The Dell New Horizon represents how this computer company has grown since its inception in 1984. The company has recorded a rising growth since the year 1992 after it hit the ten billion dollar mark. It was estimated that the company made 30% growth in every year up to year 2000. This was accustomed to the increased technological use in that era and also as a result of increased internet usage. However, between the year 2000 and 2001 Dell recorded a reduction in its growth rates. This was linked to the increased number of computer providers and also due to the fall in prices of computers. The hyper growth of Dell in the industry would was also as a result of the Dell Direct Model. This was a low cost product that allowed for customer integration as well as virtual assimilation. The company estimated a $3 billion to $5billion revenue position. This was due to an increase in the level of its service revenues which would improve its market share and. Consequently, this would lead to growth of its position in the industry. Finally, the company predicted $60 billion revenue in year 2007; this was attributed to the rise in growth of Dell. However, this would require an adoption of a highly competitive strategy so as to accrue the revenues. For Dell to accomplish the double revenue of $60 billion in year 2007, the company would adopt the following vital strategies.
- What is Dell’s Position in the Industry as of 2002?
Dell recorded a market capitalization of $32 billion and based on their estimated increase in service revenues in year 2002 the company was expected to lead the market share. However, due to the merger of HP and Compaq in 2002 the company maintained a second position in the market share (United States, 2009). Dell recorded a 15.2 percent unit in market share closely behind the HP-Compaq’s 16.2 percent market share.
- An August 12, 2002 Business Week article, indicated that by 2007 dell intended to double revenues to $60 billion. How should Dell go about building the nearly $6 billion annual sales growth needed to achieve that target?
This is a proper indication of the business potential in these regions. Hence, the company should find out new ways of utilizing this market so as to clinch a leading position in the market share of EMEA. Secondly, in order to remain competitive, Dell must focus in the production of cheap products which give way for consumer integration. This way the company would hold a leading position in sales regarding the falling prices of computers. This is due to the fact that computers have been widely developed and most consumers seek to buy cheaper products. Lastly, the company would increase its undertakings in the Dell Service Providers (DSP) section. This would consequently improve its sales revenue and at the same time allow the company to attract more clients worldwide.
- If you disagree with Michael Dell’s growth target from Question 2 above, what would you alternative recommendation be? Why?
However, this double revenue projection might not be achievable for the company. In this case I would recommend that the company forms a merger with another leading company. In this case, the best company to merge with would be IBM since it has a favorable amount of the market share. For instance, in 2002 IBM held a market share of 6.0 percent which is quite a good amount if merged with Dell’s market share.
This would make Dell-IBM the leading company in market share and thus would have a chance of reaching the projected double sales revenue by year 2007. The Dell new horizons were marked by the crafting of Dell Direct Model which accrued quality to their clients while maintaining a considerably lower price (Kleindl, 2001). This product also ensures that the company shareholders acquire maximum gains in returns. Consequently, this would foster the company in becoming the leader in the market.
- In brief SWOT of Dell
Dell possesses strength in the creation of computer products which have great appeal to the consumers and at affordable prices. The company still faces the weakness of not optimizing its growth in the international market. Dell has an opportunity of expanding its growth tremendously by taking advantage of a merger with a leading company. Lastly, the company still faces threats from its competitors such as HP-Compaq.
Anumba, C. J., & Ruikar, K. (2008). E-business in construction. Chichester, UK: Wiley- Blackwell.
Kleindl, B. A. (2001). Strategic electronic marketing: Managing e-business. Cincinnati, Ohio: SouthWestern College Pub.
United States. (2009). Dell Marketing LP. Washington, DC: U.S. Govt. Accountability Office.