Reference no: EM131401085

Summary:

Strategic Management in Action at Dell Computer

In recent years Dell's PC business has been struggling with loss of market share as well as dropping profit margins due to the increasingly competitive nature of the PC industry. To combat its falling market share and profitability, Dell is embarking on a growth strategy that will not only shore up its flagging PC business but will encompass more the industry value chain by becoming a solution provider.

Source: Dell's PC Growth Strategy - In It To Win It, Forbes 6/13

Concept to Practice

Dell's quest for growth involves for key activities: simplifying their current product lines, increasing their customer base, becoming an IT solution provider, and providing their customers with alternative computing solutions by incorporating cutting edge technology.

Simplification or as they call it, smart selection, means they are moving from a "configuration to order" model to a "build to order". This will move will lower both supplier and manufacturing costs.  This is important has the PC industry has become a low margin business.

Dell's Wyse business, a cloud-client computing business, is a key cornerstone to become a solution based computer.  This business already encompasses the key components of an IT solutions - hardware, software and service.  This business is in position to take advantage of the predicting growth in this industry segment.  This allows Dell to advantage of a high margin business (cloud computing) that is expected to see steady growth over the next decade.

Key Takeaways

The key takeaway from this article is that strategic change starts with a strategic vision. In order for Dell to move towards this vision of end-to-end solution provider, they need to utilize not only a growth strategy but a defensive strategy as well.  By simplifying their product line, they hope to increase the bottom line of their flagship product (PCs).  Dell's move towards becoming a solution provider, means that are adding new capabilities and new function in order to meet the needs of their existing and future customer in ways they have not been able to in the past.

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