Dell: Swot Analysis

A SWOT (Strength, weakness, opportunities and threats) provides a basis for crafting a strategy that capitalizes on the company's resources, while taking advantage of the best opportunities, and defending against the threats to its well being. The SWOT analysis for Dell is summarized below.

Strengths

* Direct to customer business model. Uses latest technology.

* Dell is the market leader in personal computers. For the last couple of years it has held its position as market leader (it took it from rivals Hewlett-Packard).

* Dell's brand is one of the best known in the world.

* Dell has a remarkably low operating cost relative to revenue because it cuts out the retailer and supplies directly to the customers.

* It uses information technology, and excellent customer relationship management to capture data on its loyal consumers. This allows it to produce the personal computer based on the customer's own specification.

* Dell is not a manufacturer; Components are made by suppliers and Dell assembles the computers using relatively cheap labor. The finished goods are then dropped off with the customer by courier. Dell has total command of the supply chain.

* No inventory buildup.

Weaknesses

* The company has such a huge range of products and components from many suppliers from different countries. Thus there is a chance for occasional product recall that can cause Dell some embarrassment. For example, in 2004 Dell had to recall 4.4 million laptop adapters (http://www.reuters.com) because of a fear that they could overheat, causing electric shocks or fires.

* Dell lacked solid dealer/retailer relationships.

* No propriety technology

* High dependence on suppliers. Dell is a computer maker, not a compute manufacturer. It buys from a group of concentrated hi-tech component manufacturers. Whilst this is a tremendous advantage in terms of business operations, allowing Dell to focus on marketing and logistics, the company is reliant on a few large suppliers, and to an extent is locked in for periods of time.

Opportunities

* Network