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Dell Case study.
In this report we are going to analyse the business environment of the computer industry in the form of a PESTE which stands for Political, Economical, Social-Cultural, Technological and Environmental.
We feel that it is important to analyse the environment of a business as it will help the business to identify the Opportunities and Threats surrounding it. Using the case study of Dell we have identified the following opportunities and threats of the computer industry.
Political
There are a number of political issues, that large organisations such as Dell must consider when expanding or operating in different countries. Obviously government in the western world have different ideals to the countries in other regions. Rules and regulations in different countries would reflect their different ideals; so in order for companies to be successful, they must have a good understanding about how different governments operate.
As stated in the case, patents and trademarks are prevalent in the computer industry, so it is important for organisations to develop good relations with different governments. Other elements that must be considered include: Currency exchange rates, taxation and employment law, labour conditions and political stabilities. Organisations should also understand different governments’ attitudes towards monopolies and competition.
Economical
Opportunities:
1) The computer industry is predicted to continue to grow in volume over the years. It is expected to grow between 15-20% over the next 3-5 years. This is influenced by the development of the internet and the global expansion opportunities.
2) The foreign markets like Asia and china were previously not accessible due to their political and economical environment. However the situation has changed eliminating barriers thus is now readily accessible; this is a big opportunity for the computer industry to grow in these regions.
Threats:
1) Economical changes around the world can affect the computer industry. The biggest threat to the industry is the instability of the world market, for example Dell opened a new manufacturing facility in Brazil and the changes in the South American economical conditions could thus affect the company.
2) The currency fluctuation in different regions can affect the profitability of a company within the computer industry.
3) As the computer industry tries to expand into developing countries they face the threat of these markets being very unstable.
Social-Cultural
Opportunity
1) For the computer companies to succeed within the industry, it is vital that they keep the environments and societies healthy in order to recruit and retain a highly skilled and motivated workforce.
2) The cultural shift in the way businesses operate, towards on-line trading mean there is now more growth in the computer industry as it is essential tool for modern businesses.
3) By the computer industry expanding this will have a positive affect on the society, environment as they will create more jobs.
The computer industry needs to understand that all countries have different business cultures, for example Dell operates, DELL AMERICAS, DELL EUROPE, MIDDLE EAST, AFRICA, DELL ASIA PACIFIC/ DELL JAPAN. This could be a opportunity or threat to a business if they can adapt successfully to the different business cultures.
Technological
Opportunity
1) Due to Telephone expansion in developing countries, businesses are realising that the internet is essential for operating globally. This is a whole new opportunity for the computer industry to take advantage of these new untapped markets.
2) The computer industry needs to keep up to date in new technological developments or face elimination as this is vital to survive in the computer industry. For example with reference to the Dell case study, that the ever increasing internet expansion means that there are new opportunities for new technological developments in the computer industry.
Environmental
Opportunities
1) The direct model’s build to order manufacturing system minimises waste (JIT) this also reduces excess and obsolete inventory thus is environmentally friendly.
2) By having a good relationship with your suppliers computer companies are able to use JIT methods effectively which in turn would benefit the business.
Threats
- It is essential that businesses show that they are environmentally friendly in today’s society; otherwise, it may have negative effect on company’s reputation.
Bibliography
Books:
Adapted from John Swarbrooke and Susan Horner (2003), “Consumer Behaviour in Tourism” Butterworth Heinemann
Leon G. Schiffman and Leslie Lazar Kanuk (2003) “Consumer Behaviour” Prentice Hall
Philip Kotler et al (1999) “Principles of Marketing” (2nd European Edition), Prentice Hall
Philip Kotler (2003) “Marketing Management” (11th Edition). Prentice Hall
Gerry Johnson and Kevan Scholes (2002) “Exploring Corporate Strategy” (6th Edition) Prentice Hall
Journals/Articles:
Rosario Rosas-Vega, Robert J. Vokurka (2000) “New product introduction delays in the computer industry” Industrial Management & Data Systems Volume 100, Number 4
Ziff Davis Media Inc (2003) “HP Gains on Dell in PC Market Growth” eWeek, 16th of October
Michael Dell (2003) “On what really spurs demand” Business Week, May 26 The McGraw-Hill Companies
The McGraw-Hill Companies (2003) “PC Makers: More Sales, Fewer Profits; Some Taiwan manufacturers plan to switch to high-end TVs” Business Week, 1st of September
Jennifer Barron (2003) “How strong brands get "on intent" - and stay there” Journal of Business Strategy Volume 24, Number 2
Ziff Davis Media Inc (2003) “What PC Buyers Want” eWeek, 5th of May, Industry Overview
The McGraw-Hill Companies (2001) “Bucking the Odds By Slashing Costs” Business Week, 26th of November
Reed Business Information Ltd (2003) “European IT chiefs plan more investment in 2004 (analysts' views)” Computer Weekly, 9th of September
Ziff Davis Media Inc (2003) “HP Promotes PC Recycling” eWeek, 6th of February
Reed Business Information Ltd (2003) “Suppliers introduce price incentives to get users to invest in the latest PC hardware” Computer Weekly, 14th October
Simon Quicke (2003) “Suppliers' views; Top supply executives predict market upturn” Computer Weekly, 9th September, Reed Business Information Ltd
Adam Lashinsky (2000) “The Wired Investor: Once the drivers of the great bull market, PC makers have seen their stocks battered and bruised. The question is: Do they still deserve a place in your portfolio” Fortune, 18th December
Ben Elgin (2003) “Hitting the Delete on Compaq” Business Week, 14th of April, The McGraw-Hill Companies
Ziff Davis Media Inc (2003) “Dell Entering Consumer Electronics Market” eWeek, 25th of September
Andrew Park; Faith Keenan; Cliff Edwards (2002) “Whose Lunch will Dell Eat Next? Now, it's moving into printers, storage, and handhelds” Business Week, 12th of August, The McGraw-Hill Companies