...Week Six Case Analysis: MRKT 5000 Online Course Dell Direct and Not-So-Direct Case Summary: Dell is the largest computer-systems company based on estimates of global market share. It is also the fastest growing of the major computer-systems companies competing in the business, education, government, and consumer markets. Dell's product line includes desktop computers, notebook computers, network servers, workstations, and storage products. Michael Dell founded the company based on the concept of bypassing retailers and selling personal computer systems directly to customers, thereby avoiding the delays and costs of an additional stage in the supply chain. Much of Dell's superior financial performance can be attributed to its successful implementation of this direct-sales model. The core elements of Dell's business model are its direct sales model, usually referred as “direct model”, and the build-to-order strategy. Key Marketing Issues • Positioning/repositioning – Dell needs its brand to appeal to its correct target audience. • Styling- presenting a new cpu that is aesthetically appealing to the focused market • Design- creating a cpu that is not only stylish but with a design that can appeal to the mass of the market • Competition- with HP, and Apple being huge rivals, Dell being able to capitalize on their direct channel could give them the competitive advantage among others • Differentiation- differentiate the limited-edition products from...
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...Dell Computer Corporation Dell Computer Corporation since its arrival in the computer manufacturing business has been following the “Direct Model” that has helped it to leverage its position as a leading manufacturer of PCs. When Dell entered the PC manufacturing industry there were already established competitors like IBM, HP, COMPAQ, Gateway and Apple.IBM was the pioneer with respect to technical standards in the PC industry and also had an open architecture allowing developers to build applications suitable for running on the IBM machines. The industry was rallying around the standards set by IBM and all major players in the industry had IBM clone machines except for Apple which was using alternative standards and had its own proprietary architecture. The major players had strong sales force teams and dealer networks .So the PC industry had a lot of competition and there was very less opportunity for any substantial growth in the industry. Because of presence of so many competitors in the industry price wars were common and locking in customers could only be done by providing them with a cost effective solution. Also the PC manufacturing industry had two prominent suppliers for the microprocessor (Intel) and the operating system (Microsoft) ,the two most important things required in building a PC. Even though Intel made the microprocessor available to purchasers at a standard price it rationed new products to PC makers based on the proportion of their previous purchases...
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...Analysis of Dell Computer and its use of Information Systems in CUT THROAT PC Industry Simon T. Lau Table of Contents Analysis Paper Objective Section I : Industry Analysis : The Personal Computer Industry A. Personal Computer (PC) Industry Profile B. Porter Competitive Model for PC Industry Structure Analysis C. Business Strategy Model and Representative Business Strategies D. Globalization of the Industry E. Importance of the Information Technology to the Industry Section II : Company Perspective : Dell Computer in the PC Industry A. Business Leaders and Company Profile B. Competitive Strategy Statement C. Dell Computer Financial and Market Performance D. Significance of Information Systems at Dell Computer E. Strengths and Weaknesses of Dell Computer Section III : Structured Analysis of Information Systems at Dell Computer A. Strategic Option Generator B. Roles, Roles and Relationships C. Redefine and/or Define D. Significance of Telecommunications E. Success Factor Profile Section IV : Final Analysis – The Success of Dell Computer in the PC Industry A. Success of Business Strategy and Information Systems Use to Day B. Is Dell Computer effectively positioned themselves for the Future? Bibliography Three Outstanding Articles Analysis Paper Objective The objective of this paper is to analyze Dell Computer Corporation (Dell) business...
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...and Extending the Business Model With Information Technology: Dell Computer Corporation Kenneth L. Kraemer, Jason Dedrick, and Sandra Yamashiro Center for Research on Information Technology and Organizations (CRITO), Graduate School of Management, and Department of Information and Computer Science, University of California, Irvine, Irvine, California, USA Keywords The exceptional performance of Dell Computer in recent years illustratesan innovative response to a fundamental competitive factor in the personal computer industry—the value of time. This article shows how Dell’s strategies of direct sales and build-to-order production have proven successful in minimizing inventory and bringing new products to market quickly, enabling it to increase market share and achieve high returns on investment. The Dell case illustrates how one business model may have inherent advantages under particular market conditions, but it also shows the importance of execution in exploiting those advantages. In particular, Dell’s use of information technology (IT) has been vital to executing both elements of its business model—direct sales and build-to-order—and provides valuable insights into how IT can be applied to achieve speed and exibility in an industry in which time is critical. Many of the insights gained from this case can be applied more generally to other time-dependent industries, suggesting that the ndings from the Dell case will have implications for a growing number of companies and...
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...------------------------------------------------- ------------------------------------------------- A Case study of Dell supply chain management Liu Xingrui 920514-7482 tml10xlu@student.hig.se Xiao Ziye 920801-6619 tml10zxo@student.hig.se Peng Yunyi 930204-9128 tml10ypg@student.hig.se Liu Siqi 921026-9628 tml10slu@student.hig.se Date Summary Dell’s supply chain is typical paragon among the computer manufacturing industry. The advantage of supply chain lead to a rather strong marketing performance for dell than it ever had been. This paper takes an overview of Dell’s supply chain and strategies used in supply development. Generally, three sections are involved in the analyses which are build-to-customer strategy, direct sale model and IT system. Build-to-customer strategy’s purpose is to give quick responsiveness from supplier to end of users to apply the customer diversification demands. Meanwhile combine with stronger IT system, information is highly sharing without enormous unnecessary intermediaries. Under the great execution of direct to sale model, JIT standard inventory control is obtained and supply efficiency is approved to handle the delivery time limit set Dell. SWOT analyze as the power tool to distinguish a company current situation. The result distinctively shows that despite the advantage of cost, there are still many opportunities as untapped market for Dell to exploit. But no matter how unpredictable the future would be. Right now the consequence is...
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...DELL "You don't have to be a genius or a visionary or even a college graduate to be successful. You just need a framework and a dream."-Michael Dell Michael Dell wasn't the only young entrepreneur to ride the computer boom of the late 1980s and early 1990s from rags to riches. Like Rod Canion of Compaq and Steve Jobs of Apple, Dell turned a fledging start-up into a multibillion-dollar computer empire. But unlike the ill-fated Canion and Jobs, who lost control of their creations as they grew, Dell has managed to hold on to the reins of his maverick venture and achieve the unique distinction of being the computer industry's longest-tenured CEO. Following the simple idea that by selling customized personal computer systems directly to customers he could best understand their needs and provide the most effective computing solutions to meet those needs, Dell has made Dell Computer Corp. the world's leading direct computer systems company. Dell's parents wanted him to be a doctor. But by the time he was in junior high, Dell was hooked on computers. While most of his classmates were tinkering under the hoods of old cars, Dell loved to tinker with his Apple IIe. To please his parents, Dell enrolled as a premed student at the University of Texas in 1983, but by then his only real interest was in computers. During his first semester, Dell spent his spare time buying up remaindered, outmoded PCs from local retailers, then upgrading and selling them from his dorm room. He was so successful...
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...1. Examine and analysis Dell’s Direct Model and its basic working and success and future challenges. Dell’s Direct Model Dell has been following it’s unique direct build-to-order sales model for more than 20 years. Customers can plan their own configuration and place orders directly with company via the phone or a web site. Over the years Dell supply chain efficiencies and direct sales gave it a competitive advantage. Dell has also leveraged JIT principle to make its manufacturing process success. Dell’s approach to JIT is different in that they leverage their suppliers to achieve the JIT goal. They are also unique in that Dell is able to provide exceptionally short lead times to their customers by forcing their suppliers to carry inventory instead of carrying it themselves and then demanding (and receiving) short lead time on components so that products can be simply assembled by Dell quickly and then shipped to the customers. Characteristics of direct model * Eliminate costs and risks of carrying large finished goods inventories * High velocity * Low-cost distribution * Direct customer relationship * Build-to-order * Just-in-time manufacturing * Products and Services aimed at specific market segments * Reduced channel costs: from 13.5%-15.5% to 2% of product revenue * Latest Technology was introduced faster than indirect channels * Dell can use IT to directly control its value chain, set quality measures and monitor in...
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...Question 1: How has Dell used its direct sales and build-to-order model to developan exceptional supply chain? Many of the challenges in improving the supply chain come with all of theunknowns. Most companies produce products they think the consumer will want. Thenthey ship these products to the retail stores. The stores then try to sell the products thatare on their shelves to the customers. The supply chain shows down while they arefiguring out what to build. Then they work with suppliers to get the raw materials andcomponents for the products. The chain slows down more while they are building the products and shipping them to the stores. Then the supply chain is still slow while theywait for the products to sell and get paid. Supply Chain Management: An Analysis of Dell¶s Value ChainDell has used its direct sales and build-to-order model to create this exceptionsupply chain by integrating everything from the beginning to the end process. Dell starts by researching customer to find out what they want. As soon as an initial product isdesigned, Dell starts to market that product on the web-site. Dell does not start to produce any of the products until the customer tells Dell exactly what they want and paysfor the product. Only then does the procurement process start. Dell has improved thesupply chain to make it exceptional by integrating the suppliers. The suppliers have aWeb page which informs them of pending orders. This allows the suppliers to plan basedon actual demand...
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...reading and understanding the various initiatives used in the company – DELL INC., explain the importance of effective operations management in achieving organizational objectives of Dell as a leading company in computer industry. (Criteria 1.1) Operation management is the adoption, design and control of the process in production of goods or services. All that to ensure the efficiency of business operation and at the same time meet the effective customer requirement. For this reason Dell and in spite of what all manufacture used to trust, adopted a new innovative business model in operation management. His sharp vision for the future market should be achieved by: -cutting out the intermediaries between the manufacture and the customer -a build-to-order manufacturing -the customers can themselves configure the product to meet their needs -the customers pay before they get the products Indeed the direct sales model enables closer customers integration so DELL built a strong and stable relationship to them which can able the company to collect a various information and databases about customers’ needs so DELL be first not only to release new products but also to maintain a high level in after sales services and anticipate in solving problems. The DELL direct sale process was adopted using telephone sale but with the emergence of the Internet, Dell Computer could extend the reach and scope of the direct sales model at a relatively low marginal cost. 1.1 Critically...
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...Matching Dell Case Analysis 6/27/2013 Submitted By: Group-4 Manjul Shrestha Megha Shrestha Mohit Basnet Sujal Dhungana Submitted To: Mr. Rupesh Krishna Shrestha Facilitator, Marketing Management Kathmandu University School of Management Background The case “Matching Dell” basically describes the history, market structure and environment of computer and peripherals industry especially emphasizing the success story of Dell Computer Corporation. Despite the fierce competition from the IBM giants and the IBM clones, Dell stood out as a successful name by focusing exceptionally on operations and manufacturing, measuring performance through several performance metrics and concentrating on products and market trends. Dell Computer Corporation emerged as a small dorm room part-time business in the mid-1980s, the era of booming popularity and purchases of the personal computers when every family wanted to own a PC for their homes and every employee wished to have a PC on their desk. So, consumers were demanding PCs and there was Dell bursting on the scene with its “direct approach”, handling each customer individually through customized PCs, delivering its core strategies of improved customer satisfaction and minimum inventory holdings. While all the other big competitors were running towards developing their retail and reseller chains and relationships, Dell with its unique approach focused on handling its customers directly and thus was rewarded with huge raise...
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...approach had two advantages. 1) Bypassing distributors and retail dealers eliminated the mark-ups of resellers and, 2) Building to order greatly reduced the costs and risks associated with carrying large stocks of parts, components and finished goods. Michael Dell’s and company executives have come to believe that the there are four key strategies for the company in delivering superior customer value; 1. Selling direct to the customer is the most efficient way to market the company’s products cause it eliminates wholesale and retail dealers that impede Dell’s understanding of customer needs and expectations and that add unnecessary time and cost. 2. Allowing customers to purchase custom-built products and custom-tailored services is the most effective way to meet customers’ needs. 3. A highly efficient supply chain and manufacturing organization, grounded in the use of standardized technologies and selling direct, paves the way for a low-cost structure where cost savings can be passed along to customers in the form of lower prices. 4. Dell can deliver added value to customers by (1) researching all the technological options, (2) trying to determine which ones are “optimal” in the sense of delivering the best combination of performance and efficiency, and (3) being accountable to customers for helping them obtain the highest return on their investment in IT products and services. In almost all cases, non-propriety, standardized technologies deliver the best...
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...Dell, Inc. BUS630- Managerial Accounting Dr. Jared Eutsler August 10, 2012 * What is Dell’s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion? Dell’s strategy “combines its direct customer model with a highly efficient manufacturing and supply chain management organization, and an emphasis on standards-based technology” (Dell, 2005, p. 1). The purpose of Dell’s multifaceted strategy is to be efficient when it comes to manufacturing products and effective when it comes to providing services. Dell feels that their business strategy allows them to “provide customers with superior value; high-quality, relevant technology; customized systems; superior service and support; and products and services that are easy to buy and use” (Dell, 2005, p. 1). Dell also focuses on developing new technologies that incorporate consumer-desired features and capabilities at a highly competitive price. Utilizing feedback from customers, Dell engineers “work with a global network of technology companies to architect new system designs, influence the direction of future development, and integrate new technologies into Dell’s products [which allows them to] quickly and efficiently deliver new products and services to the market” (Dell, 2005, p. 2). Dell relies on a combination of customer intimacy, operational excellence, and product...
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...Dell Inc. Maria Galindo Bus 630 Managerial Accounting John Kuhn 5/21/2012 Dell, Inc. * What is Dell’s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion? Dell’s strategy for success in the marketplace is a combination of their direct customer model with emphasis on standards-based technologies. D as well as highly efficient manufacture of products while providing customers with high quality and customized products as well as excellent customer service and support. The steps to follow are: 1. Establish direct effective relationship with customers by allowing them direct access. Dell removes the third party by allowing customers direct access. 2. Customers are able to purchase custom-built products and custom-tailored services. 3. Dell will be the low-cost leader. 4. Dell provides a single point of accountability for its customers. 5. Non-proprietary standards-based technologies deliver the best value to customers. * What business risks does Dell face that may threaten its ability to satisfy stockholder expectations? What are some examples of control activities that the company could use to reduce these risks? (Hint: Focus on pages 7-10 of the 10-K.) The business risks that Dell faces that may threaten its ability to satisfy stockholder expectations. Include US global macroeconomic, competitive...
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...Matching Dell Jonathan S. Leonard Two Fundamental Strategies Beat them on costs Sidestep them with differentiation Two Fundamental Strategies Dell relentlessly drove down costs Methods Corporate Financial Comparisons? These are clouded by differences in Business Organization, Product Mix, Industry Mix, Pricing, Cost Allocation Product level Comparison: Apples to Apples Five Forces Analysis Bargaining Power of Some Suppliers (very high) Proprietary standards + customer desire for compatibility Microsoft and Intel positioned to extract profits from industry Other inputs are commodities Bargaining Power of Customers (Low) Resellers and retailers have some grip on end-user relationships, giving them ability to extract price protection, but users more sophisticated (and less in need of assistance) over time Millions of customers Five Forces Analysis Intensity of Rivalry (very high) Wintel standards little distinguishes machines of leading companies except price vigorous price competition Growth of processing power outstrips growth in need for processing intense excess capacity and saturation fight for market share Threat of new entry (high) Capital costs of mfg facility low Stream of low cost entrants (white-box makers) and contract manufacturers Absolute cost advantage difficult to maintain since inputs are available at fixed prices Threat of substitutes (growing) PDAs, phones,etc. Alternative sales methods (online) ...
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...STANFORD UNIVERSITY CASE NUMBER: EC-17 November 2000 DELL DIRECT1 In 1995, a manager from a leading Japanese computer company was recounting his company’s plans to conquer the US Personal Computer (PC) market: “We have a strong brand name in consumer electronics, and what’s most important, we build many of the components that are needed in the PC ourselves: monitors, audio equipment, CD-ROM, DRAM, and so on. This will give us a tremendous advantage over American competitors, who have to buy everything outside” [1]. Several years later, it looks like the competitive weapon of this and other Japanese electronics giants had misfired. Hitachi, Sony and Fujitsu have spent vast resources trying to crack the US PC market, but had only captured a marginal share—and they had lost money doing it. At the same time, Texas-based Dell Computer Corporation, founded by 19-year-old Michael Dell in a university dormitory room, was growing rapidly, sustaining a much larger portion of the PC market than all Japanese vendors combined. And while the Japanese PC manufacturers were unable to earn any money in the US market, Dell, which produces no PC components, was highly profitable, grew by more than 50% each year over the 1995-1998 period, and saw its stock grow about 30,000% in a decade (see Exhibit 1 for Dell financial summary). Dell does not manufacture any components, but it can produce custom-built PCs in a matter of hours. How does Dell do it? Why did it succeed where the Japanese PC manufacturers...
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