Matching Dell
MATCHING DELL CASE ANALYSIS
This analysis describes the case of computer and peripherals industry especially the successful management of Dell Computer Corporation which grew twice as fast as its major rivals like Compaq, Gateway, Hewlett Packard and IBM. The main reason for the success of Dell was their "Direct Model" of selling computers which eliminated all traditional channels like distributors, resellers and retailers. Traditionally all its competitors like IBM, HP, and Compaq etc. used reseller, retailers and distributors to sell their computers to end users. IBM was the first company to launch its PC in 1981 and soon held 42% of the market. But the growth of IBM proved to be short lived as with Schumpeterian rents when it failed to take any proprietary competitive advantage and ceded rights of the microprocessor and operating system to Intel and Microsoft. Dell through its direct selling approach used to take orders directly from the customers, thus selling customized machines. This proved to be a revolutionary business strategy which would enable it gain cost leadership and competitive advantage in the PC market, enabling the company to eliminate wholesale and retail dealers that proved to be very expensive and wastage of time. It also provided for a cheap and efficient way of distribution and production of computers. Furthermore the direct model also provided a better understanding of customer needs. This efficient system of distribution was possible only because the company was able to align its resources and capabilities with customer expectations. The company was able to build huge and highly integrated and efficient external as well as internal sales forces. The external sales force was entrusted with the responsibilities of understanding customer expectations and making sure that each and every aspect of the PC was build according to customer specifications. The internal sales force was assigned to
This analysis describes the case of computer and peripherals industry especially the successful management of Dell Computer Corporation which grew twice as fast as its major rivals like Compaq, Gateway, Hewlett Packard and IBM. The main reason for the success of Dell was their "Direct Model" of selling computers which eliminated all traditional channels like distributors, resellers and retailers. Traditionally all its competitors like IBM, HP, and Compaq etc. used reseller, retailers and distributors to sell their computers to end users. IBM was the first company to launch its PC in 1981 and soon held 42% of the market. But the growth of IBM proved to be short lived as with Schumpeterian rents when it failed to take any proprietary competitive advantage and ceded rights of the microprocessor and operating system to Intel and Microsoft. Dell through its direct selling approach used to take orders directly from the customers, thus selling customized machines. This proved to be a revolutionary business strategy which would enable it gain cost leadership and competitive advantage in the PC market, enabling the company to eliminate wholesale and retail dealers that proved to be very expensive and wastage of time. It also provided for a cheap and efficient way of distribution and production of computers. Furthermore the direct model also provided a better understanding of customer needs. This efficient system of distribution was possible only because the company was able to align its resources and capabilities with customer expectations. The company was able to build huge and highly integrated and efficient external as well as internal sales forces. The external sales force was entrusted with the responsibilities of understanding customer expectations and making sure that each and every aspect of the PC was build according to customer specifications. The internal sales force was assigned to