Dell - Strategy Analysis

U20467 Student No. 483563 Page 1 of 26
Strategic Management
Unit Code: U20467
Student Number: 483563
Strategic Review

Table of Contents
Executive Summary........................................................................................................................... 3
1. Environmental Analysis ............................................................................................................. 4
1.1 PESTEL Analysis ............................................................................................................... 4
1.2 Porter’s Five Forces........................................................................................................... 4
1.3 Industry Life Cycle.............................................................................................................. 5
1.4 Strategic Group Analysis................................................................................................... 5
2. Resource and Competence Analysis ...................................................................................... 6
2.1 Value Chain Analysis......................................................................................................... 6
2.2 VRIO Analysis..................................................................................................................... 6
2.3 SWOT Analysis................................................................................................................... 7
3. Recommendation for Future Development............................................................................. 8
4. Recommendation Conclusion................................................................................................. 10
Appendices ....................................................................................................................................... 11
Appendix 1 .................................................................................................................................... 11
Appendix 2 .................................................................................................................................... 12
Appendix 3 .................................................................................................................................... 13
Appendix 4 .................................................................................................................................... 14
Appendix 5 .................................................................................................................................... 15
Appendix 6 .................................................................................................................................... 17
Appendix 7 .................................................................................................................................... 18
Appendix 8 .................................................................................................................................... 19
Appendix 9 .................................................................................................................................... 20
Appendix 10.................................................................................................................................. 20
Appendix 11.................................................................................................................................. 21
Bibliography ...................................................................................................................................... 22

Executive Summary
This report was commissioned to examine the strategic options of Dell Incorporated (Dell)
and Dell’s position in the global personal computer (PC) industry. The research draws
attention to vary environmental factors which influences the company; internally and
externally.
Currently, the PC industry is in decline but the level of rivalry amongst firms is high,
attempting to dominate the saturating markets. The reduction in global PC sales can be
contributed by the recent economic downturn and the recent shift towards alternative
products, such as tablets and mobile phones.
With Dell’s recent take-over by founder Michael Dell, internal aspects have been analysed,
identifying internal aspects, such as Dell’s direct sales model, leadership, partnerships and
supply chain management (SCM) strategies, assisting the development of recommended
strategies.
The report utilises a number analytical tools and frameworks, to gain an understanding of the
environment, resources and competencies of Dell’s PC disciplines. A TOWS and Ansoff
matrix have been constructed to help formulate different strategic options. These strategies
have then been implemented through a suitability, acceptability and feasibility evaluation
criteria to assess their viability.
Three strategies are highlighted to be critically analysed to see their viability for Dell. Once
analysed, the most achievable was selected; Dell to further develop their tablets. This
strategy was selected based on many factors, such as meeting stakeholders’ criteria. In
addition, the strategy allows Dell to move their attention to a developing market, allowing
them to re-asses the declining PC market. Also, Dell would be able to access the increased
demand in tablet technology, potentially gaining larger financial benefits for the market.
Furthermore, with Dell’s current resources and capabilities, this strategy would be best
suited for implementation.
.

1. Environmental Analysis
1.1 PESTEL Analysis
[Appendix 1]
The PESTEL analysis looks at the external influences which impact Dell. An important factor
to consider when looking at the PESTEL analysis is the rapid change of technology. Many
computing companies have encountered huge success and then failed because they could
not keep up with the rapid change of new technology. The newest technological
advancement in the industry is the introduction of “cloud storage,” which have brought
varying interest from competition from all industries
One of the greatest influences in the industry is the social shifts in lifestyle and buyer
behaviour, with the global preferences shifting to online platforms and more tablet and
mobile based devices, (Wingfield, 2013). It has been argued that, ‘mobile internet devices
will outnumber humans this year,’ (Arthur, 2013).
Another external influential l aspect is the global economy. With the computer industry
dependant on consumers and businesses, the global economy has a large impact on the
performance of Dell. For example, the recent global recession caused a dramatic decrease
in global shipments of personal computers around the world, (Sherr, 2011).
1.2 Porter’s Five Forces
[Appendix 2]
Porter’s Five Forces identifies the potential threats of new entrants into the market. In the PC
industry, there is a reduced threat of new competition breaking into the market, due to the
high capital costs and the high risk of a declining industry life cycle (Appendix 3).
The analysis of Dell’s supplier power suggests a moderate to high stake of control. Due to
the complex components used to construct a PC unit, only limited numbers of suppliers are
able to provide crucial items, due to the technologically advanced processes of research and
design (R&D) and high costs of manufacturing. For example, Dell sources their PC
processor chips from Intel, which historically have held negotiations to increase supply price,
widening their leverage gained by Intel, demonstrating the power of suppliers, (Hesseldahl,
2009; Hill et. al, 2014).
With the power of supplier rising, the bargaining power of the buyer is building and mounting.
High competition has resulted in the vulnerability of PC manufactures, allowing consumers a
large range of relatively similar products from various companies.
In relation to buyer power, the threat of substitutes can still be determined as “moderate.”
There is a strong presence of computers throughout society and will continue to be in the
coming years. However, the PC industry is being transformed by the development of
substitutes. The current substitutes are Tablets, Smart phones, gaming consoles and Smart
TVs, which are all growing in popularity, (King, 2009).

1.3 Industry Life Cycle
[Appendix 3]
Sales of PCs, once on a seemingly unstoppable upward curve, are now on a downward
spiral because of squeezed consumer spending and the development of alternative
products, (Titcomb, 2013). Currently, the PC business is in 7 quarterly slump, decreasing
year-on-year. The situation is a long way from the “boom” times of the late 1990s, which saw
20%-plus quarterly growth, (Arthur, 2014). The deterioration indicates the industry’s
placement within the industry lifecycle, moving past the “maturity” and into the “declining”
stages. The industry is highly competitive, with multiple corporations fighting to yield the
highest market share. The market is so competitive that large companies are considering
exiting the market entirely. Most recently, “LG are considering quitting the traditional
Windows PC business,” (Arthur, 2014).
1.4 Strategic Group Analysis
[Appendix 4]
The main competitors - based on Windows operating systems - in the market are currently
Lenovo, HP, Acer and Asus, (Hardy, 2014). The intense competition in the PC industry has
led to fluctuating market leaders over the past 15 years. Some competitors have exited the
market recently, “Sony has recently exited the market,” (Vincent, 2014).
The graph, “Strategic Group Analysis 1,” shows the comparison between the global top five
PC companies, based on their market share. The variables of “Price” and “Sales” were
selected based on the relevance to the industry and Dell. Dell’s direct model incorporates a
penetrating cost strategy, gaining a cost advantage versus its competitors by selling direct,
(Black Book, 2004, pg.31-40). In 2000, after the Dot Com Crash, some competitors were
forced to adapt their strategies, trying to mimic Dell’s pricing concepts. The graph suggests
that pricing products higher might lead to a larger market share, as seen by Lenovo. In
addition, lowering product prices too much might lead to lower total sales, seen by Acer.
“Strategic Group Analysis 2,” determines the correlation between “Product Range” and
“Sales.” The graph identifies that corporate product portfolio suggests a relationship with the
amount of sales. Lenovo having the largest market share, highest sales figures and a large
product range, (Yu, 2013).

2. Resource and Competence Analysis
2.1 Value Chain Analysis
[Appendix 5]
To create a competitive advantage, Dell distanced itself from the rest of the PC-
manufacturing field not only by the adoption of the direct-sales strategy, JIT inventory
management and lean production concept, but by the recognition of the internet in the mid-
1990s, (Ireland et.al, 2009; Vecchio, 2013).
The manufacturing process has an extremely low transfer time, “it can be just 90 minutes
from the time the order is placed for the computer, to the time it begins its journey through
the factory.” (Dell, 2012). This capability enables Dell to gain a competitive advantage on
competitors, producing units quickly and of high quality.
To further strengthen the company’s SCM disciplines, progression in technological
development has seen the introduction of such systems as, “i2 TradeMatrix” and “Agile,”
(Dell, 2001; Chou et. al, 2004). These new SCM systems enable the company to operate
more efficiently, promoting better communication between suppliers. As a result, these
systems help lower production and distribution costs, adding value to the company and
customer satisfaction, (Chou et. al, 2004).
In regards to marketing, to enter into already existing market with new products, Dell has to
carry out series of promotional sales and advertisements to make customers aware of its
new products. The marketing aspect of Dell claims it has a larger database on their
customers than their competitors, allowing them to connect and market more efficiently,
whilst utilising their strong brand name, (Kaye, 2013).
2.2 VRIO Analysis
[Appendix 6]
Dell’s direct model allows the company to yield a superior cost advantage versus its
competitors. Dell’s direct customer interaction generates an almost equal financial benefit as
the cost advantages of the company’s direct business model, (Black Book, 2004, pg.31-40).
Dell’s SCM strategies enable them to gain a temporary advantage over competitors. Dell’s
rivals, such as HP, are trying to imitate Dell with their own schemes to slash production time
and boost service, (McWilliams, 1997). Currently, Dell’s competitors have not yet adopted
the full JIT and Lean production strategies Dell has managed to implement so effectively.

2.3 SWOT Analysis
[Appendix 7]
Currently, Dell has one of the best SCM strategies in the industry. Adopting a JIT
methodology, Dell uses their strong SCM process to give them a competitive edge on
competition, (Kimble & Bourdon, 2013,pg. 58-68). However, the threat of competition
imitating their processes is already taking place. The I.T industry is highly competitive- with
all firms fighting to gain market share- possibly leading to Dell becoming vulnerable if they
are not able to keep up or beat competition. As result of the low R&D spending on PCs, Dell
may leave themselves exposed for competition to push them out the market.
In addition, one of their primary strengths, Dell operates a Direct Sales business model,
resulting in the reduction of processes their product needs to travel before reaching the end
consumer. Integrating their sales systems with the internet and website, has formulated a
strong position for Dell in regards to an online presence, (Kapuscinski et. al, 2004; Kelleher,
2013). In relation, as a result of their pioneering online sales and e-commerce systems, Dell
reduces their potential costs of having to operate retail stores to sell products.
It can be argued that the privatisation of Dell can be seen as strength to the company
Previously, Dell’s slow performance was attributed to their “poisonous culture,” (Satterwhite,
2013). With the re-introduction of Michael Dell, Dell’s corporate strategy is likely to develop,
helping the firm progress into a pioneering I.T leader, as it historically was under the
leadership of Michael Dell in the past.
Dell operates with a very large product portfolio; PCs, laptops, storage devices, servers,
services, tablets and phones. With such a large diverse portfolio, Dell has a large opportunity
to exploit growing markets, such as tablets. Dell’s product diversification enables the firm to
sustain operating in the PC industry. For example, “Dell’s servers and networking and
enhanced services sales grew 35% in the past five years, offsetting a $2 billion decline in PC
sales,” (Matthews, 2013).
One of the greater opportunities is the new emerging markets in various developing
countries such as Brazil, Russia, India and China. The emerging markets makes up half the
world economy, (Evans-Pritchard, 2014). However, Dell has a significant number of debts,
with analysts predicting the company to take on billions of dollars more in debt, (Ferguson &
Balassi, 2013). These amounting debts may act as a threat to Dell’s strategies, possibly
preventing them from further expanding into new markets.

3. Recommendation for Future Development
[Appendix 8/9/10/11]
The TOWS Analysis helps generate plausible strategic options Dell could implement, gaining
a form of direction and competitive advantage from the analysis. To analyse which strategies
would be most suitable for Dell, TOWS matrix, Ansoff matrix, SAF analysis and stakeholder
mapping have been formulated to highlight the viability of each strategic option.
1. Develop pricing strategies to increase sales in developing economies and
emerging markets.
This strategy enables Dell to counter act some of the key issues which effects Dell’s PC
performance (Appendix 3). With the PC industry currently in decline in existing markets, Dell
would have the opportunity to extend their product lifecycle in various emerging economies.
Developing economies are one of the main contributors of sales for PC manufacturers, with
an increase in demand from these nations.
Dell would have to review their pricing strategies in growing foreign markets, possibly using
a penetration strategy to out-price competitors. Dell already has their foundations in various
emerging economies, such as China, India and various African nations which would make
this strategy more feasible. With a penetrative pricing strategy, Dell could possibly gain an
increase in sales and market share by lowering their product costs for their PCs. Using their
strong brand image, Dell could attempt to capitalise on the increase in sales from this price
reduction. Furthermore, Dell could benefit from their expansive product portfolio, such as
servers, storage and services adopting a pricing strategy to support the sales of Dell PCs. In
addition, Dell has superior SCM strategies over main rivals, enabling them an advantage in
being able to distribute products more effectively and efficiently to different regions on the
globe. According to Ansoff matrix, this strategy would be placed in the “market penetration”
and “market development” stages (Appendix 10).
Referring to the stakeholders and acceptability, developing pricing strategies carry severe
risks (Appendix 9). Key players may not be in favour for this strategy as it may involve a
possible loss of profits. Lowering the price of a product will decrease the profit margin for
each unit. If there is not an increase in sales, Dell would suffer from a decrease in profits.
However, if the pricing strategy is effective, Dell can see an increase in sales, resulting in
larger profits and larger market share in the PC market.
2. Focus attention on the development of Dell tablets.
With the PC industry in decline, the tablet market is still in the growth stage, growing
exponentially in recent years. Forecasters estimated the worldwide tablet shipments to have
grown up to 54 percent by the end of 2013, (Harjani, 2013). The increase in interest in
tablets can be reflected in the business sector – one of Dells primary markets and sources of
revenue – with businesses’ discovering the advantages in the industry, (Arthur, 2013).

Having already built a strong foundation with business clients, Dell may be able to develop
relationships and corporate alliances, selling and catering tablets specifically to current
business client’s specifications.
In relation, main competitors, such as Lenovo, are attempting to enter this market, with some
already seeing a growth of 30 percent in sales, partly due to their recent ventures into the
global tablet market, (McDonald, 2014). With this in mind, Dell could differentiate by
strategically targeting their strong relationships with business, which limited competitors
currently adopt, enabling Dell to potentially increase their total sales and value.
In regards to stakeholders, most of the key players would agree with further penetration into
the tablet market. The Ansoff matrix identifies a high risk with diversification, which may
cause hesitation amongst stakeholders (Appendix 10). However, Dell have already invested
into their current tablet range, which means the costly, fundamental resources such as
manufacturing processes have already be established.
Furthermore, Dell has already established a relationship with key stakeholders, Microsoft.
Microsoft -one of the worlds most advanced technology based company- would possibly
support and promote the development of Dell’s tablets, which primarily use Microsoft’s
operating system, Windows 8, (Shah, 2013). It is projected that tablets using Microsoft’s
Windows 8 systems will grow, with main competition using different operating systems, such
as Apple, HP, Lenovo and Samsung, rapidly losing market share by 2017, (Harjani, 2013;
Turner, 2014).
However, Dell has previously experience poor performance of their previous range, previous
to their Microsoft partnership. Dell originally loaded Android operating systems onto previous
tablets, which failed to excite the marketplace when introduced, (Kolakowski, 2012). Taking
that in consideration, some stakeholders may be hesitant to invest considerable money into
tablets.
3. Invest in more R&D for the PC range.
Dell still has a significant leash on the PC market with their competitive market share and
products. Previously, Dell has been reluctant to invest into their R&D for their PC products,
only spending roughly 2 percent of their overall sales, (Markowitz, 2013). By comparison,
most of Silicon Valley's PC companies last year, spent over 10 percent on R&D, (Financial
Review, 2013).
This strategy purposes an increase in R&D spending, attempting to develop superior
products in comparison to competition. According to a "Dell Special Committee Investor
Presentation" compiled by the Boston Consulting Group, it suggests that Dell has not made
significant investments in R&D, (SEC, 2012).
Furthermore, the R&D investment –along with Michael Dell’s leadership and PC expertise –
can help rebuild and re-establish Dell in the PC industry. Investments in R&D for the PC
products is widely considered essential for companies to stay on the cutting edge of

technology, being able to gain that competitive advantage and entering markets with new
products.
With this in mind, Dell, for example, could exploit the growth in the PC gaming industry.
Whilst the overall PC industry is in decline, the PC gaming market is increasing. With online
revenues set to reach US$30bn in 2017, (PWC, 2013). Dell, along with their gaming
subsidiary Alienware Corporation, could invest into producing a more superior product for
the growing gaming market.
This strategy may be favoured by key stakeholders due to the lower risk, according to Ansoff
matrix due to the lower risk involved (Appendix 10). Also, Dell has experience in the industry
and having the founder Michael Dell leading again, may see stakeholders put their faith into
the re-development of the PC industry. However, due to the declining nature of the industry,
stakeholders may consider not investing valuable profits into PCs, choosing to use the
finances to pay off debt or into different products.
4. Recommendation Conclusion
[Appendix 11]
Once the SAF analysis stakeholder mapping have been taking into consideration, a score
and value have been placed on each option to show the strategies viability. The best
suggested strategy is for Dell to increase their development of Dell Tablets.
Strategy Suitability Acceptability Feasibility Average
1 3 4 5 4
2 4 5 4 4.3
3 3 3 4 3.3
With the PC industry in decline, the tablet market is still in the growth stage, growing
exponentially in recent years. This strategy would enable Dell to possibly gain higher market
in the tablet market and growth in overall revenue, benefiting from their direct sales model
and their strengths.

Appendices
Appendix 1
PESTEL ANALYSIS
POLITICAL ECONOMICAL
 Trade Barriers /Trade control/ Import
restrictions.
 Political insecurities with changing
governments/ Government stability
and likely changes
 Tax policy (rates and incentives)
 Competition regulation
 Financial Recession
o Dot Com Crash
 Exchange Rates
 The growth of developing economies
o Brazil, Russia, India, China.
SOCIAL TECHNOLOGICAL
 Change in buyer behavior – moving
towards tablets
 A growth in online shopping.
 Customers expect High performance
pcs – change in consumer in
developed countries there is a high
expectation on better performing
units.
 Lifestyle changes.
 Attitudes toward “green” or ecological
products
 Increase in touch screen laptops.
 Cloud storage – Being able to store
information on-line not on your phone
this could become a necessity for all
phones to have.
 Rapid change of technology – The
changes in technology is rapid, which
can make a winning brand a losing
brand overnight.
 New products (Ultra Books)
 Digital viruses: with the advancement
in technology, issues with hackers
and viruses are following the growth
trend.
 Compatibility against cross platforms,
with different software being able to
run on different systems.
ENVIRONMENTAL LEGAL
 Recycling materials – It is becoming
the normal for large companies to
have their own environmental policies
and give back to communities.
 Pollution
 Governmental Policies, David
Cameron wants all busy to think
GREEN.
 Environmental Laws
 Patents, copyrights, design
o PC companies have to make
sure they are not infringing on
any other companies patents
or designs, which many have
and cost companies millions.

Appendix 2
PORTER’S 5 FORCES
(Adapted: Johnson et. al, 2008)
Bargaining Power of Suppliers: MODERATE/HIGH
Moderate – due the number components within PC construction, some suppliers have
limited bargaining power due to the saturated supplier market.
High- Items in computer and laptop construction are extremely important and usually
sourced from trusted partners. For example, there are only two main suppliers of processors;
Intel and AMD. With this, partnerships and relationships have to be built in confidence for
both parties, giving the supply considerable bargaining power.
Threat of New Entrants: LOW
Capital requirement – A large amount of capital is required to be able to enter the mobile
phone market, as technological and R&D costs are extremely high.
Economies of scale – It would be extremely difficult for new entrants to be able to compete
with current large brands in the mobile phone market as it is highly saturated and they would
not be able to compete with the large scale that the main competitors of the mobile phone
market are operating at.
Product differentiation - There are hundreds of mobile phone handsets and the main
competitors in the mobile phone market rely on brand recognition and customer loyalty to
sell their products.
Bargaining Power of Buyer: HIGH
High Competition- The personal computer industry is somewhat vulnerable against the
bargaining power of buyers. In recent years customers have more and more alternative
options to the personal computer. Alternative products are suggested to be taking the
majority of consumers’ spending that might have otherwise gone to laptop or desktop
computers, (Wingfield, 2013).

Large Market – The large target market gives them a greater influence and buyer power.
High competition has resulted in the vulnerability of PC manufactures, allowing consumers a
large range of relatively similar products from various companies.
Threat of Substitute products and services: MODERATE
There is a strong presence of computers throughout society and will continue to be in the
coming years. However, the PC industry is being influenced by the development of
substitutes, possibly resulting in future sale. The current substitutes are Tablets, Smart
phones and Smart TVs, which are all growing in popularity. Currently, these substitutes still
do not have the computing power in comparison to PCs or laptops, which may change in the
near future.
Rivalry: HIGH
High concentration – there is fierce competition between the top manufacturers in the
personal computer industry. Competitions are contending to produce the most effective
platform at the best price for their consumers.
Industry - Due to the previous profitability of the industry, competition are using all their
available resource to become the market leaders.
Appendix 3
INDUSTRY LIFE CYCLE
(Adapted: Sharplin , 1985)
Personal Computers
(PCs)

Appendix 4
STRATEGIC GROUP ANALYSIS
Product Range Sales ($ million) Market Share
Lenovo 38 13,774,828 17.6
HP 23 13,532,449 17.1
Dell 27 9,218,063 11.6
Acer 22 8,615,940 8.3
Asus 20 6,354,096 6.1
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
0 10 20 30 40 50
Sales($)Q32013
Product PC & Laptop Range
Strategic Group Analysis 2
Lenovo
HP
Dell
Acer
Asus
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
0 2 4 6 8 10 12
Sales($Millions)Q32013
Price
Strategic Group Analysis 1
Lenovo
HP
Dell
Acer
Asus
Low Moderate High
(Source: Gartner, 2013)

Appendix 5
VALUE CHAIN ANALYSIS
Primary Activities
Inbound Logistics
 Material handling.
 Transportation.
 Purchasing.
 Supplier partnerships.
 Supply chain management (SCM)
 Valuechain.dell.com enables communication
between suppliers and Dell.
Operations
 Just in Time (JIT) manufacturing.
 Full Product customisation.
 Quality Control.
Outbound Logistics
 Developed global distribution channels.
 Introductions of free shipping.
Sales & Marketing
 Direct sales model.
 Pioneering online sales & e-commerce.
 Advertising & Public Relation in Medias such as
television, the Internet, magazines, catalogues
and newspapers.
 Customer& market research.
 Relationship marketing strategy.
 Business to Business sales.
 Brand reputation.
Service
 Providing good customer service both before and
after the sales.
 Keeps its research customer-focused and
towards suppliers.
(Adapted: Grant & Jordan, 2012)

Support Activities
Firm Infrastructure
 Based in Texas, United States: developing,
sales, repairs and supports computers and
related products and services on site.
 Strong communication between business
disciplines.
Human Resource Management
 Formal code of conduct, emphasising on high
ethical standards.
 Individual coaching.
 Mentoring.
 On the job training.
 3 step program to improvise on core skills of
employees which involves orientation, technical
leadership and development training.
Technology Development
 Development of the “i2” supply chain systems.
 Limited R&D on PC but higher spending on other
products in company portfolio.
Procurement
 Dell’s Worldwide Procurement organization is
committed to responsible sourcing.
 Quality control & compliance to regulations.
(Adapted: Grant & Jordan, 2012)

Appendix 6
VRIO ANALYSIS
Direct Sales Model
Valuable? Rare? Costly to Imitate? Organised to
Capture Value?
Yes Yes Yes Yes
Sustained Competitive Advantage
Valuable- Dell operates a direct sales strategy which has formed their supply chain
management strategies. By removing the “middle man” of retailers, Dell are cutting costs
dramatically and can ship products straight from the warehouse to the consumer.
Rare- The concept of online sales and e-commerce are not rare, however, the adoption of
this strategy by a PC manufacturer is uncommon. Dell uses their strong reputation for quality
and brand, obtaining a cost advantage over competition which have retailers and stores
containing physical merchandise.
Costly to Imitate- This model is costly to imitate for existing competition, due to the fact they
would have to re-organise their entire business model and assets.
Organised to Capture Value- With over 7000 workers specialized in sales and the
Direct2Dell blog giving one-to-one interactive help with a trained dell employee.
Supply Chain Management
Valuable? Rare? Costly to Imitate? Organised to
Capture Value?
Yes No Yes Yes
Temporary Competitive Advantage
Valuable- Dells majority sales derive from online sales, enabling the company to reduce
costs, whilst maximising the full potential of the internet.
Rare- Similar to the direct sales model, Dell’s SCM and distribution systems are not rare in
other industries. However, Dell’s competition are currently developing their own SCM
strategies, trying to imitate Dell’s models and systems.

Costly to Imitate- This model is costly to imitate for existing competition, the initial capital
costs would be extremely high. However, once strategies such as JIT and Lean production
are adopted, firms can actually reduce costs.
Organised to Capture Value- Dell has incorporated their SCM strategies to all aspects of
the company, using various technologies and research to maximise the value added to the
business.
Appendix 7
SWOT ANALYSIS
Strength Weakness
 Direct sales business model & Online
sales.
 Product customisation.
 Supply chain management (SCM).
 Inorganic growth structure.
 Business to Business sales (B2B).
 Providing good customer service both
before and after the sales.
 Brand name & global presence.
 Leadership & Management &
Privatisation.
 Diverse product portfolio.
 Relatively large market share.
 Partnerships (Microsoft)
 Customer Service
o “Direct 2Dell”
 Low R&D spending on PCs.
o Lack of competitive edge &
product innovation.
 Leadership & Management.
 Financial debt.
 Dell’s sales revenue from educational
institutions such as colleges and
universities only accounts for a
merely 5% of the total PC sales.
 Customers cannot go to retailers
because Dell has very limited
retailers. Buyers cannot physically
touch or see the tangible product they
want to purchase.
 Opportunity  Threat
 The growth of developing economies
o Brazil, Russia, India, China.
 Growth in online sales.
 Development of new technologies
o Cloud storage
o Tablets
o Mobile Phones
o Business Servers
 Patents, copyrights, design.
 Financial Recession.
o Dot Com Crash.
 Online dependence.
 Industry life cycle
 Competition.
o Lenovo, HP, Acer and Asus.
(Adapted: Mintzberg et. al, 2005)

Appendix 8
TOWS MATRIX
Strengths Weaknesses
1. Direct sales business model &
Online sales.
2. Product customisation.
3. Supply chain management
(SCM).
4. Inorganic growth structure.
5. B2B sales.
6. Providing good customer service
both before and after the sales.
7. Brand name & global presence.
8. Leadership & Management &
Privatisation.
9. Diverse product portfolio.
10. Relatively large market share.
11. Partnerships (Microsoft)
1. Low R&D spending on PCs.
a. Lack of competitive edge
& product innovation.
2. Leadership & Management.
3. Financial debt.
4. Dell’s sales revenue from
educational institutions such as
colleges and universities only
accounts for a merely 5% of the
total PC sales.
5. Customers cannot go to retailers
because Dell has very limited
retailers. Buyers cannot
physically touch or see the
tangible product they want to
purchase.
Opportunities Strengths – Opportunities Weakness- Opportunities
1. The growth of developing
economies
a. Brazil, Russia, India,
China.
2. Growth in online sales.
3. Development of new
technologies
a. Cloud storage
b. Tablets
c. Mobile Phones
d. Business Servers
 Strategies to enter/ develop the
growing number of developing
economies.
(S1,S3,S4,S5,S7,O1)
 Utilise Dell’s customisation
ability and integrate into all
possible products. (S1,S6,S9)
 Using a strong brand name and
global presence, Dell has the
ability to continue to develop
their product portfolios. (S7,O3)
 Increase R&D spending on PC
development & other product
portfolio. (W1,O3)
 Continue to reduce costs and
increase sales, by continuing to
implement their online platform.
With an increase in online retail,
Dell could continue to increase
their sales, whilst operating a
more cost effective online
strategy. (W3,O2)
 However, to overcome the issues
of no retailers, Dell could
implement a few more retailers in
developing markets, overcoming
the issues of consumers buying
without seeing a tangible item.
(W5, O1)
Threats Strengths – Threats Weakness – Threats
1. Patents, copyrights, design.
2. Financial Recession.
a. Dot Com Crash.
3. Online dependence.
4. Industry life cycle
5. Competition.
 Use previously adopted
inorganic growth to expand,
taking over possible competition
and/or acquiring firms in different
industries. (S4,T4,T5)
 Using the strong brand image
and partnership with Microsoft to
develop tablet portfolio and other
I.T products such as servers.
(S7,S11,T4,T5)
 Review their pricing strategy
against competition, gaining
competitive advantage.
(W3,T4,T5)
 Target educational institutions,
building a larger client base and
gaining a large market share.

Appendix 9
STAKEHOLDER MAPPING
Appendix 10
ANSOFF MATRIX
Existing Products New Products
Existing Market
New Market Market Development
Minimal Effort (Monitor)
 Competitors
Keep Informed
 Employee’s
 Pressure Groups
 Local Communities
 Governments
 Investors
Keep Satisfied
 Media
 End User (Consumer)
Key Players
 Shareholders
 Executives
 Business Partners
Level of InterestLow
Power
High
Low
High
Market Penetration
Diversification
Increasing
Risk
STRATEGY 2STRATEGY 1
STRATEGY 3
Product
Development
(Adapted: Swords & Turner, 1997)

Appendix 11
SAF RECOMMENDATIONS
Suitability Acceptability Feasibility
1
This strategic option is suitable
because it address’s a number
of key issues in the external
environment such as the
maturing stage of the PC
industry. Being able to access
new markets would allow the
extension of the product life
cycle and industry (Appendix 3).
This is also suitable as Dell
already has a strong established
supply chain network (Appendix
5).
The strategy would out price
competition. Eg. In China,
Lenovo still have the majority
of market share, selling ever
one in three PCs, (Einhorn et.
al, 2013).
This strategy may not be seen as
being acceptable to key player
stakeholders (Appendix 6). This
strategy may lower the profit
margins per unit, which could
possibly result in lower profits.
However, there may be an
increase in sales and reducing in
competitor market share.
The strategy might enable them to
gain a competitive advantage,
gaining a large market share in
the relatively unsaturated and
new markets.
Dell has an advantage over
some competitors, having
already established themselves
in a number of emerging
markets; Africa, Asia and South
America.
Dell can use their strong brand
image, good supply chain and
online platform to offer a wide
range of affordable PCs to meet
all varying consumer needs.
2
This strategic option is suitable
because it address’s a number
of key issues in the external
environment such the changing
consumer behaviour, preferring
to purchase tablets over PCs
(Appendix 1)
Statistics show that tablet sales
are rising, whilst PC purchases
are in decline. The tablet
industry has been proven to be
successful.
This strategy would be seen as
being acceptable to key player
stakeholders (Appendix 6). The
production and development of
Dell’s tablet range could possibly
lead to the company accessing
large revenue streams from that
industry.
Business partners such as
Microsoft would promote this
strategy, allowing Microsoft to
continue to supply their operating
system to Dell’s tablets.
Initial capital costs have already
been incurred, making it less risky
for Dell to continue to progress
with their tablets compared to if
they had to start the strategy from
the beginning.
Dell already invests in the
development of their tablet
range, meaning re-allocating
more resources to the
development would not be as
costly as starting up from having
no product.
They have partnerships with
Microsoft, helping fund and
develop the tablet with access to
considerable I.T knowledge.
Strategies:
1. Develop pricing strategies to increase sales in developing economies and emerging
markets.
3. Invest in more R&D for the PC range.

SAF SCORING
1 : LOW
5 : HIGH
Strategy Suitability Acceptability Feasibility Average
1 3 4 5 4
2 4 5 4 4.3
3 3 3 4 3.3
3
Investing more into PC R&D
could possibly enabled Dell to
extend their presence in the
declining industry. Already the
maturity stage, a new generation
of PCs might be able to extend
the industry. (Appendix 3)
This development may enable
Dell to achieve a higher market
share, possibly placing it further
away from their competitors
reach, seen in the Strategic
Group Analysis. (Appendix 4).
Stakeholders and key players
would accept this strategy due to
the less risky approach. Already
established in the PC industry,
Dell has set their foundations in
the market place.
However, the declining nature of
the industry may prevent
stakeholders – such as
executives -from encouraging
funds being wasted on a failing
industry.
This strategy is slightly less
risky, involving a more predicted
approach due to the fact Dell
have been in the industry for a
long duration.
For Dell to invest in R&D for the
PC industry, they have to
mitigate against higher costs.

Bibliography
Arthur, C. (2013, Dec 19) My iPad has Netflix, Spotify, Twitter – everything': why tablets are
killing PCs. The Guardian. Retrieved from:
http://www.theguardian.com/technology/2013/dec/19/why-tablets-killing-pc-ipad-apple-
microsoft
Arthur, C. (2013, February 7). Mobile internet devices 'will outnumber humans this year'. The
Guardian.
Arthur, C. (2014) How the 'value trap' squeezes Windows PC makers' revenues and profits.
The Guardian. [online] 09 January. Available at:
http://www.theguardian.com/technology/2014/jan/09/pc-value-trap-windows-chrome-hp-dell-
lenovo-asus-acer [Accessed: 20 Jan 2014].
Black Book - Dell: 'Intimacy' Unique, Valuation Attractive, But Watch for Echo of the Bust.
(2004) Sanford C. Bernstein & Co., LLC, 2004.
Black Book - Dell: 'Intimacy' Unique, Valuation Attractive, But Watch for Echo of the Bust.
(2004) Sanford C. Bernstein & Co., LLC, 2004.
David C. Chou, Xin Tan, David C. Yen, (2004) Web technology and supply chain
management. Information Management & Computer Security, Vol. 12 Iss: 4, pp.338 - 349
Dell. (2001) Strengthening The Supply Chain. Retrieved from:
http://www.dell.com/content/topics/global.aspx/power/en/ps1q01_i2?c=us&l=en
Dell. (2012) Power Solutions: Government Special Edition. Retrieved from:
http://i.dell.com/sites/doccontent/business/solutions/power/en/Documents/ps3q12gov.pdf
Einhorn, B, Larson, C & Ricadela, A. (2013, Nov 7) In China, Dell Clings Tightly to the
Waning PC. Bloomberg. Retrieved from: http://www.businessweek.com/articles/2013-11-
07/in-china-dell-adopts-retail-pc-strategy
Evans-Pritchard, A (2014, Jan 28) Emerging markets forced to tighten by US and Chinese
monetary superpowers. The Telegraph. Retrieved from:
http://www.telegraph.co.uk/finance/financialcrisis/10603363/Emerging-markets-forced-to-
tighten-by-US-and-Chinese-monetary-superpowers.html
Ferguson, J & Balassi, J. (2013, Jan 16) Dell buyout could mean more debt, junk rating.
Reuters. Retrieved from: http://www.reuters.com/article/2013/01/16/markets-credit-
idUSL1E9CG9K720130116
Financial Review, (2013, Jun 12) HP's R&D spending cut to fraction of industry norms.
Financial Review. Retrieved at:
http://www.afr.com/p/technology/hp_spending_cut_to_fraction_of_industry_KZYv3HTPjoSW
OWFFoLZkfJ
Fortt, J. (2008) Michael Dell ‘Friends’ His Customers. Fortune. Vol 158. Issue 5.
Gartner (2013) Gartner Says Worldwide PC Shipments in the Third Quarter of 2013
Declined 8.6 Percent. Retrieved from: http://www.gartner.com/newsroom/id/2604616

Gupta, P. (2013) Dell to invest more on PCs, tablets after $25 billion buyout win. [online] 12
September. Available at: http://www.reuters.com/article/2013/09/12/us-dell-buyout-
idUSBRE98B0FC20130912 [Accessed: 20 Jan 2014].
Hardy, Q. (2014) For PC Makers, the Good News on 2013 Is That It Is Over. The New York
Times. [online] 09 January. Available at: http://nytimes.com/2014. [Accessed: 21 Jan 2014].
Harjani, A (2013, Dec 4) Global tablet sales growth set to halve in 2014. CNBC News.
Retrieved from: http://www.cnbc.com/id/101248166
Hesseldahl, A. (2009) Intel-Dell Dealings Under Fire. BloombergBusinessWeek. [online] 10
February. Available at:
http://www.businessweek.com/technology/content/nov2009/tc2009114_975298.htm
[Accessed: 10 Feb 2014].
Hill, W., Jones, G. & Schilling, M. (2014) Strategic Management: Theory & Cases (11th
Edition). Mason, OH: South-Western, Cengage Learning.
Ireland, R, Hoskisson, R & Hitt, M. (2009) Understanding Business Strategy: Concepts and
Cases. USA: South Western Educational Publishing
Johnson, G., Whittington, R., & Scholes, K. (2008). Exploring Strategy . Harlow: Pearson
Education .
Kapuscinski, R, Zhang, R, Carbonneau, P, Moore R & Reeves B. (2004) Inventory Decisions
in Dell’s Supply Chain. Interfaces, Volume 32 (3), pp191 – 205. DOI:10.1287/inte.1030.0068
Kaye, K. (2013) What Going Private Means for Marketing at Dell. Advertising Age. Retrieved
from: http://adage.com/article/dataworks/private-means-marketing-dell/244474/
Kelleher, K. (2013) Dell (Yes, Dell) Is About to Make History. Time Inc. Retrieved from:
http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=91976633&site=ehost-live
Kimble, C & Bourdon, I. (2013) The Link Among Information Technology, Business Models,
and Strategic Breakthroughs: Examples from Amazon, Dell, and eBay. Global Business and
Organizational Excellence, 33 (1), pp. 58--68.
King, R. (2009) Companies Seek PC Alternatives. BloombergBusinessWeek. [online] 04
January. Available at:
http://www.businessweek.com/technology/content/dec2008/tc20081231_178982.htm.
[Accessed: 10 Feb 2014].
Kolakowski, N. (2012, Mar 19) Dell's Windows 8 Tablets Will Target iPad. EWeek. Retrieved
from: http://www.eweek.com/c/a/Mobile-and-Wireless/Dells-Windows-8-Tablets-Will-Target-
iPad-783013/
Krazit, T & Kanellos, M. (2006, Aug 15) Dell to recall 4 million batteries. CNET News.
Retrieved from: http://news.cnet.com/Dell-to-recall-4-million-batteries/2100-1044_3-
6105486.html
Markowitz, E. (2013, Jul 18) How Michael Dell Could Reinvent His Company. INC. Retrieved
from: http://www.inc.com/eric-markowitz/how-michael-dell-could-reinvent-his-company.html

Matthews, C (2013, Sept 12) Dell Shareholders Approve Michael Dell’s Buyout Plan. TIME
Business & Money. Retrieved from: http://business.time.com/2013/09/12/dell-shareholders-
approve-founder-michael-dells-buyout-plan/
McDonald, J. (2014, Feb 13) Lenovo quarterly profit rises 30% on growth in smartphone,
tablet sales. The Associated Press. Retrieved from: http://www.ap.org/
McWilliams, G (1997) Michael Dell: Whirlwind On The Web. Business Week. Retrieved from:
http://www.businessweek.com/1997/14/b3521131.htm
Mintzberg, H., Ahlstrand, B., & Lampel, J. (2005). Strategy bites back, it is fat more, and
less, then you ever imagined... London: Prentice Hall.
PWC, (2013) Global Entertainment & Media Outlook: 2013 – 2017. Retrieved from:
http://www.pwc.com/gx/en/global-entertainment-media-outlook/segment-insights/video-
games.jhtml
Satterwhite, S. (2013, Jan 4) Dell's Poisonous Culture Is Sinking Its Ship -- and Raises
Questions for Potential Buyer. Forbes. Available at:
http://www.forbes.com/sites/forbesleadershipforum/2013/04/01/
SEC (2012) Securities And Exchange Commission – Dell Inc. Retrieved from:
http://www.sec.gov/Archives/edgar/data/826083/000119312513136708/d514517ddefa14a.ht
m
Shah, A. (2013) Dell to release new Windows tablets later this year. IDG News Service.
Retrieved from: http://eds.a.ebscohost.com/ehost/detail?sid=12591aa7-d863-4eff-ae96-
247cfcdc306d%40sessionmgr4004&vid=1&hid=4210&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ
%3d%3d#db=bth&AN=87098210
Sharplin , A. (1985). Strategic Management . London: Mcgraw-Hill Book Company .
Sheer, I. (2011) Demand For PCs Falters. [online] 14 April. Available at:
http://online.wsj.com/news/articles/SB10001424052748703551304576261362140150324
[Accessed: 15 Jan 2014].
Swords, D., & Turner, I. (1997). Strategy from the inside out. London: International Thomson
Business Press.
Titcomb, J. (2013) Can Dell take the tablets and win?. The Telegraph. [online] 02 November.
Available at:
http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/electronics/
10421322/Can-Dell-take-the-tablets-and-win.html [Accessed: 20 Jan 2014].
Turner, N (2014, Jan 29) Apple Facing Slowing Tablet Growth as U.S. Market Gets
Saturated. Bloomberg. Retrieved from: http://www.bloomberg.com/news/2014-01-29/apple-
facing-slowing-tablet-growth-as-u-s-market-gets-saturated.html
Uma V. Sridharan, W. Royce Caines, Cheryl C. Patterson, (2005) Implementation of supply
chain management and its impact on the value of firms. Supply Chain Management: An
International Journal, Vol. 10 Iss: 4, pp.313 - 318

Vance, A. (2010, Nov 12) An Unsealed Lawsuit Indicates Dell Hid Faults of Computers. The
New York Times. Retrieved from:
http://www.nytimes.com/2010/11/19/technology/19docs.html?_r=0
Vecchio, P, Laubacher, R, Ndou, V & Passiante, G. (2013) Managing Corporate Reputation
in the Blogosphere: The Case of Dell Computer. Corporate Reputation Review. Volume 14
(2).
Vincent, J (2014) Sony sells PC business in order to focus on smartphones and gaming. The
Independent. [online] 06 February. Available at: http://www.independent.co.uk/life-
style/gadgets-and-tech/sony-sells-pc-business-in-order-to-focus-on-smartphones-and-
gaming-9111959.html
Wingfield, N. (2013) PC Sales Still in a Slump, Despite New Offerings. The New York Times.
[online] April 10. Available at: http://www.nytimes.com/2013/04/11/technology/data-show-
steep-decline-in-pc-shipments.html?_r=0. [Accessed: 10 Feb 2014].
Yu, S (2013) Lenovo redraws business lines as its product range grows. South China
Morning Post. [online] 07 January. Available at: http://www.scmp.com/business/china-
business/article/1121580/lenovo-redraws-business-lines-its-product-range-grows
WORD COUNT: 2746

Dell - Strategy Analysis

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

En vedette

En vedette (20)

Similaire à Dell - Strategy Analysis

Similaire à Dell - Strategy Analysis (20)

Dell - Strategy Analysis