COST LEADERSHIP STRATEGY
Dell Computers have been the industry leader with there cost-leadership strategy. They strive to provide technology and support at a lower unit cost than their competitors. They are a direct model company. Their unique relationship with customers gives Dell the opportunity to know exactly what their customers want and offer products that their customers need. They have a strong focus on being a "market taker" rather than a "market maker". Capitalizing on their ability enter new markets and dominate them the way they have in the lower end server and work station markets has been a crucial part of Dell's success. On-line and telephone sales and support can also be attributed to Dell's superb direct model. Through on-line custom system sales the customer can configure a system with assistance. By using this method Dell has managed to help keep internal costs low, increase value to the customer and provide increased returns to their shareholders. Dell's cost leadership strategy has also allowed them to respond to market indicators favorably. There aggressive strategy allows them to respond to a market slowdown by decreasing prices and making up for would-be lost profits by increased volume of sales. This low-cost competitive advantage is working because they have been able to successfully provide there products and services more efficiently in an extremely competitive market.
Supply chain management is another key competitive advantage that dell holds. Suppliers are required to have hubs near Dell's factories and manufacturing plants. Dell has reduced its turn around time to less than 5 days with their state of the art real time communications with their suppliers. This allows Dell to provide better service and faster turnaround time. Supplier loyalty has also increased. Dell and Wal-mart have both been industry leaders in supply chain management and the decreased cost in inventory have helped their bottom lines...
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