Presented by:

• Abhijit Sharma• Harshvardhan• Kaushik• Mohd Zia • Sandeep Singh

Competitive Analysis of DELL using Porter's five forces.

Competitive Analysis of DELL using Porter Five forces

INTRODUCTION

• Michael Porter developed Five Forces model in 1979 to analyze the economic and market forces that will ultimately influence an industry’s profit potential.

Those Five Forces are• Threat of New entrants• Bargaining power of Suppliers• Bargaining Power of Buyers• Threat of Substitute products or services• Degree of Rivalry among existing competitors

Competitive Analysis of DELL using Porter's five forces.

Economist Michael E. Porter identified………

Competitive Analysis of DELL using Porter's five forces.

Competitive Analysis of DELL using Porter's five forces.

Importance of The 5 Forces

…..vital in successful Strategic Management !

Competitive Analysis of DELL using Porter's five forces.

What strategy to use?

Basic knowledgeOf business strategy& Forces that influenceThe decision making

Industry analysis :1) Industry relevance2) Industry players3) 5 forces4) Industry structure5) Future changes

Strategize :* Competitive advantage* Cost advantage* Market dominance* New product development* Contraction / Diversification* Price leadership* Global* Re-engineering* Downsizing* De-layering* Restructuring

Measure and monitorstrategy effectiveness

How to deal with competition?

COMPANY DESCRIPTION• Dell Computer Corporation, incorporated in October 1987,

is a computer systems company and a provider of computing products and services.

• The Company's primary product offerings include enterprise systems, notebook computers and desktop computer systems. The Dell line of high-performance computer systems includes Power Edge servers, Power App server appliances, Power Vault storage products, Power Connect networking products, Dell Precision workstations, Latitude and Inspiron notebook computers, and Opti Plex, Dimension and Smart Step desktop computers.

• The Company also markets and sells Dell/EMC storage products under a long-term strategic relationship with EMC Corporation.

Competitive Analysis of DELL using Porter's five forces.

Contd.

• The Company provides targeted services for consulting, deployment and support, as well as an extensive selection of peripheral hardware, including hand-held products, and computing software.

• The Company conducts operations worldwide through wholly owned subsidiaries. Sales outside the United States accounted for approximately 35% of the Company's revenues .

Competitive Analysis of DELL using Porter's five forces.

Porter’s Five Forces & Analysis

Threat of New Entrants: MODERATE

• Low capital investment for independent stores

• Low product differentiation– Brand name may be a barrier to entry

• Low economies of scale• No legal or governmental barriers• Decreasing profitability shows that

there is a threat of new entrants

Competitive Analysis of DELL using Porter's five forces.

Competitors in PC industry:U.S. top five players:

U.S. PC market Share

DELL25%

COMPAQ13%HP

9%GATEWAY

7%IBM6%

OTHERS40%

Competitive Analysis of DELL using Porter's five forces.

Competitive Analysis of DELL using Porter's five forces.

Porter’s Five Forces & Analysis (cont.):

Rivalry: HIGH• High concentration• Price War: Low Margin• Decreasing profitability • Low differentiation• However, in the midst of sever

competition, Dell can still gain market share from other competitors. That proves Dell’s business strategies have been successful.

Competitive Analysis of DELL using Porter's five forces.

Porter’s Five Forces & Analysis (cont.):

Threat of Substitutes: LOW• Strong presence of PC’s

throughout society– One computer for every three

people in the U.S.• Only substitute for PC: Apple

Computer. However, high price, and lack of

software support prevent people from switching to Apple system.

Competitive Analysis of DELL using Porter's five forces.

Porter’s Five Forces & Analysis (cont.):

Bargaining Power of Buyer: High• Highly price sensitive• Reliability and customer service become

important factors.• Dell’s products are very reliable and customer

service is outstanding. These two factors help Dell to create certain brand royalty. But that’s given the fact that the Company set the prices very low. If the prices are raised too high, customers will not hesitate to switch.

Competitive Analysis of DELL using Porter's five forces.

Porter’s Five Forces & Analysis (cont.):

Bargaining Power of Suppliers: HIGH• Large number of suppliers for components like

hardware, keyboards, etc.• But two major inputs are monopolized

– Microsoft standard for all PC’s– Intel standard for most PC’s

• High switching costs

Competitive Analysis of DELL using Porter's five forces.

Porter’s Five Forces & Analysis (cont.):• Stock Performance

Competitive Analysis of DELL using Porter's five forces.

Competitive Analysis of DELL using Porter's five forces.

Competitive Analysis of DELL using Porter's five forces.