SWOT Analysis

Strengths.

• Dell is the World's largest PC maker. Profits for the 3 months to July 2005 were in excess of $1
billion US, representing a growth of around 28%. For the last couple of years it has held its
position as market leader (it took it from rivals Hewlett-Packard). The Dell brand is one of the
best known and renowned computer brands in the World.
• Dell cuts out the retailer and supplies directly to the customers. It uses information technology,
and Customer Relationship Management (CRM) approaches to capture data on its loyal
consumers. So a customer selects a generic PC model, and then adds items and upgrades until
the PC is kitted out to the customer's own specification. Components are made by suppliers,
never by Dell. PC's are assembled using relatively cheap labor. You can even keep track of your
delivery by contacting customer services, based in India. The finished goods are then dropped
off with the customer by courier. Dell has total command of the supply chain.

Weaknesses.

• The company has such a huge range of products and components from many suppliers from a
plethora of countries, that there is the occasional product recall that can cause Dell some
embarrassment. In 2004 Dell had to recall 4.4 million laptop adapters because of a fear that they
could overheat, causing electric shocks or fires.
• Dell is a computer maker, not a compute manufacturer. It buys from a group of concentrated hi-
tech component manufacturers. Whilst this is a tremendous advantage in terms of business
operations, allowing Dell to focus on marketing and logistics, the company is reliant on a few
large suppliers, and to an extent is locked in for periods of time (i.e. unable to switch supply
Opportunities.

• Kevin Rollins replaced Michael Dell in 2004 as Dell's Chief Executive Officer. Dell remained
the company's Chairman. Despite founder Dell's massive success, new blood and a change in
management thinking could lead the company into a new, even more profitable period. Dell was
born in 1965, and founded Dell in 1984 with $1000 whilst studying at the University of Texas.
He became the youngest Fortune 500 CEO in 1992, and will be a tough act to follow.
• Dell is pursuing a diversification strategy by introducing many new products to its range. This
initially has meant good such as peripherals including printers and toners, but now also included
LCD televisions and other non-computing goods. So Dell compete against iPod and other
consumer electronics brands.
• Dell is making and selling low-cost, low-price computers to PC retailers in the United States.
The PC's are unbranded and should not be recognised as being Dell when the consumer makes a
purchase. Rebranding and rebadging for retailers, although a departure for Dell, gives the
company new market segments to attack with the associated marketing costs.

Threats.

• The single biggest problem for Dell is the competitive rivalry that exists in the PC market
globally. As with all profitable brands, retaliation from competitors and new entrants to the
market pose potential threats. Dell sources from Far Eastern nations where labour costs remain
low, but there is nothing stopping competitors doing the same - even sourcing the same or
similar components from the same or similar suppliers. Remember, Dell is a PC maker, not a
PC manufacturer.
• Dell, being global in its marketing and operations, is exposed to fluctuations in the World
currency markets. Although it is a very lean organization, orders do have to be placed some time
ahead due to their size or value. Changes in exchange rates could leave the company exposed to
potential loses in parts of its supply chain.

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