An Investigation of Dell and Hewlett Packard’s Business Models: How Is Competitive Advantage Created?

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An investigation of Dell and Hewlett Packard’s business models: How is competitive advantage created?
Introduction:
Dell and Hewlett Packard (HP) are two of the most influential companies in the PC market. The CEO of HP requires an understanding of how dells strategy allows it to achieve a competitive advantage so that he/she can counteract it. This report has been carried out to provide the CEO with the necessary information to do this. Therefore the objective of the report is to provide the CEO with detailed information on Dell as a business and its strategy. In order to achieve this, first the main strategies of Dell and how they provide competitive advantage will be identified, then the business models and e-business initiatives used
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Hp’s business model is a traditional business model whereas Dells business model is direct.
The advantages of Dells model are: The internet allows Dell an extensive scope and reach for its products at a relatively low price (Dedrick and Kraemer 2001). Using the internet Dell has been able to automate many of its business functions, such as product configuration, order entry and technical support (Dedrick & Kraemer 2001), therefore the company can achieve higher revenues without customer service costs increasing greatly. Online configuration ensures that the customer gets exactly what they want. Dells build to order strategy means that inventory levels are low, they only hold approximately 4-8 days of stock, therefore inventory costs are low (Breen 2004).
Some authors say that Dells business model is successful because they offer ‘dependable support, combined with competitive prices and build to order convenience’ (Lee & Thornhill 2005). However it is argued that Dells success is falling due to a lack of investment in customer service, recently their reputation has been damaged as complaints increase (Gross 2005).
HPs business model is advantageous because their customers have more choice in purchasing options, they can buy online, but if they need more assistance they can buy from a store where advice will be provided. Although this is good for the customer, it has detrimental effects on HPs traditional

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