Strategic analysis of Dell's internal and external factors

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)

Economic Factors

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 Factors

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.

Technological Factors

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.

Financial Factors

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.

Implementation

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 are consistently evolving. Dell's management would need to monitor all new implementations closely to ascertain whether or not was accomplishing the desired objectives. Then any modification would have to be applied on the fly. Dell managers would need to evaluate both the external and internal factors that are the basis for the existing strategies, assess performance, and take measures for needed change. Flexibility is key hare, and it must follow the pattern established from the beginning when Michael Dell had people scratching their heads over a store with no stores and no inventory.(Wheelen & Hunger, 2007)

Conclusions

Strategic Management is the key to organizational success and a company's organizational ability by management. The global market is a rapidly changing environment, and flexibility will be a key factor. This is very close to the original idea which Michael Dell had in the very beginning. This kind of innovative thinking and the flexibility to make quick changes is just what this company needs to do to revive flagging sales. New products should be developed with convergence in mind and targeted at both the retiring Baby boomers and the college and new decade workers. Lighter, faster and more capable would be the watchword and customer service would be the most important factor in this mix. Dell is sailing along with few problems, but these can mushroom if not quickly resolved.

References:

Hunger, J., & Wheelen, Thomas (2007). Essentials of Strategic Management, Fourth Edition. Upper Saddle River, N.J., 07458: Pearson Prentice Hall.

Dell (2010) History. Retrieved from http://www.hoovers.com/company/Dell_Inc/ryrsyi-1-1njg4g.html

Dell (2010) Retrieved from http://www.dell.com/content/topics/reftopic.aspx/bsd/odg/13263_