Dell's Five Forces Model

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Technological – The technological factors pertain to innovations in technology that will affect the operations of the industry and the market favorably or unfavorably. Technological factors include automation, research and development etc. (a) Dell’s competitors are investing in innovation and research & development and are coming out with new innovative products at a competitive prices, so if Dell doesn’t expand its R&D and does not keep up with the technological developments in this field it would be a severe disadvantage because as soon as new development comes the other becomes obsolete very fast. Legal - These factors have both external and internal sides. There are certain laws that affect the business environment in a certain country…show more content…
This industry also needs a very huge investment in Research and Development (R&D) so that the company could develop new innovative products at lower and competitive prices to survive in the market. Nowadays the industry puts more emphasis on the prices because now the customers have become more price sensitive. So Dell has advantage in this area as Dell has lower prices and is among the few companies that dominate the computer hardware industry but the new entrants will have a higher price and they will not have a technologically innovative product. Dell is already a brand and any new company will have to first deal with brand loyal customers so they will have also work heavily on their advertising and marketing. Therefore it is not very easy for a new company to enter into this industry; therefore Dell is having advantage here. 2) Bargaining Power of…show more content…
Gadgets like Smartphone, tablets, iPods and many more handheld devices that have almost the same features as of personal computers. These devices are also thin and are trendier making the personal computers more and more obsolete. So to regain the market share of the personal computers they must differentiate it. Thus schools, large businesses, Government who buys personal computers in large amount have the power to bargain on price and quality. The manufacturers of the computers have to differentiate their product to reduce the threat of buyers. Dell is the only PC manufacturer that has the direct model concept where buyers can buy the products directly without any middlemen, thus reducing the prices of the computers. As buyers have many alternatives the firms have to keep their prices low and quality high to survive in the market and Dell keep its prices low by using the concept of direct model, with this they directly can contact their customers and it also allows them to customize their computers. But despite this differentiation buyers still have found similar units. Thus the bargaining power of buyers can be said as very

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