Dell Corporation, Strategic Case Analysis prepared by Ijaz Qureshi and John Mufich, Argosy University Business School

, San Francisco, California, USA.

Case Analysis: Dell Corporation

By: Ijaz Qureshi & John Muffich

For: Dr. Admassu Bezabah B7405 Business Policy Seminar Summer II: 2004

© Ijaz and John, Argosy Business School, Argosy University, San Francisco, California, USA

1

Dell established mobile technology park in Washington D. Dell’s strategy is to build computer so that it can be order by the consumers. The trustworthy relationship between Dell’s management and work force made it possible to change the disastrous moment in the I. Dell has very user friendly web site and half of Dell’s sale.000 servers and desktops.Dell Corporation. (IBM is the leader).C. Dell’s has highest Return on Assets (11. Michael Dell’s visionary leadership has made Dell the second most successful PC maker in the industry. half of tech support and three quarter of order status takes place online. Austin. Strategic Case Analysis prepared by Ijaz Qureshi and John Mufich.40%) in the PC market.10%). USA 2 .7) and highest Return on Invested Capital (24. California. Dell’s ability to adapt to changing circumstances is its great strength. Dell has high margin because of direct sale strategy and customers get excellent state of the art machines at low cost compare to Dell’s competitors. Argosy University. One week after the September 11th 2001 attack. San Francisco. Argosy Business School. Argosy University Business School. California. Dell sells its machines and other equipments directly to customers so it has eliminated the middleman. Executive Summary: Dell computer was founded by Michael Dell at age of twenty one in his dorm at the University of Texas. © Ijaz and John. It’s build to order strategy has made Dell the most successful company in the information technology field. and New York by converting three eighteen wheel trucks and operated its factories round the clock to fulfill the unexpected customers demand. The supply chain and data integration with suppliers has made Dell one of the most efficient computer manufacturers. The continuous advancement in technology and innovative approach to manufacturing and assembly keeps Dell the low price leader in the PC industry. San Francisco. Dell reported selling 24. USA.T industry to a great opportunity for the organization. highest inventory turnover (65.

The Core Issues at Dell Corp: 1. Our objective here is to utilize the strategic management tools mentioned in the course books and in the research material reviewed during the class secession to come up with valuable conclusion that would add value to Dell Corporation. Argosy University Business School. USA 3 . For example.Dell Corporation. we would critically view the core issues of Dell Corp. California. This step would help us to better understand the development and implementation of strategies in this organization. External Factor Matrix Analysis. Argosy University. Competitive and Internal Matrix Analysis of Dell Corporation.9 to 31. Maintaining the Market Share © Ijaz and John. California. Competitive Profile Matrix Analysis and finally the Internal Factor Matrix Analysis to analyze the strategic position of Dell Corporation in the industry. The Price War is going on between PC Makers. SWOT. San Francisco. 2. Revenues Down in 2002 compare to 2001 (31. Worldwide sales of PC’s Down 11% in 2001. USA. Service Contracts 6.1 billion) 3. External. Argosy Business School. Leadership at Dell Corporation 5. San Francisco. In this part of this research paper we would analyze the Dell Corp by utilizing the strategic management matrix tools. Strategic Case Analysis prepared by Ijaz Qureshi and John Mufich. Dell’s Sales Up 4. However before we proceed to strategic analysis. we would explore the SWOT Analysis.

Advancement Price Wars Strong Brands in The Market (IBM) Changing Consumer Needs HP / Compaq Merger Emerging Markets Indian I. California. USA. San Francisco. SWOT Analysis Strengths Production Adaptability Financial Ratio Product Reliability Customer Relationship Build To Order Competitive Prices Leading technologies Opportunities Global Markets Internet Usage Outsourcing Ecommerce EMS Maintaining Low Price Leadership Global Presence Threats I.T. Argosy University Business School. California. Argosy Business School. © Ijaz and John. San Francisco.T. USA 4 .T Industry Weaknesses Rapid I.T. Strategic Case Analysis prepared by Ijaz Qureshi and John Mufich. and ensuring to catch with industry leader IBM.Dell Corporation. advancement. Advancement Price Wars Strong Brands in The Market (IBM) From the SWOT Analysis it is clear that firms very strong in the market and major weaknesses are keeping up with the I. Argosy University.

Its awareness about the environment makes it a responsible investor.8 .20 . External Factor Evaluation Matrix NO’S OPPORTUNITIES WEIGHTS RATINGS WEIGHTED SCORE 1 2 3 4 5 6 Global Markets Internet Usage Outsourcing Ecommerce EMS Maintaining Low . California. San Francisco. California.3 .10 .15 Price Leadership © Ijaz and John. San Francisco. Strategic Case Analysis prepared by Ijaz Qureshi and John Mufich. Its user friendly web site makes it easy for those who are not computer expert to go online and do the shopping in a very safe environment.10 . Argosy University. After SWOT Analysis we would explore the External Factor Evaluation Matrix to look how Dell is standing in the market compare to its competitors in I.05 3 3 4 4 4 3 . USA 5 .T industry. USA. Dell’s global presence creates opportunities for expansion in the overseas markets.10 .10 . Argosy University Business School.Dell Corporation. Argosy Business School.4 .3 .4 .

05 2 . Interpretation of Ratings: 4 = Superior Response.3 4 Changing Consumer Needs .15 Merger Total 1.10 4 4 3 . San Francisco.2 5 HP / Compaq . industry. Argosy Business School. In other words we can conclude that Dell’s strategies efficiently and effectively take advantage of its opportunities and take serious steps to minimize the potential threats.T. Argosy University Business School.05 . San Francisco. Strategic Case Analysis prepared by Ijaz Qureshi and John Mufich. Advancement Price Wars Strong Brands in The Market (IBM) .05 3 .1 1 2 3 I. USA.T.00 3. The WEIGHTS are industry based and RATINGS represent the effectiveness of firm’s strategy. 3 = Above Average Response. Or we can conclude how effectively Dell’s strategy is responding to the factors. Argosy University.05 .2 .50 WEIGHTED SCORE in Dell’s EFE Matrix represents that Dell is responding in an excellent way to it’s opportunities and threats in the I.5 The 3.2 .05 4 . USA 6 . California. © Ijaz and John. California. 2 = Average Response and 1 = Poor Response. 7 Global Presence THREATS .Dell Corporation.

40 3. Argosy University Business School.30 6 Direct to Customers .40 3 3 . 3 = Minor Strength.10 .40 4 4 .20 3 3 .15 .30 .40 The Critical Success Factors in Competitive Profile Matrix includes both internal and external issues.Dell Corporation.40 4 4 3 4 3 .20 .05 4 .15 11 Quality Control TOTAL .05 . 2 = Minor Weaknesses and 1 = Major Weakness.20 3 .15 .05 4 4 .30 3.60 .65 4 .15 4 .40 3.30 9 10 EMS World’s Web Site Leading .60 .20 .65 score represent that it is competing fiercely with its competitors in the domestic and global markets.10 1.15 .30 . San Francisco. Dell’s 3.00 4 . California.10 .60 .FACTORS WGHT DELL RTG SCR IBM RTG SCORE HP/COMPAQ RTG SCR 1 2 3 4 5 Ecommerce Leadership Global Expansion Competitive Prices Service/Repair .15 . USA.10 3 4 . Argosy Business School.60 . Argosy University. Strategic Case Analysis prepared by Ijaz Qureshi and John Mufich.40 . In CPM ratings represents Strengths and Weaknesses.60 .30 4 4 4 4 4 .20 7 8 Adaptability Understanding Customers .90 3 . 4 = Major Strength.S. © Ijaz and John.30 .60 .40 .05 .30 .20 3 4 . California. San Francisco.15 .20 .10 4 4 3 3 3 . The Competitive Profile Matrix Critical Success Factors C. USA 7 .

Strategic Case Analysis prepared by Ijaz Qureshi and John Mufich.10 . USA 8 .10 WEIGHTS 4 3 3 3 4 RATINGS .10 3 .10 4 4 . California.40 .40 WEIGHTED SCORE .30 Diversification 3 TOTAL One Man Show . Relationship Build To Order Comp Prices Leading tech Supply Chain INTERNAL WEAKNESSES 1 Little Product .10 .10 3.05 1.05 3 . Argosy Business School.10 . California.40 Diversification 2 No Business . San Francisco.30 .30 . Internal Factor Evaluation Matrix NO’S INTERNAL STRENGTHS 1 Production Adaptability 2 3 Financial Ratio Product Reliability 4 5 6 7 8 C.10 .30 .40 .00 2 . San Francisco. USA.40 .Dell Corporation.45 © Ijaz and John. Argosy University Business School. Argosy University.15 .10 4 WEIGHTS RATINGS WEIGHTED SCORE .10 .

532.3 Ratio OPERATIONS Inventory 65. Argosy University Business School.70% 1.4 1.43 N/A 4.00% 37. Dell’s WEIGHTED SCORE of 3.42 60.80% 0. San Francisco.6 Source: www.4 10.00 167.7 Turnover Asset Turnover 2.383 HP 48. IFE Matrix is the Internal Audit of an organization. 2001 DELL KEY NUMBERS Annual Sales 31.86 20.770.535. Interpretation of Ratings: 4 = Superior Response.772. As of September 10th.90% 13.30% 2.1 63.3%) N/A 0.08 1. USA 9 .61 6. a serious threat can come from recent mergers and market leader IBM.com Compaq 42.8 1.7 2 8.70% 1. Financial Analysis.80 Price/Earning 40.5 1.50 represent that it is excellent in its overall internal strategies when it come to explore strengths and weaknesses. California.hoovers.396 Industry Market 17.888 (million $) Market Value 58.70% VALUATION Price/Sales Ratio 1.Dell Corporation. San Francisco.60 (1.6 6. 3 = Above Average Response.74 25. Argosy University.38 54.10% R O Equity 26. The WEIGHTS are industry based and RATINGS represent the effectiveness of firm’s strategy. USA. This Strategic Management Tool evaluates and summarizes the major strength and weaknesses of the Dell.49 14.60% 8.782 IBM 88.93 10. 2 = Average Response and 1 = Poor Response. California. Or we can conclude how effectively Dell’s strategy is responding to the factors.9 0.90 34.5 While Dell has very impressing data sheet. Strategic Case Analysis prepared by Ijaz Qureshi and John Mufich.10% 9.30 (million $) PROFITABILITY R O Assets 11. © Ijaz and John. Argosy Business School.

California. California. Leadership is very important in Dell’s strength. Argosy University Business School. and Global Alliance for Workforce and Communities (GAWC). Argosy Business School. What would happen if for any unforeseen reason Michael Dell is not able to lead the company? What is the second person in the team who can prove that Dell would continue to operate as successfully as it is in the presence of Michael Dell? While Dell has implemented Environment Management Systems. Strategic Case Analysis prepared by Ijaz Qureshi and John Mufich.Dell Corporation. Argosy University. CP Matrix and IFE Matrix we would conclude that Dell should develop strategies to improve its position against market leader like IBM and ensure to diversify its business into electronics and imaging. USA. USA 10 . San Francisco. © Ijaz and John. Dell should ensure that its overseas operations are fully complying with the USA labor laws. (FLA). Its foreign operations should have the membership of Fair Labor Association. state and national recycling standards. it should start collecting the old PC’s and other electronic devices and equipment from it’s customers and recycle it or dispose it in a way that it comply with the local. CONCLUSION: By looking at the Dell’s EFE Matrix. San Francisco.

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