Teamwork
Porter’s Five Forces
Threat of New Entrants ( High):
Foreign and local competitors
IBM, Compaq and HP also entered into market.
Less government policy barriers (China joined WTO in 2002)
Potential barriers include:
Access to distribution channels
Scale economies (Local production plants)
Bargaining Power of Suppliers (Low):
Most competitors are vertically integrated that’s why the there is low bargaining power opportunities for Dell with suppliers.
External Analysis:
Bargaining Power of Customers (MODERATE):
Few buyers purchase a large portion of industry output
State-owned companies, MNCs and educational institutions
Sales account for a large portion of Dell’s sales revenues 50% from government, education, telecoms, power and finance.
Brand reputation and product differentiation can mitigate
Substitutes (Low):
Competitive Rivalry (Intense):
High profit potential due to industry growth
Main buyers are institutions with more resources than individuals
Price pressure from local competitors
High fixed costs of production capacity
High strategic stakes (focus on market share)
Aggressive competitive response
Lenovo adopting Dell’s direct sales model in China
Lenovo’s joint venture with IBM to increase its share
Lenovo’s brand campaign to improve recognition
Competitors Analysis:
Future objectives:
Build market share rapidly over its competitors.
Current strategy:
Cost leadership (Lenovo, Founder, Tongfang)
Differentiation (HP, IBM & Compaq)
Focused on consumer market
Lenovo positioning itself to challenge in high-end
Competitors
Critical investigation and analysis of Dell in Chinas market
Key Strengths:
Chinese competitors: market knowledge and low cost advantage.
American competitors: technology and brand recognition.
Key Weaknesses:
Chinese competitors: brand recognition
American competitors: higher costs
High-end Customers * State-owned companies * MNCs * Government *
Threat of New Entrants ( High):
Foreign and local competitors
IBM, Compaq and HP also entered into market.
Less government policy barriers (China joined WTO in 2002)
Potential barriers include:
Access to distribution channels
Scale economies (Local production plants)
Bargaining Power of Suppliers (Low):
Most competitors are vertically integrated that’s why the there is low bargaining power opportunities for Dell with suppliers.
External Analysis:
Bargaining Power of Customers (MODERATE):
Few buyers purchase a large portion of industry output
State-owned companies, MNCs and educational institutions
Sales account for a large portion of Dell’s sales revenues 50% from government, education, telecoms, power and finance.
Brand reputation and product differentiation can mitigate
Substitutes (Low):
Competitive Rivalry (Intense):
High profit potential due to industry growth
Main buyers are institutions with more resources than individuals
Price pressure from local competitors
High fixed costs of production capacity
High strategic stakes (focus on market share)
Aggressive competitive response
Lenovo adopting Dell’s direct sales model in China
Lenovo’s joint venture with IBM to increase its share
Lenovo’s brand campaign to improve recognition
Competitors Analysis:
Future objectives:
Build market share rapidly over its competitors.
Current strategy:
Cost leadership (Lenovo, Founder, Tongfang)
Differentiation (HP, IBM & Compaq)
Focused on consumer market
Lenovo positioning itself to challenge in high-end
Competitors
Critical investigation and analysis of Dell in Chinas market
Key Strengths:
Chinese competitors: market knowledge and low cost advantage.
American competitors: technology and brand recognition.
Key Weaknesses:
Chinese competitors: brand recognition
American competitors: higher costs
High-end Customers * State-owned companies * MNCs * Government *