Taking Dell Private Harvard Case Solution & Analysis


a.      Problem Statement:

At present with the changing industry demands and the high product turnover in the industry, Dell needs to focus on innovation and how it can buyout its shares from the market to become private again. In addition to this, Dell needs to regain its market share that is being eaten up by other low cost PC vendors abroad.

b.      Justification for the Statement:

With the declining demand for customized products, Dell is losing its market share in the industry. Its low cost business model, which was earlier a valuable resource for the organization in a highly competitive market, was no more valuable. The international PC vendors such as the vendors from the Asian market were moving forward with the same low cost model. The decline in the company’s overall financial performance led Michael Dell to think a step ahead. As a consequence of this, the company planned a leveraged buy-out from the market with the help of Silver Lake.

The trend in the market was shifting to tablets, mobiles and other technological transformations, which was shifting Dell’s profit pool to segments where Dell had no competency. For example, Dell’s strength was at PCs that helped it to accumulate profits of $38 billion in FY12, at that time the lower margin value segment was accumulating $8 billion in profits. As time passed, and the consumer preference changed, profits moved to the tablet segment with 30% cumulative annual growth rate, generating $30 billion in FY17. And consequently, profits for the PC market went down with a cumulative annual growth rate of 7% by accumulating $26 billion.

Other trends in the PC market include the rapid deterioration of the already established market by Asian vendors. Most of the emerging economies were going active in this business, intensifying competition and giving rise to price wars in the industry. The model followed by the Asian vendors was different from the traditional model followed by Dell Corporation. For example, the Asian vendors were increasingly expanding their market share by competing with the present rivals on the basis of operating margins through low single digits. This helped them to foster their market share. According to the presentation cited in the case, the FY13 brought Dell a substantial decline in the share price to 11.1% from 15% in FY08. With the emerging threats from international competitors, and rising demand for alternative mobile devices resulted in 13% decline of PC shipments on a year-on-year basis in FY13 Q1, which was a considerable drop in 20 years.

c.      Plan Analysis

The case will be analyzed in terms of several strategic, tactical and operational models, each of which will shed light on the company’s macro and micro environment. These tools will help the company to revamp its position in the market place and capitalize on its strengths, and seize anticipated opportunities in a manner that will help the company to achieve competitive edge in the market. The strategic models that the paper will use are Ans-off matrix, BCG Matrix, Red Ocean Strategy, Porter Five Forces model, Company’s Core Competency Analysis, PESTEL Analysis, Value Chain Analysis, SWOT analysis and TOWS analysis. The tactical models that I will use in my analysis are Business Process Redesign, Company’s Core Quadrants, Type of business in which Company operates, Philip Kotler’s 4Ps of Marketing and Supply Chain Analysis. Lastly, the operational models that will be used in the analysis include Balanced Scorecard, Pareto Analysis, Internal and External Factor Evaluation Matrix and Value Stream Mapping. Each of the above strategies will be used in order to prevent gap in analysis from any nook. As each model has its own benefits and limitations, hence, the below list suggests what insights each of model will give. Furthermore, the limitation of each of the model is also mentioned below individually.


a.       Ans-off matrix

Ans-off matrix is a graphical representation of the business decision that the company must take in order to tackle a complex business situation. The four options to consider are product development, diversification, market development and market penetration. This provides insight into what option the company can consider in order to overcome a difficult prevalent market situation. However, the limitation of Ans-off matrix is its inability to incorporate external environment into the analysis. Consider for example if the company plans to pursue the option of introducing their product in new markets, then the question arises that whether the product is in demanded by the market or not. Therefore, this is not sufficient for the analysis, but it is  a good initial step for proceeding towards the analysis..................................

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