Dell Computer Future Market Condition: Outlook & Analysis
Market structure
At present, the current structure of the PC market is a market structure closer to one of perfect competition, with a very buyer rather than seller friendly focus. Many buyers and sellers and a high level of price volatility characterize the PC industry. However, no market is a textbook definition of any market structure. Although there are many products in the PC industry, they are not all exactly similar in nature and with many substitutes, and there are higher barriers to industry entry than in other competitive market structures -- thus this state of perfect competition is somewhat limited. (Investopedia, 2005) But overall, Forbes Magazine has said the PC market growth will moderate in 2005 due to a lack of significant new product introductions in a too-competitive marketplace. ("Market Share," 2005)
Impact of New Competitors
No new competitor has quite been able to match Dell's efficiency. Dell sells directly to their customers so their distribution channels are simple and inexpensive, with no need for the company or the consumer to absorb dealer markup. Dell builds-to-order, keeping inventories low compared to its competitors. Low inventories mean that, when its competitor Intel drops the price of its processors, Dell does not have any older, more expensive processors lying in its stores at a cost to the company.
Thus, Dell can reduce the prices on its computers faster than its competitors because the components that make up those computers are the latest and cheapest. So far, no other new PC maker has been able to match Dell's cost structure. (Bean, 2005)
Pricing
The problem faced by Dell competitors HP and Compaq is the same problem that earlier defeated Gateway and IBM, namely Dell Computer's consistent low, low, pricing. Dell has become and remains the most cost-efficient PC manufacturer in the industry....
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The process would then need to continue so that the changes that can be seen in the environment can also affect the changes in entry strategies. Environmental factors, economic factors, political/legal factors, social/cultural factors and also technological factors should all be considered. The legal factors that need to be addressed include issues in employee law, monopolies and mergers legislation, environmental protection laws, and wider issues such as foreign trade regulations.
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