Presented by:

• Abhijit Sharma
• Harshvardhan
• Kaushik
• Mohd Zia
• Sandeep Singh

Competitive Analysis of DELL using

Porter's five forces.
Competitive Analysis of DELL
using Porter Five forces
 INTRODUCTION

• Michael Porter developed Five Forces model in 1979 to

analyze the economic and market forces that will
ultimately influence an industry’s profit potential.

Those Five Forces are

• Threat of New entrants
• Bargaining power of Suppliers
• Bargaining Power of Buyers
• Threat of Substitute products or services
• Degree of Rivalry among existing competitors
Competitive Analysis of DELL using
Porter's five forces.
Economist Michael E. Porter
identified………

Competitive Analysis of DELL using

Porter's five forces.
Competitive Analysis of DELL using
Porter's five forces.
 Importance of The 5 Forces
…..vital in successful Strategic Management ! Measure and monitor
strategy effectiveness

Strategize :
* Competitive advantage
* Cost advantage
* Market dominance
* New product development
* Contraction / Diversification
* Price leadership
Industry analysis : * Global
1) Industry relevance * Re-engineering
2) Industry players * Downsizing
3) 5 forces * De-layering
4) Industry structure * Restructuring
5) Future changes

Basic knowledge
Of business strategy How to deal with competition?
& Forces that influence
The decision making
What strategy Competitive Analysis of DELL using
Porter's five forces.
to use?
 COMPANY DESCRIPTION
• Dell Computer Corporation, incorporated in October 1987,
is a computer systems company and a provider of
computing products and services.
• The Company's primary product offerings include
enterprise systems, notebook computers and desktop
computer systems. The Dell line of high-performance
computer systems includes Power Edge servers, Power App
server appliances, Power Vault storage products, Power
Connect networking products, Dell Precision workstations,
Latitude and Inspiron notebook computers, and Opti Plex,
Dimension and Smart Step desktop computers.
• The Company also markets and sells Dell/EMC storage
products under a long-term strategic relationship with EMC
Corporation.
Competitive Analysis of DELL using
Porter's five forces.
 Contd.
• The Company provides targeted services for
consulting, deployment and support, as well as
an extensive selection of peripheral hardware,
including hand-held products, and computing
software.
• The Company conducts operations worldwide
through wholly owned subsidiaries. Sales outside
the United States accounted for approximately
35% of the Company's revenues .
Competitive Analysis of DELL using
Porter's five forces.
 Porter’s Five Forces & Analysis
Threat of New Entrants:
MODERATE
• Low capital investment for
independent stores
• Low product differentiation
– Brand name may be a barrier to entry
• Low economies of scale
• No legal or governmental barriers
• Decreasing profitability shows that
there is a threat of new entrants
Competitive Analysis of DELL using
Porter's five forces.
Competitors in PC industry:
U.S. top five players:
U.S. PC market Share

DELL
OTHERS 25%
40%

COMPAQ
13%
IBM GATEWAY HP
6% 7% 9%

Competitive Analysis of DELL using

Porter's five forces.
Competitive Analysis of DELL using
Porter's five forces.
Porter’s Five Forces & Analysis (cont.):
Rivalry: HIGH
• High concentration
• Price War: Low Margin
• Decreasing profitability
• Low differentiation
• However, in the midst of sever
competition, Dell can still gain market
share from other competitors. That
proves Dell’s business strategies have
been successful.
Competitive Analysis of DELL using
Porter's five forces.
Porter’s Five Forces & Analysis (cont.):
Threat of Substitutes: LOW
• Strong presence of PC’s
throughout society
– One computer for every three
people in the U.S.
• Only substitute for PC: Apple
Computer.
However, high price, and lack of
software support prevent people
from switching to Apple system.
Competitive Analysis of DELL using
Porter's five forces.
Porter’s Five Forces & Analysis
(cont.):
Bargaining Power of Buyer: High
• Highly price sensitive
• Reliability and customer service become
important factors.
• Dell’s products are very reliable and customer
service is outstanding. These two factors help
Dell to create certain brand royalty. But that’s
given the fact that the Company set the prices
very low. If the prices are raised too high,
customers will not hesitate to switch.
Competitive Analysis of DELL using
Porter's five forces.
Porter’s Five Forces & Analysis (cont.):

Bargaining Power of Suppliers: HIGH

• Large number of suppliers for components like
hardware, keyboards, etc.
• But two major inputs are monopolized
– Microsoft standard for all PC’s
– Intel standard for most PC’s
• High switching costs

Competitive Analysis of DELL using

Porter's five forces.
Porter’s Five Forces & Analysis (cont.):
• Stock Performance

Competitive Analysis of DELL using

Porter's five forces.
Competitive Analysis of DELL using
Porter's five forces.
Competitive Analysis of DELL using
Porter's five forces.