Strategic Analysis of Dell Strategic Management Is Essay
- Length: 6 pages
- Sources: 3
- Subject: Business
- Type: Essay
- Paper: #17249160
Excerpt from Essay :
Strategic Analysis of Dell
Strategic management is a combination of continual dynamic processes. These include: strategic alternatives and recommended strategies, the implementation of strategies, and continuous ongoing evaluation and control. Each phase must include: environmental analysis, implementing an organizational course of action, creating organizational strategies, applying those strategies, and evaluating and modifying them as needed. The construction of a strategic analysis includes factors which are internal and external to the company, are weighted and scored. Strategic management is a critical tool to insure the organization's continued existence. (Wheelen & Hunger, 2007) This is a strategic analysis of Dell
Strategic Analysis of Dell
Dell Company History:
Michael Dell founded the company in Austin, Texas in 1984 with an innovative sales plan. Dell implemented direct sales to customers, taking orders and delivering custom computing solutions to individuals and companies with no brick and mortar stores. 5.4 million customers interact with Dell daily via phone, in person, on the company web site and through using social networking sites. Dell now has over 96,000 employees globally, who are committed to making Dell successful. Dell has made innovative changes in both the supply side and delivery to meet customer needs. Dell ships more than 100,000 systems to customers in over 180 countries daily; "that's more than one every second" (Dell, 2010).
Strategic Analysis of Dell:
Most companies have plenty of information available, from market statistics to consumer demographics and operational reports with facts and figures. In today's market atmosphere companies must pay close attention to both external factors and internal operations, continuously seeking business opportunities, increasing profits, and networking with suppliers and outlets. By creating an excellent business strategy, all of this can be accomplished. However, competitive analysis is critical to this strategy, since it focuses upon improving the company's current market position. (Wheelen & Hunger, 2007)
A strategic analysis must be a central part of Dell's strategy. Due to the nature of their supply chain and delivery corridor, Dell must consider the capacity of the competitive market, the advantages of that particular market, and necessary capital expenditures, plus they must calculate the additional factors directly and indirectly contributing to their business and the impact of all of this upon all stakeholders. (Wheelen & Hunger, 2007)
Dell has to stay on top of its operations in order to speed the supply side. In addition, delivery corridors must be maintained and managed and proper CRM suppliied. Dell's objectives are included in their strategic planning, and assess their internal and external conditions in order to devise and revise their strategy in a constantly dynamic process and develop necessary corrections which are, or will be, central to meeting their goals. External influences can disrupt the market and interrupt the supply chain. However, these disruptions can create opportunities, or threats, depending upon the circumstances and the management team. External factors must be anticipated, watched, appraised and added to the mix via constant environmental scanning and are completely inter-reactive with socio-cultural, economic, political, technological and financial data. (Wheelen & Hunger, 2007)
Globalization is a two edged sword. It drives the market and is driven by it, and branding is key to success. Customers already familiar with the brand and anticipating harmony and consistency in products and service despite their location stay loyal to the brand. The currency exchange rate and the stock market positions may influence financing and cash flow, thereby creating an atmosphere of entrepreneurial-like risk, However, corporate spending has not reacted overtly to inflation or deflation, nor the global financial troubles, even though these could affect the demand for personal computer hardware, and could negatively influence investments and profit margins. (Wheelen & Hunger, 2007) Globalization enlarges the market, but it brings with it a host of new problems: transportation, international taxation, environmental impacts and social disruption of the distribution, assembly or distributions points.
Political fluctuations may impact on Dell greatly, especial;ly when they are nearby a Dell owned installation, an assembly point or a distribution channel, Political instability among Asian and Middle Eastern markets are not stable. Managing governmental regulations and licensing dispersed personnel could pose to be a threat to Dell. The possibility of terrorist attacks and the political volatility of the Asian region also influences investments and profit margins; as well as seriously disrupting the global markets. (Wheelen & Hunger, 2007) Dell competes at home and abroad, combats piracy, and follows local laws and regulations concerning business practices, labor and environmental impact.
Dell has transformed E-business and has eliminated geographical and time zone barriers for its market. Dell was a pioneer in online marketing. Dell has created an innovative global connection, improved its quality, advanced technology, recreated the supply chain with JIT (Just in Time) delivery and instituted advanced CRM practices. Technology has also been leveraged to decrease operational costs and increase efficiency, through the use of RFID. (Dell, 2010).
Social and Cultural Factors
Dell has shown itself to be a conscientious ecological leader and has sought to constantly decrease their environmental footprint and carbon balance. Dell uses technological innovations that assist people and companies around the globe to enhance environmental settings (Dell, 2010). In addition they contribute to local communities where they volunteer or donate corporate funding and other resources.
For Dell's fiscal year 2011, in the second quarter, Dells revenue was $15.5 Billion. Their operating income was $745 Million and the net income was $545 Million. Dell stockholders have earnings per share at this time of $0.28 (Dell, 2010). Some of Dell's main competitors are Apple, HP, Acer and Sony. Dell with Alienware, competes directly head to head against AVADirect, Falcon Northwest, and HP's Voodoo Computers (Dell, 2010). New requirements for recycling and carbon reduction will have some impact, but some think that Dell can actually pull forward on this score.
Strategic Alternatives and Recommended Strategies
Dell needs to make some far reaching business changes in order to maintain its advantages They should consider carefully the factors of the environmental scan. Flexibility is a key factor and customization and customer service are of high value. Quality has been a recent issue and decentralization can reduce delivery times of materials and end products to the consumer. Customization of simply changed factors, such as case colors and textures can attract new business. Also some core applications for synchronization to smartphones or pdas would enhance the usefulness at very little or no cost. In addition, Dell must take care to increase its CRM satisfaction too, since service is the main differentiating factor among companies right now.
While restructuring the company, Dell should consider a Divestment Strategy. In this case, Dell should dispose of property or other assets which are counterproductive, such as some assembly depots and storage facilities. Installations such as the holdings in Edmonton, Alberta, which are too expensive to hold with no profit being made there. Dell also has some small experimental brick and mortar stores which are not doing well enough to keep. These might be sold as a franchise.
The Internet is the main conduit to new sales now and Dell must leverage this massive display area and exert some creative control and expand the marketing plan Dell should consider a merger or an acquisition with an entertainment company, producer or outlet. Streaming music and video built into the system with already installed DRM in the BIOS could really attract the youthful college and first work decade customers. Working within some of the social networking sites should be good strategy for Dell and some interactive games and contests could raise their visibility at very low cost. Besides, these social networking sites drive traffic and people will pay for this traffic. By establishing partnerships with suppliers of peripherals and add-ons, like flash cards and cameras. Dell should offer the complete multimedia and communications package on its site.
Strategy implementation is the most important change to make. Here decisions are made to establish newer strategies or to strengthen existing strategies. At this time, Dell would need to establish annual plans and goals, and mileposts, develop procedures, and create a budget, as well, all while reorganizing the corporate structure and matching strategies with new partners. (Wheelen & Hunger, 2007) After strategic alternatives and recommendations have been thoroughly reviewed, Dell should implement the following:
Distribution and Management: Reduction of Inventory
Creating a double layered international team using members of different divisions with different cvultural backgrounds,
Monitoring best practices, evaluating the efficiency of and executing effective strategy. (Wheelen & Hunger, 2007)
These programs are financially feasible for Dell; but the hardest part would be the execution within nearest time frames and developing the budgets for implementation.. While we think we know our target customer and our market, sales go somewhere else, due to some costly cultural faux pas. Dell has a talented employee pool around the world upon which to draw for this project.
Evaluation and Management
All new implementations are possibly going to need modifications, due to unforeseen external and perhaps misinterpreted internal forces plus dynamic markets which…