Dell’s Challenges in Tough Global PC Market
Introduction
Since 12th Aug, 1981 when IBM introduced the first 5150 personal computer, the PC industry has been changed greatly. August 2009 marked the 28th Anniversary of the release of the original personal computer. The number of personal computers in use worldwide hit one billion on June 2008, while another billion is expected to be reached by 2014.[1] IDC worldwide PC shipments in 2009 are 313 million compared to 40 thousand in 1981 and are expected to grow 3.8% compared to last year.[2] Commerce is growing in a tremendous way and usage on the internet is skyrocketing. Although global PC industry is expected to experience slow shipments outside the United States as the impact of the financial crisis spreads, outlook for global PC market will continue to improve.
The changing market conditions, such as pricing competition and global locations, have influenced the business model of PC industry. Most of IT companies are facing whether they can successfully survive with their own business models in the face of shifting market conditions, locally and globally. This term paper will deal with Dell’s strategy case concerned with the application of the direct business to customer in global expansion, further complicated by changing industry market. Firstly, it will cover the competition in the PC industry using Porter’s Five-Force Analysis, and then will deliver how the forces of globalization have affected the PC industry as well as one of the most innovative IT companies, Dell.
Analysis of PC Industry
Michael E. Porter explains in his How Competitive Forces Shape Strategy that the state of competition in an industry depends on five basic forces: the threat of the entry of new competitors, the bargaining power of suppliers, the bargaining power of customers, the threat of substitute products, and the intensity of competitive rivalry.[3] In this paper, the competition in the personal computer industry...