SWOT Analysis of Dell Inc.

Strengths Built-to-order personal computers provide the following advantages: Bypassing distributors and resellers eliminates the markups of the resellers, thereby improving profits. By building computers when ordered reduces the costs and risks of buying components in bulk and warehousing Customized computer systems Rapid inventory turnover and reduced inventory levels Incorporation of new technologies and computer components into its offerings Cheaper Rates Sales force to handle the service relations with Dells corporate and governmental organizations Selling of computer systems online through its website Weaknesses No retail outlets Lack of R & D department Rebranding printers reduces the profit margin significantly Few manufacturing facilities in Asia which are the potential big markets

Opportunities Mergers and acquisition of new companies can improve profit margins and can improve Dells position significantly in Asia and the European region Establishing manufacturing facilities in the developing countries Establishing Retail Stores Threats Competitors acquiring Dells suppliers of computer accessories Lexmark merging or acquired by Dells competitors Though minor competitors globally; Gateway and Apple Computers can cater niche markets through product innovation which can yield high profit margins and make them big competitors against Dell

 Lack of retail store might hamper Dells success in the Asian markets especially the SubContinent where people are habitual in buying through retailers and with lack of internet and phone connections this can be a real hindrance to Dells success.

DELL INC. RECOMMENDATIONS

Although the figures suggest that they are going fine in personal computer markets but in some areas they are facing some very stiff competition from their main rivals HP and IBM. Since HPs merger with Compaq they are making huge revenues as compared to Dells mainly because of the printer market. Although Dell also started to sell printers but the way they sell it is not going to get them any way closer to HP. Rather than purchasing printers from Lexmark and then re-brand them as Dell they should also look forward to a merger with Lexmark to compete in printer market. Similarly in Asian market where Lenovo is the market leader has acquired IBMs division will be giving extreme competition to Dell where the computer market is expected to grow abnormally in the next 5 years and in places which lack telephone and internet facilities. So they will be required to start some distributions centers over there to capture the market. Further they need to develop some R&D if they want to compete with IBM in server market. Furthermore, Dell has to opt for setting up retail stores in the Asian markets which can give a real boost to Dells sales.

SWOT ANALYSIS:
Strengths: Dell is the World's largest PC maker. For the last couple of years it has held its position as market leader and shown signs of growing market share. Direct sales approach. Build to Order approach. Long term partnerships with reputable suppliers of name-brand parts and components Reputation/image JIT, know-how and capabilities Dell has total command of the supply chain.

Weaknesses: Lacks the product line and service breadth of Hewlett Packard and IBM The direct sales approach is not the preferred distribution channel in some locations No in-house repair service capabilities Opportunities: Customers know what they want and need to purchase. Customers value convenience and one stop shopping. Servers market can be tapped. Printers market can be tapped. 80% of new computer sales are likely to come by 2010

Threats: Global economic recession. Aggressive pricing wars Continuously changing consumer demands. Strong brand name of competitors (IBM, HP) Rapid technological advancement. Expected computer sales increase from 7.9 million to 78 million by 2010, many areas lack phone and internet services.

EXTERNAL FACTORS ANALYSIS SUMMARY:

Key External Factors
Weight Rating Weighted Score

Opportunities Customers value convenience and one stop shopping Customers know what they want and need to purchase 80% of new computer sales are likely to come by 2010 Printers market can be tapped Server market can be tapped better Threats Global economic recession Aggressive pricing wars Continuously changing consumer demands Strong brand name of competitors (IBM, HP) Rapid technological advancement Expected computer sales increase from 7.9 million to 78 million by 2010, many areas lack phone and internet services .12 .09 .06 .07 .08 .17 3 4 3 3 4 2 .36 .36 .18 .21 .32 .34 .05 .05 .11 .04 .16 3 2 3 2 2 .15 .10 .33 .08 .32

Total

1.00

2.75

INTERNAL FACTORS ANALYSIS SUMMARY:

Key Internal Factors Weight Rating Weighted Score Strengths Growing market share Direct sales approach Build to order approach Long term partnerships with reputable suppliers of name-brand parts and components Reputation/image JIT know-how and capabilities Command over supply Chain Weaknesses Lacks the product line and service breadth of Hewlett-Packard and IBM The direct sales approach is not the preferred distribution channel in some locations No in-house repair service capabilities TOTAL .11 .08 1 2 .11 .16 .15 .14 .12 .07 4 4 4 3 .60 .56 .48 .21

.12 .05 .13

4 3 3

.48 .15 .39

.03 1.00

.03 3.17

TOWS MATRIX:
Strengths 1. 2. 3. 4. Growing market share Direct sales approach Build to Order approach Long term partnerships with reputable suppliers of namebrand parts and components 5. Reputation/image 6. JIT, know-how and capabilities 7. Command over supply Chain Weaknesses 1. Lacks the product line and service breadth of Hewlett Packard and IBM 2. The direct sales approach is not the preferred distribution in some locations 3. No in-house repair service capabilities

S-O Strategies

Opportunities 1. Customers value convenience and one stop shopping 2. Customers know what they want and need to purchase 3. 80% of new computer sales are likely to come by 2010 4. Printers market can be tapped 5. Servers market can be tapped Threats 1. Global economic recession 2. Aggressive pricing wars 3. Continuously changing consumer demands. 4. Strong brand name of competitors (IBM, HP) 5. Rapid technological advancement 6. Expected computer sales increase from 7.9 million to 78 million by 2010, many areas lack phone and internet services 1. Produce low price standardized PC. 2. Reduce workforce to cut some costs.

W-O Strategies

1. Conduct aggressive domestic advertising campaign.

1. Joint Venture 2. Open couple Dell outlet stores where direct sale approach is not worthy.

S-T Strategies

W-T Strategies

1. Conduct aggressive ad campaign to promote Dell Direct Selling.

RECOMMENDATIONS:

Although the figures suggest that they are going fine in personal computer markets but in some areas they are facing some very stiff competition from their main rivals HP and IBM. Since HPs merger with Compaq they are making huge revenues as compared to Dells mainly because of the printer market. Although Dell also started to sell printers but the way they sell it is not going to get them any way closer to HP. Rather than purchasing printers from Lexmark and then re-brand them as Dell they should also look forward to a merger with Lexmark to compete in printer market.

Similarly in Asian market where Lenovo is the market leader has acquired IBMs division will be giving extreme competition to Dell where the computer market is expected to grow abnormally in the next 5 years and in places which lack telephone and internet facilities. So they will be required to start some distributions centers over there to capture the market. Further they need to develop some R&D if they want to compete with IBM in server market.