Dell Computers' turnaround strategy under Michael Dell's leadership

Dell

The current situation for Dell is that it is trying to recover from a downturn in its business. The company has a good brand name, a strong online distribution channel and good relationships with its suppliers. Key weaknesses are a lack of innovation, poor offline distribution channels and the company's finances are not great anymore. There are opportunities for Dell to rebuild its corporate business, or enter new consumer segments like tablets. The company could also focus on growth in overseas markets, as these remains a major source of growth in the PC industry. There are a lot of different threats for Dell, however. The company is threatened by competition, the state of the economy, by increasing costs at suppliers and technological changes such as the commodification of PCs, even though this was once an opportunity for Dell.

In order to succeed again, Dell has undertaken a number of different steps. One of those steps has been to introduce Dell computers into stores, as a means of reaching more consumers. Dell had long focused on the corporate market, ignoring consumer use, but moving into stores signals that Dell is seeking to pursue the consumer market more aggressively.

The company has also undertaken the tactic of renewing its marketing focus on its corporate customers, this time with a much broader product range reflecting a shift in positioning to that of an HP-style total service provider (No author, 2011). For a time, Dell had not really met the needs of these customers and so Dell has sought to remedy that. By forging closer relationships with its key corporate customer base, Dell is seeking to renew growth in what has traditionally been its best market. A third strategy undertaken by Dell is to streamline the company's operations. The environment is challenging, and margins are being squeezed. Furthermore, Dell is not anywhere near the forefront of innovation. This implies that the best strategy for Dell should be as a cost leader, and Michael Dell's return has spurred a renewed commitment to cost control, which is a key element of that strategy.

3. In order to implement these strategic elements, Dell has undertaken some restructuring in order to focus his organization on these strategies. He brought in new blood into the leadership team to head these changes (Edwards, 2009). For example, the company has bolstered its consumer products focus by placing more organization emphasis on consumers. More sales staff, for example, has been assigned to work on the development of the retail sales channels. Another element of restructuring has been to bolster the sales component at the corporate level. Dell has benefitted from putting more resources in general into marketing, in order to strengthen relationships with the core customer bases.

4. It is questionable as to whether or not Dell will be successful again. Since Dell's return, the company's sales have picked up, but then so has the American economy. There is no evidence of strong new revenue streams that would support the idea of Dell being a powerhouse in the long run (MSN Moneycentral, 2012). It seems that a low cost strategy is incongruent with being largely based in America, and that producers in countries like China and Taiwan might be more cost-competitive. Dell is not going to be the innovative technological leader of the industry either, so is challenged to compete with Apple, HP or Toshiba anytime soon. This leaves Dell without a very good competitive position. The company had grown complacent with its strong position in the corporate market, and will have trouble succeeding without that market.