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International Business Strategy - Dell Inc. Ltd Presentation

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Jack Stanley

on 26 November 2014

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Transcript of International Business Strategy - Dell Inc. Ltd Presentation

International Business Strategy

Dell Inc. in 2008: Can It Overtake Hewlett-Packard as the World Leader in Personal Computers?
Question 1
Which company is competitively stronger – Dell or HP?

Use an appropriate pragmatic assessment methodology to support your answer.
Question 2
In what respects, if any, is HP’s strategy in PCs more appealing or better than Dell’s strategy?
Better Strategy
Who is good at what, and will it make them
gooder
?
Historical Milestones
Dell Corporation Ltd - Founded by Michael Dell in 1984

Hewlett-Packard Ltd - Founded by Bill Hewlett and Dave Packard in 1939
Question 1
Which company is competitively stronger – Dell or HP?

Use an appropriate pragmatic assessment methodology to support your answer.
Bigger Picture
How do these strategies and competencies align with the changes in environment?
Conclusions
Dell Inc. in 2008: Can It Overtake Hewlett-Packard as the World Leader in Personal Computers?
Question 1
Which company is competitively stronger – Dell or HP?

Use an appropriate pragmatic assessment methodology to support your answer.
Question 2
In what respects, if any, is HP’s strategy in PCs more appealing or better than Dell’s strategy?
Our Approach
Critical analysis

Quantitative factors

Qualitative factors

Justified conclusion
Dell Inc. Ltd
Michael Dell (19) found
PC's Limited
with $1000 in 1984

By 1988, Dell's market capitalisation was $85 million

In 1996,
Dell.com
launched & earned $1 million / day after just 6 months


HP Ltd
Bill Hewlett and Dave Packard found
Hewlett-Packard Ltd
with $538 in 1939 - The name was decided on a coin toss

HP's first product was the
Model 200A audio oscillator
, priced at $55 compared with competitors' at $500
PC Industry
The
Altair 8800 Kit
, created by Ed Roberts in 1975, is considered the first functional PC

IBM created the first commercial PC in 1981, called the
IBM Personal Computer
, which cost $1600
Competitively Stronger
Total Revenue

Net Profit

Sales Volume

Market Share

Product Portfolio
Dell Inc. Ltd
Global PC Revenues 2007 - Dell $37.4 billion vs HP $36.4 billion

Provides a personalised sales experience and product range

Improves customer value through utilising a shorter value chain
HP Ltd
Global PC Market Share 2007 - HP 18.8% vs Dell 14.9%

Global PC Sales Volume 2007 - HP 50.5 million vs Dell 40.0 million

Provides a comprehensive retail and support network
HP Ltd
HP is competitively stronger than Dell


Why?
Time of economic uncertainty:

Power of quantitative results

Diversity of portfolio

Availability of support network
Things to Consider
What are they?

Key Competencies

What's going on around them?

Best setup tp
defend
or
enhance
position?

Decision Time
What they say it was ...
Dell: "
[Dell's] core business strategy is built around our direct consumer model... and highly efficient manufacturing
."

HP: "
[Our] multi-year strategy [is] to create the world's largest technology company.
"
Key Competencies
Dell
: Manufacturing & Logistical Expertise

Customer Direct Model - "
...finger on the pulse.
"

HP
: Large & Diverse Distribution Network

Mark Hurd's
renewed focus

Diversified Portfolio
Generic Strategy Confusion?
Dell
:
Cost Leadership
... leading to Hybrid?

HP
:
Lost & Found

2008: Both Cost Leadership,
different consequences
What Changes?
High-Growth Markets

Economic Downturn

New Entrants

Changing Consumer Preferences

Cost Fluctuations
And the winner is...
HP
has the better, more appealing strategy


Question 1
HP is competitively stronger than Dell
Question 2
HP has a better strategy, more appealing strategy than Dell
Can Dell Do It?
Dell
could
overtake HP

however

HP is not Dell's priority anymore ...
References
Johnson, G., Whittington, R., Scholes, K. (2011)
Exploring Strategy: Text & Cases
. 9th edn. Harlow: Pearson Education Limited.

Porter, M.E. (1980)
Competitive Strategy: Techniques for Analyzing Industries and Competitors
. New York: Free Press.

Rugman, A.M. and Collinson, S. (2012)
International Business
. 6th edn. Harlow: Pearson Education Limited.
Competitive Advantage
Porter (1985): "
[Competitive Advantage is] those things about our business that we do better than our rivals, and so make customers come and buy from us.
"

Grant (2003) -
Sources of Advantage
coupled with
Porter (1980/1985) -
Generic Strategies Theory

Sources of Cost Advantage

vs

Sources of Differentiation
Full transcript