SWOT Analysis of Dell – Dell SWOT Analysis

SWOT Analysis of Dell focuses on Strengths, weaknesses, opportunities, and threats. Strength and Weakness are the internal factors and Opportunities and Threats are the external factors which influence the SWOT Analysis of Dell.

Dell is a US company that sells notebooks, data storage, servers, printers, and peripherals to customers. If we talk about Dell we can say that it is one of the top laptop brands in the world. Dell laptops are configured to meet the demands of every company and take care of any task with all the latest technology. Its well-known laptops models are Inspiron, Vostro, XPS, G Series, and Alienware laptops.

Strength in the SWOT Analysis of Dell – Dell SWOT Analysis

• Brand name: Brand name. Dell has a very good reputation for quality goods for the company. Its brand is worth $7.5bn.
• Customization of the Product. Dell lets its customers customize their laptops. Originally, these services were not available within any other major computer retailer (and currently only Sony and Toshiba allow that), but add tremendous value to customers and provide a competitive advantage for Dell.
• Record Environmental. Dell is involved in many green initiatives and has received numerous rewards for being an environmentally friendly business. This is advantageous when working with agencies of the public and government.
• Competency in acquisitions and mergers. Dell is spending a lot of money to acquire new ventures and doing successful mergers and acquisitions, bringing patents, assets, new capabilities, and skills into the business.
• Company model on direct sale. Rather than selling its products through big-box retail stores, Dell markets directly to customers and businesses, maintaining their less profit margin.
• Biggest PC & Laptop manufacturer in the world.
• One of the world’s most recognized brands.
• First PC maker to offer next day on-site services for products.
• Business model direct to consumer. Requires cutting edge technology.
• Dell has relatively low running costs compared to sales, as it leaves out the retailer and supplies the consumers directly.
• Dell’s Direct Model approach helps the organization to provide direct customer partnerships, such as corporate and institutional customers.
• Direct consumer from Dell allows it to have top-notch customer support before and after the transaction.
• Every Dell device is designed to fit the needs of each customer. Reliability, Support, and Operation.
• Dell boasts a highly efficient production, manufacturing, and distribution cycle that enables it to deliver powerful solutions to consumers at reasonable prices.
• Compared with companies using indirect distribution networks, Dell is able to implement the new related technologies.
• Dell is not a manufacturer; the manufacturers produce parts, and Dell uses fairly inexpensive labor to assemble the computers. Then the finished goods are dropped in by courier with the customer. Dell holds absolute supply chain order.
• Dell switches inventory over every six days on average, keeping the inventory costs low.
• By increasingly applying the efficiencies of the Internet to its entire sector, Dell is strengthening and expanding the fundamental competitive advantages of the direct model.

Weaknesses in the SWOT Analysis of Dell – Dell SWOT Analysis

• Items in material:  The large stream of Dell’s revenue comes from sales of computers, especially laptops, which is a commoditized product. Computer hardware goods (commodity) are marketed with a very low-profit margin.
• Bad service to the customer:  Although celebrated, Dell’s customer relations declined as its call centers were outsourced overseas. Dell has spent a huge amount of money in fixing this but has not yet recovered its former customer service image.
• Less Investment in R&D: The company spends a much lower percentage of its income on R&D than its main competitors and thus missed an opportunity to develop strong products for the smartphone and tablet markets and to learn new skills and capabilities.
• Low Portfolio of Patents: Due to low R&D spending, Dell has not acquired a strong patent portfolio, and is now finding it difficult to compete in the lucrative smartphone and tablet market.
• Far too few shopping stores:  Selling products online saves money and allows for product customization but gives the products less visibility. The customer finds it difficult to trust the goods unless he can keep them in his hands first.
• Low Unterscheidung: When Dell’s competitive advantage was the low price but the company can no longer afford competitive pricing. In addition to the quality, Dell ‘s products are little differentiated from the products of the rivals and are at a competitive disadvantage if the price offered by the rival is lower.
• A wide range of goods and parts from many manufacturers from various countries.
• Computer maker and not the manufacturer of computers, leaving DELL unable to move supply.
• Dell lacked strong partnerships with dealers/distributors.
• No proprietary equipment
• Not attracting the market segment of college students. Dell’s sales revenues from educational institutions such as universities constitute just 5 percent of the total.
• Dell ‘s focus on institutional corporate and government customers somehow affected his ability to form relationships with educational institutions.
• Dell ‘s direct method and approach to customization posed problems for home users. For one thing, customers can not go to the retailers because Dell does not use channels for distribution.
• Customers simply can not purchase Dell as easily as other products, since each product is custom-built to their needs and this can take days to complete.

Opportunities in the SWOT Analysis of Dell – Dell SWOT Analysis

• Expand divisions of logistics and business solutions:  Dell provides numerous services (cloud, security, and infrastructure) and enterprise solutions (servers, networking, and storage), which are currently Dell’s most profitable business. Dell’s business must focus on growing those divisions as they promise better opportunities for growth and higher margins for profit.
• Further patents are acquired by acquisitions:  When Dell wants to diversify; it needs patents and innovative innovations in emerging technology. Dell has not properly set up its R&D facilities to discover new technologies and patents so acquiring other companies are the only feasible way to obtain patents and technologies.
• The company can strengthen its presence in emerging markets:  The fastest-growing markets for laptops, pc, tablets, and other electronic devices are the emerging economies. Dell has a good market presence but the company experiences decreasing market share, hence company should strengthen its position.
• The growing market for tablets:  Over the next few years the tablet market is projected to rise in double digits and the business has a great opportunity to introduce new tablet models and benefit from the growth of the market.
• Strategy for diversification by adding a lot of new products into its portfolio.
• Now more than ever personal computers are becoming a requirement. More and more consumers are being informed about computers. Second-time buyers will most likely take advantage of Dell’s custom-built machines, because as their experience grows, so does their need to explore or use some new device features.
• The internet also offers Dell greater opportunities, as all they have to do now is visit Dell ‘s website to place their order or get information.
• Because Dell has no retail outlets, online sales will definitely make up for her absence. Also, shopping online is more convenient for customers than actually driving and buying at a physical store.

Threats in the SWOT Analysis of Dell – Dell SWOT Analysis

• Demand for smartphones and tablets is growing. Consumers also prefer tablets and smartphones over notebooks, with a lower price and greatly improved capabilities. The rising demand for the previous products is taking a share of Dell ‘s key revenue source, the laptops.
• Lowering the profit margin on hardware goods. Dell ‘s key income comes from the selling of hardware goods, which will raise costs in the future due to the increasing prices of raw materials. It will add to Dell’s expenses and further increased the profit margin.
• Slowing demand growth for the laptops. Computer industry growth is slowing down, and the markets will become exhausted in the near future. This will prove difficult for Dell to survive in such a market, or at least to claw back the market share lost.
• Heavy rivalry. The company is facing intense competition in all segments of its market. It competes with Acer, Apple, HP , IBM, Lenovo, and Toshiba, in terms of price, quality, brand, technology, reputation, distribution, and product selection.
• A competitive rivalry that exists globally in the PC market.
• New business entrants face potential risks.
• The possibility of being outmoded in a computer company is a pulsating fact.
• The difference in price between the brands is getting smaller.
• Direct Model by Dell attracts consumers as it saves costs. It could challenge Dell’s price-conscious rising consumer base because many companies can sell computers at a low cost.
• Price distinction is no longer a problem for a consumer with nearly equal costs. Instead of waiting for Dell’s personalized computers, they could prefer other brands.
• The computer industry’s growth rate is declining, too. Today, Dell holds the largest market share. When demand slows down, the process will make competition stiffer. To be able to continue holding a significant market share, Dell has to work doubly hard to differentiate itself from its replacements.

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