SWOT Analysis of the Dell Computer Corporation


Executive Summary

The personal computer industry consists of general-purpose computers of varying capabilities, sizes and is mostly affordable to individual users. There are a number of companies manufacturing such computers, the major players of the industry are; Apple Incorporation, Hewlett-Packard (HP), Lenovo, Dell Computer Corporation and Sony. The first personal computers were produced in 1975 this was the MITs Altair 8800. The computer industry is said to be mature due to its rapid developments and innovation in the last decade.  This report is based on the strengths, weaknesses, opportunities and threats that affect the Dell Computer Corporation. The company has grown fast despite facing numerous external and internal challenges, as the population gets more knowledge on the use of computers almost everything is now based on use of Information technology. This has made personal computers a basic necessity in the lives of many people in line to this; dell has globally offered the best computing solutions to individuals as well as to professionals in many multinational companies. This makes the sales trends of its products increase drastically mostly due to the use of direct sale method.

Introduction

  In 1984, after the production if the IBM’s Altair 8800 in the year 1975, followed by the Apple Incorporation’s Apple II in 1976 which was then the true “personal computer”. In 1984 Michael Dell had the idea to sell computers directly to customers. Dell products increased their sells, it made Dell Incorporation become the most growing company in the US (Null & Lobur, 2012, p. 49). IBM’s introduction of the IBM PC in 1981 changed the industry it now focused on the business community. This report highlights the micro-environments and macro-environments as they affect Dell Computer Corporation in the computer industry it also provides some future projections. As the number of people using personal computers increases the profits of the players in the industry have been decreasing in the recent past. This has been pointed to the increase in price competition among the computer products entering the market.  The industry is quite expansive it includes the software companies like Microsoft and Oracle Incorporation. Dell mostly targets three markets for its sales namely the business executives, college students and homes through production of customized home desktop computers (Matching Dell)

Strengths

Almost every player in the PC industry has a wide variety of products used in offices, businesses, and schools not forgetting their common presence in most homes today. Greatest advantage of this is that it gives dell an added advantage in the industry through direct sales method keeping the operation costs lower compared to those of competitors as its sales are kept constant or on an upward trend. It also is capable of ensuring that the company maintains a personal touch with the customers by providing high quality customer support services (Shelly, Vermaat, Quasney, Sebok, & Freund, 2012, p. 18).

The above factors are a clear indication or rather exhibition of competitive advantages of the dell given the profound advantages derived from the low operational costs and direct customer interaction while maximizing the profits (Schneider, 2011, p. 29). Dell Incorporation takes a USP’s (unique selling points) of their products as they provide training to customers using both their hardware and software. This is now gaining popularity with the rest of the competitors in the industry making it an exciting moment for the used to freely get first hand training free of charge, this might not be the case in other players in the industries.

Resources, strategic assets( patents),  and people are essential for the growth of any company as seen in the recent years more people are depending on PCs to perform most basic tasks, investors are now pumping more money to the industry. Dell assembles components with cheaper labour and the products are sent to the buyer directly. The level of understanding or the knowhow of computer uses is now widely taught in schools; this has seen increasing numbers of computer experts thus a thriving industry dell takes advantage of this fact to build computers meeting the user specifications. Data in today’s world is in digital form and most people use dell products to access this data online as well as reading eBooks offline as a form of accessing knowledge which can also be traditionally accessed in books, the company’s ability to use the latest technology that is relevant to the market unlike the other companies like Apple that uses indirect distribution channels. Though this industry recommends more financial reserves as capital, the likely returns expected is also higher as the subsequent investments more so for dell that produces computers on order.

Personal computers are widely used in almost every part of the globe his provides a vast market reach that is well distributed; creating awareness to the clients of particular product is easily done through the internet enables reach of large numbers of people over short time. The PC industry’s innovative aspects are very dynamic (Wang, Yanhui Li, Yan, Li, & Yang, 2007, p. 105). It has seen dell produce new products year in year out. This makes this great industry more profound, it is clear that in the next few years the new merging innovations like the Google glasses will see the reduced number of PCs in homes as more people will be wearing computers.

Despite the difference in location and geographical position of the market and cheap labor, Dell has use the JIT approach and lean supply chain system to sale its products (Ireland, Hitt, & Hoskisson, 2009, p. 71). Mass production model of dell has seen it save some production costs as compared to its competitors like Apple, Lenovo and HP. This ensures lower prices of the average personal computer while maintaining the value of the brand and the quality of the product. Players in this industry are easily accreditations and their qualifications are globally recognized are they are offered internationally recognized certifications of processes, systems, IT, communications products.

Weaknesses

When a brand dominates the market there is lack of competitive strength from the smaller players as their reputation, presence period and customer reach is therefore difficult. There is the question of the quality of the products produces in Dell due to its system of mass production on request. Door to door delivery can be a problem in new markets was such a system may not be in place.

 The financials in the case of new players in the market can be difficult to accumulate and gaining the share market is not easy because of the existence of stronger brands with stable client base. Own known vulnerabilities like hardware and online hacking can be a major blow to the industry if and when it occurs. Timescales, deadlines and pressures can result in production of low quality in some dell products.

Cash flow, especially for start-up companies in the industry can cause higher cash-drain more so if the has few sales. Continuity and supply chain robustness in the industry may not be guaranteed as there may be distractions on core activities by external factors for instance legal bill and political influences in the industry’s management. Theoretical research data cannot be reliable as the industry is very dynamic for long-term planning and predict.

Leadership in specific companies and management in the entire industry require commitment and morale of the employees for the processes and systems produced to be accredited. This requires smooth and successful management which lacks in the industry in most cases (Schermerhorn, 2010, p. 62). Because dell assembles components it is innovations only comes from the component manufacturer. Dell is said to have no dealer-retailer relationship thus no constant supply of the PCs hence unpredictable market. A single product buyer for instance home buyer cannot approach the company for only one unit shipment.

Opportunities

 Market developments like the ecommerce has ensured reach of consumers all over the world dell has fully digitalized its distribution mechanism for easy customer service and order follow-ups or tracking during shipping. This has enhanced the variations in the both exports and imports of electronics mostly the customized computers and their components. Companies in the industry are vulnerable at any given time and as dell takes advantage of the downfall of her competitor to launch new products. Change of lifestyle in the society is always seen as an opportunity for new products to suite new lifestyles. Technology development and innovation in this diverse industry require that companies has seen dell take initiatives in conservation of the environment by production of environmentally friendly products with reduced costs. Their products should also be energy efficient, smaller in size like for the case of ultra books as well as reduced weights for example Dell XPS ultrabook and Dell Latitude notebooks.

 Proper knowledge and utilization of a company’s strengths is vital in the exploration and entry in to new markets in that given a market the company will be able to evaluate its strategies accordingly. This also offers a lot of insight in how to handle market niches. The knowledge of the strengths and threats facing a company also acts as a parameter on determining the extent to which the business can export or import products.

Some companies like HP cannot handle large orders as in the case off dell this is a weakness for such a company it the industry and a great opportunity for Dell Incorporated.

Threats

Dell relies on partnerships, agencies, for distribution and supply on computer components from third party companies like IBM, Microsoft and Intel sometimes may supply more or less the required components resulting in the shortage or over-supply of the same (Shelly, Vermaat, Quasney, Sebok, & Freund, 2012, p. 93). Constant IT developments in the industry can make the present products obsolete. Competitor intentions can never be predicted and this poses a threat to the market share in case a one company does not keep the phase of innovation and creativity. High market demands attract new sellers and products into the market reducing the market share. Rivalry among dell and other companies in the market leads to reduction of the price of PCs, this is always the prayer of every customers but it reduces the sales of Dell Incorporated. New players can enter the market with new technologies, services, ideas reducing the sales of  Dell which is the major player in the industry. The issues of piracy or use of the same brand names by counterfeit products reduces trust among the customers who fall victims of the vice.

Vital contracts may go wrong and partners may get bankrupt affecting the whole partnerships as most of them may not sustain internal capabilities as they could with their partners. Obstacles faced in this industry may be severe and can bring down big companies dell as Apple suffered in 1996 under the management of Steve Jobs. Loss of key staff as a result of greener pasture in competitor companies or countries not only takes skills but also company secrets. Sustainable financial backing may be withdrawn from important projects thus hindering further product developments hence weakening the competitive ability of such a company. Economic situations at home and world currency fluctuations in the exchange rates, they may be as a result of seasonality and bad weather such Hurricane Sandy on the east coast of the Americas.

Conclusion

The personal computer industry will continue to grow faster as the world’s technologies nearly depend entirely on the use of computers. The military now uses them to execute major attacks on the enemies; students in schools cannot do without them. The businesses are now fully depended on then by use of business softwares.  The future of this a highly dependable industry is brighter than anyone can predict. The major players should maintain their innovations up to date in order to maintain their market shares. Prices of the personal computers are expected to continue falling so that they are more affordable to everyone. Pollution being a challenge as the number of obsolete computers increase companies like dell and HP are now inventing new ways on how to recycle then to conserve the environment for the future generations. The personal computer and the entire computer industry is now the key pillar of most governments’ economies contributing a good percentage of tax to the national tax kitty. It is also notable that it employs large numbers of professionals from all sorts of fields enhancing their living standards. Use of the PCs has helped in development of key sectors such as the health sector where diseases that were previously difficult to diagnose can now be accurately a diagnosed and equally treated easily. Dell now produces fast and more powerful computers such as Alienware.

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