This research project is based on a study made on Dell Computer Corporation. The task given is to assume the role of advisors to the CEO. The first step to take is to analyze the market situation for the company and also investigate the competition. Afterwards in order to understand the organizational characteristics and capabilities SWOT and TOWS analysis are implemented.
Based on the above tools the key problem area which Dell Inc is facing is recognized. Mostly based on TOWS analysis the possible strategic alternatives are connected to the problem areas.Furthermore with using company’s vision, mission and tools such as Scenario planning and Ranking options the highest priority strategy is chosen.
Table of Contents
Introduction
Company history
Organization
Product Portfolio
Business model
1 Industry capabilities and characteristics
1.1 PESTEL
1.2 Competition Environment
2 Organization capabilities and characteristics
2.1 Customer segments
2.2 SWOT analysis
2.3 TOWS analysis
3 Key problems & strategic alternatives & Arguments
3.1 Key problems:
3.2 Strategic alternatives
4 Discussion and Arguments of the strategic options
5 Strategic choice & recommend actions
5.1 Implementation of strategy
5.2 Structure & Culture
5.3 Processes
5.4 Importance of acquisitions
5.5 Resource allocation
5.6 Reply to Murphy
Research Objectives & Key Themes
This project aims to advise Dell's CEO, Michael Dell, on navigating a challenging market environment by evaluating the company’s current strategic position, identifying key operational problems, and proposing a revised organizational strategy focusing on service and consultancy.
- Industry environment analysis using the PESTEL framework.
- Internal organizational capabilities assessment via SWOT and TOWS analysis.
- Identification of strategic problems including innovation gaps and brand erosion.
- Development of strategic alternatives through scenario planning and ranking models.
- Recommendations for organizational restructuring, resource allocation, and market strategy.
Excerpt from the Book
3.2 Strategic alternatives
We can categorize 7 main problems that are mentioned above into 4 main strategic areas that dell could focus on and improve. These are:
1. R&D
2. Services
3. Product type
4. Core competencies
In the upcoming paragraphs it will be explained how each problem could be solved by focusing on each of identified categories as well as pros and cons of each strategic groups.
Dell has lack of innovation that is directly related to R&D activities. Today, For Dell investing on R&D is a low margin activity and does not bring its customer any specific value. Dell does not have any innovative technology that changes their positioning in the market. Therefore, focusing on R&D could be one of the strategic areas that will give Dell the opportunity of growing. However this strategy also has a disadvantage which would cause Dell to deviate from its core business which is based mainly on sale of mature products instead of dealing with new products. Limited solutions are one part of service business that they should take care of. Current services at dell have low profit margins as one of the problems that are listed above. This limited service also might make the brand weak. Also, if they had focus on the market they would understand that today giving solutions is one of the most demanding businesses in the IT market. Therefore, one possible strategic option for Dell is to jump into the area of business consulting. However this strategy also has some drawbacks as it would place Dell in competition with many well experienced business consulting companies which would give it a competitive disadvantage but the knowledge already gained for the computer business should be enough to put Dell in a fairly good compatible position. The third strategic option is product types in Dell. Brand erosion and loosing market focus are one of the problems that could be the consequence of having so many product types in the market. Also, some of these products have low margin growth for the company because they are not strong in their R&D and can’t compete with other competitors. This strategic option also has some disadvantages. First of all this won’t give Dell a chance to experiment and hence try to enhance its range of products which is expected of a company as huge as Dell. Besides this, this option would bring an end to any innovative thinking that is present in the company.
Summary of Chapters
1 Industry capabilities and characteristics: Provides an environmental audit of the computer hardware industry using PESTEL analysis and identifies current market competition.
2 Organization capabilities and characteristics: Examines Dell's internal strengths and weaknesses through SWOT and TOWS methodologies to determine its current strategic standing.
3 Key problems & strategic alternatives & Arguments: Categorizes identified corporate challenges and outlines potential strategic paths forward for the company.
4 Discussion and Arguments of the strategic options: Critically evaluates the proposed strategic options using scenario planning and priority ranking techniques.
5 Strategic choice & recommend actions: Presents the final recommendations regarding organizational structure, the creation of a new service division, and resource allocation strategies.
Keywords
Dell, Strategic Management, PESTEL, SWOT Analysis, TOWS Analysis, Business Model, Direct-Selling, Innovation, Research and Development, Corporate Restructuring, Service and Consultancy, Resource Allocation, Competitive Strategy, Market Segmentation, Brand Value.
Frequently Asked Questions
What is the primary focus of this research paper?
The paper focuses on providing a strategic turnaround plan for the Dell Corporation, addressing issues in innovation, service limitations, and market focus under the guidance of its CEO.
What analytical frameworks are utilized to assess Dell's situation?
The author employs PESTEL for external industry analysis, SWOT and TOWS for internal capabilities, and scenario planning/ranking models to prioritize strategic choices.
What is the ultimate goal of the proposed new strategy?
The goal is to transition Dell from being purely hardware-focused to a provider of holistic IT solutions by establishing a new 'Services and Consultancy' division.
What methodology is used to evaluate the effectiveness of the strategies?
The author uses scenario planning to test strategies against future environment outcomes and a ranking matrix to align strategies with specific organizational problems.
What is the central problem identified in the organizational structure?
The current multidivisional structure lacks a dedicated service-oriented unit and fails to effectively handle the specific cultural and behavioral requirements of diverse global markets.
Which keywords best characterize this work?
Key terms include Dell, Strategic Management, PESTEL, SWOT, Innovation, Corporate Restructuring, and Service and Consultancy.
Why does the author recommend a new 'Services and Consultancy' (S&C) division?
Because Dell's current service offerings are limited and contribute less than 1% to revenue; a dedicated division is needed to drive high-margin growth and enhance customer loyalty.
How does the author propose to improve resource allocation?
The author suggests implementing a Resource Allocation Process (RAP), similar to Intel's model, to prioritize projects with higher profit margins and reduce focus on non-profitable activities.
What role do middle managers play in this strategic proposal?
The author emphasizes that middle managers, when involved early in the strategy formulation, are crucial for effective implementation and maintaining operational continuity.
- Quote paper
- Mohsen Shirani (Author), 2010, Strategy Creation and Change - Dell Corporation, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/191900
