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PESTEL and SWOT analysis of Dell computer company

Table 1 shows the income statement for Dell Computer Company. The net income of Dell is dropping year by year. This means there are many strong competitors in the market than starting to threaten Dell. The sales are dropping as Dell reduces the cost of research development.

1.2 Management Overview

The management concepts of Dell are “improve efficiency, increase IT productivity and reduce costs”.

Dell creates the comprehensive systems management solutions with open standards and incorporated with industry-leading partners. By following the solutions, Dell can protect its investment in the skills of its IT staffs and the recent systems management framework, while the superior systems management abilities of Dell™ servers, storage and networking is still being a benefit to Dell.

The combination approach to enterprise-wide systems management provides Dell efficiencies that help ensure its IT services are available when the business needs them, including reduce IT complexity which means maximize the effectiveness for staffs and resources of IT, hence reduce the system downtime. Besides, this can avoid vendor lock-in which is the Integrate key management solutions from Dell and the systems management partners, including BMC Software, Microsoft and Symantec.

1.3 Mission Statement

Dell’s mission statement is "To be the most successful computer company in the world at delivering the best customer experience in markets we serve." It is a straight forward but hard to achieve target as nowadays people are more concern about services and convince. Dell introduces online purchase system and delivery service which enable people to shop easier. And with the help of E-Connect, Dell’s customers can ask for support online.

1.4 Market Share

Prelim worldwide PC vendor unit ships for Q4 2009 (thousands of units)

Company

Q4 09

Mkt Share

Q4 08

Mkt Share

Growth

HP

17,792.2

19.8%

14,239.9

19.3%

24.9%

Acer

12,188.2

13.5%

8,612.7

11.7%

41.5%

Dell

10,397.1

11.5%

9,839.3

13.3%

5.7%

Lenovo

7,836.5

8.7%

5,509.3

7.5%

42.2%

Toshiba

4,811.9

5.3%

3,668.1

5%

31.2%

Others

37,008.5

41.1%

31,855.4

43.2%

16.2%

Total

90,034.5

100%

73,724.7

100%

22.1%

The table above shows the market share of different companies from the year 2008 to 2009. HP becomes the winner as the market share grows 24.9% and it own 19.8% of the computer market. Dell is having a hard time as the growth of its market share is 5.7% from 2008 to 2009. It is a bad sign of Dell as the market dominance is taking by HP and Acer. Lenovo is having a nice boost in market share which is 42.2%.

2.0 Sector Trends

The trends of the computer sector can be analysis by using PESTLE analysis which consists of political, economic, sociological, technological, legal, and environmental.

2.1 Political

One of DELL’s major intimidations is involving the fourth element of the external environment, the political or legal environment. The Chinese government likes to promote national PC vendors as compare to foreign companies and there are a lot of formalities involved in securing government contracts, which shows that local firms and companies in China is more preferable by the China government. Another threat of Dell is that the internet usage is being controlled by the China government which means the growth of internet is being limited.

2.2 Economic

The economic environment is the nature and economy direction in which a firm competes or may compete. The problem of software piracy is the main threat that computer companies suffer in China. China has a lot of economic opportunities as it has the highest population amount, but the shortage of skilled labor is making China to suffer. DELL is aware that cheaper system is more preferable in China.

2.3 Sociological

The social and cultural sector is follow closely with a society’s attitudes and cultural values. Dell has the opportunities to expand into a new market as the potential of internet growth in China is tremendous. At the same time, due to the huge expense of computer, China people are still unsure about card sales. Therefore, DELL has to offer door-to-door or face-to-face operations in order to increase consumers’ trust and consumers’ belief in the company and product.

2.4 Technological

The technological sector consists of the agencies and activities which related with inventing new technology into products, materials and processes. The main direction of technology nowadays is everything become smaller and faster. Institution has proven a key government resource by providing access to technologies developed. By the year 2000, it was observed that the annual PC production in mainland China would reach 7.6 million, making it the third largest in the world. With the help of internet, companies have a great opportunity to get their name into the public area plus a fast way to custom services to its customer segments. However, the high cost of using internet in China has become a threat to Dell in the technology sector.

2.5 Legal

Dell was fined $4 million for fake and misleading advertising about PCs sold to consumers in New York. While in New Orleans, there are two companies which claim Dell is selling a surveillance camera system by conspiring with city officials. This shows that Dell is being interrupted by the legality of their actions in different countries.

2.6 Environmental

The target of Dell is to build a corporation culture for better awareness towards the environment because of the values of environmental conservation, the efficiency of eliminating waste which follows the values of the direct business model and is more effective to deliver the value of customers.

Dell's goal is to be a careful attendant of the environment and to execute programs and processes to ensure the operations and products are environmentally friendly. Other than that, Dell is also trying to make the neighboring environment in society better for the people who work and to generate strategic partnerships with organizations evenly dedicated to environmental objectives.

Dell's direct business model guides their promise to straight meeting with employees, customers and suppliers. Dell also engage in direct conversation with the investment groups which are socially responsible, shareholder activists, and many variety of nongovernmental groups that are looking for business meeting to uncover the global way out for most of the public and environmental concerns.

3.0 SWOT Analysis

SWOT analysis is to help marketers to analyze the strengths, weaknesses, opportunities, and threats of a company. By understanding the SWOT of competitors, marketers can help to generate a better marketing plan for leading the company to fight for market share in a more effective way. The below analysis is about the two main competitors for Dell, which are HP ad Acer.

3.1 Strengths

The primary strength for HP is that it has a large amount of available cash, which is about $10 billion. HP is running it business in over 170 countries which consist of developed and under-developed. As a worldwide dealer of computer hardware, HP is having many advantages. For example, HP is leading the printers market which includes laser printers and inkjet printers. Furthermore, HP is fighting in local and international level. Therefore, the competitiveness of HP is being increased by the policies and plans that support free-market economies.

For Acer, its strength comes from its innovations like the Aspire One laptop which comes with a long life battery which can last for almost 8 hours, and this allow the owner to access the internet everywhere without the need of finding plug for the charger. Secondly, Acer also competes in the profitable mobile phone market with Tempo Smartphone series in 2009. Acer’s main factory is located in Taiwan, which has the advantages of cheap labor and easy allocation for the US market and Asian market. Because of that, Acer is able to fight with the strong competitors and obtain the market share of low-priced laptop with low price products.

For Dell, the strength of it is Dell employed over 76 million of workers which means that Dell has strong manpower. Secondly, Dell has low manufacturing cost and nine manufacturing plants. Furthermore, Dell provides non-rest customer service which running 24 hours for 7 days a week. Other than that, Dell built its product based on customers provide specifications which leads to higher customers’ satisfaction. Last but not least, Dell is the first company which establish product-recycling goal in information technology industry.

3.2 Weaknesses

The weakness of HP is that it was in a long term liability for many years which limiting it from investing in various growth opportunities. Another weakness of HP is its touch pad problem which earned the company for many complaints because of the touch pads hard to use due to friction. 

The weakness of Acer is that the PC, laptop and mobile phone markets are tremendously competitive and need numerous improvements to achieve or even surpass the expectations of the customers. Basically, the laptop customers are looking forward to new features yearly. Strong and flexible supply chain is needed for innovations and changing market demand to accomplish the successful innovations and bring them into the market before the competition.

Dell declared the turndown of its manufacturing plant in Limerick, Ireland on 8 January 2009 with the loss of 1900 workers. Secondly, Dell is weak at attracting the students in schools and colleges, this segment of market is only get 5% of the total revenue of Dell. Other than that, Dell is facing many criticisms against its claim of world most secured laptops. Lastly, the dependency of Dell towards its suppliers is high which means that Dell’s activities will be limited by its suppliers.

3.3 Opportunities

Opportunities are needed for companies to take chances and win the competition. For HP, it is staying in a strong position of the IT market plus is having a more impressive portfolio as the recent acquisition of EDS helps out a lot. Furthermore, HP was able to produce huge amount of revenues from various deals and increased more than six billion profits which it can be used to pay off its liabilities as well as spend in a varieties of research and development activities.

For Acer, it had competed on bringing a dependable PC’s and laptops at an aggressive price level. Secondly, the acquisition of Gateway©, emachines and pockard bell (Acer inc., 2010) by Acer is successful. This success will help Acer to incorporate its presented assets or establish new manufacturer to produce eReaders or similar products with the functions of iPad. Moreover, by using its low price model, it will be able to compete in the Asian market. If marketed well, the Asian market will be able to generate large amount of revenue as the size of the market is extremely huge.

For Dell, the main opportunity is the reduction in cost of the latest technology. Secondly, the new partnership and acquiring of suppliers are also a crucial opportunity for Dell. Furthermore, Dell has got the opportunity to directly sell its products to retailers and customers which can greatly decrease the products’ price level.

3.4 Threats

The major threat of HP is that it is running business in global market, which means there are many competitors. Hence, HP needs to stay at the front position of rapid-changing technologies as well as dealing with the changing customer demands and needs. As the global economic recession is affecting the world market, it is also a threat for HP’s sales and profits. Another threat for HP is that many other companies including Dell are entering the printer business while IBM has become a market leader.

When comes to Acer, the threat is that the investment of research and development departments needed management support for the two main products which are PCs and laptops.

For Dell, the main threat is the fluctuation of currency outside of US. Secondly, as Dell is marketing its products globally, there are many major competitors in the market. Furthermore, as the global financial recession took place earlier, Dell’s revenue will most likely be reduced by the effect of it. Last but not least, Dell’s products will be obsolete easily as the change rate of technology is extremely fast, which means that Dell will need to put in more investment into the research and development departments and will lead to higher product cost.

4.0 SMART Objectives

SMART consist five parts which is specific, measurable, achievable, relevant, and time-based. A SMART objective must be straight forward and easy to understand in order to provide a clear direction for the company.

4.1.1 Specific

The objective of Dell is to increase the sales by 15% at the end of year 2013.

4.1.2 Measurable

Increase the yearend sales of the year of 2013 by 15%.

4.1.3 Achievable

Create at least 10 products which built by environmental friendly materials and are recyclable.

4.1.4 Relevant

Conspire with new material supplier companies to reduce expenses on materials.

4.1.5 Time-based

Increase sales in 3 years time from 2010 to 2013.

4.2 Strategies

Nowadays, the society is more concern about the environment. The objective of increase the sales by 15% with selling environmental friendly products are achievable since the awareness of protecting the environment is increasing. The strategies for achieving this objective are research the market and promoting the usefulness of the new products towards the environment.

4.2.1 Research the market

By research the market, marketers get to understand the market demands and needs better. Meeting the customers’ expectations is the first step to dominate the market. As the impact of global warming is getting more serious, the society is started to care about the environment. This is a good sign for the environment and is an opportunity for Dell to get to increase its market image.

A good market image helps Dell to get higher attention from customers. Dell needs to find new partners for getting more environmental friendly resources to create a low cost product and sell it with a reasonable price.

Dell can try to get low cost material by acquisition of secondhand laptop or PC and reuse the usable components to create a new product. By using this method, Dell can get itself a new source of materials with low purchasing cost. With low cost material, Dell can set the price level of the new product lower as compare to other companies. Customers will prefer low price product to high price product as the features the product provide are the same.

4.2.2 Promoting the Product

Positioning of a product is a critical process for getting a good start of new product. The strategy is that Dell needs to add in some good features about the new product for viewing purpose. For example, making a green color laptop or PC and promote its eco-friendliness to the public.

There is a need for Dell to show the components used for creating the product to the society. This action can greatly increase the faith of customers towards the new products. By purchasing secondhand PC or laptop form customers, Dell shows its commitment to the public that the new product is made with an eco friendly way. Dell can hold a campaign by using the following slogan, “everyone can help the environment by selling us your old computer products, no more hesitate!” And Dell can announce the importance of reusing the usable components and the benefits that this action brings to the environment.

5.0 Forecast

3 Years Forecast for Dell Computer ($,000)

 

Sales

Cost

Profit

Percentage

2010

52902

43641

9261

 

2011

55547.1

44077.41

11469.7

5.00%

2012

58324.455

44518.18

13806.3

5.00%

2013

61240.678

44963.37

16277.3

5.00%

Total

228014.23

177200

50814.3

15.00%

The above table shows the forecast for Dell Computer. It shows that the sales is successfully increase by 15%. This is because of Dell is using the usable components from secondhand PCs and laptops to create new products. This action effectively decreases the cost of production and successfully increases the sales and profit.

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