Matching Dell Case

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Strategic Management
Word Count: 743
BUSI 4701U
Section 2

Strategic Management
Word Count: 743
BUSI 4701U
Section 2
UOIT| Group Assignment - Matching Dell|

UOIT| Group Assignment - Matching Dell|

Q1.
Buyer Power – High –
Since large and medium size business consists of 42% of industry sales, which represent high buyer power because these buyers demand the industry’s attention and businesses are not brand loyal as they usually had “a motley collection of PCs of various brands” (p. 4, 16). Additionally, there are low switching costs for buyers as a result of the Wintel standard. Additionally, the power of downstream channel members has been decreasing as a result of the emerging practice of producing bare bones PCs for channel-member assembly. This practice shows lower buyer power because it creates switching costs for the channel members since their operations are integrated with the core PC manufacturers. Finally, buyer power is increased by the fact that some resellers were integrating backward and setting up their own assembly processes and brand names for PCs, such as MicroAge and CompUSA (p.13-14). Supplier Power – high –

The bargaining power of hardware manufacturers is low because there are many of them and PC manufacturers source these components globally. In contrast, the bargaining power of microprocessor manufacturers is high because Intel has a “near monopoly.” (p.3) The bargaining power of the suppliers of operating systems is also high as a result of the fact that Microsoft provides nearly all operating systems for computers with x86 microprocessors. Furthermore, Microsoft provides approximately 80% of application software (p.3). Industry rivalry – high –

Wintel standards result in PCs that are not significantly differentiated, which increases rivalry. Also, Intel’s practice of distributing new processors to PC manufacturers based on past purchases increased competition because this gave manufacturers’ pressure...
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