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External Environmental Analysis


Dell Inc was founded by Michael Dell in Austin Texas in 1984. While he was a student at the College or university of Tx in Austin, he began by selling Personal IBM pcs under the brand name PC's limited which were set up by him individually. In 1985 he included his business as Dell Computer Company and rolled out the first computer called the Turbo. Today it is one of the leading produces of computers in the world. As per Fortune journal 2010, Dell is detailed as the 38th major among the list of Fortune 500 companies of the world.

Dell started retailing computers right to the finish users by preventing retailers and channel partners to decrease distributing costs. Utilizing the direct model of selling, it could provide personal computers at a competitive price that its competition. Another reason why people bought Dell computers is that these were custom made to meet their need. So the Direct selling model and custom-made built were Dell's competitive gain over its competition.

In 1991 Dell made its first laptop and by 1993 it was one of the most notable five computer manufacturers of the world. From then Dell, has increased its product list with the addition of printers, serves, data storage devices, PDAs (personal Digital Assistants), high definition televisions and computer accessories. Dell faced various challenges on the road map to its success. We will now discuss the exterior factors that influenced the expansion of Dell in britain.

http://money. cnn. com/newspapers/fortune/fortune500/2010/snapshots/1053. html

http://www. referenceforbusiness. com/history2/68/Dell-Inc. html

Analysis of Macro environmental factors

PESET analysis is used to analyse the effect of macro environmental factors on a business. The factors include Politics, economical, communal and technological. We will the factors at length.

Political Factors:

Political factors include authorities regulations and legalities and specify both formal and informal rules under that your firm must operate. Some examples include:

Tax policy

Employment laws

Environment regulations

Trade limitations and tariffs

Political stability

In 1980, Ronald William Regan was elected as president of america. He integrated several politics and monetary initiated. The politics environment was favourable to begin up industries.

Economical factors:

All companies are affected by nationwide and global monetary factors. They affect the purchasing electricity of prospects and the firm's operating costs. These factors include:

Economic growth

Interest rates

Exchange rates

Inflation rate

America was called the land of opportunity. This tells that the economical factors were aiding Dell to develop successfully. Dell as company was found with an idea to reach the customers straight. This helped Dell to provide quality products at a much reduced price than its opponents.

Social Factors:

Social factors are the demographic and social aspects of the world. These factors have an impact on the mind models and needs of customers.

Health consciousness

Population development rate

Age distribution

Career attitudes

Emphasis on safety

Due to Dell's immediate model of offering, it could give attention to the building the computer systems to accommodate the needs of specific targeted customers. Dell provided importance to comments from customers to improve its business functions. It gained huge gratitude from customers as the personal computers were built by order. This became an effort to its competetiors as these were relying on route partners and marketers.

Technological factors:

Technological factors help the industry to perform better. The efficiency of the companies raises when they start rivalling with one another on the factors like:

R&D activity


Technology incentives

Rate of technical change

Dell being the market leaders in the computer developing industry, it has to modify itself to the new evolving technologies like use of It, E-Commerce. It was very proficient at putting into action and using the systems effectively.

http://www. quickmba. com/strategy/pest/

Analysis of Macro environmental factors

In 1979, Michael Porter developed the five forces model. This helps to analyse the competition and appeal of the industry.

Analysis of Porter's Five Forces

http://www. mba-tutorials. com/strategy/65-porters-five-forces-model. html

Rivalry among competitive firms

Potential entrance of new competitors

Potential development of substitute products

Bargaining vitality of suppliers

Bargaining electric power of consumers

http://www. mba-tutorials. com/strategy/65-porters-five-forces-model. html

Rivalry among competitive firms

Competition in the market is good, as it does increase the efficiency of the industry and the companies and organisations in it. However some argue that it cannibalises the industry itself.

As the marketplace is huge and growing day-to-day. Competitors are just few on the market. The competition to get more market talk about is increasing day by day. Desll's immediate model is their completive advantage over its competitors.

Potential accessibility of new competitors

"A argument over how to identify the word 'barriers to entry' started decades ago, however, and it offers yet to be gained. Conditions that constitute admittance barriers may be structural or tactical. "

http://www. oecd. org/dataoecd/9/59/37921908. pdf

The barriers to enter into the computer market are high, as it requires huge investment in infrastructure, technology, functional costs and man power. Other factors like domination of large players who've already established their brands reduce the opportunity of new entrants.

Potential development of replacement products

Availability of alternative products will saturate the industry. As the computer industry is growing more and more, we can say the actual development of substitute product is negligible. We are able to even conclude that we now have no substitute products for personal computers.

Bargaining ability of suppliers

Suppliers of computer processing components have moderate bargaining power only when they can put into practice and create new components by putting into action new evolving technology. However their market is limited as their customers are the computer creation companies, that are few in the market.

Bargaining ability of consumers

Bargaining power of consumers plays a major role in the computer industry. Consumers have a great bargaining ability due to the high competition on the market. Technology remains the same, but its price makes decreasing daily. Companies have to reduce the prices appropriately, to capture or retain their market talk about.

http://www. mktgsensei. com/AMAE/Strategy/HBR%20on%20Strategy. pdf#page=25

Key Success Factors

Key success factors are the advantages of a firm in the market. Identifying them is a obstacle; however it will pay the firms when they focus on bettering them.

Key success factors of Dell are as below.

Direct selling model.

Built to order

Lean inventory

Implementing technology change effectively.

Getting constant feedback from customers.

Analyse comments from customers and improve quality of products and business processes.


After the analysis of the macro and micro environmental factors, we've listed the key success factors. By concentrating on them Dell will surely record large market talk about in the computer industry hence making huge income.

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