Introduction
Dell is one of the largest computer companies established in the 1980s. Since its inception, Dell has achieved great success as a company specializing in the PC market. Dell struggled to maintain a competitive edge during its 2013 privatization (Case Study). Investor Carl Icahn took to social media to share how Michael Dell and Dell Inc. tried to defraud investors. To retaliate, Dell’s management decided to restructure the company, assuming the main weakness to be the poor attitude toward customers and stakeholders.
The organization has experienced quite a range of changes. In 2013, the transfer of the company to private ownership took place, initiated by a public scandal, but had several other reasons (Case Study). First, Dell tried to resolve ethical issues with customers, investors, and stakeholders. Second, due to instabilities in the U.S. economy, investing in long-term assets was another reason for going private (Edwards). Thirdly, it was necessary to restore the trust and loyalty of customers, as they are essential for increasing market share and revenue (Case Study). Given the recent scandal and the volatility and competitiveness of the PC market, the company went through difficult bidding.
In 2018, Dell went public again and was attracting investment; that is why customers and investors need to understand where the company occupies in the global market. According to the Global Industry Classification Standard (GICS), Dell is in the Technology Sector, in the Tech Hardware and Semiconductors Industry in the Technology Hardware Sub-Industry (Case Study). The company is based on a strategy to optimize business units to achieve a competitive level of customer service and create products of the highest quality (Moore). The current state of Dell Company showcases features of the industry lifecycle’s maturity phase (Hill et al. 217). These features include limited possibilities for growth and high barriers to market entry for new competitors. Thus, Dell will need an update in its business strategy.
Assumptions and Biases
The tech giant is supposed to be unable to run into financial trouble and not have to restructure privately to regain its competitive edge. This is a bias, as many large companies have closed in the US over the past 15 years (Tahir et al. 32). The US inflation rate is 8.5 percent, and political instability is fourteen percent (Tahir et al. 32). Such a high level of volatility is forcing large companies to enter the international market to protect their assets.
To avoid bias, Dell diversifies risk internationally and operates globally. The speculation of investors who did not want to keep their money in a troubled tech company led to prejudice against Dell. However, the company chose the right move to increase profits by restructuring a private company to reinvest it and then go public again (Case Study). Clients and investors have benefited from the technology company’s long-term success by taking these steps (Case Study). In addition, there is a prejudice in the public sphere that all companies must act ethically (Case Study). The modern consumer society pressures businesses, forcing them to be more moral. However, in the global business world, this is almost impossible, as it reduces the company’s competitiveness (Hill et al. 217). It is necessary to be aware of these biases to ensure that none of these assumptions will influence the research or suggested solutions.
External Analysis of Dell
The PC market is represented by the industry “giants,” such as Dell, Apple, and Hewlett-Packard. Consequently, new entrants cannot withstand competition with already established companies in this market sector. The intensity of rivalry among existing competitors is fierce, with many companies going out of business, unable to compete with economies of scale, or having to partner with another company (Gara). The bargaining power of buyers demands standard-based implementation of new technologies and innovations in ubiquitous digitalization (Isabelle). Suppliers’ bargaining powers are relatively equalized: at the moment, not a single supplier possesses market dominance.
On a macro scale, company strategies must be based on global, demographic, social, political, and technological analysis. One of the most important strategies for a technology company is to develop manufacturing standards with compatible building blocks. This strategy covers several aspects simultaneously since it increases the consumer’s convenience and reduces production costs (Hill et al. 217). In addition, it reduces the risks associated with maintenance and software development.
Second, Dell needs to not only offer new industry standards and formats but also invest in their advertising and distribution. In the competition with other technology giants, the company that wins the marketing competition wins (Hill et al. 219). In other words, what becomes popular then continues to grow in popularity and is established as a standard. Thirdly, Dell is an international company; therefore, it must use a localization strategy in global markets (Hill et al. 248). First of all, it is associated with an increase in the powers of local managers who can come up with solutions suitable for a particular country’s market. The main difficulty lies in maintaining a balance between mass production and localization since the launch of local solutions increases their cost. For this reason, appropriate adjustments to the company’s financial strategy and marketing framework will have to be made.
Internal Analysis of Dell
Dell Inc. is a world leader in providing quality electronic products for various consumer types. The company focuses on creating value for its shareholders, customers, and employees to remain a competitive entity in the world’s electronic marketplace. Dell Inc. currently has two main growth strategies, market penetration, and product development, that ensure the company can continuously create value for its shareholders (Case Study). The market penetration strategy aims to expand the company by boosting sales in markets where it currently holds a strong market dominance (Hill et al. 250). Flexible changing marketing efforts that ensure the company’s competitiveness against other companies in the same markets is a strategic goal connected to this aggressive strategy.
Strategies based on internal analysis should consider the development of the company’s strengths and cover its weaknesses. The focus on building a sustainable supply chain is presently seen as one of the key options for Dell (Ansari et al. 262). Dell can invest in the strategic use of information to track supply needs and adjust them online. This strategy reduces planning time and the amount of inventory that must be stored in warehouses.
Dell’s other early strength is its direct selling strategy, which they have used for decades. Therefore, the organization should consider the further enhancement of cooperation with other businesses (Ansari et al. 262). This will boost Dell’s sales and give the company more turnover and a competitive advantage. Given Dell’s past, while caring about its weaknesses, the company must develop a strategy to improve its ethics and moral image among customers and stakeholders (Hill et al. 380). To achieve this, Dell needs a new approach to communicating with the public and a policy of openness. In a highly competitive environment, buyers and investors, other things being equal, often prefer to choose ethical companies. If Dell does not pay attention to this issue, then it may lose the war of formats and marketing strategies.
Dell’s Corporate-Level Strategy
Dell has the opportunity and good prospects for a horizontal integration strategy at the corporate level of management. There is no point in vertical integration for the company since it has a developed network for the supply and distribution of goods, which is a company’s strength (Hill et al. 294). Horizontal integration is beneficial in the technology market as it allows one to generate a larger pool of new technologies and increase the organization’s competitive advantage.
Moreover, the company’s global scale allows Dell to use an outsourcing strategy. It does final assembly but outsources many components of various grades, from decorative parts to microchips. For example, outsourcing allowed Dell to increase its production capacity while minimizing costs (Ansari et al. 262). In addition, this strategy allows the company to focus on its strengths, namely, innovation and logistics.
Business Model Recommendations
Dell’s business model has both advantages and weaknesses. The company has a developed logical structure, strong research and development base, and a global scale, which makes it relatively stable. The focus should be on creating innovative value to continue building on Dell’s strengths. One possible way is to focus on the needs of customers concerning compliance with new digitalization standards, such as cloud services. In this way, a company can compete with its competitors for new digital customers while increasing the retention of its existing customer base (Neher). Expanding the product line to meet the demand for replacement smartphones or tablets is also possible. For this, a horizontal integration path is suitable, which allows the supply of various substitute products and has great potential to attract new customers while increasing brand reputation and market share.
To improve Dell’s performance, three strategies have been identified. The first approach suggests that Dell should adopt a centralized business model organizational structure approach because it will benefit the company. This organizational structure has many positive features since middle management does not need to develop financial decisions (Neher). The second strategy concerns the marketing approach, namely, the branding part thereof. Specifically, the company needs to find a balance between localization and centralized management, as management is neither creative nor efficient at the moment. The consequence of Dell not changing its strategy has been a poorly managed company that has lost sight of its mission, values, and goals (Case Study). A company can adapt its model to develop sales channel strategies that optimize the sales organization in specific multinational markets. As a third strategy, Dell should revisit its approach to promotion to attract new audiences. This strategy can enable a company to increase revenue and optimize the global value of products and services for customers.
Conclusion
Thus, the implications and effects of the proposed strategies could be of great benefit to Dell. Further international development will enable Dell to grow its global footprint by reconnecting with customers and stakeholders. Functional methods would allow Dell to regain its competitive edge and increase revenue by providing new business opportunities. Horizontal integration and outsourcing can affect the pace of a company’s development and make it more flexible. Overall, Dell can be said to be able to rebuild its public image and reputation as the market conditions allow for this shift in focus. In addition, the business model recommendation will establish Dell as a major technology company with consistent standards of improvement to achieve its mission, vision, and goals.
Works Cited
Ansari, Arslan Afzal, Muhammad Waqas Ameer, and Lubna Tabbassum. “Strategies of Green Marketing as tool of Competitive Advantage.” Pakistan Journal of Humanities and Social Sciences, vol. 7, no. 2, 2019, pp. 257-265.
Case Study. (n.d.) Dell going private then public story [Course handout].
Edwards, John. “How Dell Stock Ceased to Exist.” Investopedia, 2021. Web.
Gara, Antoine. “Deal of the Century: How Michael Dell Turned His Declining PC Business into a $40 Billion Windfall.” Forbes, 2021.
Hill, Charles W. L., et al. Strategic Management: An Integrated Approach: Theory et Cases. 13th ed., Cengage Learning, 2019.
Isabelle, Diane, et al. “Is Porter’s Five Forces Framework Still Relevant? A Study of the Capital/Labour Intensity Continuum via Mining and IT Industries.” Technology Innovation Management Review, vol. 10, no. 6, 2020, pp. 28-41.
Moore, Corbin. “Reduce Product Development Costs and Increase Innovation.” Dell Technologies, 2017.
Neher, Krista. “Twelve Digital Marketing Trends for 2022 and How to Take Advantage of Them.” Forbes, 2021.
Tahir, Muhammad, Zia ur Rehman, and Farhan Javed. “Asymmetric Effects of Inflation Instability and GDP Growth Volatility on Environmental Quality in the USA.” Human Nature Journal of Social Sciences, vol. 3, no. 1, 2022, pp. 31-43.