Dell Value Chain

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The value chain of a company, the concept introduced by porter is its entire product flow from the supplies to the customers and manageing the information flow such that the customer derives maximum satisfaction while the company increases its profidt. Dell's value chaing is unique in the sense that the company sources all its components from vendors across the world, undertakes the financial assemply and sells it directly to the consumer. Dell's model of selling and build-to-order have been the main driving forces that have enabled it to gain advantage over other players in the computer industry that can be described as highly competitive according to Porter;s five forces model.

Dell, Inc. has experienced tremendous growth since Michael Dell founded the company with only $1,000 in his University of Texas dorm-room. Today, Dell has global revenues of nearly $50 billion and employs more than 55,000 individuals. Despite this tremendous growth, the organization has remained committed to its core values. The “Soul of Dell” creates an ethical framework in which people are the common thread which links the organization’s current position and future aspirations.

The computer industry can be characterized as mature in the U.S., Japan, and Europe but there is continued room for growth in Latin America, the Middle East, and the rest of Asia. Further, business and consumer customers globally are subject to a technology “upgrade cycle,” whereby the short product lifecycle of computer products drives repeat purchases. Pricing is fiercely competitive in the computer hardware industry. Further, mergers characterize a significant trend and are likely to remain a defining factor in the near-term. These deals are enabling computer hardware providers to offer better services to their customers. Two of Dell’s largest competitors, HP and IBM, offer full-service products (i.e. hardware, software and consulting services).

Porter’s Five Forces of Competition provide a...
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