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, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%,
challanges to central banks by blockchain based private currencies, technology disruption, 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 -
High switching costs
– The high switching costs that Dell Compaq has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Analytics focus
– Dell Compaq is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Adrian B. Ryans, Mark Vandenbosch can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High brand equity
– Dell Compaq has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Dell Compaq to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
Learning organization
- Dell Compaq is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Dell Compaq is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Compaq Computer Corp.: The Dell Challenge Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Dell Compaq digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Dell Compaq has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Dell Compaq in the sector have low bargaining power. Compaq Computer Corp.: The Dell Challenge has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Dell Compaq to manage not only supply disruptions but also source products at highly competitive prices.
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.
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.
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 -
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.
Need for greater diversity
– Dell Compaq has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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.
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.
Low market penetration in new markets
– Outside its home market of Dell Compaq, firm in the HBR case study Compaq Computer Corp.: The Dell Challenge needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
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.
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.
Slow to strategic competitive environment developments
– As Compaq Computer Corp.: The Dell Challenge HBR case study mentions - Dell Compaq takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Dell Compaq needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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 -
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.
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.
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.
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.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Dell Compaq can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Dell Compaq to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Dell Compaq to hire the very best people irrespective of their geographical location.
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.
Buying journey improvements
– Dell Compaq can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Compaq Computer Corp.: The Dell Challenge suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Developing new processes and practices
– Dell Compaq can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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.
Using analytics as competitive advantage
– Dell Compaq has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Compaq Computer Corp.: The Dell Challenge - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Dell Compaq to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 -
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.
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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Dell Compaq in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Dell Compaq with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Dell Compaq needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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 .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Dell Compaq in the Leadership & Managing People sector and impact the bottomline 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.
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.
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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Dell Compaq business can come under increasing regulations regarding data privacy, data security, etc.
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.