Navigating Forces and Factors: Analyzing Business Dynamics and Dell's Environmental Landscape1/10/2022
This research is credited to Ahmad Fuad Al Hattab Introduction There are numerous forces that can have an impact on a company. These forces can be internal or external. The success of a firm relies on considerable forces which can or cannot be under firm’s control. An organization’s goals and mission, staff, leadership, and company’s culture are all considered internal forces. That being said, an employer should control over these forces. He or she should take steps to determine and resolve potential challenges which might affect his company’s performance and revenue. In contrast, external forces cannot be controlled (Picincu, 2019). External factors can be political, economic, social, technological, etc. They are hard or impossible to control. Accordingly, this report talks about the external and internal factors which affect a firm. Then, it’s going to talk about the government intervention in the economy. Next, it will move to evaluate government intervention in terms of price control.
Internal Environment First, I am going to delve into the internal environment, which is comprised of many substantial elements that exist in a business. Those elements could have an impact on the decisions, choices and actions of a firm. The internal forces can be controlled by the organization. It includes the management practices, employees, company’s culture, finance, human resources, technology, etc. All these factors tremendously affect a business. An important internal force that influences a company is its vision, mission, and objectives. The firm’s vision explains its position in the future, the mission determines the firm's business as well as explains why the company exists, and finally, the objectives define the firm's aim besides how to achieve those objectives. Another remarkable internal factor is the structure of the firm, which identify the system wherein activities are directed in the firm to achieve its goals. Those activities comprise coordination, supervision, level of professionalization, task delegation, etc. Many firms adopt high hierarchical structures. What defines the firm from top to bottom is the layers of leadership and management. Nowadays, companies try to minimize the hierarchical layers and adopt a flat structure. This is way much better than having several layers of leadership and management (Gleeson, 2019). Furthermore, one of the significant internal factors that influence a business is the culture of the company. It includes behavior, values, and the beliefs of the firm. It determines the way in which management and staff communicate. What also considered an important factor is the human resources department. It is considered an invaluable asset of a firm. A company relies heavily on its human resources as it determines the company's failure or success (Business Jargons, 2019). The strength of staff is another significant internal force. The diligence, motivation, and talent of employees are really crucial. Employees with high skills and motivation are going to be more productive and effective. However, when employees are not motivated and do not have high skills, this will ultimately have a negative impact on the whole company. What is also significant is the collaboration and communication between the departments. External Environment When it comes to the external environment, companies couldn’t control the external forces. However, they should respond to those factors. Legal and Political Factor A firm should take into consideration many issues, for example, 1. Social and environmental policy 2. Property law enforcement 3. Employment laws and safety regulations 4. Tax guidelines 5. Copyright 6. Trade regulations 7. Political stability For instance, Brexit is going to influence the trade between UK companies and EU, in terms of trade, UK is going to lose EU clients. However, it may have a good impact, for instance, EU lawmakers will place lesser limitations on companies (BBC, n.d.). Economic Factor “Economic factors refer to the character and direction of the economic system wherein the firm operates. The impact of economic factors may also differ between industries” (Onyisi, n.d.). Economic factor focuses on the external economic issues which may influence company’s success. Hence, a firm should concentrate on issues like gross domestic product, credit availability, interest rates, unemployment, and inflation, besides exchange inflation. Social Factor A firm could examine the socioeconomic environment of the market, so that it can recognize how customer needs are formed, what are the things that make him motivated to buy. Some of the social forces are, age distribution, population growth rates, demographics, etc (Post, 2018). For instance, “statistical evidence shows that the UK population is ageing. This demographic information is useful for firms that provide products and services for older people” (BBC, n.d.). Technological Factor Nowadays, undoubtedly, technology has affected companies in a positive way. For example, teleconferencing is a powerful technology that can get everybody together online. There are some businesses that don’t use paper anymore, and they keep their documents in the cloud. Not to mention, the mobile applications that helped many businesses around the world. Moreover, customers can communicate with a company via online chat. In general, innovation may have a great impact on a company. For instance,” Kodak used to produce and sell 80% of the world’s film for cameras. But the invention of digital cameras has caused the market for camera film to shrink dramatically” (BBC, n.d.). Environmental Factor An environmental force that has an impact on a firm is climate change. It is considered a threat to companies. In the last few years, there has been a remarkable increase in the issue of adverse weather conditions and global warming, so it is really hard for businesses to run equally in these types of weather conditions. Another important factor is the pollution. It can really influence an organization's strategy. It might result in disruption of supply chains, and even an increment in costs of raw material. A firm should develop contingency plans in order to deal with these events (Farooq, 2018). The Intervention of Government in The Market A government intervenes in markets to overcome market failure. There are considerable reasons why the government intervenes in markets. First, it tries to stabilise the prices in the market. Moreover, it provides workers with a minimum income. In addition, it wants to evade extravagant prices for products with important social welfare. It also encourages merit goods as well as discourages demerit goods. In terms of the forms of government intervention in markets, there are many forms, such as, nudges/behavioral units, minimum wages, maximum prices, and minimum prices (Pettinger, 2017). Maximum Prices The maximum price is “the highest possible cost of a good or service that is legally permissible” (BusinessDictionary, n.d.). Reasons for Government Intervention? For example, a necessity could not be afforded by poor consumers. Food and housing markets are example of where maximum prices can be imposed. In the developing countries, food considered a necessity, thus, a government might set a price ceiling on specific foods. Likewise, with the housing market, many people cannot manage to pay for the quantities required for survival (The IB Economist, n.d.). Moreover, a government may intervene because of the monopoly that charges high prices. Moreover, the services or goods that are essential and the merit goods. The Effects When it comes to the impact of setting a maximum price, it usually results in a shortage. One of the effects is also the emergence of black market. In addition, the market will be less profitable (Amir, 2017). Evaluation 1) The maximum price is going to be effective when it comes to monopoly, which inflates prices as well as restricts supply. 2) A long-term solution is to build more affordable housing when housing is costly, instead of relying on maximum price. 3) Instead of distorting the market through controlling the price, it is advisable to use supply-side policies. Minimum Prices The minimum price is the minimum legal limit for prices that are set by the government. Reasons for Government Intervention? There are some reasons to set the minimum price. First, it increments wages, it also increments farmers’ incomes, as well as making demerit goods costly. The Effects There is some downside of minimum prices. Firstly, it can be expensive for a government to purchase the surplus. Secondly, a minimum price is like an incentive for farmers to increment supply. Thirdly, the minimum price inspires more supply than anticipated, subsequently, the cost for a government rises. Evaluation A government could get rid of surplus through purchasing the overflowing supply at a minimum price. Hence, it will create an equilibrium at a higher price level (Pettinger, 2017). In conclusion, there are many factors that may have an impact on businesses. There are external factors that cannot be controlled, and internal factors that can be controlled by the employer. External factors can be political and legal, economic, social, technological and environmental factor. Some examples of the internal factors are employees, suppliers, finance, human resources, etc. A company should keep an eye on these factors, since they influence its business. Every company strive to meet its objectives; however, these factors can be an obstacle. There are any companies that do not survive, and they fall apart because of some external forces that they could not stand firm against them. Dell Dell is a multinational company dealing in personal computers and related products. This report is going to talk about the firm’s recent history. Then, it will talk about the objectives, structure, products and services of the company. Next, the report will delve into the relationship between Dell and the UK. After that, it is going to conduct a PESTLE analysis of Dell. Finally, it will talk about an external factor that will have the greatest effect on Dell Technologies in the future. The Company’s Recent History In 2015, Dell had intentions of acquiring EMC Corporation, a company dealing in enterprise storage and software in what was then history’s highest-valued technology company acquisition. In 2016, the merger between Dell Inc. and EMC Corporation was completed, and the resulting company was Dell Technologies. Dell Technologies became a public company in December 2018 by buying back the shares that originally tracked VMware’s financial performance. VMware is a public company that provides virtualization services, software, and cloud computing. Dell Technologies owns the majority of the shares of VMware. The Company’s Objectives Dell is now part of the bigger company, Dell Technologies. The main objective of Dell Technologies is to drive human progress by developing new technologies that shape the future of innovation and transform businesses not only in the United States but also around the world. The company is passionate about propelling human progress by providing better access to technology for everyone around the world. With the combined muscle of major industry leaders such as Dell, Virtustream, VMware, RSA, Secureworks, Pivotal and Dell EMC, Dell Technologies is set to drive the future of digital technology (Dell Technologies, n.d.). The Structure of Dell Technologies Regarding the structure of Dell Technologies, the company is a product of the mergers between Dell and other companies that provided hardware and software services (Dell Technologies, n.d). Dell Technologies is a metamorphosis of Dell, as it has been acquiring other smaller companies over the years. It is now a combination of seven companies that provide different computer and digital products which enable the company meet its objectives. The various companies under Dell Technologies include Dell, Virtustream, VMware, RSA, Secureworks, Pivotal and Dell EMC (Short and Todd, 2017). Dell’s Products and Services Through its various subsidiaries, Dell Technologies offers a variety of products and services to customers in the United States, Europe, and across the world. Dell provides customers with high quality laptops, desktops, monitors, endpoint and docking security solutions, and powerful workstations that fit the needs of any business and personal activities. Through Dell EMC, Dell Technologies provides data storage and protection infrastructure technologies and servers for businesses and individuals worldwide (Short and Todd, 2017). Pivotal provides software development methodologies, analytics tools, and cloud platforms to companies, transforming how they develop various software so that they make the process more innovative and quicker (Dell Technologies, n.d.). RSA is a hub of security solutions to help companies protect what matters most to them, and that is their data. Secureworks also develops security solutions for data, creating software that detects and prevents cyberattacks and data breaches. Virtustream brings forth cloud solutions designed to run even the most complex applications with efficiency and security. VMware is a software provider creating software for cloud computing, networking, security, and software that creates virtual environments for testing other software and simulating cyberattacks to improve security. The Relationship Between Dell and the UK One of the countries in the European Union that Dell Technologies has a relationship with is the United Kingdom. Dell is a supplier of several computer products such as laptops, desktops, servers, workstations, and other PC accessories to customers in the UK. It conducts sales both through the online platform and through physical shops. Dell has a large customer base for its laptops and desktops in the UK. The company also pays taxes to the UK government as it conducts businesses in the country. PESTLE Analysis Political Factors In the international environment, political factors exert a lot of influence on businesses, Dell Technologies being among the victims of any form of international political turmoil. Dell has had to deal with political derangements that happen in any country within which it operates. Foreign business policies and tax regulations have a direct impact on the revenues earned in the foreign markets. The struggling foreign relations between the US and China have, to some extent, troubled American businesses in China, such as Dell (Campbell and Ratner, 2018). Recently, the European Union has been targeting American firms operating within its borders. Europe is a significant part of Dell’s customer base and any political instability affects its business operations. Dell needs a politically stable environment to do business and grow its brand. Political stability makes it possible for a sustained supply of labor and raw materials that may be needed from one country to another. Economic Factors Economic factors have directly affected Dell Technologies and its customers. Recent cycles of world economic recession have greatly reduced the purchasing power of customers around the world, which has reduced earnings from product sales. The economic factors such as interest rate, inflation rate, economic cycle, foreign exchange rate, and savings rate of the countries in which Dell Technologies operates have determined the demand and investment in those countries. The United Kingdom, for example, has a huge purchasing power; it has bought more products from Dell than Croatia, which is a much smaller economy. The economic factors differ across countries, from Latin America to European and Caribbean countries. Therefore, Dell Technologies has to cope with different economic conditions to stay entrepreneurial (Castaño, Méndez, and Galindo, 2015). Economic conditions also exert influence on the operational costs, which grow in economic recessions. This has led to many international companies reducing their workforce to cut operational costs. Economic slowdown cuts down on the profits from sales, leading to poor performance. The growth of the dollar since the economic recession has aggravated economic volatility for the US brands as their sales from international markets have dropped. Dell Technologies has also been affected by this. Social Factors Social factors have also had both direct and indirect effects on Dell Technologies. The social trends that have been happening in the last few decades have affected Dell’s businesses and sales in particular. Dell manufactures IT solutions and laptops for the global market. The recent growing trend towards the preference of tablets and smartphones to laptops and desktops has affected Dell’s markets globally. Societies and cultures are different among countries. As a global brand, Dell Technologies has to operate under these diversities. Dell has to come up with different strategies to win in these unique markets since cultures influence exactly which products will be demanded in a particular locality (Gajjar, 2013). In addition, social factors such as high social media use has affected the way Dell Technologies conducts its marketing and advertising. It now advertises through different websites and social media, which has gained tremendous use across the globe (Dwivedi, 2015). Technological Factors As a technological company, Dell is greatly influenced by any slight changes in technology. The recent explosive increase in the demand for mobile devices globally has hurt the market for PCs. More clients are now looking for tablets and smartphones with wider screens, which has altered the market dynamics and sales. Dell Technologies has, therefore, had to diversify its range of products by offering software and security solutions to boost its sales. It has also avoided investing in potentially unprofitable ventures and used the latest technology developed by its suppliers (Kumar and Craig, 2007). Environmental Factors In this century, governments and various organizations have advocated for environmental protection and use of manufacturing methods that are friendly to the environment. Governments have encouraged citizens to buy from environmentally responsible businesses; therefore, environmentally friendly brands are flourishing. Dell has invested in energy efficiency and recycling, among other areas, to improve its environmental impact (Kumar and Craig, 2007). These ways of conserving the environment are costly and cut on revenues. Legal Factors Legal compliance is one of the most important factors that enable a business to operate in any country. Dell is an international company and has to comply with all the laws in each of the country it operates in, including the rapidly changing European Union regulations. Dell has faced legal issues in China in the past and even in other nations, some of which have ended up in fines. Political Environment to Have the Greatest Effect on Dell Technologies in the Future There has always been some conflict between the United States and China. The friction in the China-US trade relations has affected many businesses, especially tech companies. The sources of friction are numerous, including exchange rate manipulation in the past, among other factors (Woo, 2008). China is a multibillion-dollar PC market for Dell, and any friction between the two countries will greatly hit Dell’s China market. The conflict between the US and China may not have ended and may not always be inevitable in future (Maher, 2018). Dell has to be prepared for future halts in its business operations. The European Union will also affect businesses such as Dell in the future. Issues such as Brexit have far-reaching consequences affecting how Dell’s UK stores will be operating with neighboring countries. Brexit will create barriers to trade and negatively affect immigration, which helps in the flow of labor (Cumming and Zahra, 2016). Political factors even in the US will directly affect the economy and currency exchange rates, and therefore, potentiate the economic factors and their effects to businesses. In the future, other countries, such as China, may cut imports of computers and computer products in favor of their own locally produced products. This will affect not only Dell Technologies but also other international companies doing business in such countries as well. To sum things up, Dell started manufacturing laptops in 1993. Later, they introduced a website through which they sold their computers. They incorporated information technology through the use of the internet into their business model (Kraemer, Dedrick, and Yamashiro, 2000). Dell later introduced its first Dell printers in 2003 that were tailored for the public and small businesses. Dell made a name back then in the personal computer industry by providing computer customization services to its customers. They offered customized personal computers according to every customer’s need by allowing customers to submit requests of what features they wanted their computers to have (Kraemer, Dedrick, & Melville, 2001). References
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