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Essay / Industrial context and competition
In any industry, competition depends on five key forces (Porter, 1979): the bargaining power of suppliers, the threat of substitute products or services, the bargaining power of customers, the threat of new entrants. and the industry is fighting to position itself among its existing competitors. Kennedy Consultants applied Porter's 5 Forces to Dell to understand the industry and its dynamics. The bargaining power of suppliers is important in the IT sector, and more particularly in the computer hardware segment. Dell relies on its suppliers for its manufacturing processes, since the company only assembles the parts into the final product. Despite the large number of computer parts suppliers, proximity to Dell's assembly line is a crucial factor. To protect against the risk of high demand variability and combat long delivery times, the company has developed a system through which suppliers keep their inventory readily available at Supplier Logistics Centers (SLCs) close to Dell factories, based on quantitative demand forecasts provided by Dell. Furthermore, as a dominant buyer, the company also holds power over its suppliers by imposing technological imperatives and determining the geography of its supply base (Fields, 2006). Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an Original Essay As computer sales decline significantly and customer preferences shift towards smartphones and tablets (Marketline, 2018; Passport, 2018), one of the main pillars of business , the IT segment, are seriously threatened by these emerging substitutes. Competition is rapidly intensifying in the smartphone and tablet niches, forcing companies to either reduce prices or improve performance. In addition, consumers have a multitude of choices when it comes to IT products, in areas such as personal computers, networking and storage services or data protection technologies. Customers therefore have considerable bargaining power over market players, forcing Dell and its competitors to engage in an ongoing battle for market share. By focusing more on industry segments where it can achieve product differentiation, Dell can mitigate some of the power of its customers. An example would be cloud computing, which provides an exciting opportunity for the company to consolidate its position and further expand its customer base (Marketline, 2018). The company faces intense rivalry from numerous competitors in all areas of its business. In the business PC and server markets, its main competitors are Acer, HP, Lenovo, IBM and Toshiba. In the consumer electronics sector, it faces competition from HP, Acer, Apple, Sony, Lenovo as well as Asustek in European markets (Marketline, 2018). We can argue that expected exit barriers due to large capital investments contribute to the state of competition. In the IT industry, and particularly in the hardware industry, the threat of new entrants is not very significant due to a number of barriers to entry, including sunk costs, revolutionary technological innovation required to enter the market and the economies of scale achieved by large market players. These obstacles can be overcome when competitors are able to introducedisruptive innovations. Key Sustainability Challenges and Dynamics The IT sector is prone to high energy consumption, carbon emissions and e-waste, accounting for more than 2% of human greenhouse gases according to the Global Action Plan ( 2018). The industry is energy intensive due to manufacturing processes and use, but also the transportation of materials. In 2018, Gartner Inc. reported that combined annual device shipments reached 2.2 billion units, illustrating the global reliance on technology products. In particular, the consumer electronics industry recognizes the urgent need to further commit to environmentally friendly business practices. Research undertaken by Greenpeace (2017)Examining 20 of the largest consumer electronics companies by market share showed that most companies are trying to establish environmental sustainability by reducing waste, conserving resources and reducing the size of products. Another report published by the Consumer Electronics Association (CEA, 2008) highlights that the consumer technology industry is focusing on eco-friendly packaging and recycling initiatives. There is currently no international label for sustainable IT products. However, companies are proactively developing their own “green” labels. Assessing the quality of these labels is a difficult task. In the consumer electronics sector, Greenpeace (2017) has developed a ranking framework that provides some starting guidance. The 2017 leader was Fairphone, a company that positions itself as the developer of “the world’s first ethical and modular smartphone” (Fairphone, 2018). Their competitive advantages include reduced resource consumption and transparency throughout the supply chain. Apple is well regarded in terms of sustainability due to its efforts to use renewable energy in its manufacturing, and in addition to being the first company in the sector to commit to closing the loop of production processes. Dell is ranked third “greenest” company and stands out for reduced resource consumption, more sustainable product design and closed-loop use of plastic. The company's sustainability strategy was born from an accumulation of stories, in which Dell focused on narrow areas of sustainability. with whom he interacted frequently. This ultimately gave birth to the “Legacy of Good” campaign (Dell EMC, 2017). Dell identified five areas where the company could make a significant impact using its technology capabilities: net positive impact, supply chain, environment, communities and people. Dell is reducing negative environmental impact and tackling climate action through several initiatives such as open-source plastics supply chain innovation “Ocean Bound,” investing in renewable energy and coastal cleanups. with the aim of becoming more eco-efficient, i.e. reducing negative environmental impact. overall ecological impact per production unit (Dyllick and Hockerts, 2002). Additionally, Dell sets ambitious goals to measure its progress, such as regenerating resources by giving back 10 times to the world's systems. On a societal level, Dell has taken various steps to improve the social issues facing our planet, with a focus on communities and people. The company has addressed several areas of sustainability, improving the quality of education through the Youth STEM Learning initiative, as well ascontributing to the well-being of society through precision medicine technology in the early treatment of diseases. Dell has also helped develop the right infrastructure for industrial innovation, clean water, sanitation and affordable clean energy in India, where Dell has its second largest research center (The Economic Times, 2018). Additionally, Dell reports progress on these initiatives in its annual “Legacy of Good” CSR report in what appears to be a very transparent and detailed manner. To assess the impact of Dell's sustainability strategy, we use some key academic frameworks to establish the value of sustainability, assess the effectiveness of Dell's policy using an academic typology, and position Dell within planetary systems. Creating Value Through Sustainability By modeling the various actions and policies that Dell has implemented over the years in response to the issue of sustainability, Dell's value capture and creation model can be visualized. The Sustainable Value framework, developed by Hart and Milstein (2003), positions sustainable development initiatives according to spatio-temporal parameters in order to understand how these tools create fundamental value for shareholders. Figure 1 outlines Dell's current initiatives in this context. The lower right quadrant classifies initiatives in the internal space and having short-term effects. This type of initiative generally concerns waste, pollution and reducing consumption. Dell's initiatives that fall into this category include the Gold Recycling program, focused on increasing the energy efficiency of their products to reduce the carbon footprint of product manufacturing and use, as well as the Ocean Plastics initiative and partnerships. . The latter is one of the largest and most impactful initiatives and creates value for Dell by reducing packaging and material costs, as well as developing networks with other industries and companies to expand the plastics and new packaging recycling infrastructure (Dell, 2018). The program was launched through a partnership with other technology companies and an NGO who raised awareness of the issue at Dell. The Gold Recycling program, through a partnership with Goodwill, is another industry-leading initiative, making Dell the first OEM to recycle gold for its products (Werner et al., 2017). Additionally, Dell's innovative use of mushroom-shaped capsules as packaging represents an overlap in the parameters of future impact and near-term impact (Dell, 2018). This innovation has significantly reduced the company's packaging costs and presents the opportunity to set a standard for new eco-positive business decisions. The lower right quadrant contains initiatives with short-term impact and focused on business externalities. These activities typically involve transparency of supply chains, as well as honest and frank reporting to legitimize the business (Hart & Milstein, 2003). Dell is entering this quadrant with its efforts to require suppliers to comply with international regulations on the mining of conflict minerals, namely tin, tantalum, tungsten and gold, also known as 3TG ( Dell, 2018). This compliance has so far allowed Dell to operate in stricter markets where the supply of conflict minerals is monitored, as well as improving the company's reputation. Additionally, Dell sets aside some of its capital to help in the event of natural disasters (Dell, 2018). Market studies show that companies benefiting from.