|← BUS 499: Social Performance of Organizations||Business Organizations and Policy →|
This paper evaluates the different types of environments that accost the business operations and activities of Dell Inc. These types of environments are the external environment and the internal business environment. This paper further analyzes two business segments in which Dell Inc. exerts the highest influence as well as the second of the most significant forces of competition facing its operations. The paper surveys the external threats of the Computer Company, strengths, and weaknesses, core competencies, resources, and capabilities. Finally, this paper analyzes the value chain of Dell Inc.
Dell Inc. is an American computer technology company involved in the manufacture, designing and selling of computer electronics and other computer-related electronics and electronic parts. The firm operates as a multinational computer technology company, with business operations and activities spanning across the entire globe. The computer technology giant was founded in 1984 in Austin, Texas, the United States by Michael Dell and the multinational company has grown to be the third-largest vendor of computer and computer-related electronics in the world as of the 2013 survey, with only Lenovo Inc. and HP Inc. surpassing it in worldwide sales of computer and computer-related electronics and parts. Besides the personal computers and electronics parts that Dell Inc. manufactures, designs and sells, the computer technology giant also manufactures designs and sells various types of computer software programs, different kinds of data storage devices such as Flash drives, hard drives, and thumb drives among others.
Furthermore, the company also designs, manufactures and sells computer peripherals, different kinds of electronic printers, camera, and video recording devices, High Definition Television Sets, network switches as well as server systems. Previously, Dell Inc. has operated as a public traded company, but as of 2013, the computer technology giant was bought out back into private operations, hence the computer electronics company currently operates as a private limited company. The computer technology company has massive operations and business operations, evidenced by the various financial parameters of financial performance and stability. As of 2013, the firm realized revenues totaling at the US $ 56.94 billion, with an operating income of over US $ 3 billion. The computer technology giant also employs approximately 108, 000 workers in its manufacturing and distribution centers all over the world. This too is an attestation to the massive business activities and operations that it undertakes in day to day operations globally.
General Environment Segments Affecting Dell Incorporated
The two segments of the general environment where Dell Inc. has the highest influence are the technology environment segment and the global environment segment. In the technology segment, due to the many successful mergers and acquisitions, the firm has been able to rapidly improve the quality of its technology, helping it to produce quality personal computer and electronics products. In the global segment, Dell Inc. has managed to take its business operations to all corners of the globe, making it a popular and well-known computer technology multinational. These two segments greatly affect the operations of the firm, as a personal computer and electronics industry is highly dependent on new and innovative technology, with high levels of dynamism too, requiring a business firm operating in it to be dynamic too. Global operations also demand that a multinational firm pay attention to all the market segments making up its global market share.
One of the most significant forces of competition facing the business activities and operations of Dell Inc. is the existing intensive and competitive rivalries from fierce rivals in the personal computer and other electronic devices market industry. Existing competition from other computers technology firms such as Apple Inc., IBM Computers, Hewlett-Packard Company, Lenovo Computers, and Acer Computers is a fact that Dell Inc. has to face and deal with every day. Another significant force of competition is the threat of substitute products from the aforesaid chief competitors of the firm. The substitute products cover virtually all electronics segments, from computer tablets, laptops and desktop computers, camera devices, printers, and data storage devices. The firm has taken key steps in the recent past to address these two forces of competition, by providing customized personal computers, increasing the quality of their products, improving customer services and also, through mergers and acquisitions that enable the company to obtain new technology patents and innovative ideas.
Future Prediction of Dell Inc. and the Two Forces of Competition
In the near future, Dell Inc. may need to improve on its mode of customer services, the customization of products and the differentiation of its products to overcome the threats of substitutes and intense competitive rivalry. The company may also need to reduce the prices of its products, to increase its global market share over its competitors.
External Threats to Dell Incorporation
There are numerous and different external business environment threats that usually face the business activities as well as the operations undertaken by Dell Inc. in the process of manufacturing, designing and sale of its personal computers and other computer-related devices and technologies. These threats oppose a considerable danger to the operations of the computer technology giant and the firm has placed different measures in place to tackle these external business environment threats. These particular threats include:
Intense Rivalry and Competition from Rivals
Dell Inc. has been facing a lot of intense rivalries as well as fierce competition from some of its key competitors within the computer technology and electronics devices industries. Some of these computer technology and electronics companies include the massive computer giant Hewlett-Packard Company (HP) and Lenovo Group Ltd., both of which have a bigger global market share in the computer technology and electronics industry than the firm. Some of the other computer technology giants offering it with massive and fierce business competition include Acer Inc., Apple Inc., Toshiba Computer Electronics and IBM Computers, which also have a considerable global market share in the vending of personal computers and other computer electronic technology devices and gadgets. All these computer technology giants offer a lot of intense rivalry and competition to the business activities and operations of Dell Inc. in all possible business segments, from pricing, technology, branding, and reputation, as well as the range of computer electronic products the company manufactures and sells. Therefore, this is one of the major external business environment threats currently facing the firm altogether.
A reduction in the Rate of Growth of Portable Computers Market
Another major external business environment threat was facing the business operations and activities of Dell Inc. is the reduction in the rate of growth of the portable personal computer market globally. This growth rate reduction, specifically of laptop computers, as well as desktop computers, is proving to be gradually detrimental to the growth of the firm, and as such, it will become more and more difficult in the future for the computer technology giant to compete and maintain its position and status in the global computer technology and electronic devices market. This growth rate reduction is, therefore, posing a massive external business environment threat to the numerous business operations and activities of the company.
A Marked Decline in the Profit Margins of Computer Hardware Products
In recent years, there has been an observable marked decline in the profit margins, especially of computer hardware products manufactured, designed and distributed by Dell Inc. Since most of the income and revenues earned by the firm is derived from a different computer and technology electronic devices hardware it produces and sales, the gradual rise in the costs of raw materials used in the manufacture of hardware products is drastically reducing the profit margins previously enjoyed by the computer giant. The increasing price of computer hardware raw materials is, therefore, also a major external business environment threat facing the firm and its business operations and activities.
A Steady Increase in the Demand for Computer Tablets and Smart-phones
Another major external business environment threat currently facing Dell Inc. and its distinctive business activities and operations is the steady increase of demand by computer technology devices customers and electronic gadgets consumers of computer tablets and smart-phones devices, as opposed to portable personal computers and desktop computer devices. The main reason behind this is that most computer tablets and smart-phones devices are relatively cheaper than portable personal computers and desktop computer devices and they also possess improved capabilities and user-friendliness. This, coupled with modern trends among the young people of the world have made computer tablets as well as smart-phone devices much more popular and trendy. Thus, these modern trends in computer technology devices have eaten deeply into the sale of portable personal computers and desktop computer devices, which are the computer devices that earn most of the revenues and income for the company.
Opportunities Available to Dell Incorporation
There are also numerous business opportunities, which exist that Dell Inc. can exploit in a bid to expand its market share, global growth, and development. These opportunities will further increase the amount of revenue and income that Dell Inc. will earn and, therefore, make it a stronger global leader in the personal computer technology and electronic devices industry. Some of the opportunities available to Dell Inc. include:
Using Acquisitions to Obtain More Technology Patents
One of the major business opportunities that Dell Inc. can massively exploit to its own business advantage is the obtaining of technology patents relevant to different types of new technological computer devices and electronics. Dell Inc. is able to obtain these patents through the various acquisitions that the computer technology giant is involved with. New technological ideas, as well as patents, will enable the firm to diversify and expand its operations and business activities in the personal computer and technology electronics global market. This will also cut losses for the computer technology giant since it does not have a well established innovative infrastructure.
Fortification of their Business Operations in Global Emerging Markets
Dell Inc. has a unique business opportunity of strengthening its business presence, particularly in the emerging market economies that are rapidly purchasing a personal computer and technological electronic gadgets such as Africa, South East Asia, and Latin America. Such a move will ensure that it is able to tap into fresh and unexploited market territories, thereby expanding its global market share and cementing its place as a global leader in the personal computer electronics and technological gadgets industry.
A Marked Rise in the Computer Tablets Market
Due to the marked rise in the computer tablets market, Dell Inc. has a business opportunity of diversifying and putting more focus on the manufacture, designing, and distribution of computer tablets and smart-phones. This will enable the Computer giant to tap into the lucrative and fast-rising computer tablet industry, where rivals such as Apple Inc. and Hewlett-Packard have earned significant portions of the revenues and income. Such a move will further ensure that Dell does not only rely on the production and sale of personal portable computers such as laptops and desktops, with the demand for the latter two gradually diminishing.
Expanding the Services and Enterprise Solutions Offered by the Company
Dell Inc. also has the business opportunity of expanding some of the services it offers such as communication infrastructure, cloud computing, as well as the different enterprise solutions it usually offers such as data storage, networking, and server systems. The expansion of these services will ensure that it is able to earn higher profit margins and better growth opportunities.
The most serious threat facing the firm is arguably the intense rivalry and fierce competition accorded to the company from its chief competitors such as Lenovo Inc., HP Inc., and Apple Inc. To address this business threat, Dell Inc. needs to invest in innovation and new technological ideas, as well as venture heavily into the computer tablets industry too. The greatest business opportunity facing it is the expansion of the different services it offers as well as the enterprise solutions it offers consumers and computer technology customers. This will ensure an increasing stream of revenue and income as well as global market share expansion.
Dell Incorporated Greatest Strengths
Dell Inc. has a number of business strengths that have enabled the computer technology company to become the third-largest world personal computer vendor as of 2013. Some of the greatest strengths that have sustained the business operations and activities of the firm include:
Customization of their Computer Products
It is well known for the customization of its numerous personal computer and technology electronic device products that it designs, manufactures and sells. Such customization makes its personal computer products popular among consumers in the industry, thereby ensuring customer loyalty and increasing customer base. The value of customized laptop computers to consumers has, therefore, granted it a competitive advantage over most of its chief rivals, with only Toshiba Electronics and Sony Electronics providing the same services.
A Strong Brand Name
Another major business strength that it enjoys is the strong and reputable brand name that it has within the personal computer and technology electronic devices industry. The company is valued at US $ 7.5 Billion, and the computer technology giant is well known for quality computers and electronic products.
A leader in Mergers & Acquisitions
Dell Inc. is also a global leader in the modern business trend of mergers and acquisitions. In the past five years, the computer technology giant has spent roughly $13 Billion in the completion of highly successful mergers and acquisitions with other computer technology companies, thereby granting the company new capabilities, new technology patents, increased innovation as well as increased skill and technical know-how.
Wonderful Environmental Record
The company enjoys a wonderful and reputable environmental record with most of the governmental authorities in the countries where the company manufactures and designs its personal computer products and other technology electronic devices. With its involvement in different eco-friendly and green initiatives, the computer technology company is ensured of a good environmental record in comparison to other computer technology companies.
Good Sales Business Model
Dell Inc. also enjoys the business strength of having a working business model when it comes to the sale of its personal computers and electronic products. By selling directly to customers and different business enterprises, the computer technology giant eliminates distributors, thereby maximizing from their profit margins.
Dell Incorporated Greatest Weaknesses
Dell Inc., just like any other business company in the personal computer and electronic technology devices, and even in other business industries, suffers from a number of weaknesses, providing a soft belly for its rivals and making it vulnerable. Some of the greatest business weaknesses facing the computer technology giant include:
Low levels of Differentiation
One of the business weaknesses facing the operations and business activities of the firm rests with the lower levels of differentiation of the company’s personal computer products and electronic devices. Thus, the company’s products have numerous substitutes from its chief rivals and competitors such as Apple Inc. and Hewlett-Packard Company. The company also can no longer sustain lower product prices.
Poor Customer Service Record
Dell Inc. suffers from a relatively poor customer service record, partly because the computer technology company outsources most of its telephone customer services from abroad. Despite putting measures to regain the confidence of its customers, the decision has continued to resonate badly with most personal computers and electronic devices consumers globally.
Manufacture of Commodity Products
Another weakness of the firm faces rests with the fact that the personal computers and technology electronic devices company manufactures and sells commodity products, particularly hardware, which is sold with relatively low-profit margins. This means that only large economies of scale bring the personal computer’s company meaningful revenue.
Minimal Investments in Research and Development
Dell, as a company, has not taken the business effort to largely invest in research and development initiatives that would ensure the company has sufficient innovative structures. Lack of such investments means that it misses out on new and innovative technology ideas that would further improve the quality of its products as well as helping it to challenge key players in the computer tablets and smart-phones industry.
Minimal Product Distribution Locations
The company also suffers from minimal locations upon which the different personal computer products and the electronic devices that it manufactures can be sold. The personal computer company has invested a lot in the online sales of computer products, and this brings up customer trust issues, hence a weakness that the company suffers from.
One of the strategies that Dell Inc. can implement to maximize upon rests with the continued customization of its products, investing more in marketing to strengthen the already solid brand that the personal computer company has. These measures will ensure that the firm is able to increase its global customer base, as well as to be able to earn more revenue and income from its reputable brand. On the other hand, it can employ some strategies to fix the numerous weaknesses facing its business activities and operations. One of the strategies the personal computers’ company can use is the increased differentiation of its computer and electronic devices products as well as improving its customer services and relations. This will ensure that the company’s computer and electronic products stand out from the products of its chief competitors such as Lenovo Computers and IBM Inc., thereby increasing its sales. It will also ensure that the company is able to maintain customer loyalty and thereby sustain its global customer base and market share
Dell Incorporated’s Resources
Dell Inc. enjoys numerous resources base that sustains the company and also, assists it in achieving its goals and targets, as well as effectively conducting its business activities and operations. For instance, the firm enjoys a larger pool of human resources all over the world, with about 108, 000 employees working to fulfill the company’s mission and goals. The computer technology multinational company also has a huge capital resource; with total assets worth $47.54 billion and an operating income of over $ 3 billion. Subsequently, it enjoys total equity of about $ 10.68 billion as per the 2013 financial year.
Dell Incorporated’s Capabilities
Some of the business capabilities possessed by Dell Inc. include leveraging with partners, the management of personal computer products demand, collaborating, both internally and externally as well as the production of quality personal computer and technology electronic products.
Dell Incorporated’ Core Competencies
Dell Inc. possesses some key core competencies in its business activities and opportunities that put it on a higher level than most of its chief competitors. One of the key core competencies of the computer technology giant includes cost-efficiency in the production of its computer and electronic products. Another core competency of the company is the production of customized quality personal computer and technology electronic products. Speed and low pricing are another core competency of Dell, enables it to become a key world leader in the personal computers and electronic devices industry.
Dell Incorporated’s Value Chain
Dell Inc. can create more value in the human resources and well as the capital resources that it possesses through effective human resource management, procurement, development of technology and company infrastructure. To create more value in its capabilities, Dell Inc. needs to invest more in suppliers, increase the range and quality of its computer and electronic products and finally it needs to enhance its marketing and sales strategies. To create more value in its core competencies, Dell Inc. needs to increase the speed of delivery and shipments, efficiency in manufacturing and designing of personal computers and other electronic products, increase the customization of its products and work on reducing the rising prices of its products.
- Business Organizations and Policy
- Weighted Competitive Strength Assessment
- BUS 499: Social Performance of Organizations
- Leadership Style: How Are Leaders Leading in the 21st Century?