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DELL Strategic Analysis

Strategic Analysis of Dell Technologies


Dell is known worldwide as a major computing and IT brand. Michael Dell founded the company in 1984. He remained the CEO of Dell from the year of foundation till 2004. Again he resumed his position as chairman and CEO in 2007. Dell is among the top players in the computing industry. Prior to 2016, it was a private company. In 2016, it acquired EMC to grow its product range. After it merged with EMC, the brand was renamed Dell technologies. Dell’s revenue saw an impressive rise this year. It provides products and services that are organized in three main groups. They include Client Solutions Group, Infrastructure Solutions Group and VMware Group. Dell is a global brand with its headquarters in Round Rock, Texas. The PC industry is marked by heavy competition as well as high level of regulation. Intense competition has led to higher expenditure on sales and marketing as well as research and innovation. Dell is focusing on the emerging markets to find faster growth. As a PC brand, it has maintained excellent focus on product quality. This is why it enjoys high level popularity in the international market. It is among the top five players in the industry rivalled by HP, Lenovo, Apple and Acer. It is an innovative brand that holds a large portfolio of patents. Dell is planning faster growth. Its business model has undergone some significant alteration during the recent years. The PC market is full of significant risks where even the smallest moves matter. Dell is a strong brand and must remain steady to survive upcoming risks and challenges.



  • Brand image :- Dell has maintained a strong brand image as a global PC and IT business. Its focus on quality and innovation are the reason behind its popularity. Dell’s popularity can also be attributed to its pricing strategy. It has brought a wide range of products. However, it makes products for the higher end as well as the lower end market. A strong brand image has resulted in higher sales worldwide.
  • Product Portfolio :- Dell has maintained a large product portfolio which it has continued to grow through acquisitions. Its business is divided into four segments that include Infrastructure solutions group, Client Solutions Group, VMWare and Other businesses. The Client Solutions Group offers  PCs, notebooks, branded peripherals like monitors and projectors as well as third party software and peripherals. Dell formed its Infrastructure Solutions Group after the acquisition of EMC and its merger with Dell’s Enterprise Solutions Group. ISG offers  cloud and big data solutions, which are built upon a modern data center infrastructure for enterprise customers. “VMware offers compute, cloud, mobility, networking and security infrastructure software to businesses” (Dell Annual Report, 2018). Its other businesses include RSA, Pivotal, Secure Works and Boomi. RSA and Secure Works provide security solutions. In its PC business, the brand has brought both high end and low end products. Its alienware laptops come with a large price tag. However, it has also brought  a large number of products in the lower price range too.
  • Focus on innovation :- Dell is an innovative brand and invests in innovation for continuous expansion of its product line. Its focus is on the development of scalable technology solutions at competitive prices. Dell incorporates customer input into the research and design process. Moreover, its engineers collaborate with a large network of technology companies globally to create new designs and bring hi-tech solutions. In the recent years, it has increased its investment in Research and development. For 2016, 17 and 18, its investment in research and development was 1.1, 2.6 and 4.4 Billion dollars. In 2018, it has sharply increased its investment in research and development.
  • Global expansion :- Dell is a multinational brand with operations across several countries in Americas, Europe, Middle East, Asia and other geographic regions.  US is its main market. However, the brand is trying to expand its business faster across newer areas. It is focusing on emerging markets outside US, Japan, Canada and Europe. China and India are among the fastest growing markets currently. Dell is trying to increase its presence there.
  • Efficient manufacturing and supply chain :- Dell has an extensive and efficient manufacturing and supply chain. The company owns manufacturing facilities in the United States, Malaysia, China, Brazil, India, Poland, and Ireland. Its manufacturing process consists of assembly, software installation, functional testing, and quality control.


  • High operating expenses :- Operating expenses of Dell Inc have grown very high which has resulted in operating losses for previous several years. In 2018, the operating expenses of Dell Inc have grown as high as 23.4 Billion Dollars leading to a loss of 3.3 Billion dollars.
  • Over-dependence on Michael Dell for decision making:-  Dell depends too much on Michael dell for decision making who is both the CEO and the largest stockholder of the company. Sudden loss of his services may result in major difficulties for the  brand.
  • Lack of differentiation: – Dell is not a very highly differentiated brand. Moreover, it failed to enter some of the most profitable business segments like smartphones. Most of the products and services it offers have several substitutes in the market.
  • Dependence on US market :- The brand earns a very large part of  income from the US market. In 2018, nearly 48% of the brand’s income came from United States. Dell currently depends heavily on United States. Apart from that Western Europe, Japan and Canada are also important markets for the brand. It is trying to increase its presence in the Asia Pacific market. However, Dell’s main market are still the Americas.


  • AI and emerging technologies: – Dell can use differentiation to grow its business and expand faster. It can venture into new areas and invest in the development of new technologies. There are several emerging areas from AI to mixed reality that offer new growth opportunities. The brand can invest in these areas to grow its business. Investing in the emerging technologies can help the brand be more competitive.
  • Asia Pacific markets:- The Asia Pacific markets are growing faster and Dell must  focus on the emerging markets like China and India to find profitable growth. These markets are growing at the fastest rate and investing in them will also work to increase Dell’s income from international markets.
  • Differentiation: Dell must try higher differentiation to create a distinct brand image. It is facing high level competition in the world market because most of its products have several substitutes. Differentiation will help the brand grow its product line as well as  open new channels of revenue.


  • High level of competition :- The level of competition in the PC industry has grown very high. Dell is facing heavy competition from other brands like HP, Lenovo, Acer, Apple and Asus. It has increased its expenditure on research and innovation as well as marketing. However, dell still does not spend much on Promotions. Its advertising expenditure for 2018 was just around 1 Billion dollars. Its R&D expenditure on the other hand has grown a lot reaching 4.4 Billion dollars in 2018.
  • Shrinking PC market :- The PC market has declined fast during the recent years. this has happened due to several reasons. The biggest reason is the rise of mobile computing which has led to growth in use of smartphones, tablets and other mobile computing devices.
  • High level regulation :- The level of legal and political regulation in the PC industry has grown very high. There are several laws in each area and apart from that laws related to international trade have also grown very high. This has led to higher compliance related costs as well as higher operational costs and pressures.

PESTEL Analysis of DELL INC.:


Political factors have grown highly important in the context of business worldwide. Their role has grown central to operating successful international businesses. The political environment worldwide is having a direct effect on global businesses. It is why certain foreign markets are more difficult to penetrate than the others. The geopolitical factors too can have a heavy impact on businesses. Today, companies are operating in a heavily controlled environment. The level of government oversight is much higher than it used to be some years ago. There are several reasons that governments are exercising heavier control. Several changes in the 21st century political environment have influenced this change. Political stability has also grown important to conducting business peacefully and successfully in 21st century. Political chaos on the other hand can  disrupt sales and supply chain network. Dell is a global brand with operations in nearly every part of the world. As such politIcal factors and the political environment of these nations has  direct impact on its business.


Economic factors too are playing a central role in the context of business. Their impact is most direct on global businesses. It is why changes in the economic environment worldwide matter the most to businesses and investors.  The world economy has been through a  recession. During that period employment level fell worldwide leading to decline in people’s income. This was a period when spending on electronic items grew lower. As such most businesses saw heavy losses. The world economy has returned on track in the recent years and the level of employment has also grown higher. People are having more disposable income and global brands are enjoying higher sales and revenue. Dell has also seen a fast rise in its net revenue during the recent years. Its 2018 revenue rose to 78.6 Billion dollars, rising  from 61.6 Billion dollars in 2017. Economic stability is important for growth and most of the world economies are seeing faster growth including the Asia pacific region. Dell  has its headquarters at Texas in United States. US is also its main market which accounts for 48% of its net revenue. Economic activity has grown a lot in US during the recent years. The overall economic outlook is also a lot better than the recessionary period. Some of the world markets are still seeing economic fluctuations but economic growth in the Asia Pacific markets has brought fresh opportunities for brands like Dell. In this way, the role of economic factors in the context of international business is very important.


Social factors are also growing important in the context of business. Their role has grown manifold in the last few decades. A good social image is now more important than ever for businesses and particularly the large and global companies. Businesses like Dell are investing millions in building a strong social image. They invest in social responsibility and other areas of philanthropy. Sociocultural factors are also playing a major role in the area of marketing. Dell operates across several countries. Culture differs from country to country. It is why a company like Dell would need to adjust its business and marketing strategies to suit its markets and cultures. It also invests in communities and local economies where it operates. This has helped the brand build a great reputation and image. Social trends also affect businesses. This century has seen the rise of the millenial generation and the middle class. Customers’ taste and preferences have changed a lot. Dell and its competing businesses are building models that suit the millenials’ taste. Society and culture are now more important factors than ever in the field of business.


Technology is now a central pillar of business strategy for global businesses. Brands are investing heavily in Information technology. Dell is a technology brand that has brought a large range of hardware, software and cyber security products. It also invests heavily in technological innovation. This has helped the brand grow its revenue faster. Technology is now  driving the business world. It has become a key source of competitive advantage for companies. Every brand is investing in technology to create sustainable sources of competitive advantage. Even Dell has raised its investment in Research and innovation. In 2018, its investment in R&D reached 4.4 Billion dollars rising from 2.6 Billion dollars. Dell has brought a large range of technology products including software, hardware and cyber security products. It also serves a large number of firms globally through its global sales and service network.


Environmental factors have also grown in importance in the twenty first century. Businesses are taking environmental forces more seriously than ever. It is because while on the other hand the government has formed strict laws regarding environment and emissions, brands themselves are cautious regarding their social image and their environmental impact. They are also investing in environmental issues and the protection of their community and environment. Dell has also invested in environmental issues in several areas from sustainable production to green packaging and reduction of carbon footprint. It is also investing in renewable energy and energy efficient production. While this is great for the environment, it is also good for the brand in several ways. It gives rise to higher trust, better social image and higher customer loyalty. Governments around the world are encouraging businesses to invest in the environment and build an environment friendly image. In this era, investing in the environment is great for any brand.


Law and legal factors have grown central to business in the 21st century. The level of legal oversight in the PC industry is also very high. Governments and legal agencies around the world have tightened their grip on businesses. Major global businesses and mainly the technology companies have felt string pressure and several of them have also incurred huge fines in various areas. The legal environment in EU is being seen as an attempt at stifling growth of the large technology brands. Even in US, businesses are complaining of  an outdated regulatory model that does not suit the needs of the modern business scenario. From labor to environment and product safety, legal issues are causing significant financial pressure for businesses. Dell’s image in this area has remained relatively clean. This is because of the company’s focus on compliance. While compliance adds to operational costs still brands cannot afford to lose focus on local and international laws governing their businesses. It can lead to major fines and losses.


Bargaining Power of Suppliers:

Bargaining power of Dell suppliers is low. Its is because most suppliers are small in size and do not hold significant financial clout. Apart from few large brands most of them are small in size and scattered throughout the world.  Other factors which have led to higher clout of Dell compared to its suppliers include its brand image and financial position. Overall, suppliers hold low bargaining power against Dell. The company sets rules and standards for its suppliers to follow. An important factor that gives Dell higher bargaining power is that it is a major customer for its suppliers holding significant financial strength . None of the suppliers would want to lose a major customer.

Bargaining Power of Customers:

Customers’ bargaining power in the 21st century has grown much higher. It is due to several factors including higher availability of information as well as increased competition in the PC industry. Every customer in the 21st century is a well informed customer who makes informed choices. Apart from that the number of options before customers have grown. HP to Acer, Lenovo, Apple, Asus and several other brands, make laptops and peripherals. Customers check reviews before purchasing any product.  The level of competition is so high in the PC industry that each brand is spending a lot on advertising and promotions. They are also focusing on being customer centric and retaining their existing customers. So, due to these several factors, the customers’ bargaining power has grown very high. Some of the factors that moderate their bargaining power include Dell’s brand image, financial strength and marketing.

Threat of Substitutes:

The threat of substitutes in the PC industry has grown. Most of the threat comes from the existing PC and cloud brands that offer similar products and services. The main competitors of Dell include HP, Lenovo, Apple, Acer and Asus that sell a large range of PCs, laptops, peripherals and other computing related products. The overall threat is moderate. Some of the factors that moderate the threat from substitutes  include brand image and financial strength. Overall threat from substitute products is moderately high.

Threat of New Entrants:

The threat of new players entering the market has grown minimal. This is due to several reasons including high cost barriers. There is very high financial investment in manufacturing supply chain management as well as marketing and research and innovation. Apart from that human resource management and other areas also require very high level of investment. For any new player it would be very difficult to  enter the market with a small investment. The level of competition is also very high in the industry. The existing players are investing heavily in innovation and to remain competitive. All these factors make it difficult for new players to enter the market and build a new brand.

Competitive Rivalry Between Existing Players:

The level of competitive rivalry between the existing players in the PC industry is very high. There are several players in the market. the largest ones include HP, Acer, Asus, Apple and Dell. These are the five biggest ones with the largest market share. All of these invest aggressively in  marketing, promotions as well as research and innovation. Every brand is fighting for market share and to expand its customer base. the overall level of competitive rivalry in the PC industry is very high.


Michael E. Porter of Harvard gave the concept of value chain. The Value Chain includes all activities from product conception to marketing, sales and after sales service. It is a useful model allowing managers to understand how each activity described in the model adds value to the product or service. Optimizing the value chain helps at cost reduction as well as waste minimization. In this way, it helps increase overall efficiency of the entire production and sales process. Here is an analysis and description of the value chain of Dell technologies.

Primary Activities:

Inbound logistics:

Dell’s supply chain network is spread globally. The company has managed its supply chain very well through a chain of warehouses. These warehouses serve its manufacturing facilities and retail operations. It owns manufacturing facilities located in United States, Malaysia, China, Brazil, India, Poland, and Ireland. Dell sources raw materials from suppliers located around the world. The company has hired external logistics partners to optimize its inbound logistics and uses a mix of several channels including sea route and air to source and stock raw material. Dell uses the Just in Time (JiT) model for supply chain and inventory management. Sourcing is easier with the help of logistics partners like DHL, UPS and others.

Outbound logistics:

Just as in case of its inbound logistics, Dell has managed its outbound logistics with help from external logistics providers. Third party vendors and logistics providers play a central role in delivering products and solutions to customers. Dell uses its network of distribution centers and retail partners for making deliveries to the end customer from a location close to them. In Europe it has extended its fulfilment network and changed the way it used to deliver accessories. Dell is now using a multi channel transportation strategy for deliveries. Using a balanced mix of several channels has helped it reduce wastage and cut emissions. Whether in terms of inbound or outbound logistics, the focus of Dell remains on minimizing the environmental footprint. Apart from the selection of the best route for delivery, using the right transportation channels also ensures that time and other resources are not wasted.


Dell is a global brand with a global supply and distribution network. It has continued to optimize its network to gain highest efficiency and productivity. Dell has its global corporate headquarters in Round Rock, Texas, United States. The brand has operations and conducts its business in several countries located in the Americas, Europe, Middle East, Asia and other geographic regions. Apart from that to increase its global presence Dell has continued to focus upon the emerging markets outside US, Canada, Japan and Western Europe. Its manufacturing facilities are located in United States, Malaysia, China, Brazil, India, Poland, and Ireland. Dell has also implemented Lean Six Sigma methodology for continuous quality improvement.

Sales and Marketing:

Dell has a global sales and distribution network apart from its direct to customer sales channel. Apart from its own retail network, it has focused upon increasing the number of its retail partners in the recent years. Dell also uses a multichannel strategy for marketing and promotions of its brand and products. Apart from tis own website, the brand uses social media and more traditional and digital channels for marketing and promotions. However, considering the size of the brand, its advertising expense is still very small. Last year, the brand spent a little above a billion (1045 million dollars) on paid advertising.

Support Activities:

Technology :

Dell is a technology brand and focuses on technological innovation to bring better products and services as well as to expand its business. Apart from its cloud computing business, the brand depends heavily on its IT infrastructure for successfully operating its business. It also uses innovative technological solutions for efficient business, supply chain and sales network management.

Infrastructure :

Dell’s global operations are supported by strong infrastructure. Its business is supported by a large and interlinked IT and manufacturing infrastructure. Michael Dell leads the brand and is its main decision maker. Dell has regional offices all over the world.Its total assets were worth 122.3 Billion dollars in 2018 rising from 118.2 Billion dollars the previous year.


Dell has also maintained heavy focus on HR management. Strategic HR management has become critical in this era to the operation and management of a successful business. Dell employs around 145000 full time employees ( as of 2018) of which 22000 are VMware’s employees. 39% of its all employees are located in United States whereas around 61% are located in the other countries.


Dell has coordinated its global procurement process very well. Its global procurement team works in close coordination to manage an efficient supply chain and source raw materials efficiently from suppliers located in all corners of the world. Moreover, this team works in coordination with the Dell Supply Chain Sustainability team to ensure that suppliers perform as per the environmental standards.


Direct Sales :-

Dell was also among the first ones to introduce the direct sales model under which it sells directly to the customers. Customers can chat with an expert and select the best model for themselves or customize existing models as per their taste. The model is then shipped to their address directly.

International expansion :-

Dell is also focusing on international expansion and while Americas are its main market, its products sell all over the world from United States to Europe, Asia Pacific and Middle East. Due to the fast growth in the Asia Pacific economies, it is focusing on increasing its market share in India and China.

Product quality and competitive pricing :-

Dell has brought  a large range of computing related products. The company follows a varied pricing strategy in order to cater to the various customer segments. Some of its products like the Alienware series of laptops is made for the higher end market. However, it has also brought affordably priced models made for the lower end market. The Product portfolio of Dell is also quite large and apart from laptops, PCs and peripherals, the brand also offers cyber security and cloud based services.



Product quality:

Dell’s focus has remained on providing great quality products to its customers. Quality has always been its priority and  is a major reason behind its popularity. Its string brand image is due to its string focus on innovation and bringing good quality products to the market. While it offers a large and varied range of PCs and Laptops, its innovative technology and greta product design have resulted in higher popularity.

Customer loyalty:

Dell caters to diverse segments of customers. Good products quality and after sales service have resulted in higher popularity and customer loyalty. higher customer loyalty means better sales and revenue.

Supply chain management:

Supply chain management has become a critical source of competitive advantage for pC brands. It helps st reducing costs as well as ensuring higher quality and better availability f raw materials in the supply chain. Efficient supply chain management also leads to faster growth.

Competitive pricing:

Dell has priced its products and services competitively so as to generate higher sales and revenue. Its products cater to diverse customer segments from the lower end to the higher end of the market. Gaming laptops like Alienware are meant for the higher end whereas the brand also offers lower priced laptops for the lower end customers. In a highly competitive PC industry, pricing strategy affects demand directly.

Global presence:

Dell is a global brand that has smartly managed its global and interconnected business operations. Americas are its biggest market. Apart from that Japan, western Europe and Canada are also its major markets and Dell is trying to penetrate deeper in the emerging Asian markets. it has also managed a global supply chain and distribution network very well. Global presence means a larger customer base and higher sales. It is also a source of sustainable competitive advantage.


In fiscal 2018 (compared to 2017) Dell saw and net growth of 28% and 27% in its net revenue and Non GAAP net revenue. the growth in net revenues was mainly due to incremental revenue from the EMC businesses. However, operating expenses from the EMC acquired businesses also rose leading to growth in operating expenses. operating loss increased by 2%. Product net revenue of the brand increased 21% in 2018 and service net revenue 54% (compared to 2017). Operating loss of Dell includes the impact of purchase accounting associated with the EMC merger transaction and to a smaller extent the impact of going private transaction. Dell is once again going public after having gone private in 2013. The ISG group of Dell saw slower growth in 2018. Particularly, it was the storage business that experienced a 11% decline in revenue in last quarter of 2018.


  • Dell has failed to diversify profitably into some of the most important areas while its rivals did. Entering smartphone and tablet businesses would have opened new channels of revenue for the brand.
  • Dell must focus more on marketing and promotions as most of its rivals play very aggressively in this area. From Apple to HP and Lenovo all invest aggressively in promotion of their brands and products.
  • Controlling operating expenses must be an important focus area for Dell. Better resource allocation and alignment of its new product portfolio will help control operating expenses and grow profitably.
  • Markets in Asia Pacific are growing faster than the other areas. Investing in these markets will help generate higher revenue as well as grow customer base faster. Apart from strengthening its supply ad distribution network in these markets, the brand must also invest in marketing of its brand so as to penetrate these markets deeper.
  • Dell must invest in AI and other technologies to improve its customer experiences. Improved customer experience will lead to higher customer loyalty and retention. Customer and supplier engagement must be made special focus areas for higher growth.
  • The brand must also use digital technology for higher staff engagement which will improve their performance and productivity.


Dell Annual Report 2017