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Overview

In dealing to marketing analysis that the elements of its marketing environment should be crucially be considered as they are most likely to influence the development of a suitable marketing mix as the micro environment of a business pertains to its resources, capabilities and competencies and on the other hand, the macro environment refers to the industrial as well as the competitive conditions as it involves tools for its market analysis and that such forces are important because it enhances and establishes growth and stability in business as it deals to economic profits and determines the strength of competition in order to acquire a stronger marketing position and increase in sales and market share and involves diverse strategies and objectives and will follow its corporate culture and governance per se. These marketing environment elements will influence the organization’s marketing mix in such a way that they will be able to provide an effective approach for the organization and that such marketing mix will describe product lines and its respective functions as the micro environment discusses and explains the importance of SWOT Analysis as a relevant tool for achieving appropriate and exact analysis of marketing in a particular organization while the macro level involves the PEST Analysis accordingly. The examination of these external drivers forms an integral part of marketing opportunity analysis as well as being the foundation for any strategizing in an organization.

Executive Summary:

This marketing analysis paper gives the readers an insight to the business strategies adopted by organizations and or companies to gain a competitive advantage and prosper in the highly advanced global business environment. The industry chosen for this analysis is the computer industry and thaat the focused company is the DELL Corp. to achieve success in the populated country with great potentials. DELL is a premier provider of products and services required for customers worldwide to build their information-technology and Internet infrastructures and is by far the most renowned name in the computer industry.

DELL in the Chinese market is perceived to be a highly competitive environment by strict legislation and different cultural and social values. The Chinese government promotes national PC vendors to foreign companies and strict control of internet usage. The technological advancement is getting better at a quick pace. The economy of the country is also doing well but the societal view of internet sales is rather blinkered, and Dell does not have much success in its online sales.

DELL’s competencies are their cost/ strategy. In consistent to being an integrated cost leader, DELL produces high quality PCs by using their Direct Business Model approach and sells them directly to the customers. DELL’s weaknesses are single sourcing, new product and reliance on corporate clients. DELL has opportunities like the potential growth in overseas markets as the industry is still in growth phase and the entering of the new product markets. Henceforth, the threats are technological changes that are expected since technology can only get better. Global economy and increased competition in which DELL’s financial ratios identifies that the company is no match for their competitors.

DELL’s most competitive force is the Direct-Model concept which helped them to reach above-average returns and remains in business today. Customers have developed a brand-name loyalty to Dell because of their low cost differentiation strategy.

The biggest threat faced by DELL is the fierce competition in the industry. If DELL enters into a merge it would not have to spend so much money and time trying to develop a face-to-face communications, if the local business is already well known. According to cost saving benefits, the company will not have to spend any extra money for product development if it is already developed. Furthermore, there will be plenty of joint financial support. If there is synergy between the two companies, their market penetration will be that much easier to achieve. DELL initiated ways to overcome its weaknesses and use its strengths to gain advantages over its competitors- by careful analyzing of the factors that contribute to the company’s success in business strategies that had implemented created the path for the company’s continued success.

Company Background

DELL was founded in 1984 by Michael Dell on a simple concept: that by selling computer systems directly to customers, DELLl could best understand their needs and efficiently provide the most effective computing solutions to meet those needs. Headquartered in Round Rock, Texas DELL is a premier provider of products and services required for customers to build their information-technology and Internet infrastructures.

DELL is enhancing and broadening the fundamental competitive advantages of the direct model by applying the efficiencies of the Internet to its entire business. Dell led commercial migration to the Internet, launching www.dell.com in 1994 and adding e-commerce capability in 1996. DELL became the first company to record $1 million in online sales.

Business Strategy
DELL’s strategy is collapsing profit margins throughout the PC market, a dire development for rivals who cant keep up. DELL is pricing its machines not so much such as high-tech products but more like airline tickets and low margin commodities.

Macro Business Environment
There are a lot of factors affecting DELL’s business from the external environment. DELL has tight competency with other big computer sellers like Compaq and HP. Social factors also affect the business environment of DELL. Computer companies have to acknowledge that in the Chinese culture, people are still unsure about credit card sales because of the huge expense of computers in China. Companies, then have to invest in door-to-door or face-to-face operations to gain consumers’ faith and consumers trust in the company and its product.

The external environment of a company consists of outside conditions that affect a firm’s performance. An analysis of this external environment allows a firm to identify key conditions that are beyond its direct control and those elements on which it can have an affect. Analyzing these areas of the external environment help DELL identify the opportunities and threats in the computer industry.

PEST Analysis

Political
One of DELL’s biggest threats is involving the fourth element of the external environment, the political/legal environment. The Chinese government prefers to promote national PC vendors to foreign companies. There is a lot of red tape involved in securing government contracts. The Chinese government not only favors local firms but also local companies. Government control of internet usage in China is another threat to the growth of the internet.

Economic
The economic environment refers to the nature and direction of the economy in which a firm competes or may compete. A primary threat that computer companies encounter in China is the problem of software piracy. China has a shortage of skilled labor, even though the country has many economic opportunities. Computer companies have to acknowledge that the average consumer could not afford the investment and very few had a bank account. DELL is aware that Chinese customers go for the cheapest System.

Social
The socio-cultural segment is concerned with a society’s attitudes and cultural values. The potential for Internet growth is huge in China, giving foreign computer companies, DELL the opportunities to expand into a new market. Computer companies have to acknowledge that in the Chinese culture, people are still unsure about card sales because of the huge expense of computers in China. DELL have to invest in door-to-door or face-to-face operations to gain consumers’ faith and consumers’ trust in the company and product.

Technological
The technological segment includes the institutions and activities involved with creating new knowledge into products, processes and materials. In the computer industry, technology continues to be smaller and faster than ever. Providing access to technologies developed by institutions has proven a key government resource. It was observed that by the year 2000, mainland China’s annual PC production would reach 7.6 million making it the third largest in the world. The internet is a great opportunity for companies to get their name into the public domain as well as a fast way to tailor services to its customer segments. A threat in the technological segment to DELL’s business in China is that access to the Internet is costly.

Micro Business Environment

The internal business environment of the DELL is very good. DELL also has achieved the ISO 14001 Environmental Management System (EMS). DELL aims at product design, transportation and so on. As a part of DELL’s ISO 14001 EMS, the organization implemented goals where by the goal is to improve internal business environment performance in a continuous improvement processes which are used to share successes throughout the company.

DELL has positioned to extend its brand name beyond mainstream computer products by leveraging its reputation as an e-commerce leader. In the year 2000, Dell began to redefine itself as the company that knows how e-business works. It has shared its online sales expertise with a few large customers as they developed their own e-commerce capabilities.

Strategic
DELL faces some forces from its competitors in terms of Information Technology as the EDI tool gives very effective opportunities in reducing costs and it can establish the tight linkage between DELL with its suppliers and DELL with its customer.

High Potential
DELL started selling its own brand of handheld computers, called the Axim, at low price which can be considered as high potential and CEO, Mr. Michael Dell stressed how DELL’s success lay in making it as easy as possible for someone to buy a computer.

Key Operational

There are some applications that are currently being used by DELL and they are critical to the core operations of DELL business and the DELL direct which are its operational factors for success.

Support
Some applications that are currently being used by DELL that are valuable but are not considered for certain critical success.

Five Forces Model
The five forces model of competition expands the arena for competitive analysis and include the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitute products and the intensity of rivalry among competitors.

Entry Barriers
New entrants to a market can threaten the market share of competitors already in the market .New entrants, such as IBM, are interested in entering the Chinese market to try to gain a large market share from existing competitors in the market. DELL is using a different approach to catch the eye of Chinese consumers. DELL’s Just-In-Time (J-I-T) inventory keeps inventory costs to a minimum. A barrier to entry in China is dealing with the governments political and legal issues. Many foreign firms have to depend on Chinese resellers to make their product available to the public. 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 as DELL can still undermine Legend prices.

Buyer Power
The bargaining power of buyers is an important aspect in the computer industry. The buyer segment is especially powerful in China because computers are so expensive that consumers do everything they can to get the best deal for the cheapest price because of the cost savings derived from cutting out the middleman, DELL believes it can sell computers at lower prices that its competitors can.

Supplier Power
The bargaining power of suppliers is moderate in the computer industry. Dell Computers is a vertically integrated company. Substitute products are goods or services from outside a given industry that perform similar or the same functions as a product that the industry produces.

Substitutes
The computer industry has a low to medium threat of substitute products. Alternatives to the PC include written communication. Calculators can compute numbers. Books are an alternate source of knowledge but do not have the amount of information available at the touch of a button like the Internet. The computer is also a form of entertainment as substitutes for entertainment value includes radio, television and movies.

Rivalry
Competition is intense in the PC market. Legend, a government backed PC company is the market leader in China. Legend has a domineering presence in Mainland China. Other foreign firms include IBM Hewitt-Packard and Compaq. Success requires foreign companies to partner with Chinese companies to gain distribution-channel and market access while they also operate their own independent subsidiaries.

DELL is forging ahead without an in-country partner and is doing well. DELL is reaping all of the profits from its sales with a Chinese company.

SWOT Analysis
To be able to look analytically into the internal affairs of a firm one must outline the strengths and weaknesses as well as the opportunity and threats.

Strengths
Strengths are internal resources and capabilities that have the potential to be core competencies. DELL’s core competencies are their cost strategy. In consistent to being an integrated cost leader, DELL also produce high quality PCs by using their Direct Business Model approach and sells them directly to the customers. With this innovative process, DELL cuts out the intermediary, excluding the associated cost as the company can understand the customers’ needs better and can provide the most effective computing solutions to meet those needs.

Weaknesses
DELL’s weaknesses are single sourcing, new product market and reliance on corporate clients.

Opportunities
DELL has many opportunities such as potential growth in overseas markets, the industry is still in a growth phase and the entering to the new product markets.

Threats
DELL’s threats are technological changes that are expected since technology can only get better. Global economy and increased competition in which DELL’s financial ratios identifies that they are no match for their competitors.

Critical Success Factors
DELL’s direct-to-customer business model is the key to the company’s dramatic growth and success and has focused on selling directly to customers. This helps eliminate the middleman and offers customers more powerful configured systems than most competitors. The direct model enables DELL to develop a thorough understanding of customer expectationswhich strengthens customer relationships and increases customer satisfaction and loyalty. One of the characteristics that distinguishes DELL from its other competitors is that DELL provides the mode to custom the computers of the customers’ choice and taste and deliver the system to the customer as it is the most crucial and critical success factor behind DELL Computers.

Conclusion
Therefore, DELL must be aware of the benefits they wish to realize, how it will be realized and ensure only investments of appropriate amounts of resources to obtain benefits. DELL relies on reputation in the US market of award-winning service and a high-quality product. Customer satisfaction and consumer awareness surveys should be conducted quarterly to ensure the image that DELL creates for itself within a culture has not existed before there is a positive one.

References
Daft, R. (1999). Management, 5th edition, The Dryden Press.
Edwards et al. (1995). DELL’s positioning, Gale Group Inc.
Hicks, H. and Gulliet, R. (1998). Management , 4th edition, McGraw Hill
Needle, R. (1999). Business in Context, 2nd edition, Thompson Publishing.
DELL website
www.dell.com
DELL Computers