Dell - Environmental Anaylsis Essay

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INTERNAL ENVIRONMENTAL ANALYSIS
An organization's external environment has three components: the remote environment, the industry environment, and the operating environment. The Remote environment is made up of economic, political, social, technological, and ecological factors. The industry environment is made up of entry barriers, supplier power, buyer power, substitute availability, and competitive rivalry. The operating environment is made up of competitors, customers, labor, and suppliers.
Industry Environment
Entry Barriers
New entrants to a market can threaten the market share of competitors already in the market. New entrants are interested in entering the Chinese market to try to gain a large market share from existing
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Because of the cost savings derived from cutting out the middleman, Dell believes it can sell computers at lower prices that its competitors can.
Supplier Power
The bargaining power of suppliers is moderate in the computer industry. Dell Computers is a vertically integrated company.
Substitutes
The computer industry has a low to medium threat of substitute products. Alternatives to the PC include written communication, telephones, faxes, and the typewriter. Calculators can compute numbers. Books are an alternate source of knowledge, but do not have the vast amount of information that is available at the touch of a button like the Internet. The computer is also a form of entertainment. Substitutes for its entertainment value include the radio, television, video games, and movies. All of these substitutes are available, but the PC has the technology that combines each of these into one medium.
Rivalry
Competition is intense in the Chinese PC market. Legend, a government backed PC company is the market leader in China. Legend has a domineering presence in Mainland China. Dell is also competing with Hewitt-Packard for market share.
Remote Environment
Economic Factors
The economic environment refers to the nature and direction of the economy in which a firm competes or may compete. The primary threat that computer companies

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