Environmental Analysis of Dell Organization

Environmental Analysis of Dell Organization

Industry Environment

Competitive Rivalry

The competitors to Dell are as follows: Hewlett-Packard, IBM, and Sun Microsystems (Hoovers). HP and IBM pose the biggest threat in competition. Dell's sales overview has increased each year except for 2001 to 2004. In 2001 the annual sales in millions were $31,888 and a major increase in sales in 2004 at $41,444.0. (Hoovers).

In terms of Entry Barriers, Dells direct to consumers sales approach has increased their sales each year and they will soon be among their top competitors. Because of this approach, Dell has entered into this highly competitive market in a unique way. The biggest entry barrier that Dell has to face when entering into the technology industry is having customers gain the trust of company over the more popular veteran computer companies. Nevertheless many of competing companies use a range of different suppliers. Competitor Sun Microsystems annual sales are lower than Dell's. They offer an online service where customers can order servers, and personal computers. They differ from the rest of the organizations is that they do not use the Microsoft operating system which is a weakness compared to the rest. Sun does not see Dell as a major competitor, in obvious place of Dell; they see Microsoft as a major competitor along with Hewlett-Packard and IBM

This being said, Dell is performing in the right direction and sales are increasing dramatically overtime as mentioned above, and the competition exist between the companies and that what makes Dell unique. The increase in sales between 2001 and 2004 proves the success for the organization.

Operating Environment

Consumers view Dell as a quality brand at a good price. Some consumers find that Dell's competitors may be a little more expensive but still offer a quality brand the company plans to launch a sales campaign -"Dell on Ice" - that will offer 15% discounts on its Blade Centre system and on its x440 top-end Intel server. (Shankland). Dell ranks high with customers because the company offers free technical support if needed. The purchasing process has changed for the consumers with Dell because all the ordering is done online which offers convenience to its customers and minimize inventory.

The flow of materials from suppliers into Dell starts by the company putting in orders to factories that are based on two categories. These two categories are product type and geography. When putting in orders for product type Dell wants to select the right factory that specializes or deals with a certain product. Geographic orders mainly focus on the where the order is coming from to minimize the transportation expense. Michael Dell and his team have superb relationships with their suppliers; they maintain those superb relationships, by ensuring that the suppliers win every time Dell wins. (Rizzo) As a consequence, Dells suppliers are perfectly willing to keep a truck load of inventory at Dells loading dock. (Rizzo)

Figure 1 illustrates the flow of material into Dell.

(Figure 1 from Dell's web site)

Dell will go through some several changes in the next couple years to develop its system, improve customer service, reduce cost, and improve supplier control. Dell will lead the technology industry and be a good example to the competitors. More technology of software and hardware will be available in the next couple years with less cost.

Remote Environment

The internet market has been expanding and exploding across the globe. It has varied by market segment and already has been a big hit in the U.S. Dell knows that the way to globalize the company successfully is through e-business. Analysts agree that e-business is the most significant trigger to the achievement of economic globalization. (Reynolds)

Economic

For Dell to penetrate into this market it must oust the Legend brand PC which is already a big hit in China and therefore Dell has already built a factory in Xiamen, which is on the southeastern coast of China. Dell's facility inside of China is a major step into the Chinese market. With this factory in Xiamen, Dell can