ECO561 Phoenix Dell Inc Challenges of Expansion to China Assignment Purpose of Assignment This week students will review and revise their Week 3 Research
ECO561 Phoenix Dell Inc Challenges of Expansion to China Assignment Purpose of Assignment
This week students will review and revise their Week 3 Research Analysis for Business Signature Assignment based on economic analysis and the feedback provided by their facilitator. Students will also expand their Week 3 analyses to evaluate the challenges of expanding their chosen company’s production to a foreign market.
ASSIGNMENT MUST BE BASED ON DELL INC. FROM MY WEEK 3 ANALYSES
About Your Signature Assignment
This signature assignment is designed to align with specific program student learning outcome(s) in your program. Program Student Learning Outcomes are broad statements that describe what students should know and be able to do upon completion of their degree. The signature assignments might be graded with an automated rubric that allows the University to collect data that can be aggregated across a location or college/school and used for program improvements.
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Revise your Week 3 assignment, Research Analysis for Business, using the feedback provided by your facilitator. This Week 6 report should only include one conclusion, so you will need to rewrite the conclusion you included in your Week 3 assignment, Research Analysis for Business.
Select a foreign market in which to expand your chosen product (Dell Inc.). If you wish, you may use one of the countries your team analyzed in their Week 5 Comparative and Absolute Advantage Assignment.
Prepare a minimum1,750-word report addressing the points listed below about Dell Inc. The use of tables and/or charts to display economic data over the time period discussed is highly encouraged, you may submit any economic data in Microsoft® Excel® format in a separate file. You may use the U.S. Department of Labor’s Bureau of Labor Statistics (BLS), U.S. Dept. of Commerce’s Bureau of Economic Analysis (BEA), the Federal Reserve of St. Louis’s FRED data, the CIA World Fact Book, World Bank data, and World Trade Organization, or other appropriate sources you might find on the Internet or in the University Library. The new sections of your report should:
Evaluate current global economic conditions and their effects on macroeconomic indicators in your selected country. Provide forecasts for population growth, gross domestic product (GDP) growth, GDP per capita growth, export growth, and sales growth.
Evaluate any competitors’ existing production in the chosen country.
Assess sales forecasts in the selected country by using the Federal Reserve of St. Louis’s FRED data, the CIA World Fact Book, World Bank data, World Trade Organization, or other appropriate sources you might find on the Internet or in the University Library.
Categorize the type of economy that exists in your selected country as closed, mixed, or market. What is the difference between these types of economies and how might this affect your expansion?
Assess how your chosen country’s current credit market conditions, especially interest rates and the availability of financing, affect demand for your product or service and your planning or operating decision for your production in that country.
Analyze the role of the selected country’s central bank on that country’s economy.
Compare the availability, education, and job skills of the work force in the selected country. Discuss any additional challenges of international production, such as political stability, availability of government financing or other incentives, threat of capital controls, and exchange rate risks.
Explain any additional supply chain challenges you anticipate if attempting to make your product in your chosen country and selling the product in other countries.
Based on the data gathered and analysis performed for this report write a conclusion in which you:
Create business strategies, including price and non-price strategies, based on your market structure to ensure the market share and potential market expansions and explore global opportunities for your business in a dynamic business environment and provide recommendations.
Develop a recommendation for how the firm can manage its future production by synthesizing the macroeconomic and microeconomic data presented.
Propose how the firm’s position within the market and among its competitors will allow it to take your recommended action.
Recommend strategies for the firm to sustain its success going forward by evaluating the findings from demand trends, price elasticity, current stage of the business cycle, and government.
Recommend any comparative advantages your company will have over competitors currently operating in that country, and defend your position, either for or against, expanding your company’s production into your chosen country based on your research.
Integrate with the Week 3 Individual Assignment, and incorporate corrections and suggestions from the instructor’s feedback. The final report should be a minimum of 2,800 words.
Cite a minimum of three peer reviewed sources not including the textbook.
Include all peer-reviewed references and government economic data sources/references from Week 3.
Format your assignment consistent with APA guidelines. Dell Inc.
June 26th, 2017
Dr. Mark Erenburg
Dell Inc. is quite easily one of the most recognizably public traded firms in the US. The
firm is most well known for their technology in personal computers and software, but also deal
in servers, data storage devices as well as other advanced technological equipment. Dell Inc. was
founded around 1984 and has over 100000 employees (Forbes, 2015). The company operates in
a incredibly competitive market structure. Many competitors, to include Hewlett Packard (HP),
Acer, Toshiba, Lenovo, IBM, Samsung, and Apple, are capable of providing similar products
which saturate the market providing customers a multitude of options of products. The fact that
Dell Inc. has continued to grow as a successful organization amidst fierce ever growing
competition, speaks volumes of Dell Inc. This paper will provide an analysis of economic data
and business data to explain how the core economic principles impact the sustainability of the
firm and what actions the firm can take to ensure success.
Over time, the company’s market share has continued to change. As early as 1999, the
market share of Dell Inc. was approximately 16% with higher returns their rivals. As the
company expanded its product line and acquired other firms, their profits and market share also
grew and increased. However, Dell Inc. no longer dominates the market share as they once did
nor gain returns as they used to. Increase competition as mentioned before have made it
increasingly difficult for Dell to thrive. Furthermore, other barriers such as the high capital
needed to start and operate a technology company have hindered Dell Inc. Another barrier that
Dell Inc. faces is the rate of which technology advances. This challenge is shared amongst the
competition as equipment and software rarely remain current for long periods of time. It takes
money and resources in order to stay current in this field as it quickly can become very
expensive. If Dell Inc. were to fall behind significantly in the advancement in technology, they
would quickly become irrelevant in their market and the company would surely fail. Taking all
of these barriers of entry into consideration, Dell Inc. would be better served to remain in the
industry, but must provide continuous product variation and diversification or will otherwise be
eliminated from competition.
There are always indicators that influence companies and their success or ultimate
failure. Indicators of Key Macroeconomics that could potentially influence the success of Dell
Inc. include unemployment, interest rates, consumer price index, personal income, industrial
production, and inflation. As an example, unemployment could be an indicator because the
employment rate has remained stagnant since roughly 2009 and while growing, is doing so at a
very slow speed, which reduces the demand and overall purchasing power of the consumers;
ultimately resulting in a loss of revenue and cuts in wages and salaries within the company.
There are so many effects, as in the ripple effect, with this one indicator. For instance, to take it
even further, the loss of revenue and cuts of wages is detrimental to Dell’s reputation to the
general public which can most certainly affect its future success. While the government can
potentially undertake fiscal policies to increase employment, the company may still need to
strain its resources and monies on wages and salaries in recruiting more employees.
It’s important to note that industrial production has increased steadily since 2009
implying that more firms are encouraged to enter the industry which pressures Dell to reduce its
product’s prices. If the growth does eventually decline and the price of elasticity is analyzed
carefully, the prices of Dell’s products could be increased just enough to increase profits by
capitalizing on higher levels of consumer demand. Furthermore, Real Income has also increased
which further represents that consumers purchase power is ever growing. As consumers increase
their household or individual income, the demand for Dell products will also increase, which will
lead to more sales for the company. Dell must capitalize when this occurs and beat their
competition to the point of new quality and innovative products and technology in order to gain
the edge over their rivals. Dell must also expand their operations, but in order to do so smartly,
then must be able to make sound financial loans, such as alternative lending practices or
financing such as venture capitalist or equity financing, despite an increasing federal government
interest rate. Today, prices in the US are no longer determined by only the forces of supply and
demand, but rather through quality products and customer service. Consumer price index has
been unstable over the past few as it fluctuates as the strength of the US dollar changes which
creates an unpredictability in the demand for Dell products. The business is operating at the
expansion phase, therefore modifying their products to extend to its products life cycle in order
to achieve a constant competitive edge.
Most recently, there is a decline in the market for personal computers and desktops by 5.7
%, according to market research firm international data corporation in 2015. Lenovo reported a
reduction in personal computers from 57 million in 2015 to 55.5 million computers and has a
market share of 21.3 % of the market share. HP Inc. had about 54.2 million personal computers
in 2016, an increase of about 1.3 %, with a market share of 21%. (US B.E.A, 2006). Dell
finished at a modest 3rd with about 40.7 million personal computers which were a 4.3 % increase
(IDC, 2015). Dell expects a change in customer expectations and looks forward to service based
areas of growth such as security software, mobile and cloud computing. As a recent example, the
firm recently launched ProSuppport Plus which detects possible issues before a problem is
caused. The GDP of the United States by the year 2015 was 17.95 trillion dollars and has been
increasing since the year 2010. The growth in GDP has a positive impact to Dell as it will
motivate the company to produce more since economic systems are improved, and income levels
Today, Dell Inc. has computers that range in price from $1000 to $2500, but minor
changes in price could be examined in order to determine the Price Elasticity of Demand for the
computers. This can be done by taking the change in the quantity of computers bought and
dividing it by the resultant change in price. If the price elasticity of demand is low, then Dell can
vary its prices to make more sales, but if highly elastic, consumers may shift to rival firms.
Substitutes to personal computers include the tablets, Mac books and other gadgets that are
produced by some the rival firms (O’connor, 1999).
In conclusion, Dell Inc. could and should place itself in great position within its market
by offering top quality products that are innovative and creative, competitive products and
prices, and product expansion to remain relevant and current with the competitors whose market
share is steadily declining. Also, the firm should comply with the federal policies especially on
loans by developing alternative financing as I mentioned in this paper.
Accounts, I. E. (2006). US Bureau of Economic Analysis. Washington, DC.
Branson, A., Espinal, C., Mogaji, L., Campbell, M., Quintela, S., & Gallegos, S. I. Organization
Introduction-Company History and Current Status.
Estrella, A., & Mishkin, F. S. (1998). Predicting US recessions: Financial variables as leading
indicators. Review of Economics and Statistics, 80(1), 45-61.
O’connor, C. H. (1999). U.S. Patent No. 5,894,571. Washington, DC: U.S. Patent and Trademark
People, W. K. Dell Explained “2015 annual results”. Forbes
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