Dell Value Chain

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VALUE ADDED CHAIN IN DELL

SUBMITTED BY:
SIDDHARTHA DAS
ROLL NO: 32
BATCH: PGDM (FM) 2010-12
SUBJECT: Project and Infrastructure Management: Financing, Implementation and Control

Table of Contents
Sl.No.| Description| Page No.|
1| VALUE CHAIN ANALYSIS | 3|
2| VALUE CHAIN IN DELL| 4|
3| DIRECT SELLING STRATEGY OF DELL| 5|
4| COMPONENTS OF DIRECT SELLING STRATEGY| 6|
5| ADVANTAGES OF VALUE CHAIN OF DELL| 8|
5.1| CONCLUSION| 9|

CHAPTER-1
What is Value Chain analysis?
The value chain of a company is the entire product flow of a company beginning from its suppliers to the customers as well as managing the flow of information so that both the customers derives maximum satisfaction while at the same time the company maximizes the profit. The Value-Chain was conceptualized and popularized by Porter in 1985 through his book, “Competitive Advantage: Creating and Sustaining Superior Performance”. The value-chain management tool recognizes that there are two value-adding activities in an organization, the “primary activity” and the “support activity”. (i) The primary activity includes inbound logistics, production, outbound logistics, sales and marketing, and maintenance. (ii) Support activities include administrative infrastructure management, human resources management, research and development team and procurement  Primary Value-Chain Activities:

* Inbound logistics: It is the receiving and warehousing of raw materials, and their subsequent distribution to the processes of manufacturing. * Operations: It is the processes of transforming inputs into finished products and services. * Outbound logistics: It is the warehousing and distribution of finished products. * Marketing and sales: It is the identification of customer needs and the generation of sales. * Service: It is the support given to customers after the products and services are sold to them. Support Value Chain Activities:

* The infrastructure of the firm: It mainly focuses on organizational structure, corporate culture, control systems, etc. * Human resource management: It is the process of employee recruiting, hiring, training, development and compensation. * Technology and development: It is the development of technologies that can support value-creating activities. * Procurement: It is the purchasing of inputs such as materials, supplies and equipments. CHAPTER-2

Value Chain in Dell
Introduction
Dell was founded by Michael Dell in 1984. From the very beginning the direct sales model was adopted: In the initial stage, computers were sold over the phone and they were built according to the customer’s specifications. Headquartered in Austin, Texas, Dell has gained a reputation as one of the world’s most preferred computer systems companies and is now the market leader in its segment. Direct selling, from manufacturer to consumer, was a key component of its strategy. State of the Computer Industry

The level of competition in an industry is defined by:
(i) The threat of entry of new competitors
(ii) The threat of substitutes
(iii) The bargaining power of buyers
(iv) The bargaining power of suppliers
(v) The degree of rivalry between existing competitors If we take all these factors into consideration, the computer industry is a highly competitive one as per Porters theory. CHAPTER-3
Direct Selling Strategy of Dell
The direct model means that Dell does not use the retails channel, but sells its PCs directly to customers through its website, Dell.com. This way the intermediary steps that may add time and cost are eliminated, and Dell is directly linked to its customers. Dell’s direct model of selling and build – to – order supply chain have been the main driving forces. SUPPLIERS

DELL
CUSTOMERS

DIRECT SALES MODEL OF DELL
Traditional System Vs Dell Direct Sales Model
The traditional value chain in the personal computer industry was...
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