According to Porter the value chain is defined as the complete flow of products from the suppliers to the customers and management of the information flow in a way that maximizes the consumer satisfaction with the increase in the profit margins of the company.(ivythesis,2009)
Dell’s value chain is one of a kind, they outsource all there components across the world and then assemble and sells it directly to the customers. Dell works in a very complex manner by directly supplying to the customer and by this they skip the market middlemen. They achieve value addition at the same time because of incurring low on total expenditure. This ensures dell to get the maximum advantage in the market.
The computer industry is a very fast growing industry and is very competitive, according to Porter’s (1980) theory, the level of competition in an industry is decided by five forces:
1. The threat of entry of new competitors
2. The threat of substitutes
3. The bargaining power of buyers
4. The bargaining power of suppliers
5. The degree of rivalry between existing competitor
Key points that ensure Dell’s advantage in its value chain activities:
* Dell has good relations with its suppliers ensuring easy procurement of hardware.
* Dell has a good information channel due to which the customers are always well informed about the product
* Direct selling to customers through internet hence cutting the middlemen
* Dell provides its customers with the latest and the best technological up gradation in their products
* Provision of experienced customer service workforce
DELL value change activities are based on two models below :
* DIRECT SELLING STRATEGY
* BIULD TO ORDER
Dell never used retail channels for distribution like its competitors, according to dell they waste unnecessary cost and time which could be saved. Hence... [continues]
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