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This is a Strength, Weaknesses, Opportunities and Threats (SWOT) analysis which is the examination of a company according to its internal and external factor besides considering the positive and negative impacts. The internal analysis evaluates the capabilities of a company with close and careful examination of all the strengths and weaknesses. External factors on the other hand examine the main points in environmental surroundings carefully identifying all the possible opportunities and threats facing a company. It allows a company management and administration to devise strategies that aims at maximizing output for optimal profits within an organization (Gray 2008, p. 57).
This analysis is also paramount to assisting the employees and the company to familiarize and adapt to the dynamic surrounding and factors within a specific industry. SWOT analysis is classified into two broad categories; the internal and external characteristics and factors that affect the company in the industry. The Strengths and Weaknesses of SWOT represent the internal factors mostly influencing the viability in company's operation. On the other hand, Opportunities and Threats represent external factors affecting the performance of the company. SWOT analysis forms an extremely important tool for the operations of a business and it assists the company in decision making processes of all the situations in the company (Andrew 2009, p. 45).
SWOT analysis diagram
Source: Researcher 2010
Strength in a company is an essential factor that is inherent in the internal operations which results to the success of the company. The strengths allow the company to persevere amidst strong competition in the industry especially in presence of external threats to its operations. These strengths may include a hefty financial base of a company with good and attractive cash flow and a well market network base with a wide market area size. Other key strengths that a company may posses include; a specialized marketing expertise and approach, location advantage, innovative ideas, or establishment of a new product or a service. They also include any other factor that is intended to add value to the commodities or services of a company (Gray 2008, p. 76).
Dell Company is regarded as the largest PC maker in the world registering the highest profits in one quarter in the America. The company registered over US $ 1 billion profit between May to July 2005 making it among the most profitable companies in America. This profit margin represented a 28 per cent growth within such a short period of time. Dell took over from Hewlett-Packard company has been the market leader in the PC industry. This company also deals with their customers directly reducing the bureaucratic and red tape challenges in their distributions. It has devised market oriented approaches of Customer Relationship Management (CRM) and information technology to expand its market base through data capturing for its customers. Dell uses a cost saving procedures to assemble PC's which are delivered promptly to customers destinations using courier services enhancing its command in the supply chain. Customer complains and complements are highly encouraged and their queries are attended to promptly through their customer care services based in India (Marketing Teacher 2009, n. pg).
These forms the detrimental factors and forces that a company experiences in its normal operations in the industry. These internal negative forces may include but not limited to high employees turn over which is as a consequence of company's inability to retain its employees. These may be fueled by either poor compensation schemes practiced in the company or presence of weak organization culture that prevents employees from airing their views and concerns in an acceptable manner without intimidation and victimization. Although company should concentrate on the strengths, weaknesses should not be ignored since they represent loop holes and in the structure and operations of a company. Therefore the management should concentrate to eliminate al the weaknesses to achieve its objectives in the long run. Weaknesses are also seen as lack of expertise in the market, production of poor quality products or services and when a company has a bad reputation in the industry (Andrew 2009, p. 74).
Due to Dell Company having huge range of products that he manufactures with numerous components for their customers from plethora countries, it experiences frequent product recall causing huge embarrassment to the company. A record is evident of Dell's action to recall 4.4 million laptop adapters in 2004 across the world due to the fear of their overheating behavior. This was not only dangerous to the uses but also could cause electric shocks and fire. Since Dell is a computer maker as opposed to a manufacturer, it is sometimes locked out of the market as a result of few large suppliers in the international market for their products. This makes Dell have access only to a few suppliers operating on large scale basic which may adversely affect their revenues in case of few suppliers withdraw (Marketing Teacher 2009, n. pg).
When an opportunity arises, the company is able to increase its output which consequently increases the company's profits. This is facilitated by the chances and opportunities of reducing its operation costs, presence of a wide client's base, or its ability to offer a demand gap. The existence of a company in the industry is to optimize every available opportunity to achieve its objectives in the industry. Mostly company realizes an opportunity when the clients shift their preferences of a commodity. For a company to capitalize on the opportunities available, it should venture more on its strengths in the industry for instance through proper utilization of market strategy. Other opportunities available to a company include; developing and emerging market for its products or services, when there is a chance for mergers or venturing in to joint alliance with similar companies in the industry, expansion of market either locally or internationally (Gray 2008, p. 84).
Dell Company saw a change in the top management positions with Kevin Rollins replacing Michael Dell in 2004 in the chief executive officer's office although Dell remained the chairman of the company. This change of managerial positions is likely to lead the company to new and more profitable ventures in the market. With the strong founder being the chairman and regarded as the youngest CEO in 1992, this trend will be hard and difficult for other companies to follow. Dell Company has introduced a diversification strategy by venturing in the introduction of new products in the market. They have also been able to provide PC to American market retailers at the lowest cost expanding their market base. Its new strategy for rebranding and rebadging their products has attracted new consumers and clients for the PC's (Marketing Teacher 2009, n. pg).
These are the negative impacts that face a company in an industry more so if the company is unable to mitigate and adapt to the emerging threats in the market. For instance; if a company operating in an economic situation witnessing effects of a recession where consumer spending is declining, the company unless with proper mitigation measure may experience detrimental effects in its operations. These effects may be reduced revenues since the client's purchasing power is greatly affected. Threats which offers adverse returns to a company may be entry of new competitors in the market, when government's actions shrinks the market base like introduction of a tax to product or a service, when a company's competitor has an upper hand in either production or distribution and presence of price wars between competing companies (Gray 2008, p. 98).
Dell has over the last one decade witnessed the highest competition ever in the international market dealing with PC's. This has come with more profitable brands and retaliations from the competitors besides experience new entrants in the global market causing a great threat to Dell in terms of market coverage. The Dell culture of sourcing labor from the Eastern nations where it is regarded to be cheap does not prohibit other competitors from doing the same and even sourcing for more cheap labor. This undermines Dell in terms of cost cutting in the production processes. The world fluctuations in the currency market have adversely affected Dell due to its nature of global marketing and operation activities. The strategy of dealing with large scale supplies requires orders to be placed sometimes earlier for procurement purposes. With consideration of fluctuations and changes in exchange rates in the global market, this may result to huge losses and decline in the company's revenue base in several supply chain across the world (Marketing Teacher 2009, n. pg).