Dell (DVMT) SWOT Analysis / TOWS Matrix / 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 – technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, increasing transportation and logistics costs, talent flight as more people leaving formal jobs, there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc

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Introduction to SWOT Analysis of Dell

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 -

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.

Organizational Resilience of Dell

– The covid-19 pandemic has put organizational resilience at the centre of everthing Dell does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Learning organization

- Dell 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 is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Dell emphasize – knowledge, initiative, and innovation.

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.

Superior customer experience

– The customer experience strategy of Dell in Computer Storage Devices industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

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.

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.

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.

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.

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.

Successful track record of launching new products

– Dell has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Dell has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.

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.

Weaknesses of Dell | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Dell are -

Need for greater diversity

– Dell 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.

Aligning sales with marketing

– From the outside it seems that Dell needs to have more collaboration between its sales team and marketing team. Sales professionals in the Computer Storage Devices industry have deep experience in developing customer relationships. Marketing department at Dell can leverage the sales team experience to cultivate customer relationships as Dell is planning to shift buying processes online.

Products dominated business model

– Even though Dell has some of the most successful models in the Computer Storage Devices industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Dell should strive to include more intangible value offerings along with its core products and services.

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 cash cycle compare to competitors

Dell has a high cash cycle compare to other players in the Computer Storage Devices industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

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.

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.

Slow to strategic competitive environment developments

– As Dell is one of the leading players in the Computer Storage Devices industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Computer Storage Devices industry in last five years.

Employees’ less understanding of Dell strategy

– From the outside it seems that the employees of Dell don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.

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.

Ability to respond to the competition

– As the decision making is very deliberative at Dell, in the dynamic environment of Computer Storage Devices industry it has struggled to respond to the nimble upstart competition. Dell has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Dell Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Dell are -

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.

Low interest rates

– Even though inflation is raising its head in most developed economies, Dell can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.

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.

Building a culture of innovation

– managers at Dell 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 Computer Storage Devices industry.

Buying journey improvements

– Dell can improve the customer journey of consumers in the Computer Storage Devices industry by using analytics and artificial intelligence. It 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.

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.

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 can use these opportunities to build new business models that can help the communities that Dell operates in. Secondly it can use opportunities from government spending in Computer Storage Devices sector.

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.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Computer Storage Devices industry, but it has also influenced the consumer preferences. Dell can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Learning at scale

– Online learning technologies has now opened space for Dell to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Dell 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 to hire the very best people irrespective of their geographical location.

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.

Threats Dell External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Dell are -

High dependence on third party suppliers

– Dell 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.

Easy access to finance

– Easy access to finance in Computer Storage Devices industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Dell can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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.

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.

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.

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 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.

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 needs to understand the core reasons impacting the Computer Storage Devices industry. This will help it in building a better workplace.

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.

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.

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.

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.

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.

Shortening product life cycle

– it is one of the major threat that Dell is facing in Computer Storage Devices sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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.

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