Case 7-5: Dell Computer Corporation
1. What is Dell’s strategy?
Dell’s strategy was based on:
• Market leadership as a result of a persistent focus on delivering the best possible customer experience. Direct selling, from manufacturing to consumer, was a key component of its strategy.
• Its reputation as one of the world’s most preferred computer systems companies and a premier provider of products and services that customers worldwide needed to build their information-technology and internet infrastructure.
What is basis on which Dell builds its competitive advantage? Dell redesigning PC industry value chain as a tool in developing competitive advantage based on:
• Cost advantage: This was done in three areas. Component purchase costs, inventory costs and selling and administrative costs. • Customer knowledge advantage: Dell understood consumer needs and efficiently met those needs by selling computer systems directly to customers. The direct business model eliminated retailers, who added unnecessary time and cost, and shipped directly from its factories to end customers. It took orders for hardware and software over the phone or via the internet. Dell designed an integrated supply chain linking Dell’s suppliers very closely to its assembly factories and order-intake system. Dell outsourced all components but performed assembly. • Technology advantage: dell custom-built its machines after receiving an order instead of making machines for inventory in anticipation of orders. Dell introduced the latest relevant technology much more quickly than companies with slow moving inventories; turning Dell to become the number-one retailer of PC, outselling IBM and Hewlett-Packard. • IBM and Hewlett-Packard
• Dell moved into IT portfolio; it moved into servers, and storage, mobility products, and also challenged Printer leader HP.
2. How do Dell’s control system help execute the firm’s...
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