Case Study Description of Compaq Computer Corp.: The Dell Challenge
The new CEO of Compaq Computer, the world's second largest computer company, is facing some difficult decisions about how to combat the increasing threat posed by Dell Computer Corp. This case describes the strategic moves made by Compaq in the late 1990s under the leadership of a previous CEO who was dismissed by Compaq's board earlier in the year. Also describes the history of Dell Computer and the evolution of the Dell Direct model. Compaq's new CEO faces some major issues, one of which is the resolution of the channel issues, particularly in the commercial personal computing segment. It is clear he faces some very tough strategic and marketing choices. The power of information technology and standards that have allowed Dell to build a powerful ecosystem with its customers, suppliers, and complementers are illustrated. With the support of these other players, Dell has been able to topple one of the great companies of the late 20th century from its leadership position. Also illustrates how difficult it is for a market leader to respond effectively to such a challenge.
Swot Analysis of "Compaq Computer Corp.: The Dell Challenge" written by Adrian B. Ryans, Mark Vandenbosch includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Dell Compaq facing as an external strategic factors. Some of the topics covered in Compaq Computer Corp.: The Dell Challenge case study are - Strategic Management Strategies, Leadership, Marketing and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Compaq Computer Corp.: The Dell Challenge casestudy better are - – central banks are concerned over increasing inflation, wage bills are increasing, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , increasing commodity prices, there is backlash against globalization, geopolitical disruptions,
customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Compaq Computer Corp.: The Dell Challenge
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Compaq Computer Corp.: The Dell Challenge case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dell Compaq, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dell Compaq operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Compaq Computer Corp.: The Dell Challenge can be done for the following purposes –
1. Strategic planning using facts provided in Compaq Computer Corp.: The Dell Challenge case study
2. Improving business portfolio management of Dell Compaq
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Dell Compaq
Strengths Compaq Computer Corp.: The Dell Challenge | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dell Compaq in Compaq Computer Corp.: The Dell Challenge Harvard Business Review case study are -
Ability to lead change in Leadership & Managing People field
– Dell Compaq is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Dell Compaq in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Dell Compaq is one of the most innovative firm in sector. Manager in Compaq Computer Corp.: The Dell Challenge Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Dell Compaq
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Dell Compaq does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Dell Compaq are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Dell Compaq is one of the leading recruiters in the industry. Managers in the Compaq Computer Corp.: The Dell Challenge are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Leadership & Managing People industry
– Compaq Computer Corp.: The Dell Challenge firm has clearly differentiated products in the market place. This has enabled Dell Compaq to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Dell Compaq to invest into research and development (R&D) and innovation.
Training and development
– Dell Compaq has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Compaq Computer Corp.: The Dell Challenge Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Strong track record of project management
– Dell Compaq is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Dell Compaq is present in almost all the verticals within the industry. This has provided firm in Compaq Computer Corp.: The Dell Challenge case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Effective Research and Development (R&D)
– Dell Compaq has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Compaq Computer Corp.: The Dell Challenge - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Compaq Computer Corp.: The Dell Challenge Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Highly skilled collaborators
– Dell Compaq has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Compaq Computer Corp.: The Dell Challenge HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Compaq Computer Corp.: The Dell Challenge | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Compaq Computer Corp.: The Dell Challenge are -
Increasing silos among functional specialists
– The organizational structure of Dell Compaq is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Dell Compaq needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Dell Compaq to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Dell Compaq has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Compaq Computer Corp.: The Dell Challenge should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Dell Compaq products
– To increase the profitability and margins on the products, Dell Compaq needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Dell Compaq has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Skills based hiring
– The stress on hiring functional specialists at Dell Compaq has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Interest costs
– Compare to the competition, Dell Compaq has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High operating costs
– Compare to the competitors, firm in the HBR case study Compaq Computer Corp.: The Dell Challenge has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Dell Compaq 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Compaq Computer Corp.: The Dell Challenge HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Dell Compaq has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Compaq Computer Corp.: The Dell Challenge, in the dynamic environment Dell Compaq has struggled to respond to the nimble upstart competition. Dell Compaq has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Dell Compaq is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Compaq Computer Corp.: The Dell Challenge can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Compaq Computer Corp.: The Dell Challenge that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Compaq Computer Corp.: The Dell Challenge can leverage the sales team experience to cultivate customer relationships as Dell Compaq is planning to shift buying processes online.
Opportunities Compaq Computer Corp.: The Dell Challenge | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Compaq Computer Corp.: The Dell Challenge are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Dell Compaq is facing challenges because of the dominance of functional experts in the organization. Compaq Computer Corp.: The Dell Challenge case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Dell Compaq to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Dell Compaq can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Dell Compaq has opened avenues for new revenue streams for the organization in the industry. This can help Dell Compaq to build a more holistic ecosystem as suggested in the Compaq Computer Corp.: The Dell Challenge case study. Dell Compaq can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Dell Compaq to increase its market reach. Dell Compaq will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Loyalty marketing
– Dell Compaq has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Building a culture of innovation
– managers at Dell Compaq can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Manufacturing automation
– Dell Compaq can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Dell Compaq in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Dell Compaq can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Dell Compaq can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Dell Compaq can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Dell Compaq can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Dell Compaq can use these opportunities to build new business models that can help the communities that Dell Compaq operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Threats Compaq Computer Corp.: The Dell Challenge External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Compaq Computer Corp.: The Dell Challenge are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Consumer confidence and its impact on Dell Compaq demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing wage structure of Dell Compaq
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Dell Compaq.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Dell Compaq can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Compaq Computer Corp.: The Dell Challenge .
Stagnating economy with rate increase
– Dell Compaq can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High dependence on third party suppliers
– Dell Compaq high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Dell Compaq will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Compaq Computer Corp.: The Dell Challenge, Dell Compaq may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Regulatory challenges
– Dell Compaq needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Environmental challenges
– Dell Compaq needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Dell Compaq can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Technology acceleration in Forth Industrial Revolution
– Dell Compaq has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Dell Compaq needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Dell Compaq.
Weighted SWOT Analysis of Compaq Computer Corp.: The Dell Challenge Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Compaq Computer Corp.: The Dell Challenge needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Compaq Computer Corp.: The Dell Challenge is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Compaq Computer Corp.: The Dell Challenge is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Compaq Computer Corp.: The Dell Challenge is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Dell Compaq needs to make to build a sustainable competitive advantage.