Business Competition

Business Competition

Project 1:

Introduction:

Dell is an American company which deals with computer and computer related products, the company employs over 78,000 employees, this company is the second largest company in the computer industry while Compaq is the largest. The company was funded by Michael Dell in 1984 hence the name Dell.

Competitors:

The Dell Company faces major competition from other companies, this include Apple, Sun Microsystems, Gateway, Sony, Asus, Toshiba and Hewlett Packard which is also referred to as HP. All this companies are its competitors but HP is its major competitor, competition increased when HP merged with Compaq in the year 2006, this meant stiffer competition and the company lost its market position to become the second largest seller of computers and computer appliances.

Success of Dell:

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Business Competition

Dell has been successful in the computer industry while other companies such as Sony and Toshiba have not made as much as Dell. In the computer industry the products that are produced have a very short life cycle and for this reason products quickly become obsolete. Toshiba and Sony have only tried to make a steady supply of their products but in the computer industry this is not very important, what is important in the computer industry is flexibility. Flexibility means that a volume of one product is supplied quickly and when there is a change in technology a company must switch quickly and offer the new product to the market. [1]

Dell has succeeded in changing their products when a new technology emerges. This is followed by a well organised supply chain where products are offered in the market, for this reason therefore Dell has been successful due to their quick adoption to new technology that emerge in the production of computers and computer products.

The other reason why Dell has been successful is the adoption of a sophisticated supply network, Dell products are shipped directly from the supplier to the end customer, customers will only order their products and they are directly delivered to them, this has ensured a very effective supply chain which has led to the success of Dell, its competitors like Toshiba and Sony have not adopted such supply networks and for this reason they have not been in a position to succeed in this industry. [2]

Performance measures in the computer industry:

Performance measures are those indicators that help a company to define and measure the progress of the company, the computer industry has come up with benchmarks to measure performance, the Raw speed is one of benchmark used to measure performance in this industry, it is a measure from SPEC which stands for standard performance evaluation Corp, this benchmark measures the central processing unit, however this measure does not consider how fast data can be retrieved from the hard disk and this measure is complicated.

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Business Competition

Another test checks the CPU integer performance. this means checking how the CPU handles simple tasks, the other measure is the SPECINT95 which checks how the product handles complex mathematics. Another performance measure is the graphic performance benchmark, it is aimed at measuring how fast computers will run graphic intensive applications, and the graphic performance measure is provided by the GPC which stands for Graphic performance committee.

Project two:

SWOT analysis:

Strengths:

Strength of the Dell company is that the company offer customised products to its consumers, the company products are built to order, the customer orders and he or she is shipped the product, for this reason therefore the customer gets what he or she wants, this is a strength through which the company is able to communicate with its customers and they are able to understand their needs which is a key to success in every business.

The other strength is the introduction of internet order of products, customers order through the internet which enable a swift and improved distribution process, this also enables the expansion of value added services, through the introduction of a website where sales are undertaken the company is in a position to eliminate retailers and wholesalers and for this reason their products reach the market at very competitive prices. [3]

Weaknesses:

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Business Competition

The Dell Company has some weaknesses where one of its weaknesses is that it highly depends on the suppliers of components. This makes it a weakness in that it depends on other companies to supply them with computer components instead of them producing their own computer components.

The other weakness is that the company does not in itself produce new technology, they are not the proprietors of the technology they use to produce and for this reason they depend on others to introduce a certain technology where they adopt the technology and introduce it to the market. [4]

Opportunities:

There is a market potential in many regions in the world where Dell has not introduced its products, these markets especially are in china, India and Europe, and for this reason therefore this company has the potential to expand their market size in these regions where the company would experience an increase in the market area.

Another opportunity of this company is that it would be in a position to under price its competitor and in turn increase sales levels which will result into higher profits, for this reason therefore the company should invest more in discovery of new technology which will ensure that they are in a position to provide latest technology products at low prices to its customers.

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Business Competition

Threats:

The Dell Company is faced with strong competition from its rivals, this threatens the existence of the company where prices of products produced by its competitors are likely to go down forcing them to lower prices and in turn their profits will decline and in extreme cases may force Dell Company to close due to the failure to break even. [5]

Currency fluctuations in countries which are outside the united states also pose a threat to the company, this fluctuations may lead the company to loose their earnings as customers order goods from outside the united states and the currency fluctuates.

Financial ratios:

One of the most important financial ration is the profit margin, this ratio provides us with a measure of profitability of a company, the profit margin is calculated by dividing the net revenue by the net sales revenue, for the dell company according to the US market comparison of companies the Dell company profit margin is 5.0, the industry profit margin is 12.4, this is low compared with the industry level provided by S and P index which is 12.4. [6]

The other financial ratio is the debt equity ratio, this ratio n provides a measure of a companies proportion of equity and debts used to finance the companies operations. Dell debt equity ratio is 0.09 while the industry ratio is equal to 0.03. This ratio is also referred to as risk because it is equal to the debts divided by the shareholders equity. [7]

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Business Competition

References:

Haim M. and Johannes Z. (1999) Survival of the Smartest: Managing Information, John Wiley and Sons publishers, New York

MSN market ratios (2008) Dell financial ratios, retrieved on 5th February, available at http://mon eycentral.msn.com/investor/invsub/results/compare.asp?Symbol=DELL

Dell official website (2008) About Dell, retrieved on 5th February, available at http://www1.ap.de ll.com/content/topics/topic.aspx/ap/corporate/en/home?c=ap&l=en&s=corp

[1] Haim M. and Johannes Z. (1999) Survival of the Smartest: Managing Information, John Wiley and Sons publishers, New York, page 98

[2] Haim M. and Johannes Z. (1999) Survival of the Smartest: Managing Information, John Wiley and Sons publishers, New York, page 98

[3] Dell official website (2008)About Dell, retrieved on 5th February, available at http://www1.a p.dell.com/content/topics/topic.aspx/ap/corporate/en/home?c=ap&l=en&s=corp

[4] Dell official website (2008)About Dell, retrieved on 5th February, available at http://www1.a p.dell.com/content/topics/topic.aspx/ap/corporate/en/home?c=ap&l=en&s=corp

[5] Dell official website (2008)About Dell, retrieved on 5th February, available at http://www1.a p.dell.com/content/topics/topic.aspx/ap/corporate/en/home?c=ap&l=en&s=corp

[6] MSN market ratios (2008) Dell financial ratios, retrieved on 5th February, available at http:// moneycentral.msn.com/investor/invsub/results/compare.asp?Symbol=DELL

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Business Competition

[7] MSN market ratios (2008) Dell financial ratios, retrieved on 5th February, available at http:// moneycentral.msn.com/investor/invsub/results/compare.asp?Symbol=DELL