TMGT601 Assessment 1 SAMPLE

TMGT601 Assessment 1 SAMPLE

I/we have read and understood the Institute policy on assessment and academic honesty (which deals with issues such as plagiarism and recycling assignments) and certify that this assignment is my own work and complies with those policies.

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any other source except where due acknowledgement is made. 3. No part of this assignment has been written for me/us by any other person except where such collaboration

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detecting plagiarism. 6. I/We give permission for a copy of my/our marked work to be retained by the Institute for review and

comparison, including review by external examiners. I/we understand that:

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Further information relating to the penalties for plagiarism, which range from a

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No.

Strategic Management Analysis

Executive Summary

In this report, the internal and external factors of a firm will be discussed. How these factors could affect the firm’s ability to strategically compete in its market will be explained and the

one most challenging factor will be proposed. An approach to tackling the most challenging

factor will be given as a suggestion to help the firm better strategically compete.

Background to the Firm

Dell was founded in 1984 by Michael Dell. In 1988 the company was roughly growing 80%

annually and took the plunge to go public. The year of 1995 saw Dell expanding worldwide in

Europe, Asia, Japan and America. They continued to grow and became the No.1 computer

systems provider worldwide in 2001 and have continued to go from strength to strength

(Corporate.delltechnologies.com, 2019).

Internal Factors Affecting the Firm

The two internal factors that are affecting the firm are product design and financials. The issue

with product design is that Dell’s products run from proprietary technology, such as IBM’s

Power4 microprocessors or various UNIX operating systems (Thamhain, 2005). This means that

they don’t have their own unique product design and many of their competitors are using the

same technology, such as HPE (Hewlett Packard Enterprise) (IBM, 2019). A disadvantage of

using proprietary software is that Dell is reliant upon IBM for updates, support and fixes.

Depending upon the size of the development team, updates may be slow to reach you and it

may take some time to address security holes or other issues (Kazmeyer n.d.). Dell also uses

Sony for their batteries which caused a major issue back in 2004. Certain batteries that were

supplied to customers between April 2004 and July 2006 were recalled due to a potential that

the batteries may overheat and set alight (Product Safety Australia, 2019). Dell had no control

over the batteries due to them being supplied by Sony and therefore they had to rely on Sony

to notice the issue and provide information around it.

Financials of Dell is the second internal factor affecting the firm as they do not invest much

money into research and development like their competitors do. This makes it difficult to

innovate and play on new markets, such as Cloud computing and smartphones (Academia,

2019). According to Dell’s financial reports from Q4 2018 and Q4 2019, they had a decrease in

total assets of over $10,000,000,000 (Dell Technologies, 2019). This is a cause for concern for

such a large company and if this decrease continues year after year, it will impact their ability to

strategically compete in its market as they won’t have the funds to invest into new product

design or research and development.

External Factors Affecting the Firm

The two external factors that are affecting the firm are competition and consumption trends.

Dell’s competition took 3.5% of their global market share between 2008 and 2012. This is due

to the rapid change of technology and Dell losing their competitive advantage as they could not

keep up with the ever alternating ‘change of lifestyle’ (Academia, 2019). Dell needs to monitor

their competition and then forecast in order to decide on which move they should make in

order to keep ahead of the competition. These moves include: releasing a new product,

attracting a new segment, discounting, buying a competitor or improving their supply chain.

In 2018, Dell’s market share remained above 15% for all four quarters. This was behind Lenovo

with 25% market share and Hewlett Packard with 22% market share (Statista, 2019). Although

Dell should be monitoring Lenovo and Hewlett Packard, they should also be looking at those

companies who have slightly lower market share and could potentially grow and take a

percentage of Dell’s market share. These companies include Asus and Acer.

Consumption trends have been affected at Dell due to the cycle of recession the world faced.

The consumer’s purchasing power reduces during these times and therefore customers are not

consuming as many high-tech products such as the products that Dell offer. Although the global

economy has been doing well in the past few years, the economies of the individual nations are

still being affected (Pratap, 2019). This means that because Dell’s products are not basic needs

such as food, warmth, water – they are not bought as regularly, especially through times of a

recession when consumers are not willing to spend their money as freely.

Major Challenge Facing the Firm

The major challenge facing the firm are their competitors. This is because they not only have to

look ahead and see what the companies with greater market share to them are doing, but also

monitor what the companies with the slightly less market share are doing. Whilst they may

want to take a risk to increase their market share, they also need to be confident that this risk

will pay off and that it won’t in fact decrease their market share and not increase it. A real-life

example of this happened at Dell when they tried to release smartphones, but they

unfortunately did not catch on with consumers. Dell’s competitors such as HP, Lenovo, Acer

and Asus all offer smartphones and therefore this is a challenge that Dell faces regularly as they

have not been able to break into the smartphone market (Investopedia, 2019). This is a major

challenge that could impact Dell’s ability to strategically compete within the market and is

possibly something that they need to research to ensure they do not lose any more of their

market share to their competitors due to not having a more diverse range of products like their

competitors.

Proposed Approach to Tackling the Challenge/ Conclusion

A proposed approach to tackling the challenge of Dell’s competitors would be for Dell to invest

more money into research and development. This would give Dell greater information on what

consumers want when they are looking for a smartphone. They could then try breaking into the

smartphone market again in hope that they can increase their market share.

Increasing the amount spent on research and development will also ensure that Dell stays

ahead of the market with their current products such as laptops and printers. This is vital to

obtain their market share and stay ahead of their competitors.

References

Academia. (2019). External and Internal Analysis of Dell Computers. Available from: https://www.academia.edu/23613022/External_and_Internal_analysis_of_Dell_computers. [1st

September 2019].

Corporate.delltechnologies.com. (2019). Our Timeline | Dell Technologies. Available from: https://corporate.delltechnologies.com/en-au/about-us/who-we-are/timeline.htm. [31st August 2019].

IBM, 2010. IBM Power Systems for Oracle System Infrastructure in Midsize Organizations. Available

from: https://www.ibm.com/downloads/cas/RQ8MXP03. [31st August 2019].

Investopedia. (2019). Who are Dell’s Main Competitors? Available from:

https://www.investopedia.com/ask/answers/052015/who-are-dells-main-competitors.asp. [2nd

September 2019].

Investors.delltechnologies.com. (2019). Available from: https://investors.delltechnologies.com/static-

files/bc8e95ef-6367-4d2c-b098-e51963fea876. [1st September 2019].

Kazmeyer, M. (n.d.). Disadvantages of Proprietary Software. Available from:

https://smallbusiness.chron.com/disadvantages-proprietary-software-65430.html. [31st August 2019].

Pratap, A., 2019. A PESTEL/PESTLE Analysis of Dell. Available from:

https://notesmatic.com/2017/03/dell-pestel-analysis/. [2nd September 2019].

Product Safety Australia. (2019). Dell Australia Pty Ltd – Notebook Computers – Sony Batteries. Available

from: https://www.productsafety.gov.au/recall/dell-australia-pty-ltd-notebook-computers-sony-

batteries. [31st August 2019].

Statista. (2019). Dells Market Share 2019 – PC Shipments | Statista. Available from:

https://www.statista.com/statistics/298976/pc-shipments-worldwide-dell-market-share/. [1st

September 2019].

Thamhain, H.J., 2005. Management of technology: Managing effectively in technology-intensive

organizations. John Wiley & Sons.

https://www.academia.edu/23613022/External_and_Internal_analysis_of_Dell_computers
https://corporate.delltechnologies.com/en-au/about-us/who-we-are/timeline.htm
https://www.ibm.com/downloads/cas/RQ8MXP03
https://www.investopedia.com/ask/answers/052015/who-are-dells-main-competitors.asp
https://investors.delltechnologies.com/static-files/bc8e95ef-6367-4d2c-b098-e51963fea876
https://investors.delltechnologies.com/static-files/bc8e95ef-6367-4d2c-b098-e51963fea876
https://smallbusiness.chron.com/disadvantages-proprietary-software-65430.html
https://notesmatic.com/2017/03/dell-pestel-analysis/
https://www.productsafety.gov.au/recall/dell-australia-pty-ltd-notebook-computers-sony-batteries
https://www.productsafety.gov.au/recall/dell-australia-pty-ltd-notebook-computers-sony-batteries
https://www.statista.com/statistics/298976/pc-shipments-worldwide-dell-market-share/