Michael Dell founded Dell, a multinational information technology company, on November 4, 1984. With nearly 100,000 workers worldwide, Dell is one of the largest companies in the field of technology. The company at first dealt with trading of PC and that’s how that started making money. But after just one year they produced their first PC named “Turbo PC” and it was sold for about $800. At the very first year the company made a gross profit of around $75 million. Dell it’s a well know company worldwide and its first expansion happened In 1988 in Ireland.
On the same year the market capitalization of Dell was around 80 million and was included as one of the 500 biggest companies on fortune 500. In 1996 Dell made one of the best decisions yet, by selling computers online where you can customize a computer of your own in just few clicks. After a while dell Started acquiring big companies on the market so they could be as competitive and effective as possible. Dell Today Dell today is one of the biggest companies that operate in the market.
The Company’s four global business segments are: Large Enterprise, Public, Small and Medium Business, and Consumer. It designs, develops, manufactures, markets, sells, and supports a wide range of products and services that can be customized to individual customer requirements. The Company’s products and services are organized between enterprise solutions and client categories. Enterprise solutions include servers, storage, and related services, software and peripherals. Client includes mobility, desktop products, and also related services, software and peripherals.
The Company’s services include a broad range of configurable IT and business services, including infrastructure technology, consulting and applications, and business process services. One of other Dell’s offers is a full suite of solutions for customers who desire outsourcing of some or all of their IT management and operations. Its consulting services include IT consulting, strategy consulting, enterprise consulting, the implementation of prepackaged software applications, and research.
Speaking of this huge company we cannot be ignorant about their wide range of other products that they offer, like Dell-branded printers and displays and a multitude of competitively priced third-party peripheral products such as printers, televisions, notebook accessories, networking and wireless products, digital cameras, scanners, and other products. Wide range of targeted groups with their computers. They offer computers that are suited for people that look for design and beauty to computers that are suited to people that seek a huge performance.
It offers or arranges various customer financial services for its business and consumer customers in the U. S. through Dell Financial Services L. L. C. (DFS), a wholly owned subsidiary of Dell. They offer a wide range of financial services, including originating, collecting, and servicing customer receivables related to the purchase of Dell products. The Dell Corporate Strategy Looking at the success that Dell has had during the past years up until now, we can conclude that Dell has had a great strategy.
Firstly they have a clear mission on what they do and how they differentiate from other competitors. Dell’s mission is to be the most successful Computer Company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of: The Dell mission will show us no more that a company’s ambition of what their focus is on the market. Thus if they are to achieve these ambitions they must have a well defined and effective corporate strategy.
By corporate strategy we mean good management decisions taken by the important people in the company. We will try to get a sneak peak of Dell’s strategy with the help of the methods used by Michael Porter who is amongst the most significant authors on strategy of recent decades. Besides a number of specific tools and frameworks for analysis, Porter highlighted that the purpose of strategy was to gain and defend some form of competitive advantage. Well in order to survive in the market it makes sense to do what Porter says.
He goes further and in one of his books he says that there are only three forms of competitive advantage: Dell is a company that does many operations, but the operation that they are mostly known is the one of selling computers. So if we look at this we will se that they have very low costs compared to its competition due to some main reasons. One of the main reasons is that they don’t have an inventory. As the orders arrive online, the computers will be ready in some time after the order is received. They have a just in time inventory and this lowers their cost very much.
Another thing is that Dell does only the assembling part of the product, so other companies that Dell has cooperation with, and they are no less than 375 different companies bring in the parts. This also lowers the cost of having huge manufacturing facilities of manufacturing each part of e computer. Differentiation We can easily say that Dell differentiates with the quality of the products they provide and that is one strong characteristic that Dell has, but still their strongest differentiation activity is the ability to offer what the consumers want.
You can just go online and choose the computer you want, the storage in it, the speed, the graphics and almost everything and in no time you will get your order placed. This is one huge advantage that Dell has over others. They differentiate on shopping experience. Focus Last but not least is the focus. As we can assume from what we said above the focus of Dell is fully on consumers. They are known as experts in what they do and that they do it really fast.
The ability that the consumers have to customize their product in just some clicks shows that they offer what each consumer wants. Fully consumer oriented. So until now we have seen where Dell is right now and how they are dealing with the environment, but to have a completed view of what’s their corporate strategy we need to look at where Dell wants to go and how will they do it. Of course Dell has its mission statement and that tells us everything about what they aim to achieve, but the environment is changing and some of the competitors has caught up or even surpassed Dell.
We mentioned that their online shopping was one of the strong points of Dell and it had helped Dell grow to where it is now and that is true but nowadays the grows of PC sales has slowed to around 5% a year and around 60% of the net revenue of Dell was composed by desktop computers and mobility. People have started to prefer retail stores lately and want high-featured digital technology like Apple’s iPod. Dell is falling short now, because of a lack of retail stores. Their absence in retail stores is hurting the company’s attempts to expand beyond the PC business into consumer electronics, such as TV.
So the company needs to do something in order to remain one of the main players around. How they will do it its not yet very clear but initial indications say that Dell is trying to turn their focus more into making business with other businesses and providing different networking and storage services. Of course this takes a good strategic plan to analyze every detail on what are the opportunities in this environment. Internal environment and external micro and macro environments need to be analyzed before making further big and important decisions.
Still Dell is one of the most successful companies in the world. Seeing their PC line share they dominate the market with a huge 18. 1% and converted to revenue that’s around $50 billion. If we made a further analysis and place a Dells product in the BCG matrix their PC products will definitely be placed very well. High market share but low growth, “a Cow”, and very profitable. Dell targets two market segments : individual consumers and business. There are some basic difference between these groups.
Business actually represent 85 % of Dell’s sales, they are more willing to spend more one computer products and individuals, they usually buy on a regular basis, while individuals might buy a product and repeat the purchase either in a couple of years or never. Corporate customers are interested in price, technical support and easiness of upgrade. Based on these difference, Dell uses a direct marketing model and in the past it used to target mainly business users. Nowadays this resulted to the adoption of Dell’s products in many large US companies for their domestic and foreign plants as well.
Dell continues to target those customers in a direct one to one way, putting importance on the efficient quality and cost, not taking account of the design and fashion trends. Also their main focus is on large corporation, secondary efforts on small and medium sized businesses and last put minimal effort on the global consumer. Positioning Dell’s position in the market is set by their differentiating attributes – building evert computer to order and offer powerful, richly-configured systems at competitive prices. They also sell the computers directly without any retailer, thus knowing customer’s needs better.