Presented by Sophie Yanez

Dell produces and markets PCs and a broad

range of technology products for the
consumer, education, enterprise and
government sectors.
Founded by Michael Dell in 1984
Based out of Round Rock, Texas.
Michael Dell developed his direct model
based upon a built to order process that
allowed customization of the personal
computer.

19881991

19841987

19961999

20002004

19921995

20052008

20092012

Tablets and smart phones are reducing the need for

personal computers in homes and certain
businesses
Cloud Drives are changing the storage needs for the
personal computer

SUPPLIERS

SUBSTITUTE PRODUCTS

132 different key supply

chain markets that
include AMD, Intel Corp.
EMC, Microsoft,
Toshiba, Logitech.
Lexmark, etc..
By working with
multiple suppliers, you
are able to get a lower
price for parts.
Supplier monopolies
such as Intel
Inability to substitute
necessary hardware
(hard drives,
processors, RAM)
High cost of supply
chain churn

Hewlett Packard, Lenovo, ASUS, Apple

and ACER
Large number of competitors currently
in the market- with declining sales, the
market saturation is increasing.
There is little power in the market place
for product differentiation
Price is a high determining factor

High start up cost leads to barriers to entry the

market
There is almost no brand loyalty in this largely
commoditized market. This means that anyone can
enter and make a convincing marketing pitch.
Economies of scale lead to continued advantages
PC industry is a unique business model

Customers prefer
customizable PC
options. They purchase
what they need.
Customers dictate
product pricing since
there is a large
selection of PC brand
alternatives for them to
choose from
There is a size of order
single to largepreference for large
custom orders in order
to drive down costs.
(ex: Schools and
Businesses)
Customers have the
ability to change
between different types
of PC brands that use
the same software (ex:
Microsoft)

Porters Five-Forces
Model

Dell, Inc.
Key External Factors
Opportunities
The Green Movement: The want for more environment friendly products. Such as
computer Recycling Programs and energy efficient products
The global market Internet usage is increasing which means there is more need
for computers and technology adoption
Improving Technologies such as software and applications are creating a high
demand for consumers
Younger generations are tech saavy
There is a changing standard of communicating and sharing information. Ex: Text
messages, email and Instant messages
Threats
IT advancements are taking place at a rapid pace- ex: Windows 8 release
Price Wars with competitors
Introduction of Tablets and Smart Phones
Changing Customer Needs
Cloud Computing movement is replacing how customers use PC's
Trade barriers and hurdles affect the position of the company in multiple countries
that decline growth
NSA scares- Government checking in on me through my computer?
Total

Weight Rating

Weighted
Score

0.03

0.03

0.12

0.48

0.11

0.44

0.11
0.09

3
2

0.33
0.18

0.09
0.07
0.11
0.1
0.08
0.04

4
3
3
4
3
2

0.36
0.21
0.33
0.4
0.24
0.08

0.05
1

0.05
3.13

Competitive Profile Matrix

Critical Success Factors

HP

Lenovo

Dell

Weight

Rating

Score

Rating

Score

Rating

Score

Advertising

0.11

0.33

0.33

0.44

Product Quality

0.17

0.68

0.51

0.34

Price competition

0.21

0.84

0.84

0.84

Management

0.09

0.27

0.27

0.36

Financial position

0.15

0.45

0.45

0.3

Market Share

0.14

0.42

0.56

0.28

Global Expansion

0.13

0.52

0.39

0.26

1.00

3.51

3.35

2.82

Managerial Costs:
HR, Administration. Employee benefits, Finance,
Procurement, Managers, Public Affairs, Legal, Quality
Management.

Supplier Costs

Production Costs

Distribution Costs

Raw Materials

Inventory System

Merchandise

Loading

Sales & Marketing

Costs

Customer Service
Costs

Receiving Costs

Shipping

Sales reps

Shipping

Transportation

Plant Layout

Budgeting

Dell.com website

Phone Support

Shipping Costs

R&D

Component
parts

Cost accounting

PersonnelTrucks, Ships,
Plane

Advertising and
publicity

Online Email
Support

Transportation

Internet System

Promotions and
sponsorships

Online Chat
Support

Inspection
Warehouse
Storage

Merchandise
tracking system
Quality Control

Fuel
Maintenance

Internet
Knowledge Base
Warranty

Dell, Inc.
Key Internal Factors
Strengths
Creating a Global Recyling program
Boomi and Perot system acquisitions will diversify product portfolio
Client Reinvention Initiative launched in 2011
Re-org towards a more customer centric model
Michael Dell taking the company private in 2013
Focusing on customized products for businesses
Global Expansion to India abd China- two large technology markets

Weight Rating

Weighted
Score

0.07
0.08
0.04
0.05
0.13
0.04
0.08

3
4
3
3
4
3
4

0.21
0.32
0.12
0.15
0.52
0.12
0.32

0.14

0.14

0.08

0.08

0.07
0.09

1
2

0.07
0.18

0.13

0.13

Weaknesses
Followership Strategy into Market- Low investments in R&D
Dell is highly reliant on the increase of outside manufacturers producing
their hardware products
Dell's current debt to income ratio poses as a financial weakness.
Price Wars with other competitors
Dell is losing market share to new competitors such as Acer, Asus and
Lenovo
Total

2.36

Lenovo,
HP, Dell

Apple

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Size of Market

Small

Focus

Cost Leadership

Large

Generic
Strategies
Differentiation

STRENGTHS-S

List Internal Strengths

1. Global Recycling Program
2. Boomi and Perot system
acquisitions
3. Client Reinvention Initiative
4. Michael Dell taking the company
private
5. Re-org towards a more customer
centric model.
6. Customized product focus
7. Global expansion to India and
China

SO STRATEGIES
OPPORTUNITIES-O
List External Opportunities
1.
2.
3.
4.
5.

The Green Movement

Global Market internet usage
Improving technologies
Younger generations are tech saavy.
Changing standard of communication
through technology.

THREATS-T

List External Threats

1. Promote the efficiency of

Dell computers in Green
Datacenters. Set the
standard for powering the
worlds cloud with Dell
Servers.
2. Increasing Global Internet
usage means there will be
more of a need for online
customer service. Improve
Chat support and online
knowledge center.

ST STRATEGIES

WEAKNESSES-W
List Internal weaknesses
1. Followership Strategy
2. High manufacturer dependency
3. Price Wars with other
competitors
4. Dells current debt to income
ratio
5. Losing Market Share

WO STRATEGIES
1. With the improving technologies
in the market place, this is Dells
opportunity to remove itself from
the Followership strategy and
innovate something.
2. With younger generations
becoming more tech saavy,
ensuring that Dell leads in the
education market, will get these
younger consumers used to using
their products.

WT STRATEGIES

1. Leverage Boomi acquisition to

1. Create a new tablet or smart
create a better integration of cloud
phone that can compete with the
apps
and
on
premise
apps.
Make
likes of Apple and Android
2.
Boomi
the
choice
of
cloud
systems. One that is competitively
3.
application dashboard.
priced.
4.
2. With the Cloud Computing market
2. Start manufacturing own PC parts.
5.
expanding in China and India- seek
This will lower the cost for supply
6.
out partnerships with hosting
chain, improve quality production
7.
companys and colocation
and reduce manufacturing
Source: Fred R. David, Strategic Management Concepts &Datacenters
Cases: A Competitive
Advantage
14 th ed.
around the
world. Approach , (2013),dependency.
1.

It advancements are taking place

at a faster change
Price Wars with competitors
Introduction of smart phones and
tablets
Changing customer needs
Cloud Computing movement
Trade barriers
NSA scares

FP

Financial Position (FP)

Return on investment
Leverage
Liquidity
Working Capital
Cash Flow
Competitive Position (CP)
Market Share
Product Quality
Customer Loyalty
Tech know How
Control over suppliers

CP

Stability Position (SP)

2 Rate of Inflation
2 Technological Changes
3 Price Elasticity
4 Competitive Pressure
4 Barriers to Entry
3
Industry Position (IP)
-3 Growth potential
3 Financial stability
-7 Ease of entry to market
0 Profit potential
-7 Resource Utilization
-2.8

IP

Defensive Profile
A firm that has a very weak
competitive position in a
negative growth, stable
industry

SP

-2
-7
-3
-7
-4
-4.6
3
2
-7
3
-4
-0.6

Relative Market Share Position

High 1.0
Hig
h
20+
Industrial Sales Growth
Rate

Low 0.0

Med.
5.0

Stars

Question Marks

Med.
0

Low
-20

Cash Cows

Product Development
Diversification
Retrenchment
Diverstiture

Dogs

Strong

Average

Weak

IFE 2.36

High

IV

VI

VII

VIII

IX

Low

Medium

II
Product Development
Backward, Forward and
Horizontal Integration

III

EFE
3.13

Dell needs to remove itself from its current

followership strategy and invest more in R&D
so they can innovate new products.
They should focus expansion efforts in the
Education sector. With younger generations
becoming more.
Dell needs to start manufacturing its own PC
parts.
Continue global expansion strategy into
China and India.

Thank You!

Additional Information

Cloud ComputingBoomi acquisition

Software Development
needs hardware
Green Technology is
improving

Opportunities

Low Cost Global

Substitutes
Economic Recession
Cloud ComputingConsumer Needs are
changing
Market Saturation

Threats

Advertising- Global
Recycling Program
Brand Recognition- #2
Market Share for PCs
Improving &
Diversifying portfolioBoomi & Perot Systems
Client Reinvention
Program- reduce
supply chain cost

Strengths

Product QualityIncreased outside

manufacturers
Current debt ratio 29%
higher than industry
average

Weaknesses

Dell is valued at $9.8 billion

Dell has $5.14 billion in debt (They hold a
39.9% long term debt/capital ratio)
Retained Earnings increased from $22,110 to
$24,744 (in the millions)
In the last 5 years, Dells sales growth rates
were 1.97% in comparison to the industrys
growth rate of 33.38%
Dell has reported negative average net
income during the past 5 years.

Company Vision: Its the way we do business. Its the

way we interact with the community. Its the way we
interpret the world around usour customer needs,
the future of technology, and the global business
climate. Whatever changes the future may bring, our
visionDell Vision--- will be our guiding force.
Company Mission: Dells mission is to be the most
successful computer company in the world at
delivering the best customer experience in markets
we serve. In doing so, Dell will meet customer
expectations of highest quality; leading technology;
competitive pricing; individual and company
accountability; superior corporate citizenship;
financial stability.

Dells R&D strategy is to enter the market

during the mature phase of a products life
cycle.
They believe in a low risk and low innovation
approach.

Slow DC Expansion
Reduce Manufacturing Spending
Start Innovating!