Since the PC industry has developed rapidly over the past decade, corporations in this industry face strong worldwide competitions and challenges. Dell, as one of the most successful enterprise in PC industry, offers a wide rage of products, the principal products includes desktop PCs, notebook computers, workstations,and servers. (Datamonitor Plc., 2011). From 1998 to 2006, Dell had strong financial performance and became the biggest seller of personal computers globally(Schwießelmann, 2010), However, recently, Dell start to lose its competitive edge in PC marketplace. (The Economists, 2006). The purpose of this report is to analyse what challenge the company faces, what internal and external factors that influences Dell's business, what is the current strategy of Dell, the advantages and disadvantages of its business strategy. Further recommendations will be made to develop a suitable strategy to help Dell beats its competitors and survive in the low- margin, highly competition industry. In this report, several tools and theories like SWOT, Value Chain and Corporate Social Responsibility will be used to analyse the strategy of this company.
Michael Dell established his PC company with 1000 US dollars in 1984 when he was a student at the University of Texas.( Sabri and Shaikh, 2009). Michael founded this company with a simple vision that computers could be assemble to order and sold directly to customers(The McGraw-Hill Companies, 2002).
In 1987, Dell's first international office was founded and Sale to government agencies started to make serious profit in 1988 and soon it become Dell's major business (ibid.). In 1996, Dell founded its own website and started to sell computers directly trough internet.( Sabri and Shaikh, 2009) which totally changed the PC selling market. Dell now have become the world second largest PC makers and its success mainly because of its unique supply chain(ibid.). The core competence of Dell is the build-to-order process, it makes Dell assemble computers in a very short time and deliver and order directly to its customers(Giachetti, 2010). This order fulfillment process gives Dell competitive advantages of costs in the low-margin IT industry and it cannot be easily replicated by its competitors(ibid.).The mission statement of Dell is 'to be the most successful computer company in the world at delivering the best customer experience in markets we serve ' (Walker, 2003, pp. 264). In order to achieve the mission, Dell need to meet customers demands with high quality, low price, leading innovation, individual and corporate responsibility, best services, flexible customization ability and stability in finance situation (Walker, 2003). The key stakeholders of Dell is its customers, employees, shareholders,suppliers, communities and the environment (Dell,2011).The major competitors in enterprise PC and server markets are HP, Apple, Acer, IBM and Toshiba (Dataminitor Plc., 2011). Main competitors in retail marketplace are Asus , Acer, HP, Sony, Lenovo and Apple(ibid.).
What is more, since Dell has entered into smartphone market in 2010, Apple, HTC and RIM are the main competitors in mobile business(ibid.). Strong competition exists in all of its segments.
Analysis of Strategy.
Current strategy of Dell Before 2007, Dell did not sell PCs through retail outlets(The Economics,2006) Products of Dell was only sold directly through web site or phone-centers, and then assemble to order, this model was regarded as one of the most efficient business model(The Economist,2006) Distributors and retailers are excluded in its supply chain(ibid.). The just-in-time inventories and online sales cut the costs thus Dell could provide lower prices. However, since 2007, Dell started to sell PC products through retail stores or their own kiosks (Hoffman, 2007).However, Dell does not have many inventory in these stores. Customer only tests