Financial Statement analysis of Dell, Inc, in 2005 Essay

Financial Statement analysis of Dell, Inc, in 2005 - Essay Example Looking further, the strategy of Dell is multi-faceted which does not only include the internal company's internal operations but its external stakeholders as well. It should be noted that Dell's strategy can be summed up as follows: This strategy of Dell is perfect for the hypercompetitive industry it is currently operating in. A hypercompetitive industry, according to Kotler, is one where there is an intense rivalry among the competitors coupled with high buyer leverage, forcing the firms to commit to an efficient value chain which eliminates incompetence in the system which will bring eventually bring down the cost of operation and enhance customer value. In the face of this high competition and buyer power, Dell was able to come up with a strategy featuring a value chain which eliminates wastage and adds customer value. In the IT market, it is important that a player establishes an efficient manufacturing system which reduces or even eliminates wastage in its value chain. Dell has become a pivotal driver of the supply chain revolution in the IT industry because of its adoption of the Toyota Manufacturing System also known as Just-in Time (JIT) inventory system. This, together with its commitment in solely marketing its product directly to customers and the utilization of relationship marketing is very much appropriate for the industry Dell is operating in. As a market leader in its field, Dell is regarded in having the leanest and most efficient manufacturing system, excellent customer service, intensive research, lowest prices, and quality products. It should also be noted that Dell was able to develop its competitive advantage due to its unique strategy. Even though Dell's competitors like Hewlett-Packard, IBM, and Gateway continue to push aggressive strategies to eat up into Dell's market share or at least, capture a more patronage, the firm was already able to create a competitive image, insulating it from attacks. It can be noted that as the sales revenue of other competitors decline or remain flat, Dell manages to record increments. In fact the current strategy utilized by the firm manufacturer has become a sustainable competitive advantage. In contrast to competitive advantage, the business model of Dell is hard and is even impossible to be replicated by its various competitors. It should be noted that some organizations planned to emulate the business model of Dell but failed. Michael Dell, the firm's CEO expressed that competitors will be bound with their present strategies because adopting the business model of Dell wi ll be detrimental especially in their distribution channels. Currently, Dell enjoys its strategic position as a market leader in the IT industry. Due to this, the company is quiet insulated with current strategic issues. The only thing that Dell must address nowadays is the significant decision whether it directly employs its core strategies in its geographic expansion. As the company opted to conquer more lucrative markets outside its home country, Dell is faced with the

Microeconomics Essay Example | Topics and Well Written Essays - 1500 words

Microeconomics - Essay Example Now, there is only a single supplier of potato chip all across the region (Brigham, 1976). As all firms decided to merge together to create a single monopoly, now there will be barriers to entry in the industry as no further firms can enter the market easily and threaten the existence of existing firms. The firm is now protected against any other foreign threat as no other firm can enter the market to compete with it. This monopoly is owned by a single firm and so the business enjoys the benefit of having the entire market share to itself without any pressure or constraints. However, this monopoly is not a natural monopoly and so it can charge its customers with whatever price suits it and gain higher profits. A monopoly also produces goods and services by producing required quantity at a price where marginal cost equals marginal revenue just like any other market structure. But, it can also choose to set a price at which quantity is demanded where price might exceed the marginal cos t (Case, 1996). Monopoly is highly beneficial to society and consumers as well. Large firms usually attain the benefit of gaining from economies of scale. Economies of scale is increase in efficiency as the number of goods produced by a firm increases. Due to economies of scale, the Average cost curve goes downwards. If the fall in Average cost curve is very large so a monopolist can charge its consumers a lower price and generate a higher output than the monopolistic competition of the market. This way, monopolist maximizes the profits. Marginal cost becomes equal to marginal revenue at this point. This means that now the consumers can enjoy potato chips at a lower price than it was when the market was monopolistic due to huge producer surplus. The society gains as well (Allen, 2005). As this monopoly is privately owned, and not a government regulated natural monopoly, government does not have any say here. But it can produce revenues for the entire economy in form of more and more exports. This single firm can take advantage of economies of scale from its home economy and maintain a cost advantage through which it can exploit the international market and can sell at a relatively cheap rate abroad. Governments do gain when the economies prosper as now government receives more money in form of taxes which it can utilize in infrastructure and other welfare activities (Allen, 2005). However, the change from monopolistic market structure to monopoly does come with a lot of changes in profits and revenues. In a monopolistic competition, the industry comprise of a huge number of firms, each one of those have relatively small size as compared to total market. That is why; no firm can affect the overall market price because of its small size. But, in a monopolistic structure, firms can differentiate their output by having some control over price (Allen, 2005). The short-run equilibrium of monopolistic market is achieved by setting the price where marginal cost is equ al to marginal revenue. The profits of a firm arise by entrance of similar products by different firms in the market; where every firm competes for only a percentage of the total demand. Whenever a new firm enters the market, the demand curve shifts downwards due to which profits remain no more (Allen, 2005). Now due to large entrants of firms in the market, the individual demand curve shifts to the left. Here, the zero profit condition arises where