Dell Dan McLindon Kyle McDaniel Jeremy Smiley Tom Anderson Ray Moorman
Key Question for Dell • What is Dell? A computer manufacturer? A consumer electronics company? An online retailer? An IT service partner? What is their focus?
Secondary Questions • What contributed to Dell’s success and rapid growth in the late 1990’s? • Is Dell’s build to order model still an advantage? • Why is Dell choosing to become more like HP and HP more like Dell? • What does Dell do well and where does it struggle? • Can Dell ever be successful in B2C market in developing countries with Direct to Consumer distribution? • What is Dell? A computer manufacturer? A consumer electronics company? An IT service partner? What is their focus? • What is Dell doing today to set itself apart from the competition in the highly competitive and rapidly evolving computer hardware industry?
Dell Inc. Product Timeline Conclusion – Expanding product set into several highly competitive markets with well established players. Strategy is be the low cost leader.
Build to Order Conclusion – Dell has spent its time and money on innovation to become an efficient manufacturer of computer hardware. Was that an effective use of their resources?
Industry Overview (Supply) Porter’s five forces: Threat of substitute products High Rivalry among existing competitors High Bargaining power of buyers High Bargaining power of suppliers Low Threat of new entrants High
World Market Share – Dell vs HP • Conclusion – From 2005 declining trend in both US & World Market Share for Dell. HP has gained market share during that time. Possible reason for HP’s success is acquisitions (Compaq 2002, EDS 2008)
Is Dell’s Build to Order model still a competitive advantage or has it become a liability?
Internal Analysis – Markets Served Conclusion – Dell is strong in the US B2B market, but that strategy does not translate to success in B2C. Only 39% of sales generated outside US, compared to 67% global sales by HP.
Internal Analysis – Core Competencies Red – Easy for competitors to develop Yellow – Possible for competitors to develop Green – Very difficult for competitors to develop
Internal Analysis - Manufacturing Conclusion – Dell already starting to outsource its competitive advantage. Can it still compete with HP in the B2C market? Will outsourcing manufacturing impact their advantage in B2B market?
Recommendations • Develop a more focused strategy. Examine where the company is creating the most value for customers and invest in that business line • Focus on growth in B2B channel and the continued development of value-added IT services • Everyone competing on price, need to find new ways to create value