Dell - Environmental Anaylsis

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INTERNAL ENVIRONMENTAL ANALYSIS

An organization's external environment has three components: the remote environment, the industry environment, and the operating environment. The Remote environment is made up of economic, political, social, technological, and ecological factors. The industry environment is made up of entry barriers, supplier power, buyer power, substitute availability, and competitive rivalry. The operating environment is made up of competitors, customers, labor, and suppliers.

Industry Environment

Entry Barriers

New entrants to a market can threaten the market share of competitors already in the market. New entrants are interested in entering the Chinese market to try to gain a large market share from existing competitors in the market. By using the direct model strategy, Dell is using a different approach to woo the Chinese consumers. Dell's Just-In-Time (J-I-T) inventory keeps inventory costs to a minimum. Companies like China's market leader Legend (local Chinese PC), Lenova , recently purchased IBM Hardware Business outside China , they are beginning to move to Dell's J-I-T model, selling direct to their corporate customers.

A barrier to entry in China is dealing with the government, political forces and legal issues. Many foreign firms have to depend on Chinese resellers to make their products available to the public. Foreign companies may need to form joint venture agreements with established Chinese companies. China's regulations state that if goods were not manufactured in China, they could not be sold directly to the mainland. Despite protectionist tariffs on foreign firms, Dell can still undermine Legend's prices.

Buyer Power

The bargaining power of buyers is an important aspect in the comput...

... middle of paper ...

...es a huge potential increasing their revenue greatly.

Forrester analyst Simon Yates states that: "In India, where PC ownership should jump from 7.9 million units to 78 million by 2010, most people don't have Web access. Many rural areas lack phone lines, and most people know little about computers. So they go to local stores or computer specialists to ask for advice and to make their purchases. Since Dell doesn't have a strong presence there, consumers buy their computers from local heavyweight HCL Technologies, HP, and IBM, whose PC division is now owned by China's Lenovo. As a result, Dell only has a 4% share of China's PC shipments.

Refrences:

http://home.telepath.com/~wanderer/school/BAD%204013%20-%20Dell%20Case%20Analysis.pdf

http://www.businessweek.com/technology/content/apr2005/tc2005046_6483_tc119.htm

(Dell: Time for a New Model, Olga Kharif).

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