Analysis Of Dell's Business Strategy

At the time of its Privatization in 2013, Dell was adopting a corporate level strategy of concentric diversification; it did so by adding new businesses that produce products or are involved in markets and activities that are related to the company’s original core business of Personal Computers (Bateman & Snell, 2013). They implemented this strategy using a combination of acquisitions and organic growth.

At first glance, Dell seemed to have over-diversified through its flurry of acquisitions. To analyse if Dell’s current corporate strategy is sound, we will conduct a Porter’s Five Forces analysis of Dell’s three main business segments.

Porter’s five forces suggests that the three main business units Dell operates in are still attractive.

Dell is currently adopting an integrated cost leadership-differentiation strategy for its PC business. This strategy was effective for a long time. Dell was able to produce their products with comparatively lower price by assembling the products by themselves, cutting out unnecessary cost by selling their products directly to the customers. Dell also allowed customers to customise the components and colours of their PCs, allowing more choices to satisfy customers.

Eventually, Dell did not do well with this strategy. They fell behind competitors in terms of differentiation (e.g. Apple Macbook) due to insufficient R&D. Due to its strive for low cost, it also faced quality issues with its cheaply made products, offered poor customer service, limited consumer choice and limited shopping experience (no retail presence). These resulted in a loss of customer loyalty and market share.

3.2 Recommended Business Strategies

3.2.1 Option 1: Cost Leadership

Dell, from its efficient supply chain, is already able to offer products at a low cost. However, its products (e.g. Dell Inspiron 8600) were not able to compete well with the differentiated products of competitors (e.g. Apple’s Macbook). Dell’s cheap and unreliable products therefore failed to compete well in the market and they saw their PC sales being overtaken by

This will allow Dell to leverage on its existing low-cost production system and focus on improving production processes and product quality at a low cost.

By having low-cost production system, this cost savings can be pass down to consumers too. This will serve as an incentive for people to choose Dell over other brands.

(find example of same specs and quality, and compare the price and design)

3.3.2 Option 2: Differentiation

Dell can attempt to shift towards a business strategy of differentiation. As Dell is unable to compete well with differentiated products like that of Apple’s Macbook, it should focus on investing in more R&D to achieve a well differentiated product, in terms of creativity and design. For example, when we talk about Macbook, we will immediately think about it’s sleek design as well as the thinness and light-weight design. This is got to do with the brand association.

A well differentiated product that caters to consumers’ tastes and preferences will enable Dell to wrestle market share from its competitors.

3.3.3 Selected Strategies and Justifications:

To decide on the best business strategy for Dell’s PC business, we will conduct a pros and cons analysis to compare the current and proposed