SWOT Analysis for Dell Technologies Inc.
Global organisation with brand reputation
Efficient manufacturing and supply chain Brand visibility is limited due to direct sales
Falling behind in research and development (R&D)
Limited patented works due to limited R&D
Lags behind market leaders on innovation
Limited success beyond the core business
Insufficient / inefficient financial planning
Diversification of their product offering
Expand proline to meet broader customer needs
Computers are becoming a necessity to even small businesses and average households
Potential new market emerging from changing trends in consumer behaviour
Faster market growth Declining laptop and PC market due to smartphones and tablets
Industry saturation with new market entrants
Liability laws differ from country to country
Competitors continuously developing new technologies
Pricing gap between competitors is closing fast
Laws enforcing the use of environmentally friendly materials and practices.
Value Chain Analysis for Dell Technologies Inc.
Figure 1 The value chain within an organisation
Source: Exploring Strategy: Text and Cases by Gerry Johnson et al.
Copyright © 2017
Figure 1 The value chain within an organisation
Source: Exploring Strategy: Text and Cases by Gerry Johnson et al. Copyright © 2017
Value chain is a series of activities that an organisation undertakes that build and create value for the customer and ensure the organisation achieves competitive advantage. It is composed of primary activities and support activities and can be represented by the model below, as developed by Michael Porter. Below is a detailed analysis and description of the value chain of Dell Technologies.
Dell operates on a Just-in-time manufacturing system. This means that every activity that Dell under takes, it does so when and only when there is a customer order to fulfill. The inbound logistics is handled the same. Parts required to build customer products are delivered the manufacturing plant by supplier trucks just in time as they are required for assembly. This eliminates the need for management of inventory as there is no inventory to manage.
Dell has grown it supply and distribution network globally over the years. They treat these supply and distribution networks as their own partners and thereby instilling a sense of ownership in dells operations. The companys manufacturing methods has evolved from traditional assembly line to cell manufacturing to the pre-assembling different configurations of the most commonly ordered products. This is a result of responding to the continuously changing customer needs. Dells operations take place in more than 25 manufacturing locations, more than 40 distribution and configuration centers, and over 1,000 parts distribution centers globally as at 2018.
The finished products are handled in a similar manner as for inbound logistics. The products are transferred to the shipping department where they are packed and shipped via the distribution partners truck directly to the customers. A small inventory of finished products is kept by the distributors to respond to the needs of retailers.
Dell depended on its direct sales business model for a considerable period of time. Customers would be approached directly for sales and they would order directly from Dell. The internet became a catalyst to direct sales model. Their customers placed their order through the internet. Customer had tons of options to configure their own systems to their specific needs and Dell would deliver exactly that. The company now has networks of distribution and retail partners. Further to that, they have a multichannel marketing and sales strategy to promote the brand and its products. All this is achieved through a combined sales force of approximately 40,000 as at 2018.
The aftersales customer services is as important as the sale itself. Dell customers enjoyed and enjoys dedicated aftersales customer service depending on the customer profile. For example, premium customers enjoy dedicate onsite customer service. Other customers enjoy the aftersales care through the extensive worldwide network of aftersales service and maintenance providers. In this was Dell builds brand loyalty, which translate into business. As a result they continue to add value for their customers. Dells customer service is supported by more than 30,000 full-time Services and Support employees as at 2018.
Dell has a very strong supply chain team. Through this and a very close relationship with its suppliers, Dell coordinates it global procurement very efficiently. This ensure superior quality of raw materials and timely delivery of such materials and components. The Dells supply chain sustainability team works closely with suppliers to ensure that supplied materials conform to the environmental standards and regulations of various countries where they have presence.
For a considerable period of time, Dell proved to be somewhat slow in innovation, especially in light of various competitors entering the market with innovative ideas. However, the company has invested millions of dollars in research and development, which led the company to being what it is today an IT solutions company rather than a computer hardware company.
For a company of Dells magnitude, HR management is of paramount importance. Operating in 180 countries globally, Dell employees approximately 145000 employs as of 2018, spread amongst various groups under the Dell Technologies banner. Strategic HR is, therefore, critical to align this work workforce.
Todays Dell Technologies is composed of innovative companies that provide technology solutions and services all around the world. These include, Dell, Dell EMC, Pivotal, RSA, VMware, Secureworks and Virtustream. Each of these groups has a specific areas of focus from infrastructure and software to devices.
Five Strategic Tools to Evaluate Dells Strategic Position.
Porters Five Forces Framework (Figure 2) is a strategic management tool that helps to analyse an industry and identify its attractiveness in terms of five competitive forces: (i) extent of rivalry between competitors (ii) threat of entry (iii) threat of substitute (iv) power of buyers and (v) power of suppliers.
Porters Five Forces Analysis for Dell
Similar to the automotive industry, companies in the Computer Systems industry share a number of suppliers for their components and material supply. Dominant supplier can align their prices for materials and components supplied to Dell with prices for its competitors. This would forces Dell to charge higher for their products and services in order to maintain their profit margins. For example, the industry has always been more reliant on Intel for microprocessors, followed by AMD. This gave Intel great bargaining power against the PC manufacturers over the years.
The bargaining power of buyers is relatively strong. Today, there is a high demand of value for the lowest price as possible. Computer manufacturers spend a great deal of time and money in R&D especially benchmarking with competitor products in order to capitalize on their next product development. As a result, the product specifications between different manufacturers are relatively homogeneous. This, then means, Dell has to compete by lowering its production costs and strengthening its customer service to gain customer loyalty.
In organisations, the functionality of a computer can easily be replaced by a laptop. In personal and household, the functionality of a computer and a laptop may be easily replaced by tablet or a smartphone in some cases. Hard drives may be replaced by cloud services such as OneDrive, Dropbox and Google Drive. This poses a high threat of substitute if a new product can offer a higher value proposition than what is currently offer. This even truer with the younger generation who are always waiting for the next best product to hit the market. Dell has to be innovative in everything they do to capture the rapidly changing customer needs.