Dell (DVMT) SWOT Analysis / TOWS Matrix / MBA Resources
Computer Storage Devices
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Dell (United States)
Based on various researches at Oak Spring University , Dell is operating in a macro-environment that has been destablized by – increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy,
technology disruption, increasing government debt because of Covid-19 spendings, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Dell can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dell, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dell 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 Dell can be done for the following purposes –
1. Strategic planning of Dell
2. Improving business portfolio management of Dell
3. Assessing feasibility of the new initiative in United States
4. Making a Computer Storage Devices sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Dell
Strengths of Dell | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dell are -
Strong track record of project management in the Computer Storage Devices industry
– Dell is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Dell has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Computer Storage Devices industry. Secondly the value chain collaborators of Dell have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Dell 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 Computer Storage Devices industry. The technology infrastructure of United States is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Sustainable margins compare to other players in Computer Storage Devices industry
– Dell has clearly differentiated products in the market place. This has enabled Dell to fetch slight price premium compare to the competitors in the Computer Storage Devices industry. The sustainable margins have also helped Dell to invest into research and development (R&D) and innovation.
High brand equity
– Dell has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Dell to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Dell is one of the leading players in the Computer Storage Devices industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Dell is one of the most innovative firm in Computer Storage Devices sector.
Cross disciplinary teams
– Horizontal connected teams at the Dell 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.
High switching costs
– The high switching costs that Dell 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.
Low bargaining power of suppliers
– Suppliers of Dell in the Technology sector have low bargaining power. Dell has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Dell to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Computer Storage Devices industry
- digital transformation varies from industry to industry. For Dell digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Dell 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.
Training and development
– Dell has one of the best training and development program in Technology industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses of Dell | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Dell are -
Slow decision making process
– As mentioned earlier in the report, Dell has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Computer Storage Devices industry over the last five years. Dell even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Skills based hiring in Computer Storage Devices industry
– The stress on hiring functional specialists at Dell 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.
Capital Spending Reduction
– Even during the low interest decade, Dell 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 Computer Storage Devices industry using digital technology.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Dell supply chain. Even after few cautionary changes, Dell is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Dell vulnerable to further global disruptions in South East Asia.
High dependence on Dell ‘s star products
– The top 2 products and services of Dell still accounts for major business revenue. This dependence on star products in Computer Storage Devices industry has resulted into insufficient focus on developing new products, even though Dell has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, Dell has high operating costs in the Computer Storage Devices industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Dell lucrative customers.
Compensation and incentives
– The revenue per employee of Dell is just above the Computer Storage Devices industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Low market penetration in new markets
– Outside its home market of United States, Dell needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Dell products
– To increase the profitability and margins on the products, Dell needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Dell is slow explore the new channels of communication. These new channels of communication can help Dell to provide better information regarding Computer Storage Devices products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– From the 10K / annual statement of Dell, it seems that company is thinking out the frontier risks that can impact Computer Storage Devices industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Dell Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Dell are -
Use of Bitcoin and other crypto currencies for transactions in Computer Storage Devices industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Dell in the Computer Storage Devices industry. Now Dell can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Dell in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Computer Storage Devices industry, and it will provide faster access to the consumers.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Dell can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Dell 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Computer Storage Devices industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Dell 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 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.
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 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.
Developing new processes and practices
– Dell can develop new processes and procedures in Computer Storage Devices 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.
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 can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Dell 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.
Creating value in data economy
– The success of analytics program of Dell has opened avenues for new revenue streams for the organization in Computer Storage Devices industry. This can help Dell to build a more holistic ecosystem for Dell products in the Computer Storage Devices industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Dell to increase its market reach. Dell 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.
Manufacturing automation
– Dell can use the latest technology developments to improve its manufacturing and designing process in Computer Storage Devices sector. 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Dell can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help Dell to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Dell External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Dell are -
Stagnating economy with rate increase
– Dell 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 Computer Storage Devices industry.
Technology acceleration in Forth Industrial Revolution
– Dell has witnessed rapid integration of technology during Covid-19 in the Computer Storage Devices industry. As one of the leading players in the industry, Dell needs to keep up with the evolution of technology in the Computer Storage Devices 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Dell 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 Dell prominent markets.
Consumer confidence and its impact on Dell 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 Computer Storage Devices industry and other sectors.
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 in the Computer Storage Devices sector and impact the bottomline of the organization.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Dell in Computer Storage Devices industry. The Computer Storage Devices 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.
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.
Increasing wage structure of Dell
– 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Dell may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Computer Storage Devices sector.
Regulatory challenges
– Dell 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 Computer Storage Devices industry regulations.
Environmental challenges
– Dell 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 can take advantage of this fund but it will also bring new competitors in the Computer Storage Devices industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Computer Storage Devices industry are lowering. It can presents Dell with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Computer Storage Devices sector.
Weighted SWOT Analysis of Dell Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Dell 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 Dell 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 Dell 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 Dell 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 needs to make to build a sustainable competitive advantage.