This is the BCG Matrix Analysis of Dell Inc. which has been operating in information technology and providing robust products to their customers.
Dell Inc. is a leading name in the technology industry that has recently been changed into a privately owned firm. There are various products being managed by the company which aim to fulfil the Information Technology (IT) related needs of the customers. The management has helped the company to evolve from a computer manufacturer into other technology related areas such as data management and cloud based solutions (Dell Inc, 2016). Dell has increased its scope of operations through acquisitions and joint ventures with other technology relate firms, enabling it to bring effective IT solutions. The following section has conducted an analysis of the products being managed by Dell Inc. using BCG Matrix. The evaluation is based on the market share and growth prospects of the different products, which helps in placing these products in different categories of cash cows, stars, question marks and dogs.
Cash Cows
The cash cow in BCG Matrix is used for products that have a high market share in their respective industry. Moreover, the industry has reached its potential therefore, it is not likely to have any further development, thus limiting the chances of any further significant growth for the product. Nevertheless, the situation is still deemed as favorable by the organization as the high market share makes the product a source of sustainable profits and revenues for the business entity.
Dell Inc. has some products which can be categorized as a cash cow on the basis of the high market share and revenues of these products. One of the prominent examples in this case is the Dell PC which has been able to provide the company with sustainable profits. There has been a decline in the market need of PC, nevertheless, Dell has been able to continue getting operational profits through its PC segment (Lev-Ram, 2016). This positioning of the PC can help Dell to maintain a strong position in the market, while use the cash generated by this segment for promoting the operations of its other product ranges.
Stars
According to the BCG framework, stars on the other hand have the potential to grow in the market as the industry is still progressing. The high market share possessed by the stars is also likely to increase with the growth of the product. Any product that is categorized as a star is required to fulfil these two criteria, a good source of income for the firm and a significant market share that has future growth potential due to favorable industry dynamics. The matrix has further reflected the possibility of a star product turning into cash cow if the favorable industry environment and market success drives the product into becoming a leading source of earning for an organization.
Dell monitors can be seen as stars owing to their innovative ideas and the possible appeal that the innovative products can create in the target market. According to Hardavar (2017) the ultra-thin monitor required some major changes in the design of monitors and this step has enabled the company to gain positive response from the target market. The monitor is expected gain significant market share in the future, indicating the possibility of this star product turning into a cash cow for Dell Inc. At present, the ultra-thin monitor is operating in a growing industry which allows the firms to create new product designs and use the innovative ideas to make the products profitable. Another notable example that has generated significant amount of revenues for the company is its laptops, primarily the XPS 13 which is marked by a high degree of flexibility and offers the users 360 degree hinge, along with the ease of portability (Kingsley-Hughes, 2017).
Question Marks
The BCG Matrix has also focused on products that seem to have an uncertain future, which has been termed as question marks. These products can either become a success case for the firm by improving their financial performance, or become a prime candidate for divestment due to low performance. The market share of these products is low however they seem to have some chance of improvement in terms of market share and financial performance. Cloud computing is a question mark for the company as it has recently taken the initiative to obtain cloud computing platforms. The future of cloud computing platforms under the management of Dell is still in an emerging phase. It can become a profitable venture for Dell as the rising trend of cloud computing can bring higher revenues and profitability to the company. However the possibility of failure indicates that this product segment is a question mark as the future progress is still uncertain. A positive development in this domain, Dell can place the cloud computing as a star, and eventually a cash cow.
Dogs
The dogs in BCG Matrix are products that are the low performing items or business units that fail to generate enough revenues. In addition to this, these products have a low market share which is an additional issue in managing the production of these items. The low profits emerging attributed to the low sales of these items is the key reason for identifying these items as a dog. The continuous stream of investment followed by low revenues make this category a likely target for divestment by the management. Dell has decided to launch its own brand of cell phones to cater the needs of smart phone users across the globe. Its smart phone can be identified as a dog as it the product is included in the list of items that have not been able to become a source of profitability for the technology leader. Contrary to the company expectations, its entry into the smart phone market didn’t succeed and it was unable to compete against market leaders such as Apple Inc. Reisinger (2011) has analyzed the lack of success of Dell mobiles and found the root cause of problem as the lack of product compatibility with the consumer needs and preference. Due to this reason the company had greater investment than the return it was able to gain for that financial input.
References
Dell Inc. (2016). Annual Report. Retrieved from http://annualreport.dell.com/
Hardavar, D. (2017, February 1). The Dell 27 Ultrathin monitor really lives up to its name. Engadget. Retrieved from https://www.engadget.com/2017/01/02/dell-27-ultrathin-monitor/
Kingsley-Hughes, A. (2017, January 2). CES 2017: Dell’s killer new XPS 13 2-in-1. Zdnet. Retrieved from http://www.zdnet.com/article/ces-2017-dells-killer-new-xps-13-2-in-1/
Lev-Ram, M. (2016, December 27). The Gamblers Behind Tech’s Biggest Deal Ever. Fortune. Retrieved from http://fortune.com/dell-emc-merger-tech-biggest-deal/
Reisinger, D. (2011, April 11). 10 Things Dell Doesn’t Get About the Mobile Market. Channel insider. Retrieved from http://www.channelinsider.com/c/a/Dell/What-Dell-Doesnt-Get-About-the-Mobile-Market-10-Things-245012