Founded in 1984 by Michael Dell, Dell Computer Corporation created an innovative concept by placing the customer at the center of the business organization. In 1998, the company set up a direct sales model, allowing it to establish itself quickly and successfully in the computer industry. Indeed, the company designs and customizes products according to specific needs of its customers. Despite the constant evolution of the computing market and strong competition, Dell Computer Corporation has managed to implement a differentiation strategy. In this changing world, where competition is fierce, how has Dell Computer Corporation managed to maintain its market position?
The environmental analysis is important because it helps to develop competitive advantages, allowing the identification of opportunities and threats in the industry and facilitates the possibility to identify the links between different businesses.
The PEST analysis of the general environment:
PEST is an acronym for political, economic, social and technological aspects of the environment that a company operates in. It is a measure of the activity of the market. We chose to develop this model to analyze the computer industry because it is easily usable for understanding market growth or decline, and also analyze the role, potential and the direction that this industry .
Demand on the computing market grew in the mid-1990s thanks in particular to the economic revival.
Moreover, the share of households owning a computer was lower in Europe and Asia compared to the United States. Lagging behind the American continent, these countries turned significantly to the IT sector and the share of households owning a computer gradually increased on both continents.
The computer industry has four segments of customers: large corporations, SMEs, individuals and educational institutions. Initially only large corporations and some individuals had experienced the world of computers and were passionate about them.
Tags: Dell, PEST analysis, Dell strategy, Dell computers
[...] Communication In promoting, Dell reaches these customers through advertising in trade magazines, business publications, catalogs and direct marketing. In addition, the business can be contacted by phone for further information. - Price Dell provides affordable prices with high quality products and aligns with the competition. HP is still more expensive than all other manufacturers - Strengths, weaknesses Strengths Weaknesses Forces Products Weaknesses Products The integration of - Computer components components during the are constantly improving, which manufacturing process enables Dell poses difficulties in adapting to reduce manufacturing costs suppliers. [...]
[...] Distinctive competencies The main distinctive competence of Dell Computer Corporation is that it sells directly i.e., without physical means. Dell differentiates itself from its competitors because it favors a discerning clientele and abandoned customers seeking low prices. Finally Dell works lean, and therefore it has no or very little stock and generates economies and demand. Therefore it does not generate returns. Conclusion In an industry where the price war is installed and while e-commerce is growing in the world, Dell has managed to maintain its position in the market through effective customer service and powerful computers. [...]
[...] Technological opportunities Technological threats Changing market: professional The Sector is subject to new companies which are equipped with technologies, and needs to adapt computers, need to renew, and quickly to new trends maintain their computer equipment The Sector is highly subject to new Developing alternative products technologies, and acquires new (mobile phones able to integrate computer equipment frequently. the main functions of a computer). 3. The key success factors In this sector the main key to success is the mastery of innovation and technological advancement. B. [...]
[...] tried to follow its competitors. The sales force adapted to the customer has enabled Dell to retain businesses and institutions. Communication strengths Communication Weaknesses Dell has a database enabling it to identify the computer built specifically for the customer, and phone-based troubleshooting is simplified. Dell has divided its customers into different categories to better achieve the latter by establishing a sales force for every subset. Price Forces Price Weaknesses Costs are minimized because Dell has production sites which are close to suppliers. [...]
[...] ♦ Economic factors The demand for computers on the market has increased in the mid-1990s, thanks in particular to the economic revival. Moreover, the share of households with a computer was lower in Europe and Asia than in the United States. Lagging behind the American continent, they turn significantly to the IT sector, and the share of households with a computer is increasing on both continents. ♦ Socio-cultural factors The computer industry consists of four segments of customers: large corporations, small businesses, individuals and educational institutions. [...]
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