Strategic Management: A Case Study Of Dell Corporation

Strategic Management Module 3 Report Jacob Veorster

Dell Corporation

PESTEL:

Political—

One of Dell’s strongest political barriers is the Chinese government regulation on foreign companies. The Chinese government tends to promote national PC vendors instead of the foreign competitors. Dell, being an American company, would have to proceed through many official procedures in securing a government contract to be sold in China.

Dell also comes across a problem in certain countries where political stability isn’t always definite. There are still many countries that have certain policies that are maintained to protect domestic manufacturers and production. Such policies are likely to hamper foreign companies from investing

In addition, Dell is trying to create strategic partnerships with organizations equally as dedicated to environmental objectives.

Legal— Consumer laws, labor laws, and other legal factors can affect how Dell can function, and akin to the political factors explained earlier, can vary country by country. In some countries, certain laws may not be enforced as strictly or underdeveloped compared to most industrialized countries. Different competition laws can also affect how Dell can compete against rivals in a country.

From the above, the technological aspect of the PESTEL framework would have to be the most beneficial to a company such as Dell. Technology is changing rapidly, with advancements almost daily. With such improvements, this will serve PC companies well and produce the most profitability in a company.

Five Forces:

Threat of Entry— Barriers to entry can prevent firms from entering the market. Barriers to entry will make it hard for the new entrants to take advantage of the opportunity of new market. Existing firms, such as Dell, can produce economies of scale to make it difficult for new firms to enter the market. Not all programs can work on all computers, producing high switching costs, causing consumers to stick to the same

They all fight for the consumers to increase their market share and increase their profitability. Dell offers affordability and excellent customer service, which tends to be competitive in the PC industry.

The Five Forces model shows that the PC business has a set number of companies that are very prominent in the industry, and any new entrants will probably not survive the existing competition. It also shows that the PC industry’s substitutions (cell phones, tablets, etc..) have a prominent presence and has significant threat to the PC marketplace.

The set of Strategic Groups will be compared using the relationship between market share and the average return on assets. From the Strategic Map shown below, you can see that Dell happens to be the largest group with the largest market share of the top competitors. With the exception of Apple, Dell has the second average ROA, meaning Dell is efficiently using its assets. High efficiency implies low operating costs. It also implies that the companies with the highest market share are also the most