company should be concerned with should include responding to the buyer power and the rivalry among existing firms’ in the tech industry.

The Buyer Power

The bargaining power of the buyers in the tech market will ultimately dictate the prices of commodities, as well as introduce other dynamics such as the overheads necessary to meet the consumer desired quality, as well as the taste and preference in their offerings (Johnson, 2014). As such, Dell Company has continued to work towards revitalizing its consumer strategies to ensure that customers make more purchases of their product compared to other brands in the market. For example, Dell in 2013 declared its strategy of promoting a sustainable environment through conservation efforts. As such, it has continued to design and implement eco-friendly methods of reducing carbon footprint emission that may result from its gadgets, e.g., the PC recycling program introduced in 2012 (Form 10-K, 2016). Also, during the same year, Dell resorted to joining the green movement by going green in most of its operations. For example, in 2013, Dell Company introduced its first of a kind green supply chain, green energy alternative, and green labeling and packaging methods to conform to the overarching demand by consumers for what they term as sustainable businesses in the world (Dell Inc., 2018). Dell Company recognizes the consumers as the most important asset for it to survive and triumph in the market. Therefore, its corporate ethics strategies and CSR initiatives were aimed at ensuring that the customers are more predisposed to buy Dell PC products based on the type of mutual relationships the Company seeks to establish with the society. Such tactics have been ideal for the firm to reposition itself and building a stronger bond reputation with the consumers (Cox, 2015).

Rivalry among the existing firms

There are other several competitors in the tech market who continue to promote quality and lower prices for the brands. Nonetheless, Dell is still mentioned as being very competitive in this market (Form 10-K, 2016). An analysis of some of the strategies that Dell deploys in flourishing in the market reveals its strategy of tailoring its products to meet the needs of its diverse users. Unlike the competitors, Dell continues to manufacture computers that support the needs of the most marginalized individuals such as the blind in the society (Dell Inc., 2018). As outlined in its corporate value and goals, Dell still emphasizes on the need to adhere to the stipulated code of ethics within its production processes. Apart from its sustainability drives and CSR strategies, the firm continues to upgrade its technology to brace itself for stiffer competition. For instance, in 2014, Dell exemplified its strategy of refining its computers to respond to the complexities of e-commerce needs. In 2015, Dell recorded the highest PC sales of over 40.5 million compared to the previous year at 22.7 million PCs. The sales were second highest behind Lenovo despite having a market share of only 15% by end of 2014. A likely factor for the rise in sales of Dell PCs in 2015 was due to its professed support for B2B and B2C needs of the global marketplace (Form 10-K, 2016). Apparently, there are dozens of PCs and laptop manufacturers around the globe pursuing different niches using different pricing and non-pricing strategies. Such prospects render PCs and laptops a commodity product for individuals and businesses. Therefore, companies like Dell must seek to align their offerings along lower cost strategies to survive competition with the likes of HP and Lenovo that are currently the most dominant brand in the computing technology markets (Cox, 2015).

Question 3

From the question three discussed above, it emerges that the pursuit of buyer power and rivalry among existing firms are necessary for Dell to survive in the competitive computer technology market. Therefore, it will be prudent for the managers’ at Dell to engage in certain acts with the aim of remedying the likely impact to be created by the two primary forces. For instance:

Buyer Power

As a strategy for Dell to remedy the bargaining power of the buyers it is important that it engages in 4Ps strategies of repositioning in the market. For instance, the firm should strive to come up with exceptional services for the consumers, e.g., energy efficient computers and overcoming supply chain complexities. It means that it should pursue business-level strategies to deliver quality and affordability to strengthen its relationship with the customers. Apparently, these are the milestone that the Company continues to achieve in rendering its brand affordable and appealing to the global tech market (Cox, 2015). For example, in 2014 Dell resorted to using Bamboos in its casing as opposed to Styrofoam. The strategy has been effective in making their laptops waterproof and damages from internal tension from their laptops. Such strategies should be pursued in winning a more reputable position for their brand in the market (Dell Inc., 2018). Also, Dell should continue with the pursuit of other economical and eco-friendly strategies of shipping its products to consumers and should open up its services to serve other remote locations of the world where its brand continue to record significant presence. The firm should also pursue vigorous marketing and promotion strategies to boost its brand recognition and sales in underserved markets such as parts of Africa and Asian Continents and also in other underserved niches, e.g., the youths in developing nations (Form 10-K, 2016).

Rivalry among the existing firms

As a strategy for Dell Company to remedy the rivalry it creates with its competitors it is important that it undertakes differentiation strategies in the markets it participates (Johnson, 2014). Meaning, it has to differentiate its product offering from other participants/ players in the same market. Currently, the computing technology market continues to experience a decline in prices for their gadgets owing to the increased number of players in the industry (Cox, 2015). Therefore, it will be prudent that Dell Inc. engages in differentiation strategies aimed at revamping its brand image to overcome the unhealthy cut-throat competitions in the market. Hence, the managers at Dell must decide on what they must offer to the market to distinguish them from other players. The management should undertake competitor analyses to ascertain the level of rivalry and threat an organization pose to their brand portfolio (Schilling, 2014). The outcome of the competitor analysis process should help the firm determine some of the factors that will make a consumer forgo their product to that of their competitor. Dell must evaluate reasons for its profitability in the market. Dell is widely recognized and was honored in 2013 for its resilient green strategies (Dell Inc., 2018). Such platforms offer some of the stepping stones that Dell can exploit to outperform competitors, and remain above and beyond competition. However, it must also come up with other differentiation strategies that will prolong its dominance in the tech market.

Question 4

Threats

The primary threat for Dell Company is the intensifying competition in the tech market (Form 10-K, 2016). The basic source of competition, in this case, is usually the technology. For instance, competitors in the market continue to diversify their portfolio by including other computing smart gadgets such as tablets and notebooks. The introduction of these gadgets may hamper the growth and demand of Dell laptops and PCs in the near future. Therefore, it is critical that the Company adjust to the changing technology, failure to which, it risks losing its market (Cox, 2015). Dell should also remain vigilant to the growing competition and remain open to the possibility of new players storming the market. Furthermore, the firm should revise its pricing strategies and their responsiveness to different consumer budget needs (Form 10-K, 2016). Such milestones can be achieved through diversifying its investment portfolio to mitigate the severity of unforeseen risks, as well as implementing price mix strategies to prompt sales and consumer responsiveness to its brand offerings. Also, Dell should expand its sourcing firms to overcome the risk of portfolio development (Cox, 2015).

Opportunities

Some of the opportunities available to Dell Company in overcoming competition in the computing technology market include; pursuing growth in the foreign markets and expanding its brand recognition to the underserved niches (Form 10-K, 2016). Besides, the management at Dell can contemplate the need to expand its services to include repair and maintenance or even integrate cloud solutions within its services, to competitively grow in the market (Cox, 2015). The firm has several options it can exploit in various sectors of the global economies, e.g., education, research, government bureaus, etc. Besides, the Dell has demonstrated quality and reliability in its offering giving it an ideal platform for pursuing growth in its most established and underdeveloped segments in the market (Schilling, 2014). The firm is also financially stable and can pursue merger and acquisition strategies, as well as, corporate buyouts to expand in the market.

Question 5

Strength

Dell Company forms 10(k) of 2016 outlines that the enterprise-strength is exemplified by its effective costing techniques. Dell Inc. also manages an efficient supply chain to sustain the activities within its trading cycles, as well as motivate after-sales service strategies to its consumers (Form 10-K, 2016). The Company’s strength also emanates from its use of robust technologies, along with a resourceful staff helping the enterprise to position itself in the tech market. Dell strength is also derived from its ever-growing brand reputation in the market. For example, Dell brand is commonly associated green computing solution rendering it as a tough competitor in the market. Its brand is also venerated as being of value and quality, as well as acknowledging sustainability. Besides, the growth in Dell’s technology epitomizes to its brand value in the market (Dell Inc., 2018). The firm also has the ability to tailor its design to meet the needs of its different class of computer users. Such innovativeness was key to its remarkable growth of 40.5 million dollars in sales revenue in 2014/ 2015 FY; surpassing the $22.7 million recorded in 2013/2014 period (Form 10-K, 2016).

Weaknesses

Despite Dell’s superior competitive strategies it still underscores in several regions. For example, Dell’s products are underserved in some of the potential niches such as Africa and Asia with the potential high market for its brand (Form 10-K, 2016). The firm also has a narrow portfolio where it depends only on the sale of its PCs and laptops for its revenue. Such may demonstrate the firm inability to innovate and diversify its investment portfolio. Furthermore, Dell relies on a single sourcing strategy for its raw material and resources. According to the firm’s 2016 report, Dell depends on corporate clients, as well as sourcing from new product market for its manufacturing needs. Such a strategy is dangerous especially with regard to the development of the firm’s portfolio in the long run (Dell Inc., 2018). As such, it is recommendable that the Dell pursues differentiation strategies to revamp its cost-benefit needs.

Question 6

Cox (2015) defines core-competencies as a blend of technical capabilities and knowledge vital for businesses to remain competitive. Nonetheless, it is essential that an organization retain staff with the right set of skills and assign them resources to help them efficiently execute and accomplish organizational tasks. Agreeing with Schilling (2014), sustaining the right skills for organization job is critical to overcoming unforeseen risks and the accompanying overheads when the wrong skills are hired for work. Hence, resources, core-competencies, and capabilities should go in hand when fulfilling a project purpose for an organization. For example, for Dell Company its core competencies, capabilities, and resources include innovation, sustainable brand, and technology respectively (Form 10-K, 2016). Dell Company has some of the commonly known resources in the market with a visible brand that continues to draw traffic to its online retail stores. As such, product innovations will provide different innovative aspects for consumers to enjoy. Likewise, technological upgrades and developments will enable consumers of Dell product to enjoy quality and choices at the comfort of their PCs and laptops. Finally, brand sustainability will offer the users that additional trust, enjoyment, and happiness to use Dell products. Such deeds may go a long way to opening markets for the firm, create a stronger bond in the market and set itself above the competition (Cox, 2015).

Question 7

Conferring from studies by Johnson (2014), the value chain analysis help enterprises distinguish between activities that add value to a firm and those that are to the contrary. For Dell Company, the value chain comprise of both the primary activities, along with supporting actions. The primary activities include the manufacturing process, selling efforts, distribution strategies, and after-sales effort expended by the enterprise. Relatively, the supporting events are those which provide backings to the actions of the primary activities to render the firm competitive in the market (Cox, 2015). According to Cox (2015), the earlier management scholars have played a leading role to define value chain and the aspect of competitive advantage. For instance, Michael Porter invented a simple value-chain consisting of operations, marketing, sales, inbound and outbound logistics, along with service activities (Schilling, 2014). As such, it is arguable to claim that Dell has successfully executed its value chain to supply/ ship its gadget to consumers in different locations, along with helping to solve their specific computing needs. Dell currently ranks third in market share control behind Lenovo and HP. The Company continues to grow in the tech market owing to the insightful strategies it deploys to compete in the market (Cox, 2015).

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