Essay on Dell Analysis

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Dell Analysis

In spite of Dell’s Direct Model strategy, the company had lost any price advantage it had over its competitors. Dell also had an issue with channel inventory availability driven by the fact that their competitors were attempting to replicate their strategy. This was a large threat to the organization because they so heavily relied on just-in-time delivery of parts. Dell’s competitors faced many challenges to the direct distribution method, however. According to Exhibit 8 in the case (“Ratings of PC Vendors by Corporate Mangers with PC-buying Responsibility”), channel based support was rated the lowest on all scales, showing that this was Dell’s riskiest area as well.
Internal Analysis
Strengths and Weaknesses Dell’s
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Also, Dell did not have a price advantage over competitors despite their lower costs due to the Direct Model. Finally, the firm did not have a large share of the foreign market, which has the highest growth potential.
Value Chain Dell was more capable of maintaining the Direct Model strategy than most, if not all, of its competitors. The resources that supported this advantage were the close relationship Dell had with its suppliers, a solid just-in-time inventory management system, and proximity of warehouses and production facilities to assembly operations. In addition, Dell’s computers developed a reputation of reliability and the company excelled at customer service. While the Direct Model seemed to challenge competitors, many other companies were able to imitate Dell’s reliability and customer service. Dell attempted a cost leadership strategy although it’s PC’s and laptops were comparable in price to competitors. Gateway was the cost leader in the industry and once trailed only Dell as the leader of direct sales of computers to customers. Dell does offer computers that are customized to buyer specifications so their computers are more custom than competitors. Very large customers who purchased over $1 million in PC’s made up 70% of the firms revenues. The firm would take a big revenue hit if it lost these customers.

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