DELL ANALYSIS
...ina (Dell Inc., 2005). In July 2004, Dell Inc. announced a new chief execute officer. Michael Dell transferred the title of chief executive office to Kevin Rollins. Kevin Rollins was appointed by the board of directors to the position on its annual meeting of shareholders. Michael Dell, however, will remain the active chairman of the board (Dell Inc., 2005). SWOT Analysis: The core of Dell Computer’s strategy is to use its strong capabilities in supply chain management, low-cost manufacturing, and direct sales capabilities to expand into product categories where it could provide added value to its customers in the form of lower prices. Its standard pattern of attack is to identify IT products with good margins; to build it cheaply enough to be able to significantly lower its prices to compete with its competitor’s products (Datamonitor, 2005). The strength of Dell Inc. is in its build to order strategy. Personal computers could be built to order and sold directly to the customers. Due to this strategy, Dell can bypass distributors and retail dealers to eliminate the markups of resellers, and it greatly reduced the costs and risks associated with carrying large stocks of parts, components, and finished products. Due to its success, Dell is the largest direct sale computer vendor in the world and its success within this market has meant that the company has grown to become a significant player in the IT sector. Dell’s size and market leadership enables it to raise public awareness of its new products through expensive advertising campaigns (Datamonitor, 2005). Dell operates at a low cost operating model. Keeping costs low has helped Dell to generate increased profits and increase the company's level of efficiency. Dell has shown that it can adapt its low cost business model when entering new markets. This enable Dell to ensure that it achieves sustainable growth in the future, as the company expands while maintaining the cost control measures (McGraw-Hill/Irwin, 2005). Source: McGraw-Hill/Irwin, 2005. Dell is a profitable company. The company generated an overall net income of $2.122 billion for 2003, an increase of 70.4% against the 2002 net income of $1.246 billion. The company's desktop PC business remains profitable compare to its industry rivals, such as IBM and Hewlett-Packard (McGraw-Hill/Irwin, 2005). Dell's low cost operating model has allowed the company to remain profitable despite a decline in IT spending. Dell is relatively weak in the services sector compared to the hardware sector where the company remains very competitive. Dell's services sector is the weakest part of the company's overall solution. Dell struggles to compete with its rivals in this sector. Dell received close to 40,000 email messages monthly requesting service and support. But despite of this weakness, Dell continues to look for ways to improve. Dell contracted with local service providers to handle customers’ requests for repairs. Dell also provided its customers with technical support via a toll-free phone number and email (McGraw-Hill/Irwin, 2005). Dell maintains small inventories. This means that Dell is much more susceptible to unforeseen movements in component prices which could have a significant impact on the company's earnings. But nonetheless, maintaining small inventories for Dell in this case benefits the company. Dell’s just-in-time inventory emphasis yielded major cost advantages and shortened the time it takes for Dell to get new generations of its computers models into the marketplace (McGraw-Hill/Irwin, 2005). Dell Inc. remains the number one direct sale computer vendor in the U.S. It holds strong position but faces the threats of strong competition. Its top competitors are Apple Computer, Compaq Computer, Gateway, Hewlett-Packard, IBM, Packard Bell NEC, and Sun Microsystems. All of these companies could combine together to take sales and market share away from Dell (McGraw-Hill/Irwin, 2005). Besides its strong competitions, fluctuations in interest and foreign currency exchange rates could also have a significant effect on Dell’s overall earnings. The company has a global presence with operations divided into three areas, the America, Europe, and the Asia Pacific-Japan regions, which collectively account for around a third of its sales. The success and profitability of Dell's international operations are subject to numerous risks and uncertainties, including local economic and labor conditio...