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Case Study Of Dell Inc.

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Established in 1984, Dell Inc. has been a multinational corporation focused on computers and related services. Dell is a leader in the computer industry due to their two core competencies: a direct-sales model and its 'build-to-order' manufacturing process. The outcome of these two combined strategies has lead to a firm specific strategy of combining at the same time low-cost and differentiation. However, due to a changing market environment and internal issues, Dell's market share started to decline gradually during 2005, resulting in lower growth rates and a decrease in stock value. The question started to arise: "Should Dell stick to their objectives and strategy or adapt to a changing environment?" As being a market leader for a long time, …show more content…

This paper will investigate Dell's course of action during the period of 2004 till its privatization in 2013. In 2004, the original founder of Dell, Michael Dell, resigned as CEO which immediately involved room for innovation and a potential new outlook for the organization. However, although sales and earnings number were still on the rise, the growth rate started to decrease leading to a loss in share prices of more than 40% from a value of 40 USD to 25 USD. The question is: "What caused this downfall in Dell'’ performance?" First of all, the PC market has been declining due to its maturation.The PC market experienced its lowest growth rate since 2002 in the fourth quarter of 2008 (Pettey & Van Der Meulen, 2009). According to Bateman and Snell (2013, Ch.2), competition in an industry is strongest during a period of slow growth and with many competitors. This resulted for Dell and its competitors into changing their business strategy. Several changes were implemented to adapt Dell's strategy after examining the situation. According to Jones and George (2011, Ch.7), decision making is the process by which managers respond to opportunities and strengths while ignoring threats and weaknesses. Therefore, Dell could have possibly applied the SWOT analysis, when growth started to decline in 2005. According to Bateman and Snell (2013, Ch.4), comparing strengths, weaknesses, opportunities and threats helps executives to formulate strategies. As visible on the next page in figure 1, a SWOT analysis regarding Dell's situation in 2005 is

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