Dell's Long Term Objectives: Strategy Formulation and Implementation

1156 Words Mar 6th, 2006 5 Pages
Environmental Analysis of Dell Organization

Dell's external environment identifies all the current conditions and forces that affect its strategic options and define its competitive situation. It consists of three main sectors: the Remote Environment, the Industry Environment, and the Operating Environment. All of these environmental sectors affect the firm's operations both on an international and domestic level.

Remote Environment

In recent years the computer hardware industry has experienced a slight decrease in profits. Most of this is due to the recent downturn in the economy and a decrease in consumer confidence and spending because of inflation. Many consumers hesitate to upgrade their computers. As a result, Dell must explore
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Historically Compaq and IBM sold through resellers and distributors. When IBM and Compaq announced their new initiative to sell directly to their customers, they angered the resellers, who in turn promoted HP products. HP is able to fulfill the needs of customers who want to see and touch the computer before purchasing it, which is not possible in the direct marketing strategy. But HP's growth is declining with this strategy and they have been unable to lure major accounts. Gateway has been somewhat successful in implementing the direct marketing strategy, but Gateway does not have a strong hold in the lucrative large customer accounts.

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; 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. Dell has superb relationships with their suppliers; they maintain those superb relationships, by
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