Essay about Dell: Strategic Management and Dell

Submitted By BaraAJ1
Words: 3326
Pages: 14

Dominant Economic Characteristics

• The information technology industry witnessed a growth rate of 7.7% in 2010. The industry growth rate declined during the period 2001-2007.

• The industry usually offers the following products a) Hardware b) PC c) Servers d) Storage devices e) Printers f) Peripherals

• The PC industry is currently in the matured stage of the product life cycle. Globalization has not affected the growth rate of the industry.

• The industry has a large number of consumers and it is diverse. The attributes of the PC industry is useful to anyone. Thus anyone can derive value from the industry.

• The innovation and technological advancements are booming in the industry with the advent of sophisticated features in their products.

• The industry has both internal and external economies of scale. The industry has achieved internal economies like managerial, financial, marketing and financial economies and external economies with the retailers and distributors.

• Most of the households in US and many developed countries have computers. Students start learning about computers at a very early age. There is high reliability in the industry. The only drawback is the support systems in the industry.

• The industry is very competitive and profitable as well. As of now, the PC industry has the highest profit levels. E.g. Apple

• The industry is also characterized by mass outsourcing, customization, personalization, electronic commerce etc.

• There was sluggish economic growth in the industry in the international market during the year 2001-2003.

• Linux and Windows are the major operating systems in the industry.

• There is growing preference for low priced and standard components in the industry.

• The industry is also characterized by standardization, flexibility, simplicity, economy of use and value.

• There is cut throat competition in the industry. The major companies in the industry are Dell, Apple, Gateway, HP, Sony, Lenovo etc.

• The market is highly concentrated. The top companies like Apple, Dell etc have the major share in the market.

• Products in the industry usually follow market penetration as many companies target to sell their products at low price and get high market share.

• The industry has high experience curve effects. Companies can achieve economies of scale only after a company achieves high learning effect. This is a threat to new companies.

• Price and efficiency are the major factors determining the market share of a company

• The return on asset ratio is low for companies with high market share in the industry.

• The products in the PC industry have moved from being a luxury to a commodity product (Except Apple products)

• The massive digitalization of content is also an important feature in the industry.

Key Driving Forces

• Explosion of digital and information content is a key driver as it improved data availability. The overall rate of global spending increased and the data availability also doubled.

• The advent of search engine activity, social networking sites, e-mail, mobile phones, android applications etc. also acted as a key driver. This digital expansion improved the industry’s economic presence and overall demand in the industry.

• The demand for information technology in emerging markets like India, Brazil, Russia, China and India increased. The population is high in these areas and thus the demand for IT products and services also increased. This was a key driver in the industry.

• Certain drivers had negative implications on the industry. The digital volume content lacked authentication and there are many security issues in the industry. Also the consumers’ expectations are not stable. These keep changing. The overall ability of the consumers to deal with complexity and sophistication is low. The…