Dell, Inc.

A Strategic Management Case Study

October 8, 2013
Sophie Yanez
University of the Incarnate Word

Dell Inc., Strategic Management Case Study

Sophie Yanez

Table of Contents
I. Introduction
II. Dells Strategy
a. Vision Statement
b. Mission Statement
c. Strategies and Objectives
III. Recommended Vision and Mission Statements
IV. External Assessment
a. Porters Five Forces Model
b. External Factor Evaluation
c. Competitive Profile Matrix
V. Internal Assessment
a. Value Chain
b. Internal Factor Evaluation
VI. Porters Five Generic Strategy
VII. SWOT Analysis
a. SPACE Matrix
b. Boston Consulting Group Matrix
c. Internal-External Matrix
VIII. Strategy and Objective Recommendations
IX. Recommended Implementation Plan
X. Strategy Review and Evaluation
References
Appendixes

Dell Inc., Strategic Management Case Study

Sophie Yanez
I. Introduction
Dell was founded in 1985 under the name, PCs Limited by
Michael Dell who at the time was a college student of the University of
Texas. In 1988 the companys name was changed to Dell Computer
Corporation. The company is headquartered in Round Rock, Texas and
is the world's #3 supplier of Personal Computers (PC) behind HP who
ranks as #2 and Lenovo who ranks as #1 (According to IDC worldwide
quarterly PC tracker). Dell provides a broad range of technology
products for the consumer, education, enterprise, and government
sectors. In addition to its line of desktop and notebook PCs, Dell offers
network servers, data storage systems, printers, ethernet switches,
and peripherals, such as displays and projectors. It also markets thirdparty software and hardware. The company's services unit provides
asset recovery, financing, infrastructure consulting, support, systems
integration, and training, as well as hosted IT services. On September
12, 2013, Dell announced that it would be going private in a deal
valued at nearly $25 billion dollars. (Hoovers, 2013)
Their purpose as an organization is to deliver technology
solutions that enable people to grow and thrive. Over the past 26 years
Dell has built a solid worldwide company with:

100,000+ team members in over 180 countries

400,000 solutions in classrooms worldwide

#1 healthcare IT services provider in the world

3

Dell Inc., Strategic Management Case Study

Sophie Yanez

3.5 million connections via our social web community

Dell can attribute much of its success to their customer service

offerings, global expansion and financial performance. The growing
requirement for efficiently managing support related costs among
medium and large businesses is a concern that is increasing in
relevance in todays IT environments. The company has been
struggling with the long-term decline in the personal computer
business, while at the same time trying to transform itself into a bigger
player in enterprise hardware, software and services. But those efforts
at transformation have been uneven, and the majority of Dells
revenue is either derived directly from PCs or from ancillary products
like desktop displays and accessories (Hesseldahl, 2013).
Dell has been taking in quite some scrutiny in the past few
months since their CEO, Michael Dell, decided to take the company
private with the help of Silver Lake Venture Capitalist. To many this
may seem as a sign of weakness or downturn for Dell but in actuality
this may give the personal computer company a fighting chance to
regain its #1 position in the market. By going private the company will
initially see an increase in operating expenses, but in the long run
Michael Dell will be able to take control of company processes and
management changes without the inquiry of shareholders and financial
analysts.

Dell Inc., Strategic Management Case Study

Sophie Yanez
II. Dells Mission, Vision and Strategy
The following information was retrieved from Dell.com:
Dells Vision Statement: Its the way we do business. Its the way
we interact with the community. Its the way we interpret the world
around usour customer needs, the future of technology, and the
global business climate. Whatever changes the future may bring, our
visionDell Visionwill be our guiding force.
Dells Mission Statement: Dells 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 highest quality; leading technology;
competitive pricing; Individual and company accountability; superior
corporate citizenship; financial stability.
Strategies and Objectives: With the recent buyout and Silver
Light partnership, Dell is able to take the company forward in a
direction that isnt hindered by stockholder opinions and market
analysts.
According to a Forbes article written by Patrick Moorhead, Dell plans
to be a volume, in it to win it PC player. This statement comes from a
keynote speech that Jeff Clarke, Dells Vice Chairman and President of
Global Operations and End User Computing stated at the Industry
Analyst conference in Austin Texas in 2013. Dells end user
computing growth plan is based on four primary elements: (1) simplify

Dell Inc., Strategic Management Case Study

Sophie Yanez
their product and services portfolio, (2) obtain new customers, (3) win
with industry leading solutions and (4) scale alternative computing
solutions (Moorhead, 2013).

Dells goal of simplifying its offerings is encapsulated in a

program called Smart Selection. With Smart Selection, Dell prebuilds what they it believe will be the most popular
configurations, or SKUs, and will ship them within 24 hours. This
can be considered build to order, which is something HP and
previously Compaq have been doing for a while.

Dell now plans to be competitive in more price bands and says

they it wont be walking away from business like it had in the
past. To help accomplish this, it plans on developing specific
SKUs for specific markets, broaden its portfolio with tablets, and
better optimizing its channels of distribution.

Win with industry-leading end-user computing solutions by

investing in what they call sales makers. This is its fancy name
for salespeople. Dell plans on aggressively pursuing new
commercial customers to take business from Hewlett-Packard
and Lenovo.

Dells Wyse business is on a $1B run rate. This is the cloud-client

computing business, which includes thin clients, but its a lot
more than hardware. Its an entire chain of hardware, software

Dell Inc., Strategic Management Case Study

Sophie Yanez
and services that goes from the end point to the servers,
networking, storage and security in the cloud (Moorhead, 2013).
III. Recommended Mission and Vision
I recommend that Dell revise their vision statement to answer
what type of company they want to become instead of their current
its the way we do business response. My recommendation is to shift
the statement to something more powerful, something the employees
and consumers can relate to and be inspired by, such as:
To become the worlds first choice when it comes to computing
needs.
With the recent strategy shift to take the company private, I feel
it is fitting to revamp the companys mission statement to identify the
scope of Dells operations on how they will achieve the leading position
in the PC technology industry. Their mission statement is on the right
track, I would simply change the how we are going to get there
declarations and remove generalized statements such as corporate
citizenship and financial stability. I would remove those because if the
first objectives are met such as quality products, good services and
competitive pricing, then corporate citizenship and financial
statements will be achieved naturally. I recommend the following
revision to the mission statement:
Dells mission is to be the most successful computer company
in the world by delivering the best customer experience in the

Dell Inc., Strategic Management Case Study

Sophie Yanez
markets we serve. We will achieve this by delivering the highest
quality products to the every day consumer and any size
businesses, as well as developing innovative technologies and
maintaining competitive prices.
IV. External Analysis
According to Hoovers, the demand in the PC market is driven by
technological advances, disposable income in the consumer market
and corporate spending cycles. The profitability of individual
companies depends on supply chain efficiency and ancillary products
and services. This makes it to where large companies, such as Dell, HP
and Lenovo have advantages in leveraging extensive marketing
budgets and sales channels, securing component discounts, and
manufacturing efficiencies and small companies can compete by
offering unique products or localized service and support (Hoovers,
2013).
Porters Five Forces Model (Appendix A)
There are on-going actions by all of the major players as they
work to increase market share. There seems to be two approaches
depending on the attributes of the company. The U.S. companies (Dell
and HP) are launching efforts to diversify into higher margin
operations. The Chinese competitors (Acer and Lenovo) seem to be
willing to compete on a low-cost basis. There is almost no hope of
differentiating the products since all of them, with the exception of

Dell Inc., Strategic Management Case Study

Sophie Yanez
Apple, have to run the current Microsoft Operating System.
Additionally, there is full penetration in all dealer networks by almost
all brands, and significant Internet sales as well. Apple seems more
forward-looking and is working to maintain its niche market while
expanding into the mobile market.
This market is completely saturated, and market growth, in terms
of units sold, is almost stagnate. The players now face a zero-sum
game. This may explain why IBM chose to exit the field.
Tablets and smart phones are affecting consumers needs for a
personal computer. Worldwide PC shipments suffered the steepest
decline ever in the first quarter of 2013. According to IDC, the industry
shipped a total of 76.3 million units between January and March, a 13.9
percent decline over last years first quarter. The PC industry continues
to suffer from the rise of smartphones and tablets, which are gradually
replacing PCs as the primary computing device for many consumers
(Prafulla, 2013). Below you can see the decline in personal computer
orders across all competitors:

Dell Inc., Strategic Management Case Study

Sophie Yanez

In terms of customer loyalty, there is almost no brand loyalty in

this largely commoditized market. This means that anyone can enter
and make a convincing marketing pitch. They will have to understand
that this pitch will be primarily on the basis of price. Luckily, to actually
manufacture PCs requires a significant amount of capital investment.
When coupled with the low net margins and high risks inherent in this
industry, raising such capital seems unlikely.
The suppliers in this industry are in an interesting position. There
are only two major players in the processor market, Intel and AMD, and
all manufacturers support both brands. Additionally, there are no major
functional differences between them. This leaves the PC manufacturer
agnostic with respect to processors. The other components of the PC
are largely commodity items, so there can be no pressure from these
suppliers either. Since the PC has become a largely commoditized item
with almost no switching cost or brand loyalty, the buyers tend to buy

10

Dell Inc., Strategic Management Case Study

Sophie Yanez
based on price. Buyers will buy almost any brand that matches their
price point.
External Factor Evaluation
Dell is a technology company that has the opportunity to power
the cloud revolution that is taking place in the industry. With increasing
technology capabilities that allow for the development of applications
and products from anywhere in the world due to the cloud, Dell needs
to find a way to become the premier supplier for businesses and
developers.
The more technically inclined the population gets, the more
opportunity Dell will have to sell their products. This is not just limited
to large businesses. Education has been revolutionized by technology,
students are being asked to access information through the Internet as
opposed to libraries and books, which was the case 20 years ago. The
individual consumer still represents a large opportunity for the PC
industry.
Some of the threats affecting Dells future include the rapid
change of customer needs due to the introduction of smart phones and
tablets. Consumers that have been exposed to technology are
intrigued by the newness of it. As soon as a product is introduced,
there are 5 different variations that will follow with feature upgrades
from competitors. Dell needs to start innovating and stay in front of the

11

Dell Inc., Strategic Management Case Study

Sophie Yanez
technology in order to remain competitive. For a more in depth view at
the analysis taken to reflect these statements, review Appendix B.
Competitive Profile Matrix
Dells top competitors include HP and Lenovo. Lenovo is gaining
market share over HP and Dell and now hold the number one position
in PC sales (LPTPS, 2013). After reviewing these three companys
advertising campaigns, product quality reviews, market share position
and financials, Dells position in the market reflects their #3 ranking in
the Competitive Profile Matrix in Appendix C.
Advertising: Lenovos brand campaign, "For Those Who Do"
repositions them not as a provider of devices, but as an enabler of the
DOER lifestyle and DO mindset of the consumer. "For Those Who Do" is
the global brand umbrella theme. It was created by Saatchi & Saatchi
Publicist Group and is intended to appeal to young consumers. "The
youth market values most what they're doing with technology. If you
look at the ads, you'll see that the focus is not on the product or even
on the users, but what they're doing with it," Mr. Roman said (Bulik,
2012).
Dells recent commercial launch features a girl named Annie who
dreams of flying. The power to do more commercial campaign is
meant to celebrate the way Dell technology helps enable interests that
people pursue outside of their work life (Thielman, 2013).

12

Dell Inc., Strategic Management Case Study

Sophie Yanez
HP launched their make it matter campaign and partnered with
multiple enterprise organizations such as Nascar and Beats
Headphones. HP wanted to refresh The Computer is Personal Again
campaign that had been running successfully for several years, and
asked Liquid to focus on the diversity of new systems that that the
company was introducing. Liquid focused on the idea that the new
systems were designed for specific types of audiences and they
developed the campaign on the concept of a consumers personality
(Liquid Agency).
All of the campaigns surround themselves around the individual
consumer so there wasnt much differentiation between the
campaigns. Dell scored a higher rating in this category based on the
creativity and diversity of their commercials as well as brand
recognition.
Product Quality: Ratings for product quality were considered
based on Laptop Worlds recent 2013 top laptop list. HP was ranked
#3, Lenovo #5 and Dell #9, all were trailing behind Apples Macbook
which came in at #1(LPTPS, 2013). The following excerpts from the
article say it best:
Dell surely is among the top brands that manufactures best
notebooks and has time to care about their customers. Their
customer support is so far the best and in case something
happens to your laptop their service centers wont take much

13

Dell Inc., Strategic Management Case Study

Sophie Yanez
time to fix it. Dell is an old brand when it comes to computers
and other electronics, but recently they started manufacturing
laptops and they have grown so fast that today they have more
models than one can remember (LPTPS, 2013).
HP is one of the oldest laptop brands and after merging with
Compaq theyve become a lot more known than before. This
brand is mostly known for manufacturing standard laptops and
all they care about is delivering quality. Laptops from HP can be a
little expensive but surely they are worthy of their price. Recently
theyve also started producing netbooks that can easily compete
with ASUS and Acer netbooks and most of them cost less than
$500. They usually focus more on their sound and graphics
section because these days thats all most of naive people care
about (LPTPS, 2013).

Market Share: The IDC preliminary results show that Lenovo

has taken the #1 spot for personal computer market share with 16.7%,
HP trails at 16.4% and Dell at 12.2%. Acer Group and Asus are ranked
among the top 5 brands in personal computers. The market share
rankings used in the Competitive Profile Matrix determined the 1-4
ratings the companies received.

14

Dell Inc., Strategic Management Case Study

Sophie Yanez

V. Internal Analysis
Value Chain Analysis
The Companys value chain analysis is standard to the rest of the
PC industry and can be reviewed in Appendix D.
Internal Factor Evaluation
Michael Dells recent company buyout held a weight of 13% in
the companys strategy factors. The companys pace of internal
transformation should quicken with the company going private
because any proposed strategy will no longer be subject to
shareholders. Michael Dell has argued that revamping his company
into a provider of enterprise computing services in the mold of IBM is a
complex undertaking that is best performed outside of public markets
(Gupta, 2013). Going private gives Dell, Inc. the opportunity to do
everything they have hoped for.

15

Dell Inc., Strategic Management Case Study

Sophie Yanez
Dells plans to expand globally into emerging technological
markets such as India and China are strengths the organization has
within their strategy. Dell plans to double its store count and beef up its
sales force in China during the next few years. They also plan to
expand their reach into smaller cities as it looks to offset the harsh
impact of rapidly falling personal-computer sales worldwide. Dell,
which has 10,000 sales outlets in China, will also focus on developing
its tablet business (Smart Brief, 2013).
India has been a great growth story for Dell. We have quite a
large presence there and I personally visit the country few times a
year. We have a great team there and about 27,000 people, the
Companys Global Chief Michael Dell told PTI in an interview (Davos,
2013). Dell, who was at the World Economic Forum Annual Meeting,
said the companys plant and the operations and staff size in the
country would continue to expand as per the size of the business
(Davos, 2013). Lenovo and HP have also targeted China and India as
part of their global expansion strategy so it makes perfect sense for
Dell to focus their expansion in these regions as well in order to
maintain market share.
One of the challenges that Dell faces in its current market is their
followership strategy. Dell invests far less in technology than its
competitors, which means they will always be one step behind from
the industry. As competition increases and PCs become more of a

16

Dell Inc., Strategic Management Case Study

Sophie Yanez
commodity, differentiation through innovation becomes more difficult
(Baker & Walsh, 2011). In the Internal Factor Evaluation (IFE), the
innovation of new products held the highest rating for the industry. Dell
will need to find a way to re-invent the PC standard and develop
features that keep it relative to consumers. The balance between the
high cost to innovate and lowering Dells current debt ratio will serve
as a large challenge for the company. Appendix E has a more
comprehensive look at the IFE Matrix and reasoning to the companys
2.36 score.
VI. Porters Five Generic Strategies
Dell falls into Porters Type 2: Cost Leadership- Best Value
strategy, because along with HP and Lenovo, the company is focused
on offering products and services to a wide range of customers at the
best prices available in the market (see Appendix F). With the
exception of Apple, the majority of the PC market falls within this
category. It is difficult to differentiate in the PC industry since the
standard of the PC has been determined for many years. While
consumers are interested in a low cost product, the quality of the
product is still extremely important to them. Substitute products such
as smart phones and tablets are differentiation enough in this market
and would fall in the Type 3 category. Apple is focused on a more
specialized consumer that is considered price insensitive, which is why
it falls in Type 3 as well.

17

Dell Inc., Strategic Management Case Study

Sophie Yanez
In order to employ the Best Value strategy, Dell should perform
value chain activities more efficiently than HP and Lenovo. Such
activities would include restricting the plant layouts, mastering newly
introduced technologies such as cloud computing, using common parts
and simplifying the design of their computers.

VII. SWOT Analysis

From the detailed SWOT analysis referenced in Appendix G, I would
recommend Dell implement the following strategies:
The SO strategies are (1) Dell should promote the efficiency of
their Dell servers in Green capable datacenters. Dell has the
opportunity to set the standard for powering the worlds cloud with Dell
servers. They should partner with Amazon, Google and Rackspace to
build a more efficient, green energy powered server. By partnering with
hosting companies such as these, Dell has the ability to be recognized
as the only green efficient server hosted in the worlds top datacenters. Dell will also have the opportunity to sell their PCs to
employees housed at these company headquarters and satellite
offices. (2) With increasing global Internet usage, Dell has the
opportunity to provide a premier level of online customer service. Dell
should invest in their current chat support and online knowledge center
platforms.

18

Dell Inc., Strategic Management Case Study

Sophie Yanez
The WO strategies are (1) Dell needs to remove itself from its
current followership strategy and invest more in R&D. With the
improving technologies in the market place, this is Dells opportunity to
innovate something that its competitors havent thought of. This
opportunity would allow Dell a temporary market share increase while
its competitors work to catch up. (2) They should focus expansion
efforts in the Education sector. With younger generations becoming
more technologically saavy, Dell has the opportunity to create brand
loyalty with students and teachers that will eventually become
consumers. Consumers that would be used to working with their
products thus making it more likely for them to stick with Dell.
The ST strategies are: (1) Leverage the Boomi acquisition to
create a better integration of cloud apps and on-premise apps. Boomi
has the opportunity to become the choice of cloud application
dashboards if built properly and priced competitively. (2) Dell needs to
seek out partnerships with hosting companies and colocation
datacenters around the world. This will help to gain cloud computing
market share in global regions such as China and India.
The WT strategies are: (1) creating a new tablet or smart phone
that can compete with the likes of Apple and Android systems and
ensure that it is competitively priced. (2) Dell needs to start
manufacturing its own PC parts. This will lower the cost for supply

19

Dell Inc., Strategic Management Case Study

Sophie Yanez
chain, improve quality production and reduce manufacturing
dependency.
The Space, Boston Consulting Group (BCG) and Internal-External
matrixes helped with the building of these recommendations because
it reflects that the strategies recommended by the SWOT analysis are
in line with the competitive profiles of the Company. Dell falls under
the Defensive category in the Space matrix (Appendix H). It reflects
that Dell has a very weak competitive position in a negative growth
industry. With PC sales decreasing industry wide and their #3 market
share ranking, the Space matrix reflects Dell accurately.
The BCG matrix reflects that Dell competes in a Cash Cow
division in Quadrant III. It has a high relative market share position,
ranked third at 12.2%, but competes in a low growth industry.
According to this matrix, product development or diversification are
two attractive strategies that Dell can adopt based on their position
(Appendix I). The IDC estimates that 2012 portable PC shipments were
202 million in 2012 and will only grow 0.9% in 2013. Then from 2013
to 2017 portable PC shipments will grow to 241 million or a rate of
18.3% over the four years with the bulk of the growth coming from
emerging markets (Jones, 2013).
The Internal- External (IE) matrix positioned Dell in division II of
the nine-block cell display (Appendix J). The IFE score of 2.36 and EFE
score of 3.13 were used to plot the graph and determine the

20

Dell Inc., Strategic Management Case Study

Sophie Yanez
positioning for Dell. Based on the information used for the IE, Dell is in
a Grow and Build state, which recommends that backward, forward and
horizontal integration, market penetration, or market and product
development strategies are put in place.
VIII. Strategy and Objective Recommendations
I recommend that Dell continue with their plans for global
expansion. Since almost 50% of Dells PC sales come from outside of
the US so it makes sense for them to continue down this path and
expand in China and India. I would however, recommend that they
slow down the rate of expansion of their new data centers. They dont
want to take on more than they can handle. The current debt to capital
ratio is hurting Dell from making all of the investments they need to
make in order to innovate. If they balance their investments between
global expansion and innovation, they have a better opportunity of
meeting their goals to deliver great products and services to their PC
consumers. I would suggest they focus on the quality of the products
they are building and not so much the quantity that is being produced.
While market share is important, the quality of the products that are
being produced reflect the Dell Brand. The companys brand is an
asset they need to keep in order to get ahead.
In Dells vision statement they state their interactions with the
community will include the future of technology, however when I read
about their current R&D strategy, they arent staying true to that

21

Dell Inc., Strategic Management Case Study

Sophie Yanez
statement. In order to be the most successful company in the world
and in order to deliver the best customer service experience, they
have to be innovative in technology. If they dont, their competitors will
always be 2 to 3 years ahead of them. I would recommend they invest
additional resources into their recent acquisitions, Boomi and Perot
systems, so they can stay ahead of the curve in the hardware and
software needs of the cloud computing industry. The low risk, low
innovation (follower) strategy that Dell currently has isnt necessarily
turning out to be a high return investment for them. For example,
Dells Streak 7 did not dominate the tablet industry or make a dent in
tablet market share. Also, it resulted in bad reviews for its poor quality,
which hurts the companys brand. The consumer and business markets
are moving towards a we want the newest and best product mentality
in all of their technological devices and services. Dell will continue to
lose traction and customer loyalty if they do not keep up with their
competitors and innovate. Based on the recent buy out from Michael
Dell and Silverlight and the recent I assume that Dell is aware of a
need for a new strategy or they would not have acquired cloud
computing and software development companies.
IX: Recommended Implementation Plan

I recommend Dell implements the previously discussed strategies

by changing their spending practices and reviewing their budget and

22

Dell Inc., Strategic Management Case Study

Sophie Yanez
current investments. Dell needs to focus on reducing company debt
and reducing the manufacturing cost of their hardware products. With
the recent influx of capital and privatization of the company, I assume
that Michael Dell already has plans like this in place or he would not
have worked so hard to gain back control of the company from its
previous shareholders.
Some possible risks to be aware of include the demand for Dell PCs
can grow too fast to keep up with supply and demand or demand can
decrease due to the expansion of their competitors presence in the
global markets. Dell will also need to increase marketing and
advertising spending in order to compete with market saturation and
market traction of Asus and Acer, which are not too far behind from
Dell. Dell could avoid these problems by diversifying the countries they
expand their datacenters in, by focusing on the quality of their
products to ensure they are superior to their competitors, and
continually analyzing their market needs to ensure their strategy is
aligned with what consumers are asking for.
X. Strategy Review and Evaluation
Since stock price will no longer be available as measure of
success for Dell, the evaluation method I recommend to determine
whether or not these proposed strategies (global expansion, improved
product quality and robust customer service) are successful is to
continuously review and measure:

23

Dell Inc., Strategic Management Case Study

Sophie Yanez
1. Global PC sales trends
2. Potential improvements in market share percentage for Dell
and its

competitors

3. Product quality reviews from consumers

4. Customer service reviews
The strategy recommendation around the innovation of new
products is more challenging to measure than the others. The simple
release of a product doesnt determine its success. Dell will need to
determine a new products success based on reviews from analysts and
customers, as well as sales and profit margins.

24

Dell Inc., Strategic Management Case Study

Sophie Yanez
References
Baker, M. & Walsh, A.M. (2011). Case 26- Dell, Inc. In Strategic
Managements: A Competitive Advantage Approach. La Salle
University (pp-252-261).
Bulik, B.S. (January 9, 2012). What do you do when your business
outpaces your brand? Lenovo may soon have an answer. In Ad
Age- CMO Strategy, retrieved in October 2013 from,
http://adage.com/article/cmo-interviews/lenovo-increasing-brandawareness/231929/
Davos. (January 30, 2013). Dell expands operations, headcount in
India: Global Chief. In The Hindu Business, retrieved in October
2013 from, http://www.thehindubusinessline.com/companies/dellto-expand-operations-headcount-in-india-globalchief/article4361350.ece
Gupta, P. (September 12, 2013). Dell to Lavish more on PCs, tablets
after $25 billion buyout win. In Reuters, retrieved in October
2013 from, http://www.reuters.com/article/2013/09/12/us-dellbuyout-idUSBRE98B0FC20130912
Hoovers, A D&B Company (n.d.), Retrieved October 2013 from,
http://www.hoovers.com/company-information/cs/revenuefinancial.Dell_Inc.3d10a81e8e6a6d30.html
Hesseldahl, Arik (September 12, 2013). Dell Shareholders Approve $25
Billion Buyout to Go Private. In All Things D, retrieved October
2013 from, http://allthingsd.com/20130912/dell-shareholdersapprove-25-billion-buyout-to-go-private/
IDC- Press Release. (July 2013). Lenovo Overtakes HP as the Top PC
Vendor While US Shipments stabilize in the Second Quarter of
2013. In IDC, retrieved on October 2013 from,
http://www.idc.com/getdoc.jsp?containerId=prUS24213513
Jones, C. (March 4, 2013). PC Market to Shrink in 2013 and Exhibit Low
growth through 2017. In Forbes, retrieved on October 2013 from,
http://www.forbes.com/sites/chuckjones/2013/03/04/pc-marketto-shrink-in-2013-and-exhibit-low-growth-through-2017/
Liquid Agency (n.d), Here are our latest success stories. In Liquid
Agency, retrieved on October 2013 from,
http://www.liquidagency.com/us/studies/hp-advertising

25

Dell Inc., Strategic Management Case Study

Sophie Yanez
LPTPS.com (2013) Top 10 Best Laptop Brands in 2013. In LPTPS,
retrieved on October 2013 from http://www.lptps.com/bestlaptop-brands/
Moorhead, P. (June 21, 2013). Dells PC Growth Strategy- In it to Win it.
In Forbes, retrieved October 2013 from,
http://www.forbes.com/sites/patrickmoorhead/2013/06/21/dellspc-growth-strategy-in-it-to-win-it/
Prafulla.net, (n.d.) The Global PC Market is Collapsing (Infographic). In
Prafulla.net, retrieved on October, 2013 from,
http://prafulla.net/interesting-contents/world-interestingcontents/the-global-pc-market-is-collapsing-infographic/
Smart Brief. (April 12, 2013). Dell maps China expansion to offset
falling global PC sales. In Smart Brief, retrieved on October 2013
from, http://www.smartbrief.com/04/12/13/dell-maps-chinaexpansion-offset-falling-global-pc-sales#.UlL7hSTFZ99
Thielman, S. (February 20, 2013). Ad of the Day: Dell Y&R dreams up
an alternate universe in its latest spot for the computer maker. In
AdWeek, retrieved on October 2013 from,
http://www.adweek.com/news/advertising-branding/ad-day-dell147420

26

Dell Inc., Strategic Management Case Study

Sophie Yanez
Appendixes
A. Porters Five Forces Model

Tablets and smart phones are reducing the need for personal
computers in homes and certain businesses
Cloud Drives are changing the storage needs for the personal
computer

SUPPLIERS

SUBSTITUTE PRODUCTS

132 different key supply

chain markets that include
AM D, Intel Corp. EM C,
Microsoft, Toshiba,
Logitech. Lexmark, etc..
By working with multiple
suppliers, you are able to
get a lower price for parts.
Supplier monopolies such
as Intel
Inability to substitute
necessary hardware (hard
drives, processors, RAM )
High cost of supply chain
churn

Hewlett Packard, Lenovo, ASUS, and ACER

Large number of competitors currently in the
market- with declining sales, the market
saturation is increasing.
There is little power in the market place for
product differentiation
Price is a high determining factor

High start up cost leads to barriers to entry the market

There is almost no brand loyalty in this largely
commoditized market. This means that anyone can enter
and make a convincing marketing pitch.
Economies of scale lead to continued advantages
PC industry is a unique business model

Customers prefer
customizable PC options.
They purchase what they
need.
Customers dictate product
pricing since there is a large
selection of PC brand
alternatives for them to
choose from
There is a size of order
single to large- preference
for large custom orders in
order to drive down costs.
(ex: Schools and
Businesses)
Customers have the ability
to change between different
types of PC brands that use
the same software (ex:
M icrosoft)

Porters Five-Forces
Model

B. External Factor Matrix (EFE)

External Factor Evaluation

Dell, Inc.
Key External Factors
Opportunities
The Green Movement: The want for more environment friendly products. Such as
computer Recyling Programs and energy efficient products
The global market Internet usage is increasing which means there is more need
for computers and technology adoption
Improving Technologies such as software and applications are creating a high
demand for consumers
Younger generations are tech saavy
There is a changing standard of communicating and sharing information. Ex: Text
messages, email and Instant messages
Threats
IT advancements are taking place at a rapid pace- ex: Windows 8 release
Price Wars with competitors
Introduction of Tablets and Smart Phones
Changing Customer Needs
Cloud Computing movement is replacing how customers use PC's
Trade barriers and hurdles affect the position of the company in multiple countries
that decline growth
NSA scares- Government checking in on me through my computer?
Total

27

Weight Rating

Weighted
Score

0.03

0.03

0.12

0.48

0.11

0.44

0.11
0.09

3
2

0.33
0.18

0.09
0.07
0.11
0.1
0.08
0.04

4
3
3
4
3
2

0.36
0.21
0.33
0.4
0.24
0.08

0.05

0.05
3.13

Dell Inc., Strategic Management Case Study

Sophie Yanez
C. Competitive Profile Matrix

Competitive Profile M atrix

HP

Competitive Profile Matrix

Critical Success Factors

Lenovo

Dell

Weight

Rating

Score

Rating

Score

Rating

Score

Adver sing

0.11

0.33

0.33

0.44

Product Quality

0.17

0.68

0.51

0.34

Price compe

0.21

0.84

0.84

0.84

Management

0.09

0.27

0.27

0.36

Financial posi on

0.15

0.45

0.45

0.3

Market Share

0.14

0.42

0.56

0.28

Global Expansion

0.13

0.52

0.39

0.26

on

1.00

3.51

3.35

2.82

D. Value Chain Analysis (VCA)

Value Chain Analysis

Supplier Costs
Raw M aterials
Merchandise
Transportation
Shipping Costs
Component parts
Inspection
Warehouse Storage

28

Production Costs
Inventory System
Receiving Costs
Plant L ayout
R&D
Cost accounting
M erchandise
tracking system
Quality Control

Distribution Costs
Loading
Shipping
Budgeting
Personnel- Trucks,
Ships, Plane
Internet System
Fuel
Maintenance

Sales & Marketing

Costs

Customer Service
Costs

Sales reps
Dell.com website
Advertising and
publicity
Transportation
Promotions and
sponsorships

Shipping
Phone Support
Online Email
Support
Online Chat
Support
Internet K nowledge
Base
Warranty

Dell Inc., Strategic Management Case Study

Sophie Yanez
E. Internal Factor Evaluation (IFE)

Internal Factor Evaluation

Dell, Inc.
Key Internal Factors

Weight Rating

Strengths
Creating a Global Recyling program
Boomi and Perot system acquisitions will diversify product portfolio
Client Reinvention Initiative launched in 2011
Re-org towards a more customer centric model
Michael Dell taking the company private in 2013
Focusing on customized products for businesses
Global Expansion to India abd China- two large technology markets

Weighted
Score

0.07
0.08
0.04
0.05
0.13
0.04
0.08

3
4
3
3
4
3
4

0.21
0.32
0.12
0.15
0.52
0.12
0.32

0.14

0.14

0.08

0.08

0.07
0.09

1
2

0.07
0.18

0.13

0.13

Weaknesses
Followership Strategy into Market- Low investments in R&D
Dell is highly reliant on the increase of outside manufacturers producing
their hardware products
Dell's current debt to income ratio poses as a financial weakness.
Price Wars with other competitors
Dell is losing market share to new competitors such as Acer, Asus and
Lenovo
Total

2.36

F. Porters Five Generic Strategies

Porters Five Generic Strategies

Generic Strategies
Focus

Small

29

Differentiation

Large

Size of M arket

Cost Leadership

Dell Inc., Strategic Management Case Study

Sophie Yanez
G. SWOT Matrix

SWOT M atrix
STRENGTHS-S

WEAKNESSES-W

List Internal Strengths

1.
2.
3.
4.
5.
6.
7.

OPPORTUNITIES-O
List External Opportunities
1.
2.
3.
4.
5.

The Green Movement

Global Market internet usage
Improving technologies
Younger generations are tech
saavy.
Changing standard of
communication through
technology.

2.
3.
4.
5.
6.
7.

It advancements are taking place at a

faster change
Price Wars with competitors
Introduction of smart phones and
tablets
Changing customer needs
Cloud Computing movement
Trade barriers
NSA scares

Global Recycling Program

Boomi and Perot system acquisitions
Client Reinvention Initiative
M ichael Dell taking the company private
Re-org towards a more customer centric
model.
Customized product focus
Global expansion to India and China

1.
2.
3.
4.
5.

Followership Strategy
High manufacturer dependency
Price Wars with other competitors
Dells current debt to income ratio
Losing M arket Share

SO STRATEGIES
1.

2.

THREATS-T

List External Threats

1.

List Internal weaknesses

WO STRATEGIES

Promote the efficiency of Dell computers

in Green Datacenters. Set the standard
for powering the worlds cloud with Dell
Servers.
Increasing Global Internet usage means
there will be more of a need for online
customer service. Improve Chat support
and online knowledge center.

1. With the improving technologies in the

market place, this is Dells opportunity
to remove itself from the Followership
strategy and innovate something.
2. With younger generations becoming
more tech saavy, ensuring that Dell
leads in the education market, will get
these younger consumers used to using
their products.

ST STRATEGIES
1.

2.

WT STRATEGIES

Leverage Boomi acquisition to create a

better integration of cloud apps and on
premise apps. M ake Boomi the choice of
cloud application dashboard.
With the Cloud Computing market
expanding in China and India- seek out
partnerships with hosting companys and
colocation Datacenters around the world.

1. Create a new tablet or smart phone that

can compete with the likes of A pple
and Android systems. One that is
competitively priced.
2. Start manufacturing own PC parts. This
will lower the cost for supply chain,
improve quality production and reduce
manufacturing dependency.

Source: Fred R. David, Strategic Management Concepts & Cases: A Competitive Advantage Approach , (2013), 14th ed.

H. Space Matrix

Space M atrix
FP

Financial Posi on(FP)

Return oninvestment
Leverage
Liquidity
WorkingCapital
Cash Flow
Compe ve Posi on (CP)
Market Share
Product Quality
Customer Loyalty
Techknow How
Control over suppliers

CP

IP

SP

30

StabilityPosi on (SP)
2Rateof Infla on
2Technological Changes
3PriceElas city
4Compe vePressure
4Barriersto Entry
3
IndustryPosi on(IP)
-3Growthpoten al
3Financial stability
-7Easeof entryto market
0Profit poten al
-7ResourceU liza on
-2.8

-2
-7
-3
-7
-4
-4.6
3
2
-7
3
-4
-0.6

Dell Inc., Strategic Management Case Study

Sophie Yanez
I. Boston Consulting Group (BCG) Matrix

BCG M atrix
Relative M arket Share Position
High 1.0

Low 0.0

M ed. 5.0

Industrial Sales Growth Rate

High
20+
Stars

Question M arks

M ed.
0

Low
-20

Cash Cows

Product Development
Diversification
Retrenchment
Diverstiture

Dogs

J. Internal- External (IE) Matrix

IE M atrix

L ow

M edium

High

Strong

31

Average
II
Product Development
Backward, Forward and
Horizontal Integration

Weak
IFE 2.36
EFE 3.13