Dell Computer Corporation - SWOT ANALYSIS

STRENGTHS Reliability, Service and Support Brand name valued at $7.5 billion Product customization Environmental record Competency in mergers and acquisitions Direct selling business model Latest TechnologyWEAKNESSES Commodity (computer hardware) products Poor customer services Market share growth is slow due to competition; Fake Products/imitations affect sales Weak patents portfolio Lack of Dell Stores, can be an issue for some customer Low differentiation Overdependence on Supplier

OPPORTUNITIES With increase in e-commerce the online retail stores of Dell provide them better framework to tap new business. The Direct approach Model of Dell would help them there existing to sell the other IT products, so new product development opportunity is for Dell. Obtain more patents through acquisitions. Strengthen their presence in emerging markets. Tablet and Smart phone market growth.THREATS

Growing demand for smartphones and tablets Profit margin decline on hardware products Slowing growth rate of the laptops market Intense competition With the increase in innovation in the market the computer system are becoming outdated, so Dell should constantly come out with new products People need the quality products at low price which was Dell strength due to its customize solution, but now its competitors are coming up with products in same price range.

STRENGTHS1. Brand name.Dell has a very strong brand reputation for quality products. Its brand is valued at $ 7.5 billion.2. Product customization.Dell allows its customers to customize their laptops. Such services were not originally found within any other major computer retailer (and currently only Sony and Toshiba allow that), but add great value to the customers and provides Dell with a competitive advantage.3. Environmental record.Dell is engaged in many green initiatives and has received many rewards for being an eco-friendly business. This is a benefit when working with public and government agencies.4. Competency in mergers and acquisitions.Over the last five years Dell has spent $13 billion for successful mergers and acquisitions, which brought patents, new capabilities, assets and skills to the business.5. Direct selling business model.Dell doesnt sell its products through big-box retail outlets but instead sells directly to consumers and enterprises, keeping their already thin profit margin to themselves.

WEAKNESSES1. Commodity products.The large stream of Dells revenues comes from computer, especially laptop, sales, which is a commoditized product. Computer hardware (commodity) products are sold with a very low profit margin.2. Poor customer services.Once praised, Dells customer services deteriorated due to outsourcing its call centers offshore. Dell invested a large sum of money in fixing this, but hasnt yet regained its previous reputation for customer services.3. Low investments in R&D.The company spends a much lower percentage of its income on R&D that its main competitors and thus, missed an opportunity to develop strong products for smartphones and tablet markets as well as to learn new skill and capabilities.4. Weak patent portfolio.Due to low spending on R&D Dell hasnt acquired a strong portfolio of patents and is now finds it hard to compete in lucrative smartphones and tablets market.5. Too few retail locations.Selling products online saves money and allows for product customization but provides less visibility for the products. The consumer finds it hard to trust the products if it cant hold it first in his hands.6. Low differentiation.Low price was once Dells competitive advantage but the company is no longer able to provide competitive prices. Apart from the price, Dells products are little differentiated from competitors products and are in competitive disadvantage if the price offered by competitor is lower.

OPPORTUNITIES1. Expand services and enterprise solutions divisions.Dell provides various services (cloud, security and infrastructure) and enterprise solutions (servers, networking and storage), which are the most profitable Dells business at the moment. Dell business should focus on growing these divisions as they promise better growth opportunities and higher profit margins.2. Obtain more patents through acquisitions.If Dell wants to diversify, it needs new technology patents and new ideas. Dell hasnt properly established its R&D facilities to discover new technologies and patents, so the only feasible way to obtain patents and technologies is to acquire other companies.3. Strengthen their presence in emerging markets.Emerging economies are the fastest growing markets for laptops, tablets and other electronic devices. Dell has a good presence in these markets but should strengthen its position as the company experiences declining market share.4. Tablet market growth.Tablet market is expected to grow in double digits for the next few years and the company has a great opportunity to release new tablet models and benefit from the market growth.

THREATS1. Growing demand for smartphones and tablets.With a lower price and strongly improved capabilities, consumers often choose tablets and smartphones over laptops. The growing demand for the previous devices takes a share out of laptops, the main stream of revenue for Dell.2. Profit margin decline on hardware products.Dells main income is from selling hardware products, which prices will increase in the future due to rising raw material prices. This will add to costs for Dell and will further cut the profit margin.3. Slowing growth rate of the laptops market.Growth rate of the computer market is slowing down and in the near future the markets will become saturated. It will prove hard for Dell to compete in such market or at least fight back the lost market share.4. Intense competition.The company faces intense competition in all its business segments. It competes in terms of price, quality, brand, technology, reputation, distribution and range of products, with Acer, Apple, HP, IBM, Lenovo and Toshiba.

CASE STUDY / SCENARIO Its bad news for a PC manufactures (Particularly if it dont also produce tablets or mobile phones). A new study predicts that the rise in sales of tablets and smartphones ill directly, and negatively affect the sales of Personal Computers, which have already been steadily slowing down. Many popular attribute the decline of Computers / Laptops sales to various factors, like growing popularity of smartphones and tablets. Last year, tablet sales totaled around 116 million units; this year its ex jump up to 197 million, a near 70 percent increase. The reason for the increase is largely due to decreasing prices, love of the cloud, and addiction to IOS or android apps. On the other end of spectrum, while PCs sold 341 million units last year, anticipated sales will drop to 315 million this year. DELL, literally has no market share in tablet and smartphone segment. It solely depends on Laptops and Desktop in consumer market for its revenue. Due to decline in PC sales, Dell Profits plunged by 47% in 2012.