Dell SWOT Final

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Dell SWOT Analysis

By:

Blake Prosser - Place

Katie Schneider - Price

Matt Raccuglia - Promotion

Melody Souvannasane - Product



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Table of Contents

Introduction……………………………………………………………...3

Product………………………………………………………………..…4

Price……………………………………………………………………..8

Place……………………………………………………………………11

Promotion………………………………………………………………14

Customer Service………………………………………………………18

Recommendation………………………………………………………20

Works Cited……………………………………………………………22



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Fi ure 0.2

Figure 0.1

Introduction

This SWOT analysis will identify Dell’s strengths, weaknesses,

opportunities and threats compared to Apple within the

business to business market. Dell and Apple both offer

computers and electronics to customers, but the marketing

strategies for each company are wildly different. Until

recently, Dell dominated the home and business computer

market. In the past few years, Apple has aggressively captured some of Dell’s market share in

each of these categories.

1980 1985 1990 1995 2000 2005 2010

1993 – Dell

develops

product

lines for

business

users

1988 – Has

IPO,

Becomes

Dell

Computers

1984 –

Founded

by

Michael

Dell

1987 –

Expandsinto the

United

Kingdom

1995 – Dell

expands

worldwide

1990 –

Opens

facility in

Limerock,

Ireland to

serve

Europe

1996 –

Dell.com is

launched,

changes the

way people

shop for

computers

2003 –

Begins to

offer home

electronic

productlines

2007 –

Dell introduces

product line to

cater specifically

to small business

users

1998 –

Establishes

facilities inChina

2005 –

Dell tops the

“America’s

Most Admired

Companies”

list by Fortune

Magazine.

2009 - Dell ranks

#1 in servers,

corporate

laptops and

desktops with

business users.

Dell.com



4

Fi ure 1.1

Product

Strengths

Dell is a major player in the business computer market for several reasons. Dell has a

market share of 13 percent, which makes them the world’s second largest PC vendor behind HP

(Burt). Dell has maintained its large market share by offering several product lines that are

positioned for specific users. Dell’s wide variety of product lines and ability to customize each

product helps Dell maintain its competitive edge. Dell’s product lines provide products for small

offices (1-9 employees), small and medium business,

public sector, and large enterprises (Dell.com).

According to EWeek.com, “Dell told the Financial

Times that, like HP, Cisco Systems and others, his

company is looking to become less a seller of

computers and more of a solution provider to businesses, offering everything from software and

services to servers, networking and storage.” Dan Wood, Sr. Client Technology Analyst, states

companies need hardware assurances that are only available on enterprise level laptops. Dell

provides these assurances with their product lines which include the Vostro, Latitude, Optiplex

and Precision lines. Dell guarantees that these lines will have the same hardware available in

them for most of their lifespan. IT organizations are able to save money because “they don’t

have to constantly update their images with new drivers and helps with troubleshooting”, says

Dan Wood. IT departments prefer Dell computers for their interchangeability and low

maintenance costs. By allowing companies to customize their computers, each company has a

large supply of one specific model. IT departments only need to stock certain parts for

maintenance and Dell computer parts are easily attainable without needing to involve Dell.



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Fi ure 1.2

5%

95%

Revenues

Education

Rest of Business

Fi ure 1.3

Weaknesses

One of the most significant weaknesses with Dell is the lack of proprietary software.

Most Dell computers are shipped with a Microsoft Windows operating system (Ladendorf). This

represents a major dependence on a supplier’s product. Not only does Dell

not play a significant role in the design of Windows, but Microsoft

also has a say in the configuration of Dell products. In addition to a

heavy dependence on Microsoft, Dell has lost large market share with

college age customers (Higgins). Dell’s sales r evenue from

educational institutions such as colleges only accounts for a meager 5%

of total sales. Dell’s focus on the corporate and government institutional

customers somehow affected its

ability to form relationships

with educational institutions

(Cuizon). The larger

implication is that these

students might have a negative

opinion of Dell when they

graduate. This will not only hurt current product performance, but could hurt large enterprise

sales in the future.

Opportunities

Dell has many opportunities that include targeting educational institutions, improving the

look of products, and continuing to incorporate innovating software. Investing in research and



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Fi ure 1.4

Fi ure 1.5

development is an opportunity Dell can take advantage of.

This will lead to competitive advantage and help them

increase their innovation. The easiest way for Dell to

expand into these markets it to promote its dependable and

low-cost products. With the economy on the rebound, Dell’s custom product

lines have the ability to regain lost and capture market share. Cloud computing is upcoming

technology that business are starting to use. Dell has started incorporating cloud computing in

their computers. Specializing in their cloud computing service can lead to product strength.

Creating partnerships with other businesses is also another opportunity. Dell is in the works with

HP to create a strategic alliance (Dell.com). Dell has a page on their website where partners can

contact Dell if they want to be business partners. Through a string of 10 acquisitions in less than

two years, Dell has branched into areas such as IT services, computer networking and data

storage (Ricadela).

Threats

There has been a rapid change in how customers view computers. Many customers have

turned to Apple’s more aesthetically pleasing product lines over Dell. Apple.com describes their

products being made from aluminum, which is a breakthrough in technology. Apple provides a

wireless mouse and keyboard that Dell does not. There is

a built in camera and microphone in an Apple monitor

that lacks in a Dell monitor. The debate of Mac vs. Dell

has been a topic of discussion. A weakness of Dell



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Fi ure 1.6

products on Apple.com states, “ Unlike a PC, a Mac comes with everything you need to send

email, manage your calendar, organize your contacts, and more — minutes after you take it out

of the box.” PCs do not have Apple proprietary software which can be a weakness being that

Apple has created their software. This includes iChat, iMessage, iTunes, Facetime, Safari, and

other Apple programs that are already built into Apple

products. Dell lacks in graphic features that graphic

designers and tech savvy companies look for.

Apple.com describes, “The foundation of the Mac Pro

graphics architecture is the latest generation of GPUs

connected to the system via a fast and wide PCI

Express 2.0 16-lane bus. Couple that with Core

Animation, Core Image, and Core Video technologies in Mac OS X Snow Leopard. The result is

a graphics platform that allows applications to seamlessly tap into a teraflop of graphics power.”

Apple’s brand loyalty plays a big role in Dell’s influence on end users. The PC vs. Mac is a

debate, which can threaten Dell’s images. If Dell continues to improve their product reputation

they can overcome their loss of reputation when they had a recall on their computers. Threats of

competitors, substitute products, and past recall items can negatively impact Dell if they don’t

use their strengths.



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Price

Strengths

Although finding exact prices for business to business sales is nearly impossible, as the

price is highly dependent on what programs are needed for a specific business, one can

understand overall pricing strategies by looking at consumer pricing strategies. Dell has created

a huge strength for itself regarding price. Overall, the company practices a low cost, low price

strategy.

Figure 2.1 displays the lowest laptop prices of Dell’s major competitors.

Brand Lowest Laptop Price

Acer $328

Apple $1199

Asus $543

Dell $399

HP $399

Lenovo $399

Samsung $449

Sony $469

Toshiba $348

Although Dell is not the cheapest laptop available, the company does an excellent job of

offering discounts and coupons on their already low priced computers, which will be discussed

in greater detail in the Promotions section. When comparing a Dell computer to others,

customers will see Dell at a low price in the market. Even the most expensive computer Dell



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offers is only $2,000. Dell offers a huge range of prices, which makes it easy to appeal to all

types of markets, unlike companies like Apple who’s prices make it impossible to target markets

seeking low prices. Figure 2.1 displays Dell’s highest and lowest priced laptop f or the public

consumer market (Dell.com).

Figure 2.2

Weaknesses

Low prices do not always give a company the ultimate competitive advantage in an

industry. Although Dell’s low price strategy is in most cases considered a strength, it can be a

weakness as well. Higher priced brands such as Apple carry a certain prestige and high class

appeal with them. Consumers want to be a part of this prestigious club. They love the look that

owning a high priced computer brings with it. Comparing Dell’s low prices to Apple’s high

prices may also give businesses the idea that Dell computers are priced lower because they are

poorly made. Low prices can be considered either a strength or a weaknesses for Dell,

depending on what consumer or business is examining it.



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Opportunities

Dell obviously appeals to consumers who are price conscience, but the company does not

appeal to those who seek the most innovative products. Consumers who buy Apple products like

the appeal of being in the prestigious club of “Apple owners”. Dell has the opportunity to target

these niche customers, who want innovation over low price. Perhaps Dell can create a segment

with higher prices while using its mass customization strategy to find new potential businesses to

target.

Threats

A threat to Dell is its direct selling model. While this method helps keep Dell’s pricing

low, analysts are seeing less of a price difference in computers today (Cuizon). Dell’s

customizable computers do take longer to get to businesses. Should they be in a hurry, and not

extremely cost conscious, businesses may choose a competitor who’s prices are only slightly

higher than Dell’s, but who’s delivery time is considerably shorter. Although Dell does now give

businesses and consumers the opportunity to buy their computers in Walmart and Best Buy, most

businesses will need a large amount and will still need to order directly from Dell.

Dell Ins iron Com uters: Normall $500 A le Macbook Pro 13 in screen: Normall $1500

Fi ure 2.3



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Fi ure 3.2

Fi ure 3.1

Place

Strengths

Managing distribution channels is part of what Dell

does best. Dell doesn’t actually manufacture a product

of its own; instead Dell relies on a vast network of

suppliers to provide components to assemble Dell

products (Enderle). These suppliers help Dell produce

a product with very little inventory carrying costs, which also decreases the need for large

production facilities. Dell has used this advantage to consistently undercut the competition on

price. Every day the world becomes more reliant on the Internet, Dell found this out earlier than

most. In 1996, Dell created Dell.com to allow customers to customize a computer to fit their

needs. This has been enormously successful for Dell and many competitors quickly followed

this model. Recently Dell revamped their website to include support for more than just average

customers, but added support for various types of enterprise clients. The new menu allows home

users, small business, public sector and large enterprise clients a customized page for quick

navigation. This new interface reflects Dell’s dominate

market, enterprise sales make up two-thirds of Dell’s

computer revenue (Agnello). With the new website,

enterprise clients can research new products/services and

get specialized technical support. These innovations are

part of what makes Dell such a major player in the

technology industry.



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Fi ure 3.3

Weaknesses

Dell has profited from many of its strengths throughout the years, but these strengths can

also bring great weaknesses. Dell’s supplier network forces Dell to rely on third-party

manufactures to assemble a product. This arrangement has worked fine for Dell through the

years. Now, with suppliers being spread throughout the world, coordinating errors between

supplier and assembling facilities could severely disrupt a JIT production system. Part of Dell’s

business model is allowing customers to customize a computer; Dell’s customers give up fast

delivery for a unique product. Any disruptions in the supply chain would increase an already

extended assembly process (Cheung). In figure 3.1, you can see that Dell’s suppliers are

scattered throughout the world, and with JIT production any delay has the potential to affect how

fast Dell can

assemble the

customer’s product.

Opportunities

The technology sector is constantly changing and developing new opportunities. Because

of Dell’s market dominance, Dell has the luxury of expanding through mergers and/or

acquisitions. With more and more businesses moving towards cloud computing, Dell has the

capital to acquire the means to enter into this market as a leader (Thompson). By partnering with

other companies looking to get into this market, Dell has a great opportunity to develop



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Fi ure 3.4

significant distribution channels through its vast supplier network. One of the biggest

opportunities for Dell is the economy. Since 2008 the economy has dramatically affected how

much businesses spend on acquiring new equipment. With the “Great Recession” officially over,

companies are starting to hire again and buy new computers for additional and existing staff

(Shah). Dell is in a great position to fill this new growing demand. Although the recession did

affect the technology industry, Dell has remained a dominant force in the industry.

Threats

With new opportunities come new potential threats.

Not many other companies profited like Apple during

the recession. Posting record profits and with billions in

cash on hand, Apple has become a legitimate Dell

competitor. Perhaps taking cues from Dell, Apple has

recently started adding business friendly additions to

their website (Dalrymple). With the demand slowly increasing, Apple has already begun to

capture enterprise clients from Dell. Apple corporate sales have surged 66% in the past year and

show no signs of slowing down (Evans). Another great threat to Dell is the current political

turmoil throughout the world. Fluctuating exchange rates represent a clear threat for a company

like Dell (Dobson). Countries across the world are being affected by fear of another global

recession. Companies like Dell have suppliers and export products across the globe. Any

significant change in currency would have a profound effect of revenue. These represent very

real threats to Dell, no one being less important than the other.



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Fi ure 4.1

Promotion

Strengths

Dell’s promotional strategy and offerings are much stronger than that of Apple. Dell’s

deeper product line gives it an advantage over Apple’s limited offerings. Apple only offers five

products (apple.com) none of which are fully customizable. In addition, prices are extremely

expensive for the market norm. Dell’s product line however, contains over ten different models

that can be fully customized and tailored to the end consumer’s need. Comparing promotions

and coupons of the two companies, Dell presents a much greater amount of cost cutting offers,

from free shipping on orders, to actual money back rebates. Figure 4.1 displays just one of the

many Dell coupon promotions.

Directly through Dell’s website are navigation portals set up for easy access to products

geared towards small, medium, and large businesses, as well as to the public. The website is

well designed to promote Dell’s customizable products. Dell purposefully uses its website to

promote the company’s unique “Dell Member Purchase” program that allows companies of all

sizes to join a program exclusively offered though Dell to get better competitive pricing on both

individual and bulk orders (Dell.com).



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Fi ure 4.2

Apple has restricted promotional allowances to drive an image of prestige and high

pricing. The company has promoted their products as very high end with price ranges from $999

laptops to $2499 stock desktops (Apple.com). Dell, on the other hand, has promoted its lines

starting at $293 PC towers and rising to a sensible $1224.02 stock desktop (Dell.com). By

keeping prices low, Dell has created a more easily affordable product line that can be tailored to

the end users’ individual needs.

Weaknesses

As of January 13, 2006 Apple officially passed Dell financially. By May 1, 2008 Apple

quadrupled Dell by earning a registered $158.66 billion versus $38.97 billion (Yahoo). These

figures show that Dell has lost its hold on the market. To compensate for Apple’s ability to

charge consumers high prices while ignoring promotions, Dell has implemented more frequent

promotions that continue to slash prices. Yet Apple repeatedly produces considerably higher

profit margins and market share. Promotionally, Apple has pinned its ads directly against Dell.

Figure 4.3 displays Apple’s ad campaign against PCs, personifying the PC computer as an old

fashioned, injured old man, as compared to the “young and hip” Apple computer. Traditionally,

Dell’s ads have taken a more informative approach and obviously, this tactic is no longer

http://www.dell.com/us/eep/p/Xps-L412Z/pd.aspx?dgc=IR&lid=5699AE48&cid=





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effective in today’s IT world. While Dell’s frequency of ads is considered a strength for the

company, the content of these ads is now considered a weakness.

Opportunities

Dell continues to lose its appeal to college students. The company should follow suit

with Apple to create a larger presence in this market. College students will soon be a part of

corporations, and if the Dell brand is placed unfavorably in their minds, when these students

become CEOs, they may make the decision to buy a competitor’s computer . Of course, more

coupons and offerings are always opportunities. If Dell can position itself as an innovative, low

cost yet high worth company, business to business sales will naturally increase.

Figure 4.3



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Fi ure 4.4

Threats

The major threat in Dell’s promotional strategy is the success of Apple. Though Dell is,

in retrospect to the overall market, not doing horribly, when it comes to its own competitive

market it is suffering. Apple has steadily become a titan in the computer technologies market.

Dell needs to focus in on having the affordable product lines that are fully customizable. Dell

With today’s bad economy now is the perfect time for Dell to shine. With a bad economy

nationwide and unemployment so high, Dell has a chance to capture higher margins of profit if it

were to gear promotions towards those segments. The worsening economy is paralleled by an

increasing need for technology so the want is present in the market for cheaper, more tailored to

specific use, computers. If promotions do not do well Dell

will be under a threat of a buyout by one of the larger PC

competitors like Hewlett Packard.



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Customer Service

Strengths

Dell’s customer service aspects cannot be overlooked when analyzing the company. Dell

specializes in mass customization and selling directly to customers, so they can get exactly what

they want in their computer. This mass customization/direct selling strategy gives Dell a huge

advantage over other computer companies. For support features the company has recently

implemented its Listening Command Center (shown in Figure 5.1), which uses social media

outlets to engage with customers (Dell.com). The company now has the option of free next day

shipping, so businesses can receive their computers as soon as possible. In addition, company

computers can come equipped with a variety of special security suites. Yet another feature Dell

offers to help consumers is it’s free training service for business owners to “increase knowledge

of business technology solutions” (Dell.com). Dell has made it obvious that it places huge

importance on helping business owners who choose any Dell product.

Figure 5.1



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Weaknesses

Dell’s only major weakness concerning customer service is not having retail stores for

customers to easily go to with complaints. Apple, on the other hand, has large stores in many

major cities in the world devoted to customer needs. Should Dell ever want to completely

surpass Apple in this area, the company must open retail stores.

Opportunities

In order to keep businesses happy with their decision to purchase Dell products, the

company should be sure to have friendly tech support specialists assigned to different regions.

This opportunity to make face-to-face relationships with businesses will increase brand loyalty,

and thus increase profits over the years. Of course, another opportunity to increase customer

service would be to make a higher quality product. This way, businesses do not have to worry

about their computers breaking. If a corporation knows they will not have to worry about system

failures, they will surely invest in the product.

Threats

Constant threats to any IT company’s customer service are the increasing number of

viruses. Should a virus hit a Dell computer, or most others for that matter, even the brainiest of

tech support employees may not be able to fix the issue quickly. PCs are understood to have a

greater chance of viruses than Macs, so some businesses may feel the need to purchase Apple

computers over Dell. Overall, overcoming viruses, and preparing for the situation if one should

take over a computer is absolutely the biggest threat in the industry.



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Recommendations

Dell is a global superpower in the informational technology market. By offering highly

customizable and dependable computers for a reasonable price, Dell has set itself apart from the

competition in the business market. Dell has been able to offer these products largely because

of its commitment to customer service and a very sophisticated global distribution network.

Each Dell product is the culmination of many company’s supplying Dell with quality parts that

end up making a Dell. In today’s global economy, companies are faced with new opportunities

and threats

More Focus on Enterprise

Dell has profited for many years primarily off its consumer products. Dell.com

has become the go-to spot for consumers to build a computer to their exact needs.

With the recession came a halt in consumer spending. Dell has the infrastructure

and products to potentially dominate the enterprise marketplace. In the post-

recession environment companies are looking to the most value for their money.

Dell’s ability to offer a dependable product that is catered to a client’s specific

need at a reasonable price is what helps set Dell apart from manufactures like HP

and Apple.

Customer Service

For many years, Dell has consistently offered high quality customer service to any

of its customers via internet, mail or phone. This service has helped many

customers resolve their problems quickly and efficiently. Unfortunately some

customers have become accustomed to a more personal interaction when

receiving customer service. Companies like Apple have established stores



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throughout the world where anyone with an Apple product can come for

assistance by a highly trained professional. If Dell wants to continue offering the

best customer service in the industry, brick and mortar locations should be

considered.

Promotional Strategy

Dell has developed a strong promotional presence throughout the years. Buyers

know that Dell offers customized products at great prices. In more recent years,

Dell has lost market share with the college age crowd. Apple’s promotional

strategy portrays PC’s as boring machines without personality. This represents an

enormous threat, not only is Dell losing sales in the consumer market. But as

these young adults grow older, they could have a negative opinion of Dell when

presented with an opportunity to complete an enterprise transaction. Dell should

consider promoting itself in a better light to the young adult market.

Distribution

Dell computers are the result of Dell bringing many suppliers products together

and assembling a great product. This has helped Dell keep costs down without

sacrificing quality. However, with increased dependence on suppliers comes

vulnerability. If one of Dell’s suppliers cannot deliver an order as promised it

could delay products even more. Dell should consider becoming less reliant on

third-party suppliers.



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Dobson, John. "How Exchange Rates Affect Exporters." Http://www.business.govt.nz.

PriceCooperWaterhouse. Web. 06 Nov. 2011.



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