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Running head: BUSINESS ADMINISTRATION CAPSTONE 1

BUSINESS ADMINISTRATION CAPSTONE 8

Business-Level And Corporate-Level Strategies

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BUS499 Business Administration Capstone

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Business-Level And Corporate-Level Strategies

Introduction

When the name Dell is mentioned, what comes to the mind of many people is personal computers since the name is widely known for its link to computers. However, since its founding, the company has continued to grow and expand beyond the personal computers market to engage in other products and services such as IT (Swab & Gentry, 2018). The company now has stake in servers, networking, storage and data protection alongside its products such as monitors, PCs, and printers. The company went public in 1988 as Dell Computer Corp, and began a stiff competition with Compaq later in 2001. The company faced tough times from 2013 when smartphones and tablets became widely accepted, prompting the company to initiate privatization process (Swab & Gentry, 2018). This paper aims at discussing strategies used by the company to operate both at business and corporate level.

Business level strategies

Business-level strategy aims at meeting customers’ needs and satisfying them through offering high-quality goods and services to meet the needs and increasing operating profits (Hitt & Hoskisson, 2020). The focus is to position the company against its competitors in order to stay at the cutting edge and influence market and technology trends in the long-run.

The three core values of Dell Inc. are Listen, Learn and Deliver. These values have made the company successful in the IT sector through offering its products and services to meet customer needs. The success of the company has been pegged on unique customization, cost proposition and delivery. The company was forced to upgrade its strategies in order to meet the changing environment in the sector (Swab & Gentry, 2018). The business strategy has always centered on several core elements which include mass customization, direct sales, partnership with suppliers, build-to-order manufacturing, customer service, just-in-time inventories, market segmentation, and information sharing and extensive data with both customers and suppliers.

Dell now has strategies that focus on individual customer needs unlike before where the focus was on government and commercial customers (Hitt & Hoskisson, 2020). This is because the PC trend has been shifting towards smaller and more communications-oriented and integrated products. The market has experienced high demand for portable devices such as laptops, smartphones and notebooks. This has forced the company to adopt a strategy of manufacturing computer products which meet this need (Swab & Gentry, 2018).

The core competencies used by the company to meet specific product markets have been instrumental for the company. Growth in technology and advancement in product differentiation make customers to have more expectations of high –quality and advanced products albeit at low process (Lee & Barney, 2016). To meet these demands, Dell has focused on its cost leadership skills and customers’ buying behavior as well as differentiated products in order to create value for the customers. the cost leadership-differentiated strategy enables the company to make goods and services with emphasis on low cost and high differentiation (Hitt & Hoskisson, 2020). This means the company has to lower its costs and produce products which are high differentiated than its competitors. Through this strategy, the company has been able to build skills that can adopt quickly to rapid changes in the market and new technologies in both internal and external environments (Swab & Gentry, 2018).

In order to balance its objectives, the company has three initiatives which include manufacturing systems, quality management and information networks. These initiatives have been instrumental in continuous enhancement of products and cost reductions. Such initiatives have also enabled employees to improve communication and work flow, as well as identifying and resolving problems. Information management has helped the company improve customer services through customized assembly process (Hitt & Hoskisson, 2020). The flexibility of this process aims at meeting customers’ orders through faster manufacturing process. Total quality management is a strategy used by the company to run innovation that emphasizes on commitment to its customers as well as continuous improvement of processes through problem-solving and data-driven approaches usually based on empowerment of employees (Lee & Barney, 2016). The strategy eliminates inefficiencies in manufacturing and lowering costs hence allowing the company to offer products and service at low prices as expected by customers.

Corporate-level Strategies

Corporate strategies of any business focuses on success through a mix of business units that allow the company to remain competitive. It aims at making a business more than just a unit through development of important relationships for sharing resources and avoiding duplication of efforts. The computer industry today is one of the most important and unpredictable industry across the world. It forms the foundation of all information technologies, accounting for more than 5 percent of global GDP (Chang, 2010). Computers are crucial across many industries for telecommunication, automobiles, consumer electronics and medical research among others. Although there was recorded growth in computer purchases until 2008, today computer markets have changed immensely unlike 20 years ago (Lee & Barney, 2016). There have been innovative and technological trends in the industry, forcing companies in this sector to keep in touch with latest movements and trends technologically.

Dell company has also established multiple factories across the world in order to meet their customers’ needs at a local level and ensure products are received over a short time. The company also partnered with its suppliers to set their stores next to Dell factories to reduce transportation costs and also provide the company with quick inventory levels (Swab & Gentry, 2018). Additionally, the company is making acquisitions of new related companies in order to provide the company with services that the company does not offer (Hitt & Hoskisson, 2020). This entails acquiring companies which manufacture smartphones and tablets in order to remain afloat with technology. The company is also acquiring smaller companies which are into software and networking in order to diversify its products and services.

Dell Inc. has remained at the top of the market despite technological and innovative trends in the whole industry. The main driving force in computer industry in the recent years has been internet and applications forcing Dell to adopt a strategy of simplified PCs or computers with specific applications (Swab & Gentry, 2018). Additionally, companies are purchasing computers based on processing power and server visualization. For instance, Dell began offering Linux notebook systems to fit into the demands of the market, becoming the first company to offer such a product line. The company has also been striving to offer products with high data storage, data transfer as well as products that offer functions of connecting appliances to PCs (Chang, 2010). The company has also focused on offering computers and electronics at low prices through direct sales.

In the past few years, Dell Inc. began to focus on social media and e-commerce strategies in order to reach out to potential as well as its loyal customers (Chang, 2010). The strategy has been working for the company through transmission of its messages and products lines trough Twitter, FaceBook, among others. The strategy was adopted because of the changing nature of communication in the recent times where companies are choosing to use social media and e-commerce to reach directly to their customers . In order to improve efficiency and remain the leading company in the information technology sector, the company had to adopt ways in which it will ensure the company remain present across the world through social media.

Competitive Environment

Dell has faced intensive competition from companies in the computer sector who have tried to set distribution retain stores around the globe in order to drive Dell from the market. This forced Dell to respond by partnering with suppliers to set their stores near Dell factories in order to increase efficiency and convenience to its loyal customers (Swab & Gentry, 2018). The competition has been stiff, with Compaq edging out Dell in 2013 as the leading suppliers of computers. This was because Compaq simplified its product delivery process in order to allow customers buy its products rather than Dell’s products.

Competition in this industry has been tough because the companies use the same differentiation/cost-leadership strategy. Dell has not been struggling in this strategy and this made it face decline in demand of its products because of price. Companies which are involved in computer manufacture include Apple, Lenovo, HP, Acer, Compaq, and Toshiba, among others. Apple has been successful in differentiation while companies like Acer, Lenovo, HP and Toshiba have succeeded in cost leadership (Chang, 2010). Dell’s differentiation strategy has been copied by its competitors, sending the company to the drawing board in order to remain unique. The cost-leadership used by Dell has not been strong because other companies have been able to offer products of similar quality at low prices than Dell. As such, the company depends on other aspects of running the company in order to gain competitive advantage in the recent years. HP has had advantage in selling its PCs in other countries while Dell has been US-Centric in its approach (Swab & Gentry, 2018). This has enabled HP to gain popularity overseas although Dell responded to such competition by acquiring smaller upcoming companies which are based in different countries in order to diversify its production and gain larger market share.

Market cycles

Slow-market cycles refer to markets where resources are protected and companies maintain competitive advantage or monopoly in the market in a way that competitive pressures cannot affect the markets. These kind of markets are rare to find unlike fast-cycle and standard cycle markets. Fast-cycle markets are markets with high competition, forcing companies to continuously innovate new ways of marketing and new products, as well as counter attack new strategies used by other competitors in order to remain relevant in the market (Lee & Barney, 2016). As such, companies may not rely on singular resources because the market cycles are very fast. The needs of customers usually change fast and therefore companies should be in the look out to identify any arising gaps and new trends in order to design products that can meet the customer demands.

Competitive environment for Dell Inc. would be different if the company existed in these types of markets. In a slow-cycle market, Dell would be using the cost-leadership/differentiated strategy in order to reduce its products because of less or no competition. The company would also not see the need to differentiate its products to match them with new technologies since it would be the only existing or leader in computer technology. As such, its products would be expensive and not able to fit in the current technological age (Chang, 2010). On the other hand, in a fast-cycle market, Dell has been able to go out of its way in order to offer products which match this era of technology, as well as manufacture products that fit the demands of customers. Competition allows companies to offer the latest designs of products and services at low cost to the benefit of customers (Lee & Barney, 2016).

References

Chang, H. F. (2010). Analysis of the innovation strategy of technical‐intensive industries: scenario analysis viewpoint. Business Strategy Series, 11(3), 152–157. doi: 10.1108/17515631011043813

Hitt, I. & Hoskisson. (2020). Strategic management: Concepts and cases: Competitiveness and globalization (13th ed.). Mason, OH: South-Western Cengage Learning

Lee, Y., & Barney, J. B. (2016). Strategic Factor Markets. The Palgrave Encyclopedia of Strategic Management, 1–2. doi: 10.1057/978-1-349-94848-2_519-1

Swab, R. G., & Gentry, R. J. (2018). Vision. Drive. Stamina: How Dell Became the Company with the Power to Do More. doi: 10.4135/9781526437921