Introduction
Since its establishment, Dell has achieved great success as a company that specializes in the PC market. However, in 2013, Dell found itself struggling to maintain a competitive advantage and decided to restructure, assuming the main weakness to be the poor attitude toward customers and stakeholders. This paper aims to evaluate how the company’s industry life cycle, five forces, global strategy, competitive advantages, functional strategies, and value creation activities impact the issue of customer and stakeholder dissatisfaction.
Industry Life Cycle
According to the industry life cycle theory, the sales patterns of a company’s products or services may correspond with four stages that include introduction, growth, maturity, and decline. On the basis of the case study, it is possible to state that Dell company showcases the features of the industry lifecycle’s maturity phase. According to Hill et al. (2019), these features include limited possibilities for growth and high barriers to market entry for new competitors. At this stage, sales and profits are traditionally decreasing, and even though sales may continue to increase, the products’ revenue growth begins to decline. The price war in the competition for customers showcases an attempt to increase revenue through the customer base. In the meantime, the PC market is represented by the industry “giants,” such as IBM, Lenovo, Apple, or Hewlett Packard. Consequently, new entrants cannot withstand competition with already established companies in this market sector.
In relation to Dell, one of its crucial issues is a poor attitude toward consumers that may be regarded as unacceptable in a maturity phase. Due to the existence of large companies that operate in a highly competitive environment, it is extremely challenging to attract a considerable number of new consumers. Thus, in order to prevent sales from decreasing, it is essential to focus on loyal customers. However, being in the maturity phase, Dell failed to ensure the satisfaction of its customers, and within the framework of new clients’ absence and competitiveness when people have an opportunity to choose the products of other companies with considerable competitive advantages, the company’s reconstruction was inevitable.
At the same time, the maturity phase of the industry life cycle presupposes interaction with consumers in order to receive their feedback and improve products or services on its basis or raise people’s awareness of the company’s offers. In addition, the attraction of new consumers is still possible through innovations, the introduction of new products and services, and the renewal of marketing messages. In addition, at this stage, the improvement of customer service is particularly important as it creates additional competitive advantages.
As the maturity stage implies the industry’s peak of development, its prolonging is highly essential. For this, Dell should focus on consumer satisfaction in order to restore its reputation through effective marketing strategies and operational management on the basis of continuous demographic analysis that may define the population’s needs and interests. In addition, it is necessary for the company to focus on continuous industry analysis to define its phase. The significance of the industry life cycle’s following is determined by the fact that every phase has its peculiarities. In other words, on the basis of the stage, companies decide the appropriateness of advertising increase, the expansion of new markets, the reduction of prices, the introduction of new products and services, and the introduction of new strategies. Thus, when a company does not follow the cycle, it is particularly vulnerable to failure as the strategies may be chosen inappropriately.
Porter’s Five Forces
In general, the forces of competition substantially impact a company’s performance in the market and determine its strategies to attract consumers, as they may be regarded as a driving force of any business. According to Isabelle et al. (2020), the forces analyze the market in terms of the threat of new competitors, buyers’ and suppliers’ bargaining powers, substitute products’ threat, and the state of actual market competition. In the case of Dell, its forces partially correlate with its life cycle stage and the current state of the PC industry. In particular, the threat of new entrants cannot be regarded as significant due to the necessity of substantial investments, technological basis, innovations, and a highly qualified workforce. While a limited number of competitors makes the bargaining power of suppliers low, it creates a highly competitive environment, especially when the attraction of new consumers is challenging. As clients traditionally expect an appropriate quality of products at affordable prices, their bargaining power demands standard-based implementation of new technologies and innovations in the context of ubiquitous digitalization (Isabelle et al., 2020). Finally, the actual state of market competition benefits economies of scale; thus, Dell can be considered favorable in this regard.
The reason for the restructuring of Dell demonstrates that in order to remain competitive, it should pay particular attention to customers’ needs and habits and the quality of its customer service. In addition, the threat of substitutes and the introduction of new products by rivals may be regarded as crucial for the company. In other words, Dell might be threatened by the increasing popularity of smartphones and tablets as a company that concentrates on PCs, and its products may be replaced by smartphones or tablets even for professional work. In this case, for an updated company, it is essential to ensure the absence of internal conflicts and strategic alignment – in other words, Dell should ensure that it has enough resources to create competitive advantages, such as innovations and new products and services, the activities of all stakeholders are coordinated. In addition, there should be no conflicts of interest between stakeholders that existed before the company’s renovation as a common understanding of goals and actions for their achievement may be regarded as globally efficient decisions. Thus, Dell should eliminate the major stakeholder issues, such as resource constraints, lack of communication and collaborative planning, limited information sharing, and competing priorities, in order to succeed.
Global Strategy
Initially, Dell was successful in performing its global strategy with substantial competitive advantages in the build-to-order approach and direct selling. However, its poor attitude toward stakeholders and customers resulted in a reputation loss due to low business transparency and customer service outsourcing. In addition, the issues related to the local economy contributed to the occurrence of the substantial customer-related problem that led to the company’s restructuring. Thus, global strategies following Dell’s return to the public should include promoting the company’s ethical and social responsibilities and orienting toward the global environment. In general, Dell’s market has already expanded worldwide as it has factories across the globe. While the U.S. economy-related issues have less significance for the company outside the country, it is still essential to pay attention to its reputation to regain consumers’ trust. Thus, Dell’s reinforcement of the brand’s reputation can be done through the extensive marketing campaign of the ethical changes it implemented during reconstruction, along with the increase of its market share in other countries. In other words, by focusing on the satisfaction of consumers outside the United States and its reputation worldwide, Dell will be able to improve its position.
Competitive Advantages
Dell’s competitive advantages include quality products, efficient inventory system, distribution, and supply chain management, long-lasting performance in the PC market, innovations, and professionalism in web technologies, digital advertising, and e-commerce. All these advantages may contribute to the solution of the company’s reputation loss due to the poor attitude to consumers. In this case, Dell should consider the bargaining power of customers and a competitive environment to improve its customer service and offer quality products in accordance with customers’ expectations, introduce new products, and pay attention to the ethical aspects of performance.
Functional Strategies
In general, its functional strategies of Dell should focus on consumers’ needs in order to regain the trust of loyal and attract new ones improving its reputation and increasing sales. Thus, it may introduce new services and products to compete with its rivals and answer the replacement demand (Neher, 2021). As innovations and the quality of products have already been the company’s competitive advantages, their improvement will contribute to the company’s reputation. Moreover, the use of new technologies, such as cloud-based services, the launch of marketing campaigns, interaction with potential and real customers, and excellent customer service will be able to improve customer responsiveness and provide initiatives for continuous and stable growth and development.
Value Creation Activities
The company’s restructuration may be regarded as an opportunity for value creation activities. Taking into consideration the aim to improve the relationship with consumers, these activities may include innovations, the development of new products and services, and the establishment of cost-efficient policies. In addition, the necessity of Dell’s renovation may contribute to the modernization of its core strategies, tactics, and business aspects (Sweet, 2021). In addition, changes provide an excellent opportunity for partnership, core markets’ extension, and software innovations (Haranas, 2018). In this case, Dell is able to create a solid and respectful company as a part of the technology ecosystem that provides high-quality products addressing consumers’ needs.
Correlations and Analysis
On the basis of the company’s functional strategies, value creation activities, and the external environment, it is possible to state that Dell has considerable strengths in solving the issue of poor attitude to consumers and stakeholders. For this, it should focus on innovations, new products and services, customer-oriented approaches, and new strategies on the basis of ethics. However, potential weaknesses may include a lack of resources and a conflict of interest between stakeholders. For this, the modernization of the company’s business areas and partnership may be regarded as a solution as it ensures additional resources, improved reputation, and goal alignment.
Conclusion
To conclude, Dell’s industry life cycle, five forces, global strategy, competitive advantages, functional strategies, and value creation activities have a substantial impact on the company’s issue related to poor attitude toward consumers and stakeholders that led to renovation. In order to avoid it in the future, the company should focus on its competitive advantages, such as quality products, efficient inventory system, distribution, and supply chain management, long-lasting performance in the PC market, innovations, and professionalism, and introduce new products and technologies paying attention to competitors, innovate, expand globally, and base its reputation on ethical principles.
References
Haranas, M. (2018). Dell technologies head of strategy on biggest initiatives around software, simplification and establishing ‘defendable positions.’ CRN. Web.
Hill, C. W. L., Schilling, M. A., & Jones, G. R. (2019). Strategic management: Theory & cases: An integrated approach (13th ed.). Cengage Learning.
Isabelle, D., Horak, K., McKinnon, S., & Palumbo, C. (2020). Is Porter’s five forces framework still relevant? A study of the capital/labour intensity continuum via mining and IT industries. Technology Innovation Management Review, 10(6).
Neher, K. (2021). Twelve digital marketing trends for 2022 and how to take advantage of them. Forbes. Web.
Sweet, T. (2021). Sweet on Dell Technologies: Opportunity, growth and value creation. Dell Technologies. Web.