1.1.Brief Description of Dell
Dell history originated in 1984, after one student from the University of Texas, Austin, by the name Michael Dell invented a PC Limited. He started in his dormitory room where he used to sell IBM PC – Compatible computers made from simple stock components. He later dropped out of college to concentrate on his business after collecting about $300,000 funds from his friends and family members. In 1985, his firm created the first PC of its own blueprint which was known as Turbo PC. The firm advertised its products through national computer magazines and sold directly to its consumers. They assembled each product according to the client’s specifications and delivered to customers as required. At the end of the year, Dell Company had accrued more than $73 million in revenue. In 1988, the company changed its brand to Dell Computer Corporation and began expanding internationally. In early 1992, ‘Fortune magazine’ incorporated the Dell Corporation in its list of the world’s 500 largest companies which saw Mr. Michael Dell becoming the youngest CEO in the time. Dell is one of the world’s largest technological providers of computer systems and associated products and services. It has grown to employ more than one hundred thousand staff worldwide and it is the 3rd biggest PC seller globally after HP and Lenovo. From 1997 to date, Dell has enjoyed the steady growth in size and has gained its market shares from its competitors even during the industry’s most difficult moments (Dell Corporation, 2011).
1.2.Dell’s Market Research
Managers at Dell constantly post online questionnaires to its potential clientele. It enables its customers to respond and contribute to other ideas on the company products and services as part of their market research. The company has an operating system known as, Dell Idea Storm, that allows the members of Dell community to suggest and propose intriguing and innovative ideas about the new products and services they feel that the Corporation can competitively produce and sell to both its existing and potential markets. The management team at Dell takes the best initiative to tackle its community’ raised ideas and concerns and gives back the feedback on the findings to the community members.
The company also uses technical online systems that handles various forums including chatting with consumers online. These consumer reviews provide the management team with new opportunities as well as alerts them with potential threats that could pose risks to their business model. This two-way interactive process benefits consumers by allowing them to see other people’s opinions on products and gives consumers real-time help with problems. Dell gets feedback on products and services, allowing the company to improve and adjust products as necessary.
1.3.Features of Dell’s Market Research
The main website of Dell has a specific section called Community, which constantly supply consumers and other stakeholders with essential services that include:
- Solutions to their problems
- Technical Advice on product features
- Discussions and friends
Dell allows visitors and other groups to surf the blogs, forums, wikis, media galleries and groups sharing and learning with others and with Dell. Dell.com also provides technical support which allows Dell customers to enter forums i.e. ask questions, get answers and see accepted solutions, get ‘how-to’ and ‘step-by-step’ information for specific technical issues and information on the latest ‘hot’ issues. Dell support provides widespread information including trouble shooting guides. Customers can access this information via popular topics, content type or tech support topics.
1.4.Dell’s Unique Selling Point
The Dell’s Unique Selling Point (USP) that gives it a competitive advantage is their operating facility that allows consumers to freely and easily select and customize their computer products. Customers can also purchase custom-built products and services. A pre-built machine may contain features that customers will not use, or not include features important for a specific customer need. Hence with this unique facility, Dell’s customers, whether online, via phone or in a retail outlet, can select the specific features they want in their end product (Mcconnell, Brue, & Flynn, 2011).
1.5.Strategies that Maximize Revenue for Dell
Dell’s uses a unique direct marketing approach, which involves selling its products and service directly to its customers. The reason for this kind of model was to basically enable the company to generate high sales volumes as much as possible. This model views the Internet as the most efficient form of the direct marketing for sales, service, and support, as well as the most efficient means of customer communication both presently and in the future. By selling products and services to customers directly has enabled the company to deal with the particular needs and requirements of their customers and provide better results that meets those particular needs and wants. Dell’s Direct Metho has two distinct advantages:
- It helps the company to trim down on their overall marketing costs by eradicating the costs of dealing with middlemen in the distribution channel such as retailers and wholesalers
- The concept of build- to-order eliminates company costs from inventories and danger of keeping stocks
1.6.Measuring Return on Investment
Return on Investment (ROI) is a method used to measure the profits that should be accrued in an investment in relation to capital invested. Other related measures include Return on Assets (ROA); Return on Capital (ROC); and Return on Invested capital (ROIC).
Marketing opportunities not only influences the company’s net profits but can also have an effect on the investment levels too. In the well established company like Dell, the main categories of investments could include; operational plant and heavy equipment, inventories, and accounts. These long-term huge investments will usually affect marketing decisions at any level of the organization. ROI is measure by the following formula:
14ROI%=NetProfits ($)Investment ($)*100″>
The main purpose of ROI is basically to measure the rates of return per period on dollars invested in an economic enterprise. Organization senior managers may use this tool to gauge their profitability anticipated from a particular investment venture. Marketing opportunities have a close link to the profits, however these marketing decisions will also affect the other capital requirements for example, receivables and inventories. Therefore, marketers at Dell need to understand the real position of their company and the returns that are expected from any venture. ROI helps the firm to measure how effectively their company utilizes the scarce resources to generate profits and maximize the shareholders’ value.
1.7.Strategic Weakness & Threats Facing Dell Weaknesses
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One major weakness that Dell faces is its direct marketing method and customization approaches to selling its products especially for home users. For instance, since Dell sells avoids dealing with middlemen, customers are not able to buy products and services through wholesalers or retailers. It makes buying complicated for some customers who prefer to deal with middlemen. Also, the products are custom-built according to the customer specifications; this however may take long to deliver considering time needed. Again some customers may not really understand what is best for them unless they have enough information (Mcconnell, Brue & Flynn, 2011). The second weakness for Dell is how to attract college or institutional market. It is estimated that Dell’s sales revenue from higher institutions of learning only reports about 5% of the total. Hence, Dell is evidently not popular among the educational institutions market yet.
Dell faces several threats in its market. These include:
- The business environment is usually volatile and therefore full of threats. For instance, in Dell’s market environment, computers are continuously modified, new software emerges daily and new hardware brands are being established at a high speed. Therefore, it is essential for Dell management team to keep abreast with is new in the market.
- The competitive business environment poses challenges of the company’s products and services to become obsolete on the market. Therefore, Dell must continuously produce products and services which are excellent in their quality and produced at a low cost.
- Dell is enjoying a bigger market share today. However, this may not stay constant. Competitors are always searching for better ways on how to win the market. Hence, Dell has to differentiate their products and service from those of their competitors in order to go on with enjoying a bigger share of the market in its industry.
1.8.Information that a Business gathers from Internal systems to assist in planning process
- Resources such as financial, intellectual, location
- Competitive capabilities such as quality, price, speed, and flexibility
- Intangible assets such as patents, brands protection
1.9.Ways that Environmental Scanning can be Conducted
Environmental scanning is a business concept that organizations uses to gather information from the environment, and uses it to achieve a sustainable competitive advantage. Various tools are used which include
- SWOT Analysis: it is a useful tool for understanding and making relevant decisions in business. It involves identifying strengths and weaknesses (internal environment), opportunities and threats (external environment).
- PEST Analysis: scanning the macro-environment in which the business operates. It involves scanning the political, economic, socio-cultural, and technological factors.
- Industry Analysis: examining important stakeholder’s or groups of firms that produce similar products or services.
- Competitor Analysis: identifying the existing and potential competitors that compete for the same market. It also involves analyziing their strengths and weaknesses in order to make better decisions.
1.10. Qualitative and Quantitative Research and three ways of conducting Research Qualitative Research
It is a method of inquiry used various academic disciplines especially social sciences that try to gain an understanding of a phenomenon. It is used to investigates the why and how of decision making. Hence, it focuses on smaller samples. These methods are used to seek an empirical support for defined hypotheses.
It can be defined as a logical pragmatic analysis of a phenomenon using mathematical, statistical, or computational techniques. Quantitative research aims at extending and utilizing models, theories, and hypotheses on a particular phenomenon. It provides data that is always in a mathematical which include information on statistics or percentages. It is commonly used in social sciences fields like sociology, political sciences, education, psychology, and economics.
Ways of conducting Research include:-
- Primary Research: using primary sources such as collecting data in the field. It can be through: observations, interviews, or use of questionnaires to collect the data.
- Secondary Research: using secondary sources such as reviewing both the published and unpublished information from textbooks, journals industrial information, institutional or governmental handouts.
1.11. How Australian Bureau of Statistics (ABS) assist in Research Process
ABS is Australia’s independent central statistical authority that is mandated to provide statistical services to all levels of Australian government and the community at large. ABS has a leadership role of providing national statistical services both at Commonwealth and State levels.
As such, the ABS has a role in informing through provision of statistics and advice, policy positions that seek to increase the effective use of the Internet by consumers and businesses in order to drive productivity growth and community participation in the digital economy.
In research, ABS publishes a range of statistics that are useful information various sectors of the economy.
1.12. Define Business Opportunity and provide two examples
There is a chance that a company can utilize for growing their business or product. For example:
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- Global markets
- Environmental conditions
- Strategic alliances
1.13. A Business Threat
It is an obstacle or a risk that threatens the business or product performance. Potential threats for a business may include:
- Technology changes that alter the market segments
- A small improvement in the competitor product line could wipe out the company market position.
1.14. Pareto Principle and how business can use it to grow market share of a product
Pareto principle, also known as ‘80-20 Rule’ was proposed by one business management consultant known as Joseph M. Juran who named it after an Italian economist known as Vilfredo Pareto who experimented in his country. There was a problem of imbalanced allocation of assets among the people. Pareto observed that nearly 20 per cent of the people in the country controlled or owned 80 per cent of the wealth. This principle states that for many events, roughly 80% of their effects come from the 20% of the causes. It is commonly used in business where managers gauge to know which areas generate most of their sales. For instance, a company could realize that 80% of their sales come from 20% of their clients. This principle is vital to business as it means that for any set of things i.e. the employees, customers, or suppliers, a few (20%) are critical and the abundant (80%) are actually trivial. The Pareto Principle advices people to continue paying attention on the essential 20%.
1.15. True or False?
a) As a result of increased competition, the lifespan of business opportunities in the marketplace is increasing. True
b) The success of a new opportunity is always measured in terms of profit. False
c) It is important that any new product or service is assessed at each stage of the development process and should not proceed to the next stage until it has met the specified requirements. True
d) If a number of new product or service ideas are developed, the ideas should be ranked against criteria to determine the best idea. True
e) A marketing information system is available as a software package. True
1.16. Describe how Ansoff’s Matrix is used to develop new opportunities with a range of strategies.