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This study based on the strategic management of Dell Inc. Dell has experienced its tremendous growth by empowering people through innovative products and services. Throughout this period dell has optimized its business model to raise its standards of excellence. Dell's core values, mission, vision has facilitates the company to achieve this glorious goals. The purpose of this report to underpin an outlook for strategic significance and the management of Dell Inc. by evaluating internal and external environments of Dell's position in a comparative landscape. The report further undergoes the analysis; a recommended strategy has been outlined which will guided eventually to Dell's strategic success. The final part of this study stating recommended the strategy and its implementation with a model including conclusion for the overall sustainability of the company.
Company Profile-Dell at a Glance
Dell is an American multinational computer Technology Corporation founded in 1984 by Michael Dell. Dell offers its customers a range of solutions and services which delivered directly by Dell and through other distributional channels. According to the statistics published under the global PC market share, it was placed to the 3rd position under the worldwide PC shipments. The company employees more than 82,700 people worldwide (www.scribd.com, 2012). Dell grew during the 1980s and 1990s to become a brand, thus Company employee Direct Business Model to expand the core business worldwide. Refer Appendix 1. Dell's operational regions include mainly America, Europe Middle East and Asia Pacific regions. The company maintains a consistent focus on offering the best value to the customer. As a trusted technology innovator with diversified, comprehensive IT portfolio, Dell committed to serve its best to the customers and employee. For nearly three decades, Dell has been on an incredible journey, experiencing positive growth on a global scale. Empowering its people - customers, business partners and team members who keep the company moving through the rapidly evolving world of technology.
Dell Key towards Strategic Planning-Vision of the Company
"It's the way we do business. It's the way we interact with the community. It's the way we interpret the world around us-our customers' needs, the future of technology, and the global business climate. Whatever changes the future may bring, our vision-Dell Vision-will be our guiding forces" (dell, 2012)
The vision statement is able to put forward one of the most important principles behind the operations of Dell. The industry that Dell operates in is one of the most dynamic and ever changing one in the international market. Fluctuations of technology and consumer demands mean that change is the only constant. This is why the lack of prediction leads to the vision statement which focuses on the interpretation of strategy through consumer needs, technology trends and international business climate.
Dell's mission is to be the most successful Computer Company in the world by delivering the best customer experience in markets they serve.
Please find the detailed explanation in Appendix 2.
Dell Organizational Structure
Dell's governing body consisting with Executive Leadership team and the Board of Directors. The company is leading by the Chairman of the Board and Chief Executive Officer. Currently Michael S. Dell holding the two positions of chairman and the CEO (Dell, 2012). Dell is following two types of organizational structure which include Executive Leadership Team in senior management and Board of directors for oversight and supervision of the overall affairs of the company. They functions under the so call Executive Leadership Team. Supporting the Board of Directors are functioning seven committee charters. Please refer Appendix 3. Dell's Executive Leadership team provides the guidance and focus in terms of seeking to help their customers more efficiently. They decide the company's operations and implements strategy and policy created by the Board of Directors (Dell, 2012).The other officers functions under the supervision of Board of Directors. The hierarchical organization structure is in Appendix4.
Dell's business segmentation focuses with the customer. It attempt to fulfill customer needs which is at the heart of Dell. During the past year's Dell has signified and recognized its customer-centric business. Dell believes that they operate its global Consumer business by serving customers with faster innovation and greater responsiveness, and enables them to better understand and address their challenges. Dell's global business segments are given in the Appendix 5.
Dell Strategic Analysis
Dell Strategic Overview and issues
Dell competes in several international and domestic markets and currently produces a wide variety of products. In each of these markets, Dell has succeeded due to its broad differentiation approach. This approach, detailed in Appendix 6, is based on the strength of its direct sales business model, manufacturing prowess, and brand strength and customer service. The ability to differentiate has allowed Dell to stand out within mature markets and maintain a higher than average margins for its products. However there are many diminution factors which reflect a need for strategic change for Dell and it formulate strategically choices to Dell to enjoy at the highly competitive market.
Through the way how strategies are implemented, formulated and evaluated that is through strategic management process see Appendix 7 for the definition and process. The strategic management process as mentioned earlier, coherently analyze an internal and external environments which are discussed as follows.
Environment and strategy assessment
Strategic Analysis is the process of conducting research on the business environment within an organization which operates and on the organization itself. This provides the foundation for the strategic management by providing an insight into the forces behind the intense competition, by developing a sustaining competitive advantage based on organization core competency (JOSEPH, 2012). The Strategic analysis is a one step in strategic management which involved in strategic management is given in Appendix 7. Strategic analysis used following key analytical methods to underpin strategic management. SWOT analysis, PESTEL analysis, Porter's five forces analysis and Value chain analysis (CIMA, 2007).
Internal Analysis of Dell
Dell enjoys in terms of low cost with superior product performance by its distinctive competencies. They are the core benefits which are practicing by Dell through its direct business model. Dell designs its products according to wishes of the target which allow the company to enjoy superior customer value and brand loyalty, which enhances company ability to coordinate its various functions to produce exciting products. Dell arrive its competitive advantage from three dimensions which is given in Appendix 8.
Value chain analysis of Dell
Before making a strategic decision, it is essential to understand how activities within the organization create value for customers. The main aim of value-chain is to categorize the generically value adding service of an organization. The theoretical study of value chain and the Dell's value chain analysis is given in Appendix 9.
External Analysis of Dell
The PESTEL analysis of Dell covers the environment which consists of current market contexts. The primary industry of Dell is personal computer and computer equipments that are evolving with the passage of time due to constant advancement of technology. The dynamic nature of environment offers certain opportunities to Dell while posed certain threats to various player of the market including Dell. The PESTEL analysis of Dell is mentioned in the Appendix 10.
Five Forces Analysis
The relationship of Porter's five forces model for Dell have been depicted. The study explores the five elements that constitute Porter's five forces one by one and evaluate their impact on Dell in particular and personal computer industry in general. See the Appendix 11.
The Industry Life Cycle
The computer industry as a whole has entered the maturity stage of product life cycle (Norman, 2010).In theory, it is verified that when the company's products have relatively short product life cycle, sprinkler strategy is favorable. For an empirical case of Dell, it is obvious that their products have short product life cycles. Major reason for this result is the nature of their product itself. Dell is a technology based company and, for them, introducing innovative products faster than other competitors is vital to become biggest supplier in the industry. Average of 99 percent of its products in the markets are introduced past 18 months shows also that their rapid pace of innovativeness and therefore short product life cycle. In this situation, the theory and practical data has matched as Dell to use sprinkler strategy for products that has life cycle. The Appendix 12 gives further details about Dell's product life cycle.
SWOT analysis is a simple but widely used tool that helps in understanding the strengths, weaknesses, opportunities and threats involved in a business activity. Details of SWOT analysis are given in Appendix 13. By implementing the direct business model Dell remove business intermediary in terms of achieving high profit margin. Dell also allows its customers to customize their products according to their preferences by having strong distributional channel. The detailed SWOT analysis is mentioned in Appendix 13.
Identified Strategic Issues
Dell is facing multiple strategic issues which may impede on the company's top positioning the computer hardware market. This section addresses the four key strategic issues that Dell should address in order to maintain its prominent market position. First, Dell faces slow growth for its primary product: the personal computer (PC) in saturated U.S. market. The majority of U.S. corporate and education PCs will be replacement units affected by a technological upgrade cycle within the next two years. Therefore, as Dell attempts to maintain its dominant position, the company should focus on product customization and superior relationships with suppliers. This strategy enabled Dell's past success but hadÂ become diluted over the last five years. The company should continue to improve itself in these areas in order to remain the top computer hardware differentiator. Second, the erosion of Dell's brand value continues due to the perception of declining customer service. Although the company prides itself on superior customer service, recent surveys suggest that Dell's results recently declined in this business segment. Dell's executives are aware that quality customer service is a key element of the company's success and are reportedly working towards improvements. Third, Dell's inability to serve all market needs due to the current strategy of limited vendors in its supply chain. Dell brings few products to market and leverages technology createdÂ by other companies effectively and efficiently. Dell also remains committed to chip supplier, Intel. Although this enables Dell to offer PCs at high value to consumers, it also limits the company's ability to supply diverse customers. The company should consider enabling itself to offer more customized products by increasing relationships with more diverse suppliers
OptionsÂ andÂ recommendedÂ strategy
Strategic Formulation, Implementation & Evaluating strategic choices
Strategic choice is a part of the strategic process and involves elements like the identification and evaluation of alternatives, which then leads to a choice. After analyzing the internal and external environment different alternatives are available and then identify the best-suited alternatives for strategic implementation. In this report the strategic choices have been formulated, implemented and evaluated to elaborate how Dell should improve its business. See Appendix 14.
Recommended Model for Strategic implementation
Dell's strategy has been focused on building computers that can be ordered by consumers through a strong internal capability of manufacturing and quick inventory turnarounds. This build to order strategy has been the differentiating factor for Dell for the past few decades. The removal of the middle man gives it high margin in direct sales as well as provides low costs to its consumers. One of the strong strategic advantages for Dell has been its ability to adapt to changes.Â As an employer Dell has focused on a strong relationship with employees, focusing on their motivation, well being, reward strategy and empowerment strategy. Its strategic supply chain management, data integration with suppliers, relationship intensive approach and integrating physical store sales with online sales has made sure Dell continues to grow at an exceptional rate. The recommended strategic choices have been outline in Appendix 15.
The industry of personal computers, laptops and related hardware is one which evolves continuously. The result of globalization, political incentives and technological advances can be seen on a regular basis. This means that a reassessment of strategy for all the players in the industry is important in order to keep the respective competitive advantage going. Dell's structure allows for efficiency, cost optimization, customer relationship intensive strategies and optimum supply chain. This report assessed the strategic direction that Dell has been taking on the basis of its external environment and internal capabilities/limitations. Through TWOS, PEST, positioning maps and internal/external key factor evaluation, the report came up with a five point recommendation focusing on research and development, production plants, internal capability development, high performance management and corporate social responsibility.