Dell Case Analysis

Case: Dell Computer Corporation: Investment in Malaysia as a Global Strategic Tool

Company Overview

Dell Computer Corporation was the one of the world’s largest direct sales computer company in the world. The company was founded in 1983 by Michael Dell in his dorm room at the University of Texas. The company expanded into the international market where it has manufacturing plants in the United States, Ireland, Malaysia, and China.

What are the issues of this case?

Dell wondered whether it should increase its global presence, especially in Asia and risk facing increasing turbulence worldwide. Dell needed to decide if it should increase its commitment in Malaysia by opening a second Malaysian manufacturing plant in 2001, to support the push for international expansion.

Strengths

Dell identifies performance opportunities and accelerates growth in areas that have made money. The company exists with several key strengths that give them a competitive advantage. Most importantly they have the ability to produce a line of high-performance products compatible with the accepted competitor's standards. Next, Dell receives input from its customers regarding their products and services, their views on various products and response to advertising. This input gives it a competitive advantage in offering products and services and communication programs to meet its customers’ needs. Last, they have the ability to maintain efficient manufacturing operation because they have low inventory. Some examples of these strengths as it pertains to investment in Malaysia are as follows: Dell was the only manufacturer who used exclusively Intel microprocessors and the only manufacturer to offer an operation system from Microsoft for all its broad range of product, the direct distribution system that reduced costs and shorten turnaround times, Dell was enhancing and broadening the fundamental competitive advantages of the direct model by increasingly applying the efficiencies of the Internet to its entire business, and by selling computers directly to customers through traditional and virtual methods, which allowed Dell to most efficiently understand and satisfy the computing needs of customers.

Weakness

Dell is a functional company. This is a weakness for Dell because of its rapid growth. One of the other weaknesses of Dell was that PC’s were becoming a commodity in the eyes of the consumers because the manufacturing was very similar to other PC’s. On a business level, as Dell continues grows it may become difficult to work as an integrated team. The fundamental core competencies of serving the interest of the customer and its shareholders could be skewed if the overall focus shifts.

Opportunities

Dell deals with management in outside companies to organize processes that best fit its business needs. In Dells business investment in Malaysia they were able to capitalize on educational and expansion opportunities. The educational opportunities of Dell consisted of an Educational Online mall, which allowed consumers to choose computer systems and obtain pricing information and knowledge of the system within a matter of seconds. Dell developed international websites to boast online revenues. Furthermore, Dell was able to expand by opening a second Malaysian manufacturing plant during an economic crisis. This expansion opportunity allowed Dell to reap the benefits of lower import prices while increasing business investment strategies in new markets.

Threats

The threat of growing too rapidly led to a change in Dell’s strategies. Dell pursued every opportunity that presented itself and caused opportunities to become a threat. This created a shift in its focus to come away from external orientation to strengthen the company internally.

What is the current strategy?

Through the direct business model, Dell offers in-person relationships with corporate and institutional customers, telephone and Internet purchasing, customized computer systems, phone and online technical support, and next-day, on-site product service. Dell arranges for system installation and management, guides customers through technology transitions, and provides an extensive range of other services. Dell also serves medium and small businesses and home-PC users. Dells Unique Direct Model: Dells award-winning customer service, industry-leading growth and consistently strong financial performance differentiate the company from competitors for the following reasons: Price for Performance -- With the industry’s most efficient procurement, manufacturing and distribution process, Dell offers its customers powerful, richly configured systems at competitive prices. The main strategies that were discussed in this case were leadership, product, manufacturing, international, and Asian (excluding China). Expanding globally has allowed Dell to increase their profitability and rate in profit growth in ways, which were not available to purely domestic enterprises. Dell has expanded the market for their domestic product by selling their computers internationally. Dell exemplified strategic positioning which allowed them to generate greater returns by leveraging the valuable skills developed in foreign operations which ultimately increased global expansion, profitability, and profit growth, especially in the Asian markets.

Strategic Posture

Dell knows their success is what drives the business. It is their knowledge of how the business works and the right way to serve customers which presents strategic posture. The continuous improvement of the company pursues one collective goal: finding the next frontier of value that they can create for Dell customers. Dell follows a policy of making the most of valuable interactions. It is the kind of company to get personally involved. As a result, Dell has the competitive advantage for rapid decision making because they’re aware of their competition.

Entry Mode

Dell’s entry mode is wholly owned subsidiaries. As a result, of Dell choosing wholly owned subsidiaries as its entry mode in international business it allows Dell to own 100% of their stock. Listed below are the advantages and disadvantages that Dell could incur while implementing such an entry mode: