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The Dell Computer firm is one of the most successful and leading brands in the information technology world that has gradually transformed from being a PC manufacturer to an IT solutions provider. It was founded by Michael Dell in his dormitory in the University of Texas, Austin. The company is said to be the largest player of the personal computer (PC) market since it provides value to its customer segment through its direct sales and competitive prices strategies. Dell sales its computers and accessories directly to its customers in order to eliminate the role of middlemen and reduce costs. By eliminating the inventory costs and intermediary margins the company is able to operate profitably (see details in Annex 1). The customer is also able to get excellent state of the art computers and accessories at low costs in comparison to its competitors like IBM, HP, Toshiba and Lenovo.
Dell has divided its mission statement into three parts including the customer satisfaction segment which states that; Dell is an established company that strives to satisfy customers by continuously meeting their demands of competitive pricing, quality, and responsiveness. Each customer comes first. It also states that, “its management and workers are dedicated to liaising as a team for the purpose of profitability and fulfillment of a job well-done” and community satisfaction “We will deliver jobs in a safe, clean, environmentally comprehensive atmosphere and be an active participant in community affairs”(Dell, 2010).
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Products in the market
In a recent interview with the Daily Star newspaper, Ms. Sonia Bashir Kabir was quick to note that Dell is an End-to-End hardware solution provider, that is involved in the supply of other goods in the market as well. These includes routers, peripherals like projectors, batteries, printers and computer monitors. It also designs and sells switches. For some time now outstanding Dell competitors in the market include the HP, EMC, Cisco and IBM (Sonia Bashir, 2012 ).
Dell has put in place the company's code of conduct that guides it global daily operations. This code stipulates how the company employees and employers should uphold mutual relationships as they work together. Key values such as team work, honesty, good judgment, integrity, respect and open communication are the strong pillars that propel the organization towards realizing its global objectives (Dell, 2010).
Marketing and Sales activities
The paradigm shift of the Dell firm from being a PC manufacturer to that of an IT solutions provider has greatly influenced its marketing and sales strategy. While operating as PC manufacturer, the firm applied a rules-based criteria to identify its target clients. This system targeted those customers who were perceived as having high purchasing powers. The marketing strategy however shifted to a solutions based criteria that is all inclusive of the products, the timings to be released in the market and the consumer's feedback after consumption.
Distinctive competencies are the main benefits that Dell Computers gets in the form of superior product performance and low cost. The direct sales done by Dell through its website is said to be the strength that the company has, which has made it almost impossible for its competitors to imitate. Known as the Direct Model, this could as well be considered as one of the firm’s greatest assets(Dell &Fredman, 2006).
Additionally, Dell designs its products to meet the specific designated needs of its consumer segments. This has allowed the company to enjoy unrivalled customer value and brand loyalty. With the market becoming more educated, individuals want products that are tailored to their specific needs. Therefore, by cutting out the computer retailer as the distributor, Dell is able to allow each buyer to order directly from the factory, thus giving them the ability to customize their own product. Another distinctive strength that has set Dell apart is its ability to integrate and coordinate its functions to design and produce exciting products.
Reliability, Service and Support
With its award-winning customer service, Dell allows it to give top-notch customer service before and after sales. The firm has differentiated itself from its competitors by offering reliable, fast and trustworthy customer service available within forty eight hours of a customer lodging a complaint.
Price for performance
The firm uses an integrated management system to coordinate its processes from procurement to distribution and technical support and ultimately to the final consumer. This coordinated process enables the company to use standard operating procedures across the different economic landscapes. Cost is cut by employing this method, which is then passed on to consumers who can purchase Dell’s products at competitive prices.
Dell firm has qualified designers who continuously seek to upgrade the products in the market to suit consumers needs.
Inability to capture the college students’ market segment
One of Dell’s biggest weaknesses is its ability to attract college students to buy its products. For instance, sales revenues from institutions of education and schools account for only 5 percent of its total revenues. The focus on government institutions and corporate affected its ability to mend relationships with schools. Dell’s unpopularity is obvious since many students buy their personal computers through their schools.
Problems of the Direct Model
The direct model approach presents some problems. To begin with, an individual cannot go to retailers since Dell doesn’t use them as its distribution channel. Secondly, customers are not able to buy Dell as they would with other brands because each product is customized according to the customer’s needs. This might take some days to finish. Most buyers are wary of a product they cannot examine personally before buying. Basically, this means there is a cost for customization which every customer must pay indirectly.
The technology market is dynamic in nature. Dell therefore strives to maintain its relevance in the market through conducting consistent research and upgrading the areas of interest. Most of the buyers that the firm targets are either educated or second-time buyers. They know what they need and Dell can give it to them. The Direct Model can provide a good framework for these customers to order personalized personal computers at competitive prices.
The advancement of the Internet gives Dell a great opportunity for using this as a platform to sell its products. The online stores would fit in place of retail stores, which Dell does not have. Consumers find it easier to purchase online than drive to a physical location to do the same. During the month of November 2012, Dell initiated a global launch of the tablet, which coincided with the introduction of windows 8 in the market. Despite accusations that the introduction of the tablet came in a little bit late, Dell defended its strategy of action with the position that it takes time to develop products that seek to fill in the gaps in the market. For instance, the introduced tablets are unique as they seek to meet the consumers' security, data and systems management that may not be provided by competitors.
Between 2003 and 2005, Dell sold computers with faulty capacitors, which cases some of its models to break down, rendering the PCs useless (CNN, 2010). This hardware meltdown has haunted Dell for some time now. Even after realizing this problem, the Dell sales team downplayed this and continued to sale the PCs anyway. Even though Dell went ahead to spend over $300 million to service and replace the affected models, a lot of consumers lost confidence in Dell and have since abandoned it altogether.
Leadership at Dell Computers is a bit shaky. Michael Dell seems to be the face of the company and therefore there is uncertainty as to what happens if he bails out or for some reason he is not able to lead the company. Do they have a second person to take over and lead Dell to success as it is with Michael Dell?
Dell should develop additional strategies to hike its position against other market leaders like IBM and make sure it diversifies its business into electronics and imaging like companies like HP/Compaq has done. Recently, Dell launched an Environment Management System. With this it should be able to collect old PCs and its devices from the customers and recycle or dispose it in environmentally accepted national and state standards. There is need to also ensure that its overseas plants follow the required USA labor laws. This means it being a member of the Global Alliance for Workforce and Communities (GAWC) and Fair Labor Association (FLA).
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