IntroductionOver the years, Dell has grown in both customer base and through the mergers and acquisitions it has made in recent years, most notably, Alienware in 2006 and Perot Systems in 2009. By 2009, Dell not only sold PCs, data storage devices, servers, software, network switches and computer peripherals, but also HDTVs, printers, MP3 players and cameras. Generally, Dell Inc. is praised for its innovative electronic commerce and innovative supply chain management (Wikinvest, 2012). However, most of these have only been what can be termed as ‘sideshows’. Otherwise, Michael Dell started and developed his company as a PC business.
Still, nothing has been as simplistic as merely saying ‘PC producer’. For instance, in 2008, Dell announced it plans to sell a significant fraction of its logistics operations and factory network. This, at the time, was consistent with a global restructuring trend (Hagel, 2008). This really made headlines, especially considering that the logistics operations formed a key contributor to its initial success in the industry. However, it was seen largely as a move by the management to tackle the question on what exactly the company was dealing- or is supposed to deal- in.
Moreover, in 2011, Michael announced was planning to move from PC business to data services, e.g. server computers, networking and storage equipment (Lohr, 2011). Indeed, these are decisions that are easy to arrive at, especially for a company the size of Dell. Such decisions rest on many factors that either directly or indirectly influence Dell’s business and daily operations. These factors include macro and micro environmental factors, which can provide certain opportunities but also pose certain threats at the same time.
This paper will take an in-depth look at these factors. Macro-Environmental FactorsDell finds itself in an environment consisting of uncontrollable forces that either directly or indirectly influence its operations and ability to meet its short and long-term objectives. Kotler and Armstrong (2003) refer to these as forces and actors outside the marketing industry, but which can still affect an organization’s ability to start and maintain good relationship with its customers. These macro-environmental factors are famously summarized in the acronym PEST: Political, Economic, Socio-Cultural and technological factors.
Political Factors: Indeed, the political environment in which a business finds itself is pivotal in an organization’s quest for specific strategic goals. Generally, political environment varies from context to context, e.g. regions, countries, etc. These include government regulations, legal issues, etc. As is the case in all other markets, Dell Inc. is naturally subject to the laws that govern all the aspects of its business, e.g. pollution, advertising, health safety, labeling standards, etc. Unfortunately, a number of countries today still have limiting policies, especially for foreign companies with the aim to protect domestic production.
Dell generally sees better potential in countries with favorable laws and regulations. Economic Factors: This refers to the overall nature of a country’s economic system, including economy’s structural anatomy, an organization’s capital market, socioeconomic infrastructure, business cycles, etc. Equally, economic factors include trends in income levels of consumers, i.e. factors that influence consumer ability to buy and patterns of spending. In addition, a company’s profitability can be affected changing rates of inflation, currency fluctuation, home-currency and relative exchange rates.