Industry Environment
Competitive Rivalry
The competitors to Dell are as follows: Hewlett-Packard, IBM, and Sun Microsystems (Hoovers). HP and IBM pose the biggest threat in competition. Dell’s sales overview has increased each year except for 2001 to 2004. In 2001 the annual sales in millions were $31,888 and a major increase in sales in 2004 at $41,444.0. (Hoovers).
In terms of entry barriers, Dells direct to consumers sales approach has increased their sales each year and will soon be among their top competitors. Because of this approach, Dell has entered into this highly competitive market in a unique way. The biggest entry barrier that Dell has to face when entering into the technology industry is having customers gain the trust of company over the more popular veteran computer companies. Nevertheless, many of competing companies use a range of different suppliers. Competitor Sun Microsystems annual sales are lower than Dell’s. They offer an online service where customers can order servers, and personal computers. They differ from the rest of the organizations is that they do not use the Microsoft operating system which is a weakness compared to the rest. Sun does not see Dell as a major competitor, in obvious place of Dell; they see Microsoft as a major competitor along with Hewlett-Packard and IBM
This being said, Dell is performing in the right direction and sales are increasing dramatically overtime as mentioned above, and the competition exist between the companies and that what makes Dell unique. The increase in sales between 2001 and 2004 proves the success for the organization. Their economic status continues to improve and to grow.
http://finance.yahoo.com/q/co?s=DELL
Operating Environment
Consumers view Dell as a quality brand at a good price. Some consumers find that Dell’s competitors may be a little more expensive but still offer a quality brand, a new sales campaign –“Dell on Ice” – will offer 15% discounts on its Blade Centre system and on its x440 top-end Intel server. (Shankland). Dell ranks high with customers because the company offers free technical support if needed. The purchasing process has changed for the consumers with Dell because all the ordering is done online which offers convenience to its customers and minimize inventory.
The flow of materials from suppliers into Dell starts by the company putting in orders to factories that are based on two categories. These two categories are product type and geography. When putting in orders for product type Dell wants to select the right factory that specializes or deals with a certain product. Geographic orders mainly focus on the where the order is coming from to minimize the transportation expense. “Michael Dell and his team have superb relationships with their suppliers; they maintain those superb relationships, by ensuring that the suppliers win every time Dell wins”. (Rizzo) As a consequence, Dells suppliers are perfectly willing to keep a truck load of inventory at Dells loading dock. (Rizzo) Dell leads the way in innovative material handling in that industry
Dell will go through some several changes in the next couple years to develop its system, improve customer service, reduce cost, and improve supplier control. Dell will lead the technology industry and be a good example to the competitors. More technology of software and hardware will be available in the next couple years with less cost.
Remote Environment
The internet market has been expanding and exploding across the globe. This market has varied by market segment and already has been a big hit in the U.S. Dell knows that the way to globalize the company successfully is through e-business. Analysts agree that e-business is the most significant trigger to the achievement of economic globalization. (Reynolds)
Economic
For Dell to penetrate into this market it must oust the Legend brand PC which is already a big hit in China and therefore Dell has already built a factory in Xiamen, which is on the southeastern coast of China. Dell’s facility inside of China is a major step into the Chinese market. With this factory in Xiamen, Dell can promote its next day delivery too 400 cities which is one of the company trade marks. (Roderick) “Dells China market share has grown from near zero in 1998, to 4.4%”. (Roderick)
Dell does not produce and manufacture parts only, it searches and sets up long-term strategy to accommodate global customers. More business and more production facilities will be opened world wide to adopt and globalization system and the global demand in the next decade.
Long-Term Objectives
Dell is starting to take on new projects like focusing on markets globally. Dells objective is to take over 20% of the Asia market. The internet market has been expanding and exploding across the globe. Dell knows that the way to globalize the company successfully is through e-business.
The greatest opportunities for future profits are in the global market. China has a huge computer market and is growing fast. The main computer company right now in China is the Beijing-based Legend computer. There are many opportunities here for Dell because there is low penetration cost into the Chinese market, and is considered to be the third largest in the World. “Despite relatively low penetration rates, China’s $10 billion computer market is already the third largest in the world; within in a few years it is expected to past Japan and become second only to the U.S”. (Roderick) The project that Dell is trying to take on is to advance into the Chinese market where they see a huge potential increasing their revenue greatly. Dell should continue with their staff education program related to the global areas that they work to continue to develop knowledge, understanding, expertise and leadership effectiveness. To continue to remain competitive Dell should continue to expand their global supplier relationships that will enable them to operate cost effectively.
Dell is a global leader in the computer technology industry. It is no accident when they provide innovative ways to reach out to their customers. Efficient and unique marketing techniques are carefully calculated to create and identify specific needs of customers. Dell’s customer-direct concept gives it a competitive edge on rivals, helping the company gain customer loyalty on a global level. In addition, Dell’s management team has been able to handle difficult internal/external factors effectively, making them one of the most successful companies in the world. Their ability to recognize knowledge management will guide their worldwide employment. Dell will then effectively develop global talent for diverse ideas and skills. They can then hope to understand international customer needs and convey desirable technology to developing economies. One plan’s success begets another. Dell opens up more time to focus on its efforts to providing low cost, high quality products. They keep up with technology changes allowing them to stay ahead of other companies.
References
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